Acta Holding ASA 3rd quarter presentation 2008

Transcription

1 Acta Holding ASA 3rd quarter presentation 28 CEO Simen Mørdre CFO Christian Tunge 29th October 28

2 Agenda Highlights third quarter 28 Alternative investments Interim financial statements Segment information Company outlook 2

3 Highlights 3rd quarter 28 Continuous weak financial markets combined with a short quarter due to summer holidays led to gross subscriptions of NOK 791 million, compared with NOK 3,19 million for the same period in 27 Revenues of NOK 13 million, compared with NOK 35 million in the same period in 27 Recurring revenues of NOK 89 million, with a coverage factor to fixed costs of 92% Operating earnings of NOK -32 million, compared with NOK 122 million for the corresponding quarter in 27 Assets under management of NOK 87 billion, up 5% from NOK 82 billion at the end of September 27 The Group has a good financial standing and has a net liquidity position of more than NOK 4 million 3

4 Key financial data 3Q 3Q 1-3Q mnok Transaction revenues from new clients 1) Transaction revenues from existing clients 1)2) ,392 Total Transaction revenues ,99 Recurring revenues Other revenues Total revenues ,27 Variable operating costs Activity based costs 3) Fixed costs 3) Operating earnings ,69 EPS ROE 4) - annualised -19% 65% 31% 96% Revenues down 175 million kroner compared to third quarter 27. Significantly reduced subscription volumes main reason for decline. Increase in recurring revenues of 2 million kroner relative to 3Q7. Approx. 1 million of these due to underestimated accruals. Investments from Acta s client-owned companies are also at low levels, resulting in lower revenues for the company. Fixed cost increase of 18 million kroner compared to third quarter 27, but down 18 million kroner from previous quarter. Reduced activity based- and variable costs reflects lower subscriptions 1) New clients defined as clients with no placed orders prior to 1 Jan 28 2) Assumed same split on revenues from structuring fees as for subscription fees. 3) Operating costs have been split into Variable, Activity Based and Fixed Costs as of 4th quarter 27, where the two latter constitutes what was previously reported as Fixed Operating Costs. 4) After tax 4

5 Financial market corrections -1-2 Percent ,4-46, , Oslo Børs Hovedindeks, OSEBX, updated per 28. oktober 28-56,4-59,

6 Alternative investments - Value added Acta-customer Typical Savings Advise Acta advised customers to reduce portfolio risk in November 27 The price of risk was considered too high. More specifically; customers were advised to reduce their exposure against the stock markets. N O K 125 Today Acta considers the price of risk to be at a low level Y T D Acta advises its customers who has a medium-to-long term investment horizon to gradually enter the stock market; either through saving plans or direct investments in mutual funds. Acta-Customer: 75 % Average AUM, 25 % Bank Deposits Typical Savings Advise: 75 % Standarised Mutual Fund (i.e. MSCI World Index), 25 % Bank Deposits 6

7 Return on clients assets in third quarter 1) % -5% -1% Mutual fund returns 2) Core selection Spicy selection MSCI W (NOK) 4% % -4% Hedge fund returns Multi strategy Multi strategy + CS/T HFI (NOK) CS/T HFI ($) -15% MSCI W ($) -8% -12% -2% -16% -25% 5% % -5% -1% Gov 1 Real estate returns 3) Gov 2 Com 3 Res 1 Res 2 Res 3 Res 4 MSCi W RE (NOK) MSCI W RE ($) MSCI E RE (NOK) MSCI E RE ( ) -2% 2% 1% % -1% Index-linked bonds returns Average product R F -15% -2% 1) Returns in NOK, not annualised 2) Return on clients investments within given fund selection 3) Real estate project values are updated quarterly, based on estimates from independent brokers, or official bids for single properties or portfolios of properties. Not volume weighted. 7

8 87, clients 34,5 in Norway - 52,5 in Sweden 9, 8, Sweden Norway Year-to-year growth in number of clients of 9 % Net Increase in Norway of 5 (+1 %) Net increase in Sweden of 7, (+15 %) 7, 6, Gross increase of 85 customers during third quarter 28, of which almost all in Sweden. 5, Average assets under management per client 4, 3, Norway 1.6 million kroner Sweden.6 million kroner Average 1 million kroner 2, 1, Q8 2Q8 3Q8 Total revenues from existing clients 1) Norway 91 percent Sweden 75 percent 1) YTD - New clients defined as clients with no placed orders prior to 1st Jan 28 8

9 Gross subscriptions 1, 7,5 5, 2,5 Gross subscriptions (mnok) Norway Sweden 3,312 6,178 2,241 1,746 2,129 1,363 1,818 1, Q7 4Q7 1Q8 2Q8 3Q8 Gross subscriptions per asset class 1% % 4% 1% 13% 3% 2% 9% 1% 4% 22% 2% 3% 8% 2% Infrastructure Private equity 7% 6% 3% 29% Shipping Real Estate 45% 5% 15% 52% Index bonds Unit Linked 4% 34% Mutual/Hedge funds 3% 22% 6% 2% 1% 7% 3% 27% 18% 13% 15% % 3Q8 3Q7 YTD 27 Total subscription volumes of.8 billion kroner, down from 3.1 billion kroner in third quarter 27 Most popular asset classes are Real Estate and Unit Linked, with a 3 % and 22 % share of total subscription, respectively. However, subscriptions are well diversified among the asset classes. Second hand market for shares in Acta s client owned companies with trades of approximately 17 million kroner in third quarter 28 are beneficial for Acta s clients. 9

