EAB Group Plc transfers to IFRS reporting

EAB Group Plc, Company Announcement, 30 November 2018, 4:15 p.m. (EET)

EAB Group Plc transfers to IFRS reporting

EAB Group (EAB) publishes its First Consolidated Financial Statements prepared and presented in accordance with International Financial Reporting Standards (IFRS) for the financial year ending 31.12.2018. Comparative Financial results are presented for the financial year ended 31.12.2017. IFRS 1 (First-time adoption of International Financial Reporting Standards) has been applied in preparing these financial statements. The effective date of transition to IFRS has been 1.1.2017. The consolidated financial statements have earlier been prepared according to Finnish Accounting Standards (FAS).

Following data represents the unaudited Consolidated Financial Statements which include the Comprehensive Income Statement and Statement of Financial position prepared in accordance with IFRS. FAS data presented in the tables is based on audited FAS consolidated financial statements relating to financial years ended 31.12.2016 and 31.12.2017 and on unaudited FAS biannual reviews for six months ended 30.6.2018. The effects of IFRS conversion to the statement of financial position, comprehensive income statement and cash flow statements are described in detail later starting in a section 1. Basis for performing calculations.

The most significant changes relate to the following items:

  • Purchase price allocation of acquired entities;
  • Recognising leases (equipment leases and office rents, etc.) as statement of financial position items; and
  • Deferred tax assets and liabilities.

Financial data presented in this bulletin is unaudited, excluding the consolidated comprehensive income statement and consolidated statement of financial position for the financial year ended 31.12.2017 and the consolidated statement of financial position for the financial year ended 31.12.2016 prepared and presented in accordance with FAS.

Reconciliation calculations for the consolidated equity 1.1.2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In millions of Euro
  Additional information FAS 31.12.2016 (audited) IFRS Transition IFRS 1.1.2017 (unaudited)
ASSETS        
Receivables from credit institutions 2, 5 0.8 0.1 0.8
Receivables from public and public corporations 2, 5 6.7 0.0 6,7
Shares and participations in associated undertakings 2 2.0 0.0 2.0
Intangible assets    2, 3, 7 5.7 0.8 6.5
Property, plant and equipment   7 0.2 2.1 2.3
Share issue receivables     0.2   0.2
Other assets     2, 5 0.3 0.1 0.5
Prepayments and advances paid   2 0.6 -0.2 0.3
Deferred tax assets   8 1.0 0.0 1.0
TOTAL ASSETS       17.5 2.9 20.4
        
EQUITY AND LIABILITIES      
LIABILITIES        
Liabilities to credit institutions     1.8   1.8
Derivatives and other liabilities for trading purposes 5   0.0 0.0
Other liabilities     2 2.2 2.7 4.9
Accruals and advances received   2, 6, 8 1.0 0.1 1.1
Subordinated liabilities   0.0   0.0
TOTAL LIABILITIES       5.0 2.8 7.8
        
EQUITY       
Share capital     0.7   0.7
Reserve for unrestricted equity 2 10.9 0.7 11.7
Retained earnings    2, 5, 6, 7 0.1 -0.2 -0.1
Profit (loss) for the financial year   2 0.6 -0.6 0.0
SHAREHOLDERS' EQUITY   12,4 -0,1 12.3
Non-controlling interest   2, 4 0.1 0.2 0.3
TOTAL EQUITY     12.5 0.1 12.6
TOTAL LIABILITIES AND EQUITY     17.5 2.9 20.4

Reconciliation calculations for the comprehensive consolidated result 1.1-31.12.2017

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Year ended 31 December 2017
In Millions of Euro
Additional information FAS
1.1.-31.12.2017 (audited)
IFRS Transition IFRS
1.1.-31.12.2017 (unaudited)
        
Fee income     2 16.8 0.6 17.3
Income from equity investments 5 0.1 0.0 0.1
Interest income     2 0.0 0.0 0.0
Other operating income     0.1   0.1
TOTAL OPERATING PROFIT   17.1 0.6 17.7
        
