Good morning and a warm welcome to Taaleri's presentation of our fourth quarter results for 2024. My name is Linda Tierala and I'm heading investor relations at Taaleri. Presenting today, we have our new CEO, Ilkka Laurila. You may ask questions after the presentations, and you may do so from the webcast link at any time during this presentation. With that, I'll hand over to Ilkka. Please go ahead.
Thank you, Linda. Good morning, everyone. As I said, my name is Ilkka Laurila. I'm a new CEO of Taaleri since 9th of January this year. Even though I've been working at Taaleri already since last February as a CFO, maybe it's still worth that I would shortly introduce my kind of background a bit. Shortly, I have two master's degrees, one in forestry, one in economics. Started my career more than 20 years ago in the forest and wood industry. Then moved quite quickly, 20 years ago, already to Ernst & Young in transaction advisory, financial advisory, M&A advisory type of services. During the financial crisis, moved to more on restructuring services. After the financial crisis, moved back again to corporate finance and M&A advisory type of services.
Since 2012, I worked at Terveystalo, first as Head of Treasury and Head of Procurement and CFO since 2015. During Terveystalo's period, we made roughly 100 M&A acquisitions, two private equity rounds, listed a company in 2017, and then went international in Sweden and in Estonia during my time there. Stepped down from that position in 2022 and have had a shorter period as a CFO and different kinds of advisory roles to private equity companies since that up until February last year when I joined Taaleri. In addition to that, I have a few board roles as well. Maybe worth mentioning are the publicly listed entities. I used to be a member of Musti Group's board until recently stepped down after the Sonae's public tender offer.
I'm still a board member at Nightingale Health, which has published its intention to list the stock in a main list as well as in the OTC list in the US market. That's shortly my professional background. In addition, we have actually today also published the new appointment to our executive management team. Lauri Lipsanen will join Taaleri latest on May. He has a good kind of versatile background in a more than 10 years background in different group CFO roles. Before that, he has been also having a different career in a different kind of advisory services and M&A and financial type of advisory services. With that, we will go through the 2024 key figures and the highlights. First of all, key figures for 2024.
If you take a look at the lower side of this slide, you can see that positive development in all relevant KPIs, meaning that 1.6% increase in continuing earnings up to EUR 4.5 million. In total income, the increase was 6.3% up to EUR 70.5 million. Operating profit increased quite significantly, 19.3% up to EUR 38 million. Earnings per share increased from EUR 0.81 to exactly EUR 1.00 per share. If we compare our achievement in 2024 versus our long-term financial targets, the growth in continuing earnings and performance was 2.4%. That is obviously trailing below our long-term financial targets. On the other hand, return on equity 15.3% when the target is that 15%.
We are on a target level in there, which is based on if you take a look at the historical data, it's actually the first time since Taaleri sold its asset management business in 2021. The dividend payout ratio is exactly that 50%, which is our long-term financial target as well. Going further on the Q4 highlights, starting from the left upper corner, income growth and profitability was excellent. There was a 13% increase in group income and a nice or even excellent, you can call it, operating profit margin of 47% in the last quarter. Fundraising activities continued actively in the last quarter and the total amount of the commitments amounts now to EUR 81 million in total in the SolarWind 3 fund. The BioCoal plant in Joensuu was completed, and we are starting the operation and the production with the smaller test batches.
The broader ramp-up will take place during this financial year during 2025. In real estate business, we had a new strategic partnership with one of the largest Finnish pension insurers, namely Keva, at the beginning of 2025. That is obviously a great testimonial of our real estate business capabilities and credibility of our team and business in real estate. Garantia's performance continues strong as always. The combined ratio was 26.2. The insurance service result was EUR 3.3 million. Overall, if you would like to conclude, I think the performance itself in Q4 was on a good level. Even though we are facing quite kind of mixed operating environment, both in kind of key markets that we are operating in, real estate markets, in fundraising markets.
