Annual Report A year of major changes

Transcription

1 Annual Report 2012 A year of major changes

2 Agasti - Annual report contents tittel Contents Leading provider This is Agasti 3 Vision and values 5 Organisation 6 A strong professional environment 7 Locations 11 Group Management 12 The Board of Directors 14 Business areas Three business areas 16 Wealth Management 17 Capital Markets 18 Investment Management 19 A year of major changes CEO s comments 20 Markets 22 Key Events 25 Main figures 26 Reports Risk management and internal control 27 Articles of Association 31 Shareholder information 33 Corporate Governance 37 Results Directors report 44 Agasti Group IFRS Comprehensive income 54 Financial position 55 Changes in equity 56 Statement of cash flow 57 Notes to the consolidated accounts 58 Agasti Holding ASA NGAAP Income statement 86 Balance sheet 87 Cash flow statement 89 Notes to the company accounts 90 Confirmation from the Board 100 Auditor s report 101 2

3 This is Agasti This is Agasti The Agasti Group is a leading provider of investment advice, management and an advisor and facilitator of capital market services for wealthy individuals, companies and institutional investors. The group was established in 1990 and the controlling company Agasti Holding ASA has been listed on the Oslo Stock Exchange since At the end of 2012 the group had 213 employees and operating activities in Norway and Sweden, as well as in the USA through a strategic alliance with Wunderlich Investment Company. The head office moved from Stavanger to Oslo in As of the group managed a total of NOK 51 million on behalf of 43,000 customers within the wealth management segment. During 2012 we developed a concept which clearly sets us apart from our competitors. In addition to being perhaps the most attractive distributor of selected equity and fixed income funds, we have established one of the most experienced teams in the market with regard to real estate, private equity and shipping and, through the strategic collaboration with Wunderlich s energy team in Houston, also within energy and oil services. We have done this by bringing together dedicated people with international investment banking experience from renowned financial institutions in Norway and abroad, whilst at the same time further developing the close collaboration with Wunderlich Securities in the USA. 3

4 This is Agasti We continue to be a leading provider of investment advice and wealth management services - represented by Navigea Securities in Norway and its Swedish branch and Navexa Securities in Sweden. We will maintain this position. We have however changed the focus of our overall business and have taken a position in which we represent the entire industry line - from investment advice/wealth management, through to facilitation and advice associated with project financing and capital market transactions for business and industry, as well as offering a complete management service for all the investments our customers have made through the Agasti Group. See also more detailed descriptions of the business areas on page 16. We are convinced that our new business model and the focus which has been established in our activities during 2012 represents the way forward in a competitive capital market, in which full focus on customers, knowledgeable employees and integrity are requirements for succeeding in creating opportunities for our customers. Based on our professional strength, international experience and ability to create opportunities for our customers, we offer a comprehensive concept based on: Professional investment advice from authorised and experienced advisers based on an individually developed investment profile and first-class selection of investment recommendations Advice for/facilitation of capital market transactions for Norwegian and international environments, with strong distribution capacity and investment abilities Complete provision of investment management services associated with our customers direct investments 4

5 Vision and values We create opportunities Integrity Well-informed Energy Customisation The vision We create opportunities has a clear ambition and indicates a clear direction. The vision invokes community and has been a guiding principle in selecting our values. The group s objective with the vision and values is that they, taken together, will inspire and influence employee attitudes and contribute to decision-making processes. Our values are: Integrity We live for the trust of our customers. Trust and consideration for customers are crucial to our success. For us, the customer comes first - always. Well-informed First-class advice requires great expertise, thoroughness and a methodical approach. Employees of the Agasti Group must be characterised by their expertise and ability to utilise this expertise in the best possible way for the customer. Energy We are proactive, have high capacity and move with the market. This creates opportunities for our customers. Customisation We remain close to customers and provide and facilitate what customers need and demand. Each customer is different and has different needs and expectations. In the Agasti Group, values are guiding expressions of the culture which will lead the group towards our common vision. 5

6 organisation Wealth Management Capital Markets Investment Management Organisation Agasti Holding ASA was listed on the Oslo Stock Exchange in The Group s head office is situated in Oslo. The Agasti Group has organised its day to day business in the three business areas Wealth Management, Capital Markets and Investment Management. The Wealth Management business area consists of the companies Navigea Securities AS in Norway and its Swedish branch and Navexa Securities AB in Sweden. The Capital Markets business area consists of the company Agasti Wunderlich Capital Markets AS, and the Investment Management business area consists of the company Obligo Investment Management AS including subsidiaries. The company Agasti Business Services AS provides administrative services to other members of the Agasti Group. 6

7 A strong professional environment A strong professional environment 2012 has been a year of restructuring in which we have attracted many new skilled employees with very valuable experience from the industry, particularly within the business areas of Investment Management and Capital Markets was also a year in which a number of employees had to leave us as a result of the extensive reorganisation that we have undergone. We continuously strive to be a group in which it is attractive to work, and our new business model has contributed to us regularly being contacted by skilled people in the industry who wish to work for us. One of our key focus areas is knowledge and expertise. All our investment advisers are certified and we are developing knowledge and quality in each area of the business. Our employees are characterised by a high level of professional knowledge, integrity and solid implementation abilities founded on experience, market understanding and analytical skills. Our expertise is built on quality, thoroughness and we take a methodical approach to satisfying our customers interests and needs in the best possible manner. Our knowledgeable and skilled employees create a working environment characterised by high satisfaction and strong determination; not least in challenging periods such as the 2012 financial year. This results in energy and motivation for further development of the business and for creating opportunities and values for our customers. We are proud to present some of the selected representatives of our strong, professional team. 7

8 A strong professional environment Erik Dagslett Head of Brokerage Agasti Wunderlich Capital Markets AS Erik Dagslett has previously worked on raising capital for syndicates and property funds within UNION Corporate. He has extensive experience of financial consulting and management for wealthy individuals and their companies in Orkla Finans, where he was head of large corporate clients. Prior to this he was manager and partner of the Agasti key account team in Oslo. Dagslett holds a degree in real estate from BI Norwegian Business School and has also worked for companies such as DNB. He joined the Agasti Group in August Christian Fuhr Director Agasti Wunderlich Capital Markets AS Christian Fuhr is formerly Head of Real Estate in Corporate Finance at SEB Enskilda and Pareto Securities. He was previously a real estate project manager at Orkla Finans. Fuhr has extensive experience of corporate finance consulting within the real estate sector regarding equity, mergers and acquisitions and as strategic advisor during the establishment and development of a number of real estate companies in Norway and the Nordic region. Fuhr has served on the board of directors of businesses such as Pareto Wealth Management. He has a Masters degree in Business Administration from Central Michigan University, and joined the Agasti Group in October Rune Mæle Director Agasti Wunderlich Capital Markets AS Rune Mæle is a former partner at Wunderlich Securities and Managing Director/Portfolio Manager at Norske Shell Pensions. In recent years he has focused on Private Equity and Energy through facilitation, following up PE funds and secondary trading of shares for Wunderlich Securities and SSB Securities. He has also E&P experience from Norske Shell as an analyst and extensive experience of financial instruments and risk management. Mæle holds an MSc in Finance from Strathclyde University in the UK and is a certified Portfolio Manager (NFF/NHH). He joined Agasti Wunderlich in October Pål Thygesen Broker Agasti Wunderlich Capital Markets AS Pål Thygesen has previously worked in the corporate finance department and equity sales division at Pareto Securities, with real estate as his speciality. Thygesen has been involved in a number of listed and unlisted real estate transactions in Norway and internationally. He has also worked on project financing of real estate and shipping projects at Pareto Project Finance. Prior to this, he headed up the brokerage team at Orkla Finans. Thygesen joined the Agasti Group in August

9 A strong professional environment Christian Dovland Senior Director Obligo Investment Management AS Christian Dovland has 12 years of investment banking and investment management experience from First Securities/Swedbank First Securities, operational experience as a CFO for an IT company as well as four years of Private Equity experience from Stormbull, a Norwegian investment company. Dovland has extensive experience of complex capital market transactions within M&A, IPOs and capital raising, as well as strategic ownership issues. He has also worked on the establishment of a number of investment structures within Private Equity, Infrastructure and Renewable Energy. Dovland holds an MBA in International Management and an MA in International Policy Studies from the Monterey Institute of International Studies (California, USA) and a BA in Business from Heriot-Watt University in the UK. Dovland joined Obligo Investment Management in January Tor Pedersen Director Obligo Investment Management AS Tor Pedersen came to us from UNION Eiendomskapital AS, where he worked as a fund manager for Storebrand Eiendomsfond. As a fund manager he was involved in all aspects of the fund, including financing, transactions and portfolio strategy. Pedersen came to UNION via the London-based AEW Europe/Curzon Global Partners, where he worked as an associate director on their asset management team and was involved in the management of their European real estate portfolios. Pedersen has a BSc in Finance from Kogod School of Business in Washington, DC, and an MSc in real estate investment from CASS Business School in London. Pedersen joined Obligo in October Morten Wettergreen Director Obligo Investment Management AS Morten Wettergreen is a former partner at ABG Sundal Collier Real Estate, where he worked as an asset manager for six years. He was previously a management trainee at ABB, holding several positions that included working for the finance division in Norway and for the treasury division at the head office in Zurich. He has also worked as a project accountant in ABB Oil and Gas in Oslo. Wettergreen has extensive experience of real estate investment in the Nordic Region and has also worked on real estate investment in the USA. In addition he has experience from several boards of directors, serving as a consultant, chairman and board member for several property businesses. Wettergreen holds a master s degree in Business and Economics from BI Norwegian Business School and also studied at the military academy of the Norwegian army. He joined Obligo Investment Management in January