Fee expenses     2 -5.5 -0.7 -6.2
Interest expenses     5, 7 -0.1 0.0 -0.1
Administrative expenses        
  Employee benefits    2, 6 -5.8 -1.0 -6.9
  Other administrative expenses    2 -3.2 -1.5 -4.7
Depreciation, amortization and impairment of property, plant and equipment and intangible assets    2, 7 -1.3 -0.6 -1.9
Other operating expenses    2, 7 -1.4 0.8 -0.6
Impairment losses on loans and other receivables 5   0.0 0.0
Share of profits in associated companies   2 0.0 0.0 0.0
OPERATING PROFIT (LOSS)     -0.2 -2.5 -2.7
        
Income taxes     8 1.5 -1.1 0.4
PROFIT (LOSS) FOR THE FINANCIAL YEAR    1.3 -3.6 -2.3
        
TOTAL COMPREHENSIVE INCOME 1.3 -3.6 -2.3
        
Total comprehensive income attributable to
  Equity owners
    1.3 -3.6 -2.3
  Non-controlling interest 4 0.0 0.0 0.0
TOTAL COMPREHENSIVE INCOME     1.3 -3.6 -2.3

The Group has no items of other comprehensive income.

Reconciliation calculations for the consolidated equity 31.12.2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In millions of Euro
  Additional information FAS 31.12.2017 (audited) IFRS Transition IFRS 31.12.2017 (unaudited)
ASSETS        
Receivables from credit institutions   5 2.0 0.0 2.0
Receivables from public and public corporations 5 8.7 -0.1 8.6
Shares and participations    5 0.1 0.0 0.1
Shares and participations in associated undertakings   1.5   1.5
Intangible assets    2, 7 16.4 -3.5 12.9
Property, plant and equipment    2, 7 0.3 1.6 1.9
Share issue receivables     0.0   0.0
Other assets     2, 5 0.2 0.3 0.5
Prepayments and advances paid    1.2   1.2
Deferred tax assets   8 2.5 0.4 2.9
TOTAL ASSETS       32.8 -1.3 31.5
        
EQUITY AND LIABILITIES       
LIABILITIES        
Liabilities to credit institutions    5 4.2 0.0 4.2
Derivatives and other liabilities for trading purposes 5   0.0 0.0
Other liabilities     2, 7 3.8 1.8 5.6
Accruals and advances received   6, 8 3.0 0.6 3.7
Deferred tax liabilities    8   0.3 0.3
Subordinated liabilities     0.0   0.0
TOTAL LIABILITIES     11.0 2.7 13.7
        
EQUITY       
Share capital     0.7   0.7
Reserve for unrestricted equity    19.5   19.5
Retained earnings    2, 5, 6, 7 0.1 -0.5 -0.3
Profit (loss) for the financial year   2, 3, 5, 6, 7,8 1.3 -3.6 -2.3
SHAREHOLDERS' EQUITY   21.7 -4.1 17.6
Non-controlling interest    0.1   0.1
TOTAL EQUITY     21.8 -4.1 17.7
TOTAL LIABILITIES AND EQUITY     32.8 -1.3 31.5

Reconciliation calculations for the comprehensive consolidated result 1.1-30.6.2018

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Period 1.1.2018 to 30.6.2018
In Millions of Euro
Additional information FAS
1.1.-30.6.2018 (unaudited)
IFRS Transition IFRS
1.1.-30.6.2018 (unaudited)
               
Fee income     2 9.7 0.0 9.7
Income from equity investments 5 0.0 0.0 0.0
Interest income     2 0.0 0.0 0.0
Other operating income     0.0   0.0
TOTAL OPERATING PROFIT   9.7 0.0 9.8
        