Even though we are having a quite difficult operating environment, I think that the performance overall was on a good level. Going forward, if I take a closer look at the segment results and the performance in our segments. First of all, private asset management. In renewable energy, like already explained, the fundraising continued. Worth noting is that we also recognized EUR 1.8 million of the performance fees related to SolarWind 1 fund, of which exit preparations were initiated. According to our recognition principles, the first part of the performance fees is now recognized. In addition to that, the exit processes continued when it comes to Wind 2 and 3 funds, which are at the end of their life cycle.
If you take a look at the right up corner on the numbers, you can see especially if you take a look at the operating profit there, nice 15.8% increase in operating profit from EUR 5.7 million to EUR 8.6 million, obviously driven by both that recognized the performance fee as well as the good result of the investment operations, which were related to our US former activities in the US market, which were now recognized in the PL. Maybe short look at how we have been able to develop our Taaleri Energia's investor base. If you take a look at these vintages earlier, if you take a look at the SolarWind 1, which is now on the of which exit preparation has now initiated in 2016, the whole investor base was completely based on the Finnish investors.
Going forward to SolarWind 2 in 2019, one third of the capital was related to international investors. The situation at the moment with SolarWind 3 is such that more than half actually already of the investments is coming from international investors. This all is actually happening at the same time when the market overall is quite challenging. The graph on the right-hand side describes the private equity funds globally, the capital calls versus the distribution. You can see that the net distributions have been negative already quite some time, with the exceptions of a few years earlier and in 2021. This is actually the end result, obviously, of the market that we are having at the moment. The changes in the interest rate environment, M&A market, etc., etc.
The kind of how it combines together is the capital call versus the distributions globally. Going forward to other private asset management business, in there, if you take a look at the activities in BioOne fund, it made its fifth investment during the review period for the Dutch recycling concrete processor. On the other hand, like already touched upon, the Torrefied Biomass plant in Joensuu is currently in a ramp-up phase. The international project in Canada continues. Worth noting is that during the 2024 year, we also invested in our another kind of biofactory, namely Fintoil. We invested more capital in the second quarter, amounting to EUR 5 million, through which we were able to increase the share ownership from 24% up to 39.6% currently. In the real estate business, great achievement with that strategic partnership with Keva.
Obviously, like I said, good testimonial of our quality operations in there. The result development itself, if you take a look at again the table there, is that the operating profit declined from EUR 1.7 million negative to EUR 2.6 million. That is driven by, if you take a look at the upper line items through the investment operations, in which we made a couple of write-offs related to older investments that Taaleri has made earlier. Going forward to Garantia. Garantia continues on an excellent performance level. The insurance service result was at EUR 3.3 million up from EUR 2.7 million. The kind of the PNL recognized investment income is EUR 2.2 million up from EUR 1.4 million. Maybe worth noting is that if you take a look at the kind of the total comprehensive income, the total investment income including fair value changes is at EUR 1.8 million versus EUR 4.6 million.
As said, the combined ratio on an excellent level, 26.2. Going forward to other segment, which comprises of group functions, Taaleri Capital. Taaleri Capital, worth noting is that we have now sold by the end of the year total worth of EUR 6.3 million in shares. The total amount of non-strategic investments now totaled EUR 18.7 million. No other major changes in this segment. Finally, if we take a bit closer look on the numbers, the PNL development and the balance sheet. First, the PNL. Nice 13% increase in total income during the last quarter versus 6.3% increase in full year numbers. Again, in operating profit, nice 36.3% increase in operating profit versus 19.3% in full year numbers. Overall, if you take a look at the operating profit level for the whole year, that is, you could say, on a quite good level, EUR 53.9 million.
Obviously, driven by good result in our investment operations, supported also obviously the performance fees. The total other comprehensive income is at EUR 1.1 per share versus EUR 0.88 a year ago. Going forward to the waterfall picture, clear majority of the operating profit in the last quarter was generated by the continuing earnings in our private asset management business, 7.4. On the other hand, the investment operations for the whole group combined is at 7.7, followed by Garantia's income from the insurance operations, 3.1. If you take a look at the longer horizon, 24 months, the same similar type of waterfall you can see here. The clear majority currently during the last two years of the operating profit is deriving from the private asset management business, supported by the investment operations, then followed by the insurance operations.