10 A strong professional environment J. Harald Henriksen Director Obligo Investment Management AS J. Harald Henriksen was formerly CFO of listed shipping companies Actinor Shipping ASA and I. M. Skaugen ASA as well as debt recovery company Aktiv Kapital ASA prior to joining ABG Sundal Collier in 2008, working with Global Vessel Holdings portfolios as the global financial and shipping crisis hit. He has previously also held financial and restructuring positions at Elkem ASA and restructuring companies AS Poseidon, MG Industrier AS and Kosmos Holding. Through his shipping background with listed companies, he has extensive experience of financing, restructuring processes, mergers and acquisitions, strategic ownership issues and regulatory matters. His long experience includes international groups and he has served on boards in several jurisdictions. J. Harald Henriksen holds a master s degree in Business Administration from the Norwegian School of Economics and joined Obligo Investment Management in January Trym Otto Sjølie Managing Director Global Shipholding Trym Otto Sjølie joined Global Shipholding after serving as Senior Vice President Shipowning at Höegh Autoliners where he was in charge of the company s newbuild programme, sale & purchase of vessels as well as longterm fleet planning. He has extensive experience of shipping over the past two decades. In addition to transactions and commercial/operational shipping experience during his long tenure at Höegh Autoliners, he has a background in ship management as fleet superintendent. Sjølie also has considerable project management experience both in shipping and the oil & gas industry, and previous employers include Höegh Fleet Services, Kværner Oil & Gas and J. L. Mowinckels Rederi. Sjølie has an MSc from the Norwegian University of Science and Technology in Trondheim, and started working with Obligo Investment Management in July Svein Erik Lilleland Deputy CEO Agasti Wunderlich Capital Markets AS Svein Erik Lilleland has worked in the oil services sector since 1995, and has twelve years of experience in most elements of the supply industry, including sales, strategy, finance and management. He also has M&A experience from a number of transactions in the oil service industry. Previous positions include project manager for the Norwegian Trade Council in Houston, USA, Sales Director and then CEO at the Houston office of CorrOcean, Sales Director at CorrOcean ASA, Deputy CEO at CorrOcean ASA, and a director within the management consulting and business development division of Roxar ASA/Emerson Process Management. Lilleland has lived and worked in the UK and USA for more than 15 years. Svein Erik holds a BSc in Engineering from the University of Portsmouth and an MBA from London Business School. Lilleland joined Agasti Wunderlich Capital Markets in August

11 Locations New York Oslo Stockholm Houston Berlin Locations Head office Oslo Wealth Management Norway Oslo Kristiansand Bergen Fredrikstad Hamar Gjøvik Kongsvinger Tønsberg Haugesund Stavanger Tromsø Trondheim Ålesund Sweden Stockholm Malmö Gothenburg Uppsala Borås Halmstad Helsingborg Jönköping Karlstad Kristianstad Linköping Västerås Investment Management Oslo Stockholm Berlin New York Capital Markets Oslo Stavanger New York Houston Our strategic alliance partner in the USA, Wunderlich Investment Company, has 24 offices in 15 states. 11

12 group management Group management Alfred Ydstebø Chief Executive Officer of Agasti Holding ASA Ydstebø has been associated with the Agasti Group since 1992 and has played a crucial part in the development of the group. He was also the group chief executive officer of Agasti from 1993 to 2005 and chairman of the board of directors for the period Ydstebø holds a BA in Engineering and Economics from NKI, he also holds a Master s in Business Administration from Handelshøyskolen BI (Norwegian School of Management). Alfred Ydstebø owns, directly and indirectly, 36,984,947 shares in Agasti Holding ASA, which makes him the company s largest shareholder. He also owns 1,500,000 options in Agasti Holding ASA. Jørgen Pleym Ulvness Deputy CEO of Agasti Holding ASA and CEO of Agasti Wunderlich Capital Markets AS Ulvness joined the Agasti Group in September 2012 and has previously been the CEO of First Securities and Global Head of Investment Banking at Swedbank. He has previously been the deputy CEO and Chief Legal Officer of First Securities. He has also worked as a commercial lawyer in Advokatfirmaet Selmer. Ulvness also has broad experience as an advisor in connection with restructuring, mergers and acquisitions, emissions and other strategic ownership issues. He has extensive experience from serving on boards of directors, both as an advisor and as chairman or board member of numerous different companies. Ulvness graduated as a lawyer from the University of Oslo. He owns 1,395,000 shares and 1,750,000 options in Agasti Holding ASA. Christian Tunge Chief Financial Officer of Agasti Holding ASA During the period March to August 2012, Tunge was appointed acting CEO of the group. He joined the group as CFO in 2006, having left his role as International Negotiator in Statoil s international upstream business. He was employed by Statoil for ten years and his background primarily stems from various positions and departments in economy and finance. Tunge graduated from Norges Handelshøyskole (NHH) with a degree in Business Administration and also holds a CEMS Master in International Management from NHH/Escuela Superior de Administración y Dirección de Empresas (ESADE). He holds an MA in Business Administration from NHH and also trained as a lawyer at the University of Bergen. Christian Tunge owns 700,000 shares and 1,390,000 options in Agasti Holding ASA. 12

13 group management Bjarne Eggesbø Chief Executive Officer Obligo Investment Management AS Eggesbø came to Obligo in September 2012 and has previously been Executive Director at UBS and Head of Real Estate Structuring & Securitization at Credit Suisse in London. Earlier in his career he was Senior Ratings Analyst at Moody s Investor Service. Eggesbø has extensive experience from international finance where he specialised in strategy, funding and structuring of real estate. Combined with this, Eggesbø has institutional experience from both the USA and Europe. Eggesbø has studied Real Estate Finance at Cornell University and has also completed university studies in finance at New York University and the London Business School. He owns no shares or options in Agasti Holding ASA. Tor Arne Olsen Chief Communication Officer Olsen joined the Agasti Group in December 2012 and has previously held positions as head of communications at Swedbank First Securities and Press Officer for the Oslo Stock Exchange through 11 years. His background primarily stems from finance, but he also has experience of property and pensions/insurance. He holds a Bachelor of Business Administration in Public Relations from Norges Markedshøyskole / Handelshøyskolen BI. Olsen owns no shares or options in Agasti Holding ASA. Kjersti Aksnes Gjesdahl Acting Chief Executive Officer Navigea Securities AS Gjesdahl started as Head of Legal Risk and Compliance of Navigea Securities in October As of April 2013 she has been Acting Chief Executive Officer of Navigea Securities AS. Gjesdahl came from the position as senior lawyer in the banking and finance department of the law firm Arntzen de Besche and has previously worked for the Financial Supervisory Authority of Norway as a senior advisor within the departments for securities and market behaviour. Gjesdahl also has experience from the Norwegian Ministry of Justice, the courts and the law firm Schjødt. Gjesdahl holds a law degree from the University of Oslo and Katholieke Universiteit de Leuven. Gjesdahl owns no shares or options in Agasti Holding ASA. 13

14 the Board of directors From the left: Pia Gideon, Merete Haugli, Sissel Knutsen Hegdal, Ole Peter Lorentzen, Stein Aukner and Erling Meinich-Bache. The Board Merete Haugli Chairman of the Board Haugli has broad experience from a number of board positions, most recently from Comrod Communication ASA, Reach Subsea ASA and RS Platou ASA. She has also held several leading positions including SEB, Formuesforvaltning AS, First Securities ASA and ABG Sundal Collier ASA. She has also held the position as Assistant Chief of Police in the Oslo Police District for economic and environmental crime. She holds qualifications from the Norwegian College of Banking and the Norwegian School of Management. Member of the Board of Agasti Holding ASA from 11 May Haugli owns no shares, share options or warrant shares in the company. Stein Aukner Vice Chairman of the Board Aukner is a partner in Norscan Partner AS where he advises on finance, economics and strategy. Aukner holds a number of board positions. He is chairman of Nerliens Meszansky AS and Storm Real Estate ASA. He is also a board member of Warren Capital AS, Bama Gruppen AS and Agra Holding AS. Aukner is a business economist (siviløkonom) from the Copenhagen Business School and also a Chartered Financial Analyst. Member of the Board of Agasti Holding ASA from 6 June Aukner owns, directly and indirectly, 137,500 shares in Agasti Holding ASA. He owns no share options or warrant shares in the company. 14

15 the Board of directors Ole Peter Lorentzen Member of the Board Lorentzen is Chairman of the privately owned investment company Ludvig Lorentzen AS and has wide experience from investments in shipping, real estate and technology enterprises. He has board experience from both small and large companies, most recently in Energy Recovery Inc. and Opera Software ASA. He is a Master in Business and Economics from the University of Lund, Sweden. Member of the Board of Agasti Holding ASA from 11 May Lorentzen owns 22,170,950 shares in Agasti Holding ASA. He owns no share options or warrant shares in the company. Pia Gideon Member of the Board Gideon is a partner in GaiaLeadership AB. She has a background in international management in the Ericsson Group, where she was responsible for communications and marketing, most recently as marketing director for North America. Gideon also has experience as a financial analyst in the banking sector in addition to working as a financial journalist. She has also held a number of board positions in a variety of industries. She is a graduate of the Stockholm School of Economics and also has Executive Training from Columbia University. Member of the Board of Agasti Holding ASA from 11 May Gideon owns no shares, share options or warrant shares in Agasti Holding ASA. Sissel Knutsen Hegdal Member of the Board Hegdal has 20 years of experience within corporate law. She is a partner and owner of Bjørk Advokat og Eiendom AS. She holds a number of board positions, both with publicly and privately owned companies. She is Chairman of the Board of Stavangerregionen Havn IKS, Museum Stavanger AS and Al Dente Reklamebyrå AS. She is also a board member of the companies Crudecorp ASA and Risavika Havn AS. Hegdal holds a number of positions as a politician in Stavanger Høyre, including the City Council and the local council s executive committee. She is also Chairman of the Committee of Culture and Sports in Stavanger. She is also a candidate for Rogaland Høyre in the Norwegian Parliamentary Election, autumn She has a Master s degree in law from the University of Tromsø. Member of the Board of Agasti Holding ASA from 23 May Hegdal owns no shares, share options or warrant shares in the company. Erling Meinich-Bache Member of the Board Meinich-Bache is CFO of IKM Gruppen AS, a company related to one of Agasti Holding ASA s largest shareholders. He also holds a number of board positions in various companies, both within and outside the IKM Group, including the companies Energy Ventures III AS and Energy Ventures IV AS. He holds a Master of Science in Financial Management. Member of the Board of Agasti Holding ASA from 23 May Meinich-Bache owns no shares, share options or warrant shares in Agasti Holding ASA. 15