Fee expenses     2 -1.6 -0.1 -1.7
Interest expenses     5, 7 -0.1 0.0 -0.1
Administrative expenses        
  Employee benefits     -3.7   -3.8
  Other administrative expenses     -1.7   -1.7
Depreciation, amortization and impairment of property, plant and equipment and intangible assets    2, 7 -1.0 -0.1 -1.1
Other operating expenses    2, 7 -0.6 0.5 -0.1
Impairment losses on loans and other receivables    
Share of profits in associated companies    0.1   0.1
OPERATING PROFIT (LOSS)     1.1 0.3 1.3
        
Income taxes     8 -0.2 0.0 -0.1
PROFIT (LOSS) FOR THE FINANCIAL YEAR    0.9 0.4 1.2
        
TOTAL COMPREHENSIVE INCOME    0.9 0.4 1.2
        
Total comprehensive income attributable to
  Equity owners
    0.9 0.3 1.2
  Non-controlling interest   0.0   0.0
TOTAL COMPREHENSIVE INCOME    0.9 0.3 1.2

The Group has no items of other comprehensive income.

Reconciliation calculations for the consolidated equity 30.6.2018

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In millions of Euro
  Additional information FAS 30.6.2018 (unaudited) IFRS Transition IFRS 30.6.2018 (unaudited)
ASSETS        
Receivables from credit institutions   5 2.2 0.0 2.2
Receivables from public and public corporations 5 9.0 -0.1 8.8
Shares and participations    5 0.2 0.0 0.2
Shares and participations in associated undertakings   1.5   1.5
Intangible assets    2, 7 16.5 -3.2 13.2
Property, plant and equipment    2, 7 0.3 3.4 3.7
Share issue receivables     0.0   0.0
Other assets     2, 5 0.2 0.3 0.5
Prepayments and advances paid    1.5   1.5
Deferred tax assets   8 2.6 0.4 3.0
TOTAL ASSETS       34.0 0.7 34.7
        
EQUITY AND LIABILITIES       
LIABILITIES        
Liabilities to credit institutions    5 7.0 0.0 7.0
Derivatives and other liabilities for trading purposes 5   0.0 0.0
Other liabilities     2, 7 1.1 3.5 4.6
Accruals and advances received   6, 8 3.3 0.7 3.9
Deferred tax liabilities    8   0.3 0.3
TOTAL LIABILITIES     11.4 4.4 15.8
        
EQUITY       
Share capital     0.7   0.7
Reserve for unrestricted equity    19.5   19.5
Retained earnings    2, 5, 6, 7 1.4 -4.0 -2.7
Profit (loss) for the financial year   2, 3, 5, 6, 7,8 0.9 0.3 1.2
SHAREHOLDERS' EQUITY   22.5 -3.7 18.8
Non-controlling interest    0.1   0.1
TOTAL EQUITY     22.6 -3.7 18.9
TOTAL EQUITY AND LIABILITIES     34.0 0.7 34.7

Reconciliation of retained earnings

      1.1.2017 31.12.2017 30.6.2018
Retained earnings, FAS   0.7 1.4 2.3
IFRS adjustments      
IAS 12 Income Taxes    0.0 -1.2 -1.2
IFRS 16 Leases    0.0 0.0 0.0
IAS 19 Employee Benefits    -0.1 0.0 -0.1
IFRS 3 Business Combinations   -0.7 -2.7 -2.4
IFRS 9 Financial Instruments   0.0 -0.1 -0.1
Retained earnings, IFRS   -0.1 -2.6 -1.5
 

Material adjustments within cash flow statements for 1.1.-31.12.2017 and 1.1.-30.6.2018

 

On transition to IFRS reporting, the material adjustments in cash flow statements relate to transfer of lease and rent payments to cash flow from Financial activities which was earlier classified under Cash flow from Operating activities. (0.6 million Euros and 0.5 million Euros, respectively). Transition to IFRS has also resulted in an adjustment for Purchase Price Allocation on acquisition of Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd (1.9 million Euros).