Obviously, the performance fees recorded at the moment during the last 24 months are a significantly smaller contributor for the whole operational profitability development. These numbers we have already touched upon, but if you take a look at the right side of the slide, you can see that even though the operating profit itself fluctuates, obviously, also even though you take LTM numbers, it still has increased quite significantly versus a year ago. Going forward to the balance sheet, worth highlighting here is that the direct investments in our private asset management has increased now to EUR 36.1 million versus EUR 32.3 million. Kind of the biggest contributor or investment in there was that EUR 5 million additional investment in Fintoil. On the contrary, there were some write-offs related to that, but the biggest investment was that Fintoil's EUR 5 million.
Non-strategic investment, according to our plan, is decreasing continuously and is now down to EUR 18.7 million versus EUR 35.5 million. Garantia's investment portfolio on a stable level, EUR 155 million versus EUR 160 million a year ago. Strong liquidity position gives us room to maneuver if there would be an opportunity in addition to existing credit limits that we are having. The dividend proportion that the board of directors proposes to the AGM is EUR 0.50, and we will touch upon changes in that as well. Finally, the dividend proposal and 2025 outlook. In dividend, the board proposes now to the AGM that the company will transit to kind of the biannual dividend distribution arrangement, meaning that the total amount of EUR 0.50 will be paid in two equal installments, of which between we will have that six months period, so EUR 0.25 in April and EUR 0.25 in October.
Total amount would then be that EUR 14 million roughly. On the outlook for 2025, obviously at this stage, you can kind of conclude that the outlook is very much dependent on different, on the other hand, in our kind of business, on the different fundraising activities combined with the exit of the timings. Therefore, obviously, it's difficult to put an exact number because it's a timing type of kind of question mainly. On the other hand, it also depends on our investment operations and how we are able to perform there. Recognized performance fees related to different exit processes. On the other hand, in the bioindustry and real estate business, the kind of the international focus and the growth in there will still burden our profitability in other private asset management business. It is expected to remain on a negative numbers.
On the other hand, it should develop positively compared to a year ago. Garantia, the continuing earnings expected to remain slightly below the comparison period, obviously mainly driven by this weak development in Finnish housing market. As we all know, the kind of the declining interest rate levels, we had an exceptionally good investment result in Garantia's operation. Depending on how the market environment developed, but at the moment, based on, if you take a look at the inline with the market expectations, the investment operations is expected to decrease compared to a year ago. On the other group activities, the result development is very much dependent on the fair value changes in non-strategic investments. On the other hand, like explained at the beginning, the final exit moments and the result of those non-strategic investments. With that, I think we have gone through the 2024.
I think we have time for Q&A.
Yes. Now we open up for questions from both from the floor and from those of you following this webcast online. I would like to remind you that if you want to ask a question, you may do so through the webcast link and the chat window in that link. Let's actually take the first question through the webcast link. We have a question from Jukka-Pekka Pesonen from Nordea. He's asking about the SolarWind fund and commitments and targets. You stated that reaching the EUR 700 million target size is uncertain in this market. Could you potentially postpone the closing timeline of the fund or rather continue with a smaller fund size?
At the moment, the plan is not to postpone the closing timeline.
Obviously, when it comes to the total size, it's typical, especially with the international investors, that they have quite sizable tickets, which at this stage are obviously still uncertain. The kind of the end result and the total size will be quite significantly dependent on those, let's say, binary international tickets, that how those will end up. At the moment, there's no intention to postpone the timeline.
Thank you, Jukka. Now we have a question from the floor here. From Sauli Vilén from Inderes. Please go ahead.
Yes, thank you. My first question about the SolarWind One and its carry, what kind of timeline should we expect now as the exit preparation has begun? Secondly, can you remind us how the carry will be recognized in the future since now you kind of pre-booked some of the carry in?