16 Three business areas Three business areas Wealth Management Capital Markets Investment Management The Agasti Group is a leading provider of investment advice, management and an advisor and facilitator of capital market services for wealthy individuals, companies and institutional investors. The group was established in 1990 and the controlling company Agasti Holding ASA has been listed on the Oslo Stock Exchange since At the end of 2012 the group had 213 employees and operating activities in Norway and Sweden, as well as in the USA through a strategic alliance with Wunderlich Investment Company. The head office moved from Stavanger to Oslo in As of the group managed a total of NOK 51 million on behalf of 43,000 customers within the Wealth Management segment. Under the mantra of Systematic leading expertise, the Agasti Group has built one of the market s most experienced teams with regard to real estate, private equity and shipping and, through our close collaboration with Wunderlich s energy team in Houston, we have done the same within energy and oil services. We have achieved this by bringing together dedicated people with international experience of investment banking from ABG Sundal Collier, Swedbank First, DNB, Pareto, SEB, Morgan Stanley, Deutsche Bank and Wunderlich Securities, to name but a few. Based on our professional strength, international experience and ability to create opportunities for our customers, we offer a comprehensive concept based on: Professional investment advice from authorised and experienced advisers based on an individually developed investment profile and first-class selection of investment recommendations Advice for/facilitation of capital market transactions for Norwegian and international environments, with strong distribution capacity and investment abilities Complete provision of management services associated with our customers direct investments In the Agasti Group, we have streamlined three business areas to ensure an improved, more professional and comprehensive range of services for you, the customer. 16

17 Wealth Management Wealth Management The Wealth Management business area consists of the companies Navigea Securities AS in Norway and its Swedish branch and Navexa Securities AB in Sweden. Through these companies we offer investment advice based on an individually tailored investment profile for wealthy individuals and companies. We are an attractive and independent provider of renowned Norwegian and international equity and fixed income funds and we take a methodical approach to carrying out thorough analyses of each individual fund that we consider adding to our product range. We prioritise quality over quantity, as we believe it is most appropriate for customers to have a concentrated selection of quality products from which to choose. Wealth Management customers are also given the opportunity to invest in alternative products, for example investment portfolios within real estate, shipping, private equity and infrastructure, which are all established and managed by the affiliated company Obligo Investment Management. Based on a thorough suitability assessment we also offer attractive investment opportunities to selected customers in various capital market transactions facilitated by Agasti Wunderlich Capital Markets, which is also part of the Agasti Group. Every day we strive to live up to the vision: We create opportunities. We always recommend that customers make the investments that we feel will provide the customer with the best possible rate of return based on an individually tailored risk profile and the customer s wishes. During the third quarter of 2013, Navigea and Navexa will introduce a completely new and, in a Norwegian context, unique system in which customers and advisers jointly map the customer s overall investments. Based on this and the customer s wishes, an individual profile is established which will provide a very useful tool when considering future investments. 17

18 Capital Markets Capital Markets The Capital Markets business area consists of the company Agasti Wunderlich Capital Markets, which is a leading provider of advice and facilitation for different types of capital market transactions. In 2012 we established one of the most experienced teams within the sectors in which the Agasti Group aims to have a leading position; real estate, private equity, shipping and energy and oil services. We achieved this by bringing together dedicated people with international investment banking experience from renowned environments in Norway and abroad. Our strategic collaboration with Wunderlich Investment Company in the USA means that we have a close collaboration with their energy team in Houston. This also makes us a key player within the energy segment - both at home and in the USA. Agasti Wunderlich assists the Norwegian and international industry with financing, mergers, acquisitions and restructuring, etc. Based on a thorough assessment, selected customers are offered the opportunity to invest in various types of capital market transactions, for example participation in emissions. We have an experienced broker desk with solid investment abilities and a broad distribution to wealthy individuals and institutional investors, both through our Norwegian company and through our strategic collaboration with Wunderlich, as well as broad analytical coverage of the sectors we cover. Agasti Wunderlich carries out activities in Oslo, Stavanger and the USA. 18

19 Investment Management Investment Management The Investment Management business area consists of Obligo Investment Management AS. This company and its subsidiaries manage all direct investments that our customers have made through the Agasti Group. At the end of 2012 these totalled NOK 44 billion. Obligo Investment Management offers comprehensive investment management services, including asset management, IR services and other business services on behalf of customers that have made various investments through the Agasti Group. This includes everything from development and facilitation of investment projects to extensive reporting on the development of existing investment portfolios. Obligo is also responsible for board representation, monitoring portfolios on a daily basis and for ensuring that the Wealth Management advisers are highly familiar and up-to-date with the various investment products. Obligo is among the largest real estate management companies in the Nordic region and has leading expertise within private equity, property, infrastructure, shipping and energy and oil services. Our team is composed of highly skilled people with experience from ABG Sundal Collier, Swedbank First, Pareto, Morgan Stanley and Deutsche Bank, to name but a few. The company manages real estate portfolios with a total of NOK 34 billion. The next largest sector is shipping, in which customers have NOK 4 billion under management. Obligo Investment Management AS carries out activities in Oslo, Stockholm, Berlin and New York. 19

20 chief executive officer s comments A year of major changes 2012 was a challenging year for Agasti Holding. At the same time, 2012 was the year we staked more than at any point in our over 20-year long history. Early in 2013 we can already see a positive development and increased activity. Already at this early stage in the year, our business and our employees have undergone a testing period, which far exceeded anything we have experienced previously, when the Financial Supervisory Authority of Norway notified us that Acta Asset Management s license would be withdrawn. Instead of focusing solely on reorganisation of the business and being satisfied with continued operations, we chose to significantly develop the business further. Admittedly, it was necessary to make major changes to our advisory services, where the primary focus was to establish a watertight regulatory framework and ensure that our advisers have no incentives in their advice other than providing sound and valuable advice to customers, although we chose to do far more than just this. Extensive changes After acquiring investment management mandates from ABG Sundal Collier and Swedbank First, including the acquisition of 12 very competent employees from these companies, we now offer a complete management service for all our customers direct investments in the Agasti Group. This provides customers with increased security and better management quality as we possess all the necessary expertise ourselves. 20

21 chief executive officer s comments Furthermore, we are establishing ourselves as a leading actor within capital market transactions in selected sectors (e.g. real estate and energy/oil services), for which we have employed dedicated people with very strong expertise from Norwegian and international capital markets, whilst simultaneously entering into a very attractive strategic alliance with Wunderlich Investment Company in the USA. This presents us with unique opportunities which none of our Norwegian competitors are anywhere near able to match. Our Wealth Management business area, which is among the country s largest and leading providers of investment advice and wealth management, has undergone extensive changes. For our customers, the most important change is that we have established a concept in which our advisers have no incentives other than to always provide the recommendations and advice which are best for the customer based on an individual investment profile jointly created by the adviser and the customer. Thus far, we are finding that the efforts we have made are to our customers taste. This means that we currently have three business areas in the group, of which two are new and one has undergone significant changes. You can read more about our business model on page 16 of this report. A future-oriented strategy Our new focus is not only about adapting to the situation which arose in the spring of It is mainly about how we, as a group, should organise ourselves in an industry characterised by increasingly fierce competition so that in future we continue to stay abreast of developments and about being able to lay solid foundations for creating value and opportunities for our customers. We are confident that the model we have now chosen is a wise, future-oriented strategy - for our customers, owners and employees. Our new business model does not simply involve being an independent supplier of equity and fixed income funds of high quality from recognised Norwegian and international fund managers. Agasti Group customers will also be presented with attractive investment opportunities through Agasti Wunderlich, which is already working to facilitate exciting capital market transactions for Norwegian and foreign companies which finance projects that suitable customers will be given the opportunity to invest in. It is also gratifying that for the eight time in the last 10 years we have managed to deliver extra return over benchmark to everyone who followed our fund recommendations, which is 90 percent of our customers. As Chief Executive Officer I am incredibly proud of the morale, dedication and courage I have once again seen our employees display. As a result of the license withdrawal we held meetings and discussions with more than 40,000 customers and customers who represented 90 percent of the total invested capital displayed renewed confidence in us. I promise that we will reward this confidence. Systematic leading expertise Extensive changes require extensive measures. We have therefore trimmed and constructed the organisation in parallel. Since August 2012, we have recruited a total of around 40 new employees - several of whom came from recognised teams in Norway, the UK, Germany and the USA. Nevertheless, at the end of the year we had around 30 fewer employees than before we started the change process. This means that we have been able to adjust our expertise in accordance with the group s current focus and we have been able to add systematic leading expertise. Our new business model continues to build on a comprehensive industry mindset, in which we combine advice, management and financing/ facilitation of capital market transactions in a way which, in a Norwegian context, creates a unique breadth of services and higher quality for our customers. Overall, this forms a solid basis for healthy and profitable operations for the entire group in the coming years. This is what we believe in. This is how we will succeed. Alfred Ydstebø Chief Executive Officer 21

22 markets A good year on the stock exchange despite turmoil and uncertainty Despite negative media coverage and macro-economic instability, 2012 was a good year on the stock market with strong returns and less price volatility than we have been accustomed to in recent years. Many stock markets gave a rate of return of more than 10 percent in 2012, significantly higher than what can be expected of the stock market in the long term. The main index on the Oslo Stock Exchange rose by 15.4 percent and the Stockholm Stock Exchange rose by 11.9 percent. The major winners in 2012 were investments in shares and high interest bonds (High Yield). Navigea Securities customers that have invested in our hand-picked funds have enjoyed a very good average rate of return. Customers that invested in our core selections, which consist of broad funds that primarily invest in mature markets, had a rate of return of 10.7 percent in In the same period, the MSCI All Country World Index rose by 5.3 percent. Customers investments in the spicy mutual fund selection, which are specialised funds with a focus on growth markets or specific sectors, rose by 10.9 percent in In the same period, the MSCI Emerging Markets Index rose by 6.9 percent. Customers investments in money market and bond funds have given an average rate of return of 13.8 percent. All figures above are measured in Norwegian kroner. The fund selections recommended 22