 
Key figures IFRS (In millions of Euro)   1.1. - 31.12.2017   1.1. - 30.6.2018  
Turnover      17.7   9.8  
Operating profit         -2.7   1.3  
Operating profit, % of turnover       -15.4 %   13.7 %  
Result for the financial year     -2.3   1.2  
Result for the financial year, % of turnover   -13.0 %   12.3 %  
Earnings per share (EPS), euros    -0.20   0.09  
             
Alternative Performance Measures      
Comparable turnover*         15.9   9.6  
Return on equity, %**       -15.3 %   12.8 %  
Return-on assets; %**       -8.8 %   3.6 %  
Equity ratio, %**     56.1 %   54.2 %  
Net gearing, %**     21.6 %   42.7 %  
Cost/income ratio, %**       76.6 %   48.1 %  

*Comparable turnover is based on net fees pertaining to funds administered on behalf of external parties whereas reported revenues show these fees in gross terms.
**Calculation of key figures
Return on equity = (Operating profit/loss - Income taxes) / Total average equity
Return on assets = (Operating profit/loss - Income taxes) / Total average balance sheet
Equity ratio = Total equity / Total balance sheet
Net gearing = Interest bearing net debt / Total equity
Cost/income ratio = (Fee expenses + Interest expenses + Administrative expenses + Depreciation + Other operating costs) / (Income from investment service operations + Share of affiliates' profits (net))

1.  Basis for performing calculations

The financial data in the tables has been calculated in accordance with IAS, IFRS standards, SIC and IFRIC interpretations approved by the EU and valid until 31.12.2018. IFRS 16 impacts have been applied to the statement of financial position as of 1.1.2017, 31.12.2017 and 30.6.2018. International financial statement standards refer to those standards and interpretations, which are approved in accordance with the Decree of the European Parliament and the Council (EY) N:o 1606/2002.

IFRS 1 - First time adoption of IFRS has been applied for all calculations. IFRS 3 has not been applied retrospectively for acquisitions before 1. 1.2017.

2.  Companies considered as subsidiaries: Changes caused by IFRS standards compared to FAS reporting

Consolidated financial statements include the parent company EAB Group Plc and the subsidiaries on which it has the authority.

An investor determines whether it is a parent by assessing whether it controls one or more investees. An investor considers all relevant facts and circumstances when assessing whether it controls an investee. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. (IFRS 10:5-6; IFRS 10:8)

Intra-group share ownership of the Group has been eliminated by an acquisition method. Identifiable assets and liabilities of the acquired company are valued at fair value at the time of acquisition. Portion exceeding net assets is presented as goodwill. In case the acquisition cost is lower than the fair value of the net assets, the difference is credited immediately.

IFRS 3 Business Combinations and IFRS 10 Consolidated financial statement caused changes to the companies considered as subsidiaries and acquisition cost calculations on acquisitions realized after 1.1.2017. Acquisitions of Alfred Berg Asset Management Finland Ltd, Alfred Berg Funds Ltd and Elite Finance Ltd have been addressed according to IFRS 3 and acquisition cost calculations are performed in accordance with IFRS.

Changes caused by IFRS application on addressing certain group companies:

Alfred Berg Asset Management Finland Ltd & Alfred Berg Funds Ltd

EAB Group Plc has acquired the entire share capital of Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd on 1.8.2017. Acquisition cost is calculated in accordance with IFRS 3 and fair value adjustments concerning customer relations (1.1 million Euros) and trademarks (0.5 million Euros) have been made.

The acquisition cost calculated in accordance with IFRS 3 also includes adjustments of reserves (1.4 million Euros), which do not comply with the reserve definition as per IAS 37 at the time of the acquisition. These costs have instead been recorded as a loss after the acquisition on IFRS profit or loss statement for the year ended 31.12.2017. Additionally, transaction expenses (0.5 million Euros) capitalized on the FAS statement of financial position and an estimated transaction cost accrual (0.6 million Euros) have been recorded as cost in IFRS Consolidated Statement of Profit or Loss and Other Comprehensive Income. The acquisition cost also includes an accrual for Employee benefits of a total of 0.2 million Euros, which complies with the definition of liability in accordance with IAS 19.