Yeah, the logic is such that if the kind of when the exit process starts and it's likely that the exit process will take place in the following, let's say, 24 months, that's the timing when we start to recognize the revenue. It's recognized on a quarterly basis based on the probability of the exit and the kind of the value of the exit. It is obviously at the beginning because it's still uncertain and it's quite far away. The discount factor that we utilize is quite significant. We are using quite big, without kind of saying the exact amount of the discount factor. It is a significant discount that we are using when it's still quite far away of the final exit. That's the logic.
Okay, thanks. Then about the bioindustry, what kind of ramp-up should we expect in the near future?
Do you have anything, any new products on the table there besides when you will eventually kick off the flagship two fund? I guess it will be not this year, it will probably be 2026 or so. How should we see the ramp-up before the eventual flagship fund?
Currently, we are in the middle of kind of researching opportunities in Canada. That is obviously then one of the initiatives that we are in the middle of and we are working on quite heavily. Obviously all those activities, it will still take time. It is not happening overnight and not even during one quarter or two quarters. There is the activity that is ongoing at the moment, most concrete activity at the moment.
Regarding the same topic about the Fintoil, could you give us a status regarding what is happening in the Fintoil at the moment?
I mean, even though it's just one investment, it's kind of an important reference case for you since it's kind of the first big bioinvestments from your own business. So can you shed some light on that? Thanks.
Yeah, exactly. And our ownership in that is already increased during this financial year from 24% to 39.6%. So we have a quite significant ownership in there. It has developed positively. During the last financial years, it has suffered from the low utilization rate. Now we are seeing quite positive development, especially in the capacity utilization. Even though the market itself is maybe not that dramatically changed, it's moving slowly towards positive territory. The capacity utilization view that we have at the moment looks quite optimistic. That's why we are quite optimistic on that investment at the moment.
Okay.
Finally, about the old Wind 2 and 3 funds. You have been on the exit process for quite a while now, I think like over a year now. What has been the main reason that the exit process has been taking so long since obviously those are kind of stable assets, you could say? Is it like because of the market situation, the interest rate fluctuation, etc.? What has prolonged the discussions or what's behind that? Thanks.
Well. It is moving more or less according to our initial plan. Obviously, it is the same now with the SolarWind 1 fund. It will take time, especially in these projects when those are kind of the many of the investors that are looking at it are international. That is why it takes time. They do their quite prudent DD processes, etc.
That's why even though it's moving more or less according to plan, I said it takes time. Those are quite lengthy processes starting from the preparations until kind of the final exit then takes place.
Okay, that's all for me. Thank you.
Thank you.
Thank you. We have a question from Jukka-Pekka Pesonen from Nordea. This is related to the strategic partnership that Taaleri Real Estate announced with Keva. Can you leverage the announced partnership with Keva in the new real estate products to be launched further this year? If so, how?
Obviously, I think the biggest kind of impact that we are able to see from that mandate is that it brings credibility to our team and our operations in real estate.
We have had, with all fairness, we have had challenges with our real estate business, but we have now made a significant change in team and the operation, how it's structured and how it's managed. That is an excellent testimonial that now that we are able to have a concrete mandate with one of the biggest Finnish institutions to kind of how it will support our near-time future activities in other services that we are providing in real estate business.
Thank you. There is a question about Garantia. Is there anything you could tell about Garantia's development over the year?
Like I said, I think the kind of the good overall performance continued in Garantia. Obviously, we are facing quite slow housing market, especially in Finland.
Despite that, and also driven by the revenue recognition principles that Garantia is using, the kind of the P&L development itself is quite good and positive. Now when lately we have seen, I think we all have read from the news that the housing market is actually started to develop positively. That is something that we are also seeing, hopefully in the near future in our Garantia's operations. Obviously everything will take time and it is quite tightly linked with the housing market development overall. Kind of to summarize, even in a tough market, it has performed on an excellent level.
All right. There are no further questions online. Are there more questions from the floor? As there are no further questions, this concludes Taaleri's fourth quarter 2024 webcast.
Thank you, everybody. Thank you.