23 markets by our analysts have outperformed the reference index in eight of the last ten years. 90 percent of customers fund investments are in funds that are included in the recommended fund selection. Risk-on, risk-off The stock exchange year got off to a good start, with an upturn on both the Oslo Stock Exchange and the Stockholm Stock Exchange. In Europe there was cautious optimism after the launch of the crisis package before Christmas 2011 and the American housing market appeared to be waking up again after many years of hibernation. Uncertainty among investors increased as spring was approaching. Concerns about new problems in Europe, weaker figures from the USA and lower stimuli from China halted the growth in the stock market. The uncertainty in the financial markets resulted in investors looking for alternatives with lower risk. The demand for secure investments resulted, among other things, in negative government rates in Northern Europe. In autumn there was a more positive attitude again among investors, primarily due to new quantitative efforts and rescue packages from central banks in Europe and the USA. The entire year has been characterised by a risk-on, risk-off pattern. Investors have fluctuated between optimism and increased risk in their portfolios and a more sceptical attitude where they have looked for safer investments. Europe stimulus packages provide hope At the start of 2012, the focus in Europe was on the crisis-hit Greek economy. The spring election resulted in a clear no to further austerity measures and a disengagement from the Euro was discussed. The entire Euro-zone has been faced with weak growth and high unemployment figures. During the autumn the focus moved from Greece to Spain, where the total debt burden is over 100% of GDP. The country has very high unemployment, particularly among young people. Over 50 percent of young people under 26 are not in work or education. The crisis in the Euro-zone is not only inhibiting European growth, but also the world economy in general. However, there is no longer much discussion about whether the Euro will survive the crisis. In the last year the European authorities have solved many problems and conflicts. Even if there is much work still to be done, the rescue packages and reforms from governments have laid the foundations for a more positive future. USA fiscal cliff and the presidential election The American economy grew at a moderate rate in 2012 and the belief in a financial recovery increased. At times this led to disappointment when the statistics did not live up to expectations. An important objective for both financial and monetary policies was to reduce unemployment and increase consumption, which accounts for 70 percent of the country s GDP. Unemployment remains high, but the position of consumers improved during the year, among other things due to a reduction in household debt and also because the property market started showing signs of coming back to life. In the autumn, all eyes were on the American presidential election and the threatening fiscal cliff. This resulted in uncertainty among investors. A temporary budget agreement was reached at the last minute, but the USA still needs a more long-term solution. Even if tough political bargaining is still taking place, a glimmer of optimism can be seen in both the labour market and the property market. There are good opportunities for increased consumption and continued moderate growth in the American economy going forward. Growth markets unfounded concerns about China? Emerging markets contributed the most to global growth in 2012 and account for an increasing share of value creation in the world economy. Many countries are changing monetary and financial policies in an expansive direction, with reduced interest and increased investments in infrastructure projects, etc. 23

24 markets China s economy grew more slowly in 2012 and authorities were cautious with stimulus efforts in the first half of the year. This was a cause for concern. The authorities deliberately chose to attempt to prevent overheating the economy. In autumn we saw better figures from China once more. After seven quarters of weaker economic growth, the trend turned and, by the end of the year, industrial production increased and investments in infrastructure and consumption remained at good levels. Increased appetite for risk Despite the turmoil in the world economy the stock market did well in Many investors still chose to leave the stock market in favour of less risky investments, such as bonds. The development towards the end of the year showed that the appetite for risk among investors was on the up and there are many indications of capital returning to the stock market in

25 Key events tittel Further develops customer concept Establishes Wealth Management in Navigea Securities From Acta to Agasti The holding company changes its name New business area Establishes Agasti Wunderlich Capital Markets Clients are staying with us 70% of the clients 90% of invested capital New robust business model Places greater emphasis on professional and institutional investor environments February The Financial Supervisory Authority of Norway notified us of the withdrawal of the licenses for Acta Asset Management AS. April The Financial Supervisory Authority of Norway withdraws the licenses for Acta Asset Management AS. The decision has been appealed. March-August Extensive changes to the board of directors and the group management. Alfred Ydstebø takes over as Chief Executive Officer. Reorganisation and establishment of a new business model - heavy investment in professional and institutional investment environments. Wealth Management is established at Navigea Securities AS - customer concepts are developed further. From March to August, all customers with holdings were contacted and new customer agreements were entered into with 70% of customers, corresponding to 90% of the invested capital. The companies Agasti Capital Markets AS and Obligo Investment Management AS were established. New business areas are formed; Wealth Management, Investment Management and Capital Markets. Agasti acquires Hagberg & Partners Fondsförvaltning AB, but in January 2013 Finansinspektionen rejects the acquisition. The decision has been appealed. Purchase of 50% of Wunderlich Securities AS with an option to buy the remaining 50%, which is acquired in February September Acta Holding ASA changes its name to Agasti Holding ASA. Head office moves from Stavanger to Oslo. November-December Acquisition of the management of all direct investments that our customers have made through the Agasti Group from ABG Sundal Collier Real Estate and Swedbank First, with effect from

26 Main figures Financial key figures % % % % % % % % % % % % % % % Fixed revenues / total revenues Fixed revenues / fixed costs Fixed revenues / fixed and activity based costs Share price development Equity ratio % % % % % 66% % % -44% -78% -100 Operational key figures Equity in advisory concepts (BNOK) Equity under management per customer in advisory concepts (MNOK) Equity under management (BNOK) Assets under management in Obligo (BNOK) Assets under management (BNOK)

27 Risk management and internal control Risk management and internal control Through excellent risk management and internal control the Agasti Group aims to ensure efficient operations and proper management of risks that are of significance to achieving the group s businessrelated objectives. To further strengthen this area of the business, the Agasti Group has, in recent years, implemented significant changes to its management systems for risk management and internal control. After the subsidiary Acta Asset Management was served notice in February 2012 by the Financial Supervisory Authority of Norway of a potential withdrawal of the company s licenses, which was later confirmed by a final decision in April 2012, basic organisational changes have been implemented and the emphasis on risk management within company management has been strengthened further. The Agasti Group s approach to risk is not to eliminate risk but to facilitate the identification, assessment, restriction and monitoring of risk in a balanced manner. The board of directors determines the degree to which the Agasti Group will take risks. Risk management has been integrated across all levels in the group and forms part of all decision-making processes. To improve quality in business-related processes in the Agasti Group, a customer concept has been established in which close dialogue and good communication with customers are key. Furthermore, a requirement has been introduced for all financial advisers in Norway to be certified in the field in line with similar requirements that have been in place in Sweden for a number of years. The group has had a long-term incentive scheme for employees, including option agreements and bonus schemes. These are measures that 27

28 Risk management and internal control will ensure long-term sustainable results and which will attract and retain top-quality employees. To ensure consistent business management and quality in the Agasti Group, a common set of internal guidelines and instructions have been established. The formal organisation of the Agasti Group s control roles ensures good management and control. An independent compliance role has been established in all securities companies in the group. Compliance maintains the quality of the actual investment advice process and carries out controls to ensure that the customer has been given the treatment he/she is entitled to in accordance with regulations and internal guidelines. The compliance role is also responsible for staying up-to-date with regard to changes to laws and regulations which impact the work performed by each securities company. The results of this work are included as part of the continuous improvement work in the Agasti Group, together with other control work. Today the Agasti Group is a quality-oriented finance group with good management and control - in the best interest of its customers and shareholders. Roles and responsibilities in risk management and the internal control structure in the Agasti Group Board of directors and the audit committee The board of directors of Agasti Holding ASA is the groups highest authority for business operations, including all continuous risk management and internal control. The group has established ethical guidelines, guidelines for corporate social responsibility, guidelines for restrictions in employees proprietary trading and rules governing employees ability to hold board positions and make other investments. Policies have also been established with regard to the group s risk management and internal control. The corporate board of directors has established a clear division of responsibility between the board of directors and the corporate management through instructions for the corporate board of directors and the chief executive officer. The group has a clear organisational structure. The corporate board of directors has determined the group s overall risk profile and annual risk frameworks. Risk frameworks are determined in connection with overall objectives and strategies set out by the corporate board of directors. The various principles are continued in the group s subsidiaries. Agasti Holding ASA has an audit committee consisting of three board members and is the rapporteur for the corporate board of directors. The audit committee quality assures the group s internal control, internal audits and risk management systems and ensures that these function efficiently. The audit committee ensures that risk management and internal control are established in accordance with laws and regulations, articles of associations, orders from the Financial Supervisory Authority of Norway and guidelines issued by the board of directors to the administration. An important part of this work is monitoring the management s implementation of its control responsibilities. The audit committee holds meetings with external and internal auditors at least twice per year. The audit committee reports to the corporate board of directors. The corporate board of directors evaluates its work and its expertise associated with the company s risk management and internal control at least once per year. Chief Executive Officer The chief executive officer is responsible for establishing proper internal control and risk management in line with the principles established by the corporate board of directors. The chief executive officer is responsible for ensuring that all deliveries are of a high quality. The Agasti Group has established a structure in which line management performs systematic controls and quality monitoring in all processes. This forms part of the company s continuous improvement work. As part of the control work, the chief executive officer receives continuous quality reports from various units. In addition to the continuous management reports, yearly reporting is also carried out for the corporate board of directors containing an overall assessment of risk management and internal controls. This report sets out the key risks in the Agasti Group and how these risks are managed. Similar principles apply, where appropriate, to CEOs of subsidiaries. Compliance and risk manager role To strengthen risk management and internal control, the Agasti Group has established a compliance and risk manager role in each of the companies that carry out licensed activities. 28