Identified intangible assets are subject to depreciation and they have a limited usage period.

Elite Finance Ltd

EAB Group Plc has acquired the entire share capital of Elite Finance Ltd in two installments. The Group acquired 30 % of the share capital of Elite Finance Ltd in April 2016. The acquisition is addressed as associated company in the financial statements prepared according to FAS for the financial year ended 31.12.2016. In October 2017, EAB acquired the rest (70 %) of the company's share capital and gained control over the company. Post-acquisition, the company is treated as a subsidiary for the financial year ending 31.12.2017, both according to FAS and IFRS. There is an adjustment of 0.1 million Euros to the fair value of acquisition cost based on IFRS 3 calculations. 0.3 million Euros were recorded in intangible rights as an adjustment to the fair value of previous ownership.

Elite Institutional Services Ltd and its subsidiary Elite Kiinteistökehitys Oy

Elite Institutional Services Ltd was EAB Group Plc's subsidiary for financial year 2016. In December 2016, EAB Group Plc sold a part of Elite Institutional Services Ltd's ownership, after which EAB Group Plc owned 40 % of Elite Institutional Services Ltd. In the consolidated financial statements prepared according to FAS for the financial year ended on 31.12.2016 Elite Institutional Services Ltd with its subsidiary has been addressed as an associated company applying capital share procedure. Elite Institutional Services Ltd merged with EAB Group Plc in April 2017, after which the company's subsidiary Elite Kiinteistökehitys Oy has been presented as a fully owned subsidiary in the consolidated financial statement prepared according to FAS for the financial year ended 31.12.2017.

Elite Institutional Services Ltd and its fully owned subsidiary Elite Kiinteistökehitys Oy has been presented as a subsidiary in the consolidated financial statement opening balance on 1.1.2017. Even though EAB Group Plc owned only 40 % of Elite Institutional Services Ltd's equity on 1.1.2017 EAB Group Plc had the authority on Elite Institutional Services Ltd according to IFRS 10 criteria. 60 % minority share has on 1.1.2017 been presented as per IFRS calculation on an individual row in equity. Elite Institutional Services Ltd is a company founded by EAB Group Plc. Its subsidiary Elite Kiinteistökehitys Oy is an acquired company. However, an acquisition cost calculation in accordance with IFRS 3 has not been prepared, but a relief in accordance with IRFS 1 has been applied and an acquisition cost calculation in accordance with FAS norms has been used. The profit on sale of subsidiary recorded for the financial year ended 31.12.2016 has been cancelled in the opening balance and addressed as an entry resulting from minority share sale.

Other acquisitions

Acquisitions concerning OX Finance Oy, Auta Invest Oy, Smart Money Oy and TL Trade Oy have been addressed as subsidiary acquisitions in FAS reporting. The acquisitions do not comply with IFRS 3 business combination, so the assets and liabilities have been addressed as asset acquisitions, and the payable considerations have been addressed according to IFRS as tied agent fee, which lead to reclassification of goodwill.

3.  Goodwill

Under IFRS, EAB Group Plc recognizes goodwill as of the acquisition date measured as the excess of (a) over (b) below:

(a) the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquire and in a business combination achieved in stages, the acquisition-date fair value of the EAB Group Plc's previously held equity interest in the acquire
(b) the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured.

According to IFRS, goodwill is tested yearly in case of possible reduction of value. The goodwill is allocated to cash generating units for reduction of value testing purposes. The goodwill is valued at original acquisition cost deducted by accumulated reduction of value losses. In case the acquisition cost is greater than the fair value of net assets, the difference is recorded in the Consolidated Statement of Profit or Loss and Other Comprehensive Income immediately.