10 Assets under management Assets under management (bnok) Assets under management per asset class 1) Norway Sweden Other Shipping Mutual/Hedge Funds Unit link IL Bonds Real estate incl.debt Private Equity Infrastructure Q7 4Q7 1Q8 2Q8 3Q8 Decrease in AUM of 3% compared to previous quarter. AUM level increased by subscriptions (.8 bnok) and project related debt from investments in Real Estate and Shipping (~.25 bnok). AUM reduced by maturity and buy-backs of Index Linked Bonds/Warrants (1.1 bnok) and a negative development in several of Actas asset classes. Reserves of approximately 1.2 billion kroner available for investment in Real Estate projects. Largest asset class is Real Estate with a total AUM of 49 billion kroner (of which 32 billion kroner represent project related debt). 1) Billion NOK 1

11 Revenues 9 8 Total revenues (mnok) Recurring fees (mnok) Quarterly revenues down 175 million kroner from the 3Q billion kroner less in subscriptions together with low investment activities are the main reasons for the decrease. Record high recurring revenues during the quarter. Approximately 1 million kroner of recurring revenues due to underestimated accruals in 1H. Adjusted recurring revenues of 79 million kroner, an increase of 14 % to 3Q7. Adjusted annual recurring revenues of approximately 316 million kroner. Maturity and buy-backs of ILBs/Warrants have a reducing effect on recurring revenues, while a change to a more management fee based remuneration system will increase recurring revenues in the future. 11

12 Variable operating costs Variable operating costs down 59 % compared to third quarter 27. Advisor salaries and bonuses with the largest reductions billion kroner less in subscription volumes main reason for the decrease This corresponds well with Acta s favourable business model; where costs are highly correlated to sales and revenues The conclusion of the K2 incentive program at the end of 28 also reduces variable costs. At present time, no accruals have been made for the new K3 program 12

13 Fixed & Activity Based operating costs 1) Fixed & Activity based operating costs (mnok) Recurring revenues/costs 2) 2 Fixed Costs Activity Based Costs % 9% % 7% % 5% Q7 4Q7 1Q8 2Q8 3Q8 4% 3% 2% 1Q6 2Q6 3Q6 4Q6 1Q7 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 Fixed costs Fixed and activity based costs Fixed costs increased 18 million kroner from 3Q7 due to cost of personnel (+6 mnok), office costs (+4 mnok) and IT costs (+6 mnok). Fixed costs down 18 million kroner (~17 %) from 2Q8 mainly due to the replacement of salaries with accrued vacation pay in Norway in July. Activity based costs down 7 million kroner from 3Q7, and down 23 million kroner from 2Q8. Consultants (-4 mnok), client acquisition (-7 mnok) and marketing (-9 mnok) are the largest cost deltas compared to 2Q8. Over 92 % of fixed costs are covered by recurring revenues in the quarter. Extraordinary high recurring revenues and the replacement of salaries with accrued vacation pay in Norway for July explaining the large increase from last quarter. 1) Operating costs have been split into Variable, Activity Based and Fixed Costs as of 4th quarter 27, where the two latter constitutes what was previously reported as Fixed Operating Costs. 2) Strong third quarter ratio all years due to replacement of salaries with accrued vacation pay in Norway in July. 13

14 Operating earnings Current market conditions, non-favourable publicity over the summer and uncertainty regarding the inspection from the Norwegian FSA have all contributed to a difficult quarter for the company. Quarterly operating earnings of -32 million kroner down 154 million kroner from third quarter 27 Reduction is primarily explained by lower revenues from subscriptions, lower investment activities in Acta s client-owned companies and a change in the product mix A simplified fee structure, with more emphasis on performance and management fees and less on upfront sales commissions, also reduce earnings in the short run. Acta have taken measures to decrease its cost base even further and is constantly evaluating cost saving measures 14

15 Balance sheet MNOK Fixed assets Goodwill 6 6 Other intangible assets Deferred tax asset 4 4 Trade receivables Other receivables 27 9 Bank deposits/treasury bills 43 1,674 Total assets 634 1,882 Equity Accounts payable Taxes payable Overdraft facility Other taxes and duties payable Dividend payable Salaries/commissions payable Other short term debt Total debt Total equity and debt 634 1,882 Acta has very limited risk on its balance sheet and continues to have no direct exposure to loans in the subprime markets. The group s liquidity situation is very good, with net bank deposits and short-term government papers of more than NOK 4 million at the end of the quarter. The Group has a good financial standing. 15

16 Norway Gross subscriptions (mnok) Revenues (mnok) Operating earnings (mnok) 7, 6, , 4, 3, 2, 1, Advisors 1) Gross subscriptions/advisor (mnok) AUM/Client (knok) Q6 2Q6 3Q6 4Q6 1Q7 2Q7 3Q7 4Q7 1Q8 2Q8 3Q ) Includes branch managers, advisors and trainees 16

17 Sweden Gross subscriptions (mnok) Revenues (mnok) Operating earnings (mnok) 4, , 2, , Advisors 1) 25 Gross subscriptions/advisor (mnok) 7 AUM/Client (knok) Q6 2Q6 3Q6 4Q6 1Q7 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 5 1) Includes branch managers, advisors and trainees 17

18 Outlook Focus on Quality & Profitability Acta expects the general negative market climate to continue Acta expects continued market consolidation in the industry due to tighter markets and regulatory conditions Acta focuses on consolidating the business and concentrates on serving existing clients and potential clients who are currently not actively served by competitors October subscription levels in Norway and Sweden are at better levels than for the third quarter Acta continues the product innovation strategy. New asset class Renewable Energy launched in October Acta s clients companies have reserves of over 1.2 billion kroner available for investments in Real Estate projects from 4th quarter Acta will continue to cut costs in order to adapt the operations to the current market situation in order to regain profitability Acta will initiate a pilot on 3rd party distribution of products to increase volumes Acta is well positioned for longer term growth 18