29 Risk management and internal control The risk manager is responsible for coordinating processes for risk management in his/her company and for ensuring that risk reports provide a correct and complete view. This also includes administration of risk management and conducting training and skills development. Additionally, the role assists the chief executive officer in preparing risk reports for the board of directors of the various companies and for the corporate board of directors. The compliance role has been established to ensure that the groups licensed activities comply with increasingly complex regulations. This includes both external regulations set out by the government and the company s internal guidelines. The compliance role has been established in all companies that carry out licensed activities. The compliance role reports directly to the CEO. The person performing the role is familiar with relevant regulations at all times and ensures compliance with each of the company s internal guidelines. A separate control plan has been established for the role so that random controls are carried out continuously with a central regulation as part of the basis for ensuring that the organisation complies with the regulations. The role is also responsible for ensuring that the risk management methodology for which the chief executive officer is responsible is in accordance with the policy for risk management and internal control as adopted by the corporate board of directors. Internal audits In order to quality assure compliance with the conditions set out by the board of directors, the Agasti Group has established internal audits for companies that carry out licensed activities. The internal audit verifies that internal control routines are established and function as intended. The unit also assists the board of directors, chief executive officer and subsidiaries with professional audit expertise and capacity, including monitoring and control in selected subsidiaries. Results from the audit activities are reported to the board of directors of the subsidiaries and the audit committee and, where applicable, the corporate board of directors. The unit ensures that all necessary measures are implemented. The Agasti Group has in 2012 chosen PwC as its new internal auditor. External audits The Agasti Group s external auditor carries out statutory financial audits. The external auditor reports to the annual general meeting. The external auditor also attends Agasti Holding ASA s board meetings and the meetings of the audit committee when required. The Agasti Group has chosen Ernst & Young as its external auditor. Risk management in the Agasti Group The risk management process is crucial to achieving the group s objectives. Risk management in the Agasti Group is carried out by area. All areas carry out risk assessments. Each manager in the group is responsible for contributing to the identification, assessment and management of risks and internal control within their area of responsibility. Risk management framework The Agasti Group has established a uniform risk management methodology for the group. The principles for carrying out risk management have been set out in a separate framework based on internationally accepted principles such as those of The Committee of Sponsoring Organizations of the Treadway Commission, COSO, recommendations from the Norwegian Corporate Governance Board (NUES) and regulatory requirements set out by the Financial Supervisory Authority of Norway. The framework covers the entire risk management process and defines the principles and templates to be used in the process. The framework provides guidelines and explains the processes for carrying out efficient risk management. The common risk management methodology is intended to ensure a common understanding of the risks in the group. In addition to this, the board of Agasti Holding ASA sets out the overall risk profile for the group. Risk reviews include risk assessments, action plans and reporting. Identified risks are followed up as part of the management reporting. In the Agasti Group, risk management consists of the steps of risk mapping, risk assessment, risk management and action plans, monitoring and reporting. Risk mapping Risk mapping at Agasti starts with the group s prioritisation of focus areas for the coming period. Together with the relevant business plans for each subsidiary, these form the basis for deciding which areas will be subject to risk assessments. The board of directors and management of each subsidiary will define these jointly. The purpose is to gain an overview of significant activities, current goals and which risks could threaten the fulfilment of these goals. 29

30 Risk management and internal control The Agasti Group has defined a set of risk categories under which risks are grouped. Risk mapping is carried out at strategic, process and project level. This ensures that all key risks are identified and provides an overall risk picture which can be managed and monitored. Risk assessments, controls and measures The management and relevant key personnel carry out assessment of significant risks. Risk assessments are carried out by assessing identified risks in relation to the probability of a risk occurring and the consequences of a risk occurring, provided existing controls work as intended. For those risks that are considered to fall outside of the risk tolerance, further action and any risk-reducing measures will be decided. Based on defined objectives and strategies for the group, significant risks are reviewed for all companies at least once per year. The chief executive officer systematically evaluates whether risk management and internal control are sufficient for managing identified risks in an appropriate manner. Risk assessments form the foundations for the CEO s report to the corporate board of directors. Monitoring and reporting Information about development of risk levels is a crucial part of the management s control information and an important part of business management. Risk assessments and risk reports must therefore coincide with other business management and business reporting. Management is involved in the work to establish a structure for periodic monitoring of management parameters, including both performance parameters (KPI) and risk indicators (KRI). The above activities are documented and a summary containing conclusions about the risk situation and the need for new measures is prepared for each company. The CEO presents the board of directors, at least once per year, with an overall assessment of the risk situation for processing. The board of directors monitors the individual risks throughout the year. Risk and control monitoring Information about development in the risk picture and the underlying risk areas is also included as an important part of the management s control information and as an important part of risk management. In the event that monitoring leads to the conclusion that there is a need for further measures and controls, the responsible manager shall ensure that all improvement measures are implemented within the established deadlines. Risk factors in the Agasti Group The Agasti Group is exposed to several types of risk. The key risks are defined within the categories of strategic risk, operational risk and financial risk. Strategic risk Agasti s strategic risk exposure is a risk which is important to the group s earnings. The most important strategic risk is the development of the financial markets and customers willingness to invest in products offered by the Agasti Group. Agasti s board of directors and management continuously monitor strategic risk and carry out adaptations in relation to the risk picture. Operational risk Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, human error, system error or external events. Operational risk also includes the risk of the company s non-compliance with laws and regulations and risks associated with the use of ICT systems. The quality of consultancy processes is an important operational risk for Agasti, on which the group has performed purposeful work. The group has established an effective system for managing operational risk and the operational risk is considered to be low. Financial risk Credit risk is the risk of a customer or other party being unable to meet its obligations in accordance with agreements and that the securities provided are unable to meet outstanding demands. The Agasti Group has credit risks associated with banks and counterparts. There are interest risks associated with the financing of the company and the group also has currency risks, associated in particular with activities in Sweden. Continuous monitoring of these risks is carried out and the risk level is considered to be low. 30

31 Articles of Association for Agasti Holding ASA Articles Adopted at the annual general meeting of 31 March 2005, last amended at the Board meeting of 28 February Company name and registered office The company is a public limited company. The company s name is Agasti Holding ASA. The company s registered office is located in the city of Oslo. 2 Objects As parent company, the company s objects are to administer its ownership interests within the group, and all activities that naturally relate to these interests. 3 Share capital The company s share capital totals NOK 46,985, divided among 261,030,750 shares, each with a nominal value of NOK The shares shall be registered with the Norwegian Registry of Securities. 4 Share transfer Notification of any acquisition of shares in the company shall be sent immediately to the Norwegian Registry of Securities. The purchaser of a share may only exercise the rights appropriated to a shareholder when the acquisition has been registered in the shareholder register, or when he or she has reported and paid for the acquisition. 31

32 Articles of Association for Agasti Holding ASA 5 Structure of the Board The company s Board of Directors consists of three to seven members according to the resolution adopted by the general meeting. 6 Nomination committee The company s nomination committee consists of three to five members according to the resolution adopted by the general meeting. 7 Company signature One board member together with either the Chairman of the Board or the Chief Executive Officer may sign for the company. The Board of Directors may grant power of attorney and special authorisations. 8 Ordinary general meeting The ordinary general meeting shall be held annually by the end of June. The Board of Directors shall call the general meeting by issuing written invitations with at least 21 days notice to all shareholders with a known address, unless the Joint Stock Public Companies Act allows a shorter notice. Shareholders who wish to attend must send notification of such to the company within the deadline specified on the notice of the general meeting. The deadline must not be more than five days before the date of the general meeting. The right to participate and vote at the company s general meeting only can be exercised for shares when the purchase of shares is listed in the shareholder register no later than five workdays prior to the general meeting. 9 Publishing of general meeting documents on the company s website If documents to be considered by the general meeting in accordance with the agenda for the meeting have been made available on the company s website, the company does not have to send these physically to the shareholders. Any such documents shall, however, be sent free of charge upon request from individual shareholders. 10 Location of the general meeting The general meeting shall be held in the city of Oslo where the company s registered office is. However, the Board of Directors may decide to hold the general meeting in the city of Stavanger or elsewhere when appropriate. 11 Duties of the general meeting The ordinary general meeting shall: Approve the annual accounts consisting of the profit and loss account, the balance sheet and the annual report, including the consolidated accounts and dividends. Address other items to be dealt with by the general meeting according to legislation or the articles of association. At the general meeting, each share is allocated one vote. 32

33 SHAREHOLDER INFORMATION Agasti OSEBX Volume traded in thousands (right scale) Shareholder information Stock exchange listing Shares in Agasti Holding ASA were listed on the SMB list at the Oslo Stock Exchange on 16 July The company was included in the Oslo Stock Exchange Main Index, OSEBX, from January 2004 and from October 2004 in the OB Match list, after the Oslo Stock Exchange replaced the previous industry structure for companies structured by liquidity. After the 25 largest companies on the OBX list, the OB Match list consists of the most liquid companies. One of the criteria for inclusion is that there is a minimum of 10 trades in the shares per day. In September 2012, the company changed its name to Agasti Holding ASA with AGA as the new stock exchange ticker. In 2012, the number of Agasti shares traded on the Oslo Stock Exchange was 81 million, which gives a velocity of circulation of 0.3. On average in 2012, 0.3 million shares across 27 transactions per day were traded in Agasti Holding ASA. The company complies with Oslo Stock Exchange s recommendations on reporting of IR information, in which, among other things, requirements are set out relating to the information which must be made available on companies websites. Share capital and shares As of 31 December 2012, Agasti Holding ASA had a share capital of NOK 46.4 million, divided into 257,530,750 million shares, each with a nominal value of NOK