Goodwill depreciation worth a total of 0.7 million Euros made according to FAS have been cancelled in IFRS financial statement for financial year 1.1.-31.12.2017 and a total of 0.5 million Euros for the period 1.1-30.6.2018. The depreciation has been added back to goodwill in the statement of financial position. In future, the impact of IAS 36 on Goodwill will be assessed while preparing the financial statements.

4.  Non-controlling interest shares

The distribution of the result for the financial year between the shareholders' equity and non-controlling interest has been presented in the financial statement. The result and comprehensive result of the financial year is allocated to the non-controlling interest even if it results in a negative result for non-controlling interest share. Non-controlling interest share of equity has been presented as part of equity in the statement of financial position.

Non-controlling interest share of the acquisition object has been addressed as a relative portion of the acquired net identifiable assets.

The opening balance of 1.1.2017 presents the non-controlling interest share of Elite Institutional Services Ltd's subsidiary.

5.  Financial assets and liabilities

Initial measurement of financial assets and liabilities

According to IFRS 9, financial assets and liabilities, excluding accounts receivables, are valued to their fair value when recognized to the statement of financial position. In case of a financial asset or liability that is classified as valued to amortized cost, the immediate transaction expenses resulting from the specific acquisition or issuance are added to the fair value.

Non-interest liabilities issued by EAB have been recorded in the FAS statement of financial position according to their nominal value. The valuation of the liabilities has been valued at fair value as a result of IFRS 9 transition. The difference between the fair and original value of the liabilities is recorded as interest income using the effective interest method.

The Group has a financial liability valued to the amortized cost, and its immediate transaction expenses have been recorded as expenses in FAS reporting for the financial year 1.1-31.12.2017 and for the period 1.1-30.6.2018. The expenses have been recorded as a part of the fair value of the liability in the IFRS transition. Transaction expenses are recorded as interest expenses using the effective interest method. The changes have not had a significant impact on the profit or loss statement and statement of financial position.

Classification and subsequent measurement of financial assets and liabilities

EAB has investments in equity instruments, which have been valued to the acquisition cost in the FAS financial statement. An adjustment concerning the fair value has been allocated on the carrying amount of those instruments, because they have to be measured fair value through profit or loss in accordance with IFRS 9 classification. The fair value adjustment has been recognized in profit or loss statement. The changes have not had a significant impact on the profit or loss statement and statement of financial position.

The fair value and changes to the fair value of the derivative agreement presented as off-balance sheet item in the FAS financial statement have been recognized to the profit or loss statement and the statement of financial position in the IFRS transition. The change in fair value has been considered in the opening balance on 1.1.2017. Changes allocated on the fair value in financial years 1.1-31.12.2017 and 1.1.-30.6.2018 have been recorded in the result of the financial year. The changes have not had a significant impact on the profit or loss statement and statement of financial position.

The loss allowance on expected credit losses of the financial assets measured at amortized cost in accordance with IFRS is recognized. The loss allowance concerning expected credit losses has been recognized in the retained earnings on 1.1.2017 and in the profit or loss of the financial year for financial years 1.1.-31.12.2017 and 1.1.-30.6.2018. The loss allowance on expected credit losses is allocated on following balance entries:

  • receivables from credit institutions (no significant impact)
  • receivables from public and public corporations (31.12.2017 -0.1 million Euros and 30.6.2018 -0.1 million Euros).


6.  Employee Benefit accrual

The Group has recognized an employee benefit expense resulting from defined benefit bonus scheme in the profit or loss statement and liability in the statement of financial position in accordance with IAS 19 on 31.12.2017 and on 30.6.2018 in the IFRS transition.