34 SHAREHOLDER INFORMATION Authorisation to issue shares Agasti Holding ASA s annual general meeting has given the company s board of directors authorisation to issue new shares. The authorisation was granted at the annual general meeting on 23 May 2012 and applies to the issuing of up to 25.5 million shares with a nominal value of NOK The authorisation is valid until the date of the next annual general meeting, but no later than 30 June During 2012, the board of directors of Agasti Holding ASA did not make use of this authorisation. Authorisation to acquire the company s own shares The annual general meeting of Agasti Holding ASA has authorised the company s board of directors to purchase the company s own shares. The authorisation was granted at the annual general meeting on 23 May 2012 and applies to the acquisition of up to 25.5 million shares with a nominal value of NOK 0.18 within a price range of NOK 0.18 to NOK 10. The authorisation is valid until the date of the next annual general meeting, but no later than 30 June During 2012, the board of directors of Agasti Holding ASA did not make use of this authorisation. Options In 2009, the board of directors of Agasti Holding ASA allocated share options to selected members of the group management in accordance with the option scheme launched in A decision was made to replace this option scheme in 2009 with a three-year incentive scheme which applied to all employees in the group. In 2012, the board of directors of Agasti Holding ASA adopted a new incentive scheme for selected managers in the group. The scheme is part of a long-term incentive scheme for Agasti managers, which will contribute to creating positive results and attracting new employees as well as retaining existing employees. At the time of adoption, a total of 10,736 million share options are outstanding, of which managing employees hold respectively 6,911 million share options. The allocation is in accordance with the authorisation granted by the annual general meetings on 6 May 2009, 11 May 2010, 25 May 2011 and 23 May The options allocated in 2009 and 2010, which remained outstanding at the start of 2012, all became due during 2012 without any redemption taking place. The options allocated in 2011 with an expiry date in 2012 became due without redemption taking place. The redemption price for the options is NOK 3.14 for options allocated in February 2011, NOK 3.66 for options allocated in May 2011, NOK 2.14 for options allocated in August 2011, NOK 1.50 for options allocated in November 2011, NOK 1.10 for options allocated in February 2012, NOK 1.33 for options allocated in August 2012 and NOK 1.58 for options allocated in November The redemption price for the options shall be reduced by the accumulated dividends paid out during the period after allocation of the options. Dividends were not paid out for the 2009 financial year. The annual general meeting of Agasti Holding ASA approved dividends for the 2010 financial year as 0.10 per share. Dividends were not paid out for the 2011 financial year. The board of directors of Agasti Holding ASA has proposed to the annual general meeting that dividends are not paid out for the 2012 financial year. Share options allocated in February and May 2011 may, for primary insiders and a defined group of other employees, be redeemed by 1/3 in 2013 and 1/3 in 2014, during specific periods in both years. Share options allocated to other employees in February 2011, May 2011, August 2011, November 2011 and February 2012 may be 100% redeemed during specific periods of 2013 and Share options allocated to selected managers in the group during August and November 2012 may be redeemed by 1/3 in 2013, 1/3 in 2014 and 1/3 in 2015, during specific periods in all three years. As of 31 December 2012, Agasti Holding ASA had not issued any other financial instruments that may result in a demand for issuing of new shares other than the mentioned share options. Share price performance The share price at the end of the year was NOK 1.38, which prices the company at NOK 355 million. In 2012 the highest and lowest market price has been NOK 2.09 and NOK 0.93 respectively. For comparison, the price at the end of 2011 was NOK This constitutes a price increase of 14 percent during Oslo Stock Exchange s Main Index (OSEBX) rose by 15 percent in the same period, whereas the finance index (OSE40) experienced a rise of 20 percent. The figure on the previous page shows the price and turnover development for shares in Agasti Holding ASA from 1 January to 31 December 2012 compared with the main index in the Oslo Stock Exchange. 34

35 SHAREHOLDER INFORMATION Proprietary trading Employees who normally have access to or work with investment services or management of financial instruments for securities companies, or on behalf of the securities company s customers, are covered by the proprietary trading rules regulated by securities trading legislation. It is crucial to the Agasti Group to have a proper relationship with the financial market and the supervisory authorities and the management has decided that all employees in the Agasti Group s securities companies Acta Asset Management AS, Agasti Wunderlich Capital Markets AS and Navigea Securities AS, including its Swedish branch and Navexa Securities AB, will be covered by these rules. The company has prepared rules for how employees must behave in relation to the securities market. Insider regulations Agasti Holding ASA has clear rules for the group which regulate employees, employee representatives and related parties transactions in securities issued by Agasti Holding ASA. The rules set out a clear framework for how the transactions can take place and the periods during which trade in securities issued by Agasti Holding ASA is permitted. Dividends policy The company s dividends policy remains unchanged from 2011 and aims to pay out the highest possible share of the profits after tax as dividends, taking into account legislative requirements and the need for solvency and liquidity. The board of directors of Agasti Holding ASA has proposed to the company s annual general meeting that dividends are not paid out for the 2012 financial year. Shareholders Agasti s owners include institutional owners, various investors and a main owner who was also involved in founding the company over 20 years ago. Agasti s largest shareholder, Alfred Ydstebø, who is also the chief executive officer of the company, together with related parties, owns around 14 percent of the shares. Ownership is exercised through the investment company Coil Investment Group AS and Wunderlich Securities, Inc. At the end of the year, the 20 largest shareholders owned a total of 59 percent of the company s shares. As of 31 December 2012, Agasti Holding ASA had 3,185 shareholders, 232 fewer than the previous year. The number of foreign shareholders has reduced from 177 to 166. The number of Norwegian shareholders has reduced from 3,241 to 3,019. An overview of the 20 largest shareholders as of is shown in the table to the right. Shareholders Number of shares Equity stake Coil Investment Group as % Ludvig Lorentzen as % Perestroika as % Best Invest as % Bjelland Trading as % Mons Holding as % Ikm Industri-Invest as % Sanden as % Tenold Gruppen as % Skandinaviska Enskilda Banken as % Nordea Bank Norge asa % Sissener Sirius asa % Bnyxe - Equity Tri-Party % International Oilfield Services as % Steinar Lindberg as % Extellus as % Care Holding as % Wunderlich Securities, Inc % Solbrekk, Anders Ingvald % Brattetveit as % Total 20 largest shareholders % Total other shareholders % Total number of shares % Percentage of foreign shareholders At the end of 2012 the total percentage of foreign shareholders amounted to 18.5 million shares or 7.6 percent distributed across 166 shareholders. For comparison, the percentage at the end of 2011 was 22.8 million shares or 8.9 percent distributed across 177 shareholders, whereas the percentage of foreign shareholders at the end of 2010 was 13.4 percent. An overview of the distribution by nationality has been provided in the table below. Shareholders by nationality as at Nationality Shares Percent Shareholders Percent Norway Sweden United Kingdom Denmark USA Luxembourg Switzerland Cayman Islands Other Total

36 SHAREHOLDER INFORMATION 2013 Financial calendar The financial calendar can be found below. The quarterly presentations and the annual general meeting are usually held in Oslo. All presentations are open and the quarterly presentations are transmitted via the internet. Investor contact The Agasti Group wishes to maintain the company s excellent contacts and keep an open dialogue with all participants in the capital markets. The Investor Relations role is exercised by the company s IR Manager Jo-Inge Fisketjøn. Contact information can be found below: ir@agasti.no, tel.: Internet The Agasti Group s interim reports, interim presentations, annual reports, stock exchange announcements, up-to-date shareholder registers, etc. are continuously published at Quarter 1 interim report Quarter 2 interim report Ordinary general meeting Quarter 3 interim report

37 CORPORATE GOVERNANCE Corporate Governance Norwegian Code of Practice The Norwegian Code of Practice for Corporate Governance was first published by the Norwegian Corporate Governance Board (NUES) on 7 December On the basis of changes to legislation and regulations and experience gained from the use of the Code of Practice, NUES annually evaluates whether it is necessary to update the Code of Practice. Revisions to the Code of Practice were presented on 8 December 2005, 28 November 2006, 4 December 2007, 21 October 2009, 21 October 2010, 20 October 2011 and 23 October Agasti Holding ASA reports in accordance with the Code of Practice in effect at any given time and explains how the Group has complied with the individual sections of the Code of Practice. Instances where Agasti departs from the Code of Practice are commented on separately. Below you can find an overview of the recommendations. 1. Statement regarding corporate governance The Board of Directors of Agasti Holding ASA will comply with the Code of Practice for Corporate Governance in all key areas. The group has prepared guidelines for corporate social responsibility, ethical guidelines, guidelines for managing conflicts of interest and internal guidelines for proprietary trading and insider trading. The guidelines describe laws and regulations applicable to all employees, temporary workers and employee representatives, both internally and across the groups interest groups. The ethical guidelines are based on the Agasti Group s basic values, which guide all activities within the group. Agasti s activities are based on the following values: integrity, well-informed, energy and customisation. The ethical guidelines are clearly communicated throughout the organisation and define what is desirable and undesirable conduct. 37

38 CORPORATE GOVERNANCE The guidelines that describe corporate social responsibility deal with the Agasti Group s responsibility towards the people, society and environment affected by the company. 2. Business operations Agasti s vision is We create opportunities. The vision has clear ambition and indicates a clear direction. The vision invokes community and has been a guiding principle in selecting the group s values. The group s objective with the vision and values is that they, taken together, will inspire and influence employee attitudes and contribute to decision-making processes. The articles of association of Agasti Holding ASA are reproduced in their entirety in the annual report. 3. Company capital and dividends Equity As of the group s equity was NOK 184 million, which comprised 54 percent of the total capital. Agasti has a business model that requires low capital, which is also confirmed by the fact that the need to invest is low during periods of organic growth. The board of directors continuously analyses the company s financial solvency requirements in light of the company s objectives, strategy and risk profile. Dividends policy The company s dividends policy remains unchanged from 2011, which means that the company will exercise a dividends policy whereby the highest possible share of the net income is paid out as dividends, taking into account legal requirements and needs for satisfactory financial solvency and liquidity. For the 2012 financial year, the board of Agasti Holding ASA has proposed that dividends are not paid. The dividends policy is also presented in the chapter Shareholder information on page 33. Capital increase The general meeting of Agasti Holding ASA has authorised the company s board of directors to issue up to 25.5 million new shares, which represents approximately 10 percent of outstanding shares. The authorisation has been granted based on the desire for greater flexibility with regard to any issuing of shares to strategic business partners or financial investors, as an authorisation for use of capital, as payment for any acquisitions or the issuing of options or allocation of shares, options and/or subscription rights to management or key personnel, etc. The authorisation is valid until the date of the next general meeting, but no later than 30 June In 2012 the board of directors awarded share options to selected managers in the group in accordance with the authorisation granted by the general meeting. In 2012, the board of directors of Agasti Holding ASA did not issue any shares under the authorisation granted by the company s general meeting on 23 May At the ordinary general meeting it is proposed that the company s board of directors be granted a new authorisation to issue up to 26 million new shares, valid until the next annual ordinary general meeting, but which will expire no later than 30 June The authorisation to issue remains applicable for just under 10 percent of outstanding shares. Buy-back of shares The general meeting of Agasti Holding ASA has authorised the company s board of directors to purchase the company s own shares. The authorisation was granted at the general meeting on 23 May 2012 and applies to the acquisition of up to 25.5 million shares with a nominal value of NOK 0.18 within a price range of NOK 0.18 to NOK 10. The authorisation is justified in that such authority is common in large listed companies and provides the opportunity to use the financial instruments and mechanisms prescribed by the Norwegian act relating to public limited liability companies. It also gives the company the opportunity to optimise its capital structure. The authorisation is also granted so that the company is able to use its own shares as consideration in the case of acquisitions and to fulfil the option scheme for management and key personnel, etc. The authorisation is valid until the date of the next general meeting, but no later than 30 June It has been proposed that this authorisation is replaced at the ordinary general meeting by a new authorisation to purchase up to 26 million own shares until the next ordinary general meeting, but with an expiry date no later than 30 June During 2012, the board of directors of Agasti Holding ASA did not make use of this authorisation. 38

39 CORPORATE GOVERNANCE 4. Equal treatment of shareholders and transactions with related parties Agasti Holding ASA has one share class, in which each share entitles the holder to one vote at the company s general meeting. Equal treatment of shareholders has also been ensured in that all capital increases after the stock exchange listing in 2001 have occurred with preferential rights for existing shareholders. The only exceptions have been in connection with the company s procurement of the investment advice company Axir ASA in 2010 and the procurement of the securities company Wunderlich Securities AS in However, in the case of emissions targeted at employees, all employees have been able to participate under the same conditions, regardless of their position within the company. If the company s board of directors approves capital increases which deviate from the preferential rights of existing shareholders on the basis of the authorisation given at the general meeting, the reason for this must be made public in a stock exchange announcement in connection with the capital increase. Authorisation regarding the purchase of the company s own shares gives the board of directors purchasing freedom in relation to the methods through which the purchasing and sale of shares can occur. Transactions in the company s own shares would normally be carried out in the Oslo Stock Exchange or otherwise in accordance with the market price. All subsidiaries are wholly owned and as such there are no conflicts of interest with any minority shareholders. On 1 August 2009 Agasti Holding ASA entered into a consultancy agreement with the then chairman Alfred Ydstebø, corresponding to 35 percent of full time employment. During the period from 1 February 2012 until Alfred Ydstebø was employed as new Chief Executive Officer in August 2012, the consultancy agreement with Ydstebø was extended to 50 percent of full time employment. Ydstebø is also the company s largest shareholder through Coil Investment Group AS. The agreement was terminated from and including 15 August For 2012, NOK 625,000, excluding value added tax, has been paid under this agreement. In August 2012 the group entered into an exclusive strategic alliance with Wunderlich Investment Company, Inc. in which Alfred Ydstebø has a controlling interest. In order to strengthen the alliance, USD 2.5 million was invested in the form of a convertible debenture. At the same time, the group acquired 50% of Wunderlich Securities AS for NOK 6 million and the remaining 50% of the shares were acquired in February This company was also controlled by Alfred Ydstebø. Beyond this, there have been no material transactions between the company and shareholders, the board of directors or management. Potential conflicts of interest between the board of directors and these groups are dealt with by the board of directors. 5. Free negotiability The company has no ownership or trading restrictions affecting the company s shares. 6. General meeting The general meeting ensures that shareholders are able to participate in the body which constitutes the highest authority in the company and in which the company s Articles of Association are stipulated. The board of directors will facilitate in such a way that as many shareholders as possible can exercise their ownership rights by participating in the company s general meeting. Notice The general meeting is held by June each year. In 2013 the general meeting will be held on 29 May. Notice and agenda documents for ordinary and extraordinary general meetings are, without exception, issued to shareholders with a minimum of 21 days notice. The board of directors also strives to make the nomination committee s recommendations available at least 21 days before the general meeting. The company s financial calender is published through stock exchange announcements, on Agasti s websites and in the company s annual report. The board of directors ensures that agenda documents include all necessary information in order for shareholders to be able to consider all items that will be dealt with. The annual report is published electronically only. Shareholders may request a physical copy of the annual report free of charge. The general meeting is usually held in Oslo in accordance with the company s Articles of Association. 39

40 CORPORATE GOVERNANCE Participation The company s Articles of Association stipulate that the deadline for registration may not expire earlier than five days before the date of the general meeting and that the right to participate and vote in the general meeting may be exercised only for shares when the share position has been entered in the register of shareholders by the fifth working day preceding the general meeting. Shareholders are welcome to vote by proxy and proxies may be granted for each individual case that is discussed. Proxy forms are enclosed with the notice and may also be used to provide instructions concerning votes associated with each item under discussion. The chairman of the board of directors will, if desired, be able to vote on behalf of shareholders as an authorised proxy. The board of directors feels that recommendations from the nomination committee should be voted on as a whole and not individually. This is because the committee s recommendation for candidates for each position in the company s bodies is based on the properties already represented in the board of directors by members not up for election. The nomination committee attempts to supplement these with members who hold the desired experience and expertise. As a rule of thumb, the chairman, management, chairman of the nomination committee and the auditor will be present. In recent years the general meeting has been chaired by an independent chairperson. In 2012 the general meeting was held on 23 May and 31 percent of the total capital was represented. The minutes from the general meeting are made available on the company s website as soon as possible and no later than 15 days after the general meeting is held. 7. Nomination committee At the ordinary general meeting on 31 March 2005, it was stipulated in the Articles of Association that Agasti Holding ASA shall have a nomination committee in accordance with the recommendations on corporate governance. In accordance with guidelines adopted by the general meeting, the nomination committee s tasks include providing recommendations to the general meeting for the election of board members and remuneration of said members. The committee shall consist of three to five members each serving for two years. All members and the chairman of the committee will be elected by the general meeting. The general meeting determines the committee s remuneration based on the nomination committee s recommendations. The committee consists of Ulf-Einar Staalesen (chairman), Jan Petter Collier (member) and Steinar Olsen (member). All committee members are considered independent of the board of directors and management employees. The Chief Executive Officer or other management employees are not members of the nomination committee. The composition of the nomination committee aims to balance multiple concerns, among other things the principle of independence and impartiality in the relationship between the committee and those who will be elected is emphasised. The nomination committee s independence from the board of directors and the company management implies that the recommendation for members of the nomination committee should be made by the nomination committee itself. The deadline for providing input regarding candidates to the board of directors and the nomination committee is 31 December 2013 and this can be done by contacting Agasti Holding ASA c/o the nomination committee, PO Box 120, 4001 Stavanger, Norway. The nomination committee s recommendation of members is normally issued with the notice for the general meeting. The composition of the nomination committee is decided by simple majority vote. 8. Corporate assembly and board of directors - composition and independence Corporate assembly At the end of 2012 the Agasti Group had 213 permanent employees, the majority of whom are employed in the securities company Navigea Securities AS, a subsidiary of the parent company Agasti ASA. However, the number of employees in Navigea Securities AS is less than 200 and there is no requirement for a corporate assembly. Board of Directors The board of directors of Agasti Holding ASA consists of six members and currently has the following composition: Merete Haugli (chairman), Stein Aukner (deputy chairman), Pia Gideon, Ole Peter Lorentzen, Sissel Knutsen Hegdal and Erling Meinich-Bache. 40

41 CORPORATE GOVERNANCE Independence Agasti endeavours to ensure independence between shareholders, the board of directors and the company s administration. No members of the Agasti Holding ASA board of directors are employees of the group. Of the six board members, four are independent of main shareholders. Board members are selected in accordance with the Norwegian act relating to public limited liability companies for two years at a time. The Chief Executive Officer is not a member of the Board of Directors. Board members shareholdings As of the board members of Agasti Holding ASA have the following shareholdings in the company: Stein Aukner, deputy chairman, owns 137,500 shares privately and through the company Invest-Man AS. Ole Peter Lorentzen owns 22,170,950 shares through the companies Ludvig Lorentzen AS and Extellus AS. Board members are encouraged to own shares in the company. Selection of the board of directors The members of the board of directors and its chairman are elected at the general meeting. The nomination committee prepares a recommendation of board members prior to the election. The recommendation is usually issued to shareholders together with the notice of the general meeting. The composition of the board of directors is decided by simple majority vote. For the election of new board members, the suggestions for the board s composition take into account conditions set out in the code of practice with regard to independence from the management. This means that the majority of the shareholder-elected members who are selected must be independent of the company s general management and significant business connections. At least two of the shareholder-elected members should be independent of the main shareholders and representatives of the general management should not be members of the board. Suggestions for the composition of the board will also emphasise diversity, the ability to collaborate and a balanced gender representation. 9. The work of the board of directors The duties of the board of directors The board has the overall responsibility for the management of the group and for overseeing general management and the group s business activities. The main tasks include participating in shaping the group s strategy, as well as control and advisory tasks. Each year, the board prepares a plan for the coming year s work, in which meeting dates and themes are set out. The board appoints the CEO. Rules of procedure The board has developed rules of procedure for the board and the general management with emphasis on clear allocation of internal responsibilities and tasks. Board committees Agasti Holding ASA has two board committees, an audit committee and a remuneration committee. The tasks of the respective committees are listed below. The duties of the audit committee: To prepare the board s quality assurance of the accounting and financial reporting To assess the company s main accounting principles and analysis of entries To monitor the systems for internal control and risk management and the company s internal auditing, if such a role has been established To maintain ongoing contact with the company s selected auditor regarding auditing of the annual accounts To review and monitor the auditor s independence, cf. auditing legislation, including for services provided by the auditor or auditing company other than auditing, in order to ensure that there are no threats to the auditor s independence To review the external auditor s plans and budget The committee shall assist the board in exercising its control and management function, particularly in relation to ensuring that all activities at Agasti are carried out in accordance with applicable legislation, regulations and guidelines To ensure that the company establishes and maintains internal procedures and instructions in relation to applicable legislation and regulations and that these are communicated to employees The audit committee consists of Merete Haugli, chairman, Ole Peter Lorentzen and Erling Meinich-Bache. The members of the audit committee are considered to be independent of the company. The audit committee s mandate satisfies the legal requirement for audit committees for listed companies. 41