7.  Other adjustments

EAB has presented the improvement expenses of lease dwellings in the FAS reporting as other non-current expenses in intangible assets. In IFRS reporting, the entries are presented as Property, plant and equipment assets. Thus, in the IFRS transition the entries have been re-classified as Property, plant and equipment assets on 1.1.2017, 31.12.2017 and 30.6.2018.

EAB has addressed the lease contracts in the IFRS transition according to IFRS 16 by recording the contracts as right-of-use asset and lease liabilities.

2.1 million Euros of assets and 2.2 million Euros of liabilities have been recorded in the statement of financial position on 1.1.2017. On IFRS profit or loss statement for the period 1.1-31.12.2017, -0.8 million Euros relating to the depreciation concerning leases and +0.8 million euros relating to cancelled lease expenses have been recorded. Additionally, interest expenses have been recorded under financial expenses. On the biannual review on 30.6.2018 assets worth 3.2 million Euros and liabilities worth 3.2 million Euros have been recorded in the statement of financial position. Depreciation worth -0.4 million Euros and interest expenses and cancelled lease expenses worth +0.5 million Euros have been recorded.

IFRS transition includes the relief provided by IFRS 16 on leases that are diminutive in value or short-term.

8.  Deferred tax assets and liabilities

EAB has recorded a total of 2.5 million Euros of deferred tax assets on verified losses in the FAS financial statement for the financial year ended 31.12.2017. The deferred tax asset concerning the losses of Alfred Berg Asset Management Finland Ltd has been recognized through profit or loss statement according to FAS. In IFRS transition, the deferred tax asset was recognized in the acquisition cost calculation prepared according to IFRS 3. The change of -1.4 million Euros of deferred tax assets has been adjusted in the profit or loss statement prepared according to IFRS. Additionally, the deferred tax asset of a total of 0.3 million Euros resulting from Alfred Berg Asset Management Finland Ltd's loss in 2017 has been recorded in the IFRS transition impact; 0.2 million Euros has been recorded through profit or loss statement and 0.1 million Euros in the acquisition cost calculation. The management has estimated that taxable profit, against which losses subject to taxation can be utilized, will be generated in the future. Deferred taxes have also been recorded on the adjustments made during the IFRS transition.

In the calculations prepared for the period ending 31.12.2017 and 30.6.2018, the Group has recorded a deferred tax liability worth 0.3 million Euros concerning the acquisition of Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd in accordance with the allocation of fair value in the acquisition cost calculation defined by IFRS 3. The deferred tax liability has been recorded from the adjustment on the fair value of identifiable customer relations and trademarks.

In addition to the above, deferred tax liabilities have been recorded as other temporary differences in the financial statement as of 31.12.2017 and in the biannual review as of 30.6.2018. The temporary differences relate, inter alia, to the adjustment of the fair value of identifiable technology recognized in the acquisition of Elite Finance Ltd. The changes have not had a significant impact on the profit or loss statement and statement of financial position.

EAB GROUP PLC
Board of Directors

Further information:
EAB Group Plc

Daniel Pasternack. CEO
+358 50 569 3416
daniel.pasternack@eabgroup.fi

Kari Juurakko. Chairman of the Board
+358 50 582 7411
kari.juurakko@eabgroup.fi

Certified Advisor Merasco Ltd
Telephone: +358 9 6129 670

EAB Group offers versatile and high-quality asset management services for private investors, institutions and professional investors. The Group's parent company EAB Group Plc is listed on the First North Finland market maintained by Nasdaq Helsinki Oy (Helsinki Stock Exchanges). EAB Group uses the name Elite Alfred Berg as its marketing name. The Group companies include EAB Asset Management Ltd offering asset management activities, and EAB Fund Management Ltd acting as a fund company and authorised alternative investment fund manager. The Groups' customer base consists of individuals and corporations that are served nationwide in 14 different locations. The Group employs more than 100 investment professionals, and over 25 tied agents provide its services. On behalf of its clients, the Group manages assets of over EUR 3 billion in total. Check out EAB Group's services at www.eabgroup.fi.

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