42 CORPORATE GOVERNANCE The duties of the remuneration committee: To prepare all cases regarding the remuneration scheme which must be determined by the board of directors in the securities companies To determine remuneration for the CEO To determine the salary levels and principles for and scope of bonus schemes Other significant personnel-related issues for employees in senior positions Agasti Holding ASA has been given permission by the Financial Supervisory Authority of Norway to have a common remuneration committee for the group and as such there is no requirement regarding separate remuneration committees in the securities companies. The remuneration committee consists of Stein Aukner, chairman, Merete Haugli and Sissel Knutsen Hegdal. All members are considered to be independent of employees in leading positions. The board s self-assessment The board carries out an annual self-assessment of its operations and expertise, which includes an analysis of the board s composition and how members function both individually and as a group in relation to the goals that have been set. 10. Risk management and internal control The group does not have a dedicated internal audit department. However, there are comprehensive rules established concerning internal control as part of internal quality controls, internal and external accounting and financial management. PwC was engaged as internal auditor by Acta Asset Management AS, Navigea Securities AS and Navexa Securities AB in 2012 in accordance with the regulations regarding internal control. The group has developed sound routines and procedures for ongoing internal control. This, in addition to the audit committee, contributes to suitable control of the group s accounting and financial reporting, as well as monitoring of the company s internal control. The board carries out an annual review of the company s most important risk areas and internal control within the group. Please also refer to the specific point in the annual report where risk management and internal control (link to this) are discussed in more detail. Financial reporting In addition to board meetings, the board receives monthly management reports, which also describe the company s financial and economic status. 11. The board of directors remuneration The board of director s remuneration is decided upon at the general meeting and is in accordance with the board s responsibilities, expertise and time spent. In 2012, remuneration paid to the board was NOK 300,000 for the chairman of the board and NOK 200,000 for other members. The chairman and members of the audit committee also received an additional NOK 110,000 and NOK 70,000 respectively. Members of the remuneration committee also received NOK 20,000 each. The chairman of the nomination committee was paid NOK 30,000 and other members NOK 20,000 each. This remuneration is fixed and is in no way dependent upon results. 12. Remuneration to employees in leading positions The CEO s remuneration is determined by the board of directors. The board also sets guidelines for remuneration of other employees in leading positions, including fixed salaries and the principles for and scope of bonus schemes. These guidelines are presented at the general meeting. The guidelines for remuneration of employees in leading positions are described in detail in the notes to the annual report. 13. Information and communication Agasti Holding ASA aims to carry out accounting and financial reporting that is trusted by the financial market. Emphasis is placed on information being equal and synchronous. Effective communication with the financial market is ensured through all significant new information being sent as stock exchange announcements in accordance with applicable regulations, including the company s financial calendar with dates for the publication of interim reports, general meeting and any dividend payments. 42

43 CORPORATE GOVERNANCE Agasti works to ensure open and active communication with the financial market. Open investor presentations are arranged in connection with annual and quarterly results. The company s quarterly and biannual presentations are transmitted live on the internet and are also available on the company s website under Investor Relations. Agasti Holding ASA has applied for and been granted dispensation from the language requirements specified in the legislation on securities trading. Interim reports are therefore published in English only. The company has placed emphasis on further developing and improving the webpages for Investor Relations content. The company complies with Oslo Stock Exchange s recommendations on reporting of IR information, in which, among other things, requirements are set out relating to the information which must be made available on companies websites. The need for further improvement of these pages is assessed on a continuous basis. The group s Investor Relations department is in regular contact with shareholders, investors, analysts and the financial market in general. Shareholders, investors, brokers, analysts and other parties with an interest in Agasti shares are encouraged to contact the company s IR department. Contact information is easily accessible on the company s website. 14. Corporate takeover In the event of any takeover bids, the board and management of Agasti have an independent responsibility to ensure that the shareholders in Agasti are treated equally. The board has particular responsibility for ensuring that shareholders have sufficient information to be able to consider the offer. The board endorses the code of practice s condition that the board cannot try to prevent or impede an offer regarding the company s business or shares, and will adhere to this. No significant share issuance authorisations exist beyond that which is accounted for here, or other possible measures that can be used to impede or prevent any offer on the company s shares. In the event of an offer for the company s shares, the board will provide a statement with an assessment of the offer and a recommendation to the company s shareholders. If the board is not able to make a recommendation, the reason for this will be given. In the event of a takeover situation, the board will assess whether to obtain a valuation from an independent expert. Transactions that, in effect, constitute a sale of the company, will where possible be presented at the general meeting for a final decision. 15. Auditor The external auditor submits a plan to the board annually, in which the main features of the planned audit are described. The external auditor participates in the board meeting that deal with annual accounts, as well as other board meetings or audit committee meetings at which significant decisions in relation to accounting or internal control are to be made, along with any other meetings in accordance with the board s wishes. Both the internal and the external auditor participate in two audit committee meetings per year. The auditors shall, on an annual basis, explain the work carried out in the previous financial year including particular circumstances that have been subject to attention or discussion with management, as well as the organisation and implementation of internal control in the operational subsidiaries. Together with the audit committee, the internal auditor reviews the conditions regarding risk management and internal control within the group. Both the external and internal auditor can meet with the board without the general management being present, if there is a need for this. The external auditor is engaged on the basis of the ordinary conditions for each company in the group. The external auditor carries out limited tasks for the group beyond auditing and assistance with the preparation and reporting of tax accounts. Fees for auditing and consultancy services are explained in the notes to the annual accounts and are also stated in the documentation for the general meeting. 43

44 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report Directors report The Agasti Group The Agasti Group consists of the parent company Agasti Holding ASA and the wholly owned subsidiaries Navigea Securities AS, Navexa Securities AB, Agasti Capital Markets AS, Obligo Investment Management AS, Agasti Business Services AS, including the company s Swedish branch, Acta Asset Management AS and Acta Kapitalforvaltning AS, including Acta Kapitalforvaltning AS Swedish branch Acta Kapitalförvaltning. Overview of activities and where the Group operates The Agasti Group is a leading player within the fields of investment advice and management of alternative investments as well as an advisor and facilitator of capital market services for wealthy individuals, companies and institutional investors. The Group was established in 1990, and the holding company, Agasti Holding ASA, has been listed on the Oslo Stock Exchange since The Group has activities in Norway and Sweden, as well as in the USA via a strategic alliance with the Wunderlich Investment Company. In September 2012, the holding company changed its name to Agasti Holding ASA at the same time as the head office moved from Stavanger to Oslo. In addition to being a major distributor of selected equity and fixed income funds, the Agasti Group has established one of the most experienced teams in the market with regard to real estate, private equity and shipping and, through strategic collaboration with the Wunderlich energy team in Houston, also within energy and oil services. This has been achieved by bringing together dedicated 44

45 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel people with international investment banking experience from renowned financial institutions in Norway and abroad, whilst at the same time further developing close collaboration with Wunderlich Securities in the USA. The Agasti Group continues to be a leading provider of investment advice and wealth management represented by Navigea Securities in Norway and its Swedish branch, as well as Navexa Securities in Sweden. The Agasti Group has, however, changed the focus of the overall business and has taken a position in which it now represents the entire industry line from investment advice/wealth management, through to facilitation and advice associated with project financing and capital market transactions for industry, as well as offering a complete management service for all the direct investments customers have made through the Agasti Group. Operations, requiring licences from the authorities are carried out by the companies Navigea Securities AS, Navexa Securities AB and Acta Asset Management. The Agasti Group does not carry out research and development activities. Agasti s vision is We create opportunities. The vision has clear ambition and indicates a clear direction. The vision invokes a sense of community and has been a guiding principle in selecting our values. The group s objective with its vision and values is that taken together, they will inspire and influence employee attitudes and contribute to decision-making processes. Going concern assumption In accordance with Section 3-3 of the Norwegian Accounting Act, it is hereby confirmed that the accounts have been prepared on the basis of a going concern assumption. Corporate governance Agasti Holding ASA has one share class, in which each share entitles the holder to one vote at the company s general meeting. During 2012, the Board of Directors of Agasti Holding ASA has not used the authorisation granted at the general meeting of 23 May 2012 to issue new shares and to purchase the company s own shares. In 2012, the Board of Directors of Agasti Holding ASA adopted a new incentive scheme for selected managers in the group. The scheme is part of a long-term incentive scheme for Agasti managers, which will contribute to creating positive results and attracting new employees as well as retaining existing employees. At the time of the approval of the annual accounts, a total of 10,736 million stock options are outstanding, of which employees in leading positions hold 6,911 million stock options. The allocation is in accordance with the authorisation granted by the annual general meetings on 6 May 2009, 11 May 2010, 25 May 2011 and 23 May All subsidiaries are wholly owned and as such there are no conflicts of interest with any minority shareholders. In August 2012 the Group entered into an exclusive strategic alliance with Wunderlich Investment Company, Inc., in which the CEO of Agasti Holding ASA, Alfred Ydstebø, has a controlling interest. In order to strengthen the alliance, USD 2.5 million was invested in the form of a convertible bond. In February 2013, through its wholly owned subsidiary Agasti Capital Markets AS, Agasti Holding ASA acquired 100 percent of the shares in Wunderlich Securities AS. An agreement to purchase the first 50 percent was entered into in August This company was also controlled by Alfred Ydstebø. Beyond this, there have been no material transactions between the company and shareholders, the Board of Directors or management. Potential conflicts of interest between the Board of Directors and these groups are dealt with by the Board of Directors and the Board of Directors has been committed to following the rules on impartiality and good corporate governance. The Board of Directors of Agasti Holding ASA complies with the current Norwegian Code of Practice for Corporate Governance at any given time. The Board of Directors has provided an account of Corporate Governance in the Agasti Group in a separate chapter of the annual report. This account is also available at The Accounting Act Section 3-3b, Sub-section 2 (statement on corporate governance) The statement on corporate governance also explains how the Accounting Act Section 3-3b, Subsection 2 is covered in the Agasti Group. Information on working environment, equal opportunities and impact on the external environment At the end of 2012, the Group had 213 employees, of whom 205 worked full-time. At the end of the year, 141 were employed in the Norwegian operations and 72 in the Swedish operations. A total of seven persons were employed in substitute and temporary positions. Agasti Holding ASA had four employees at the end of the year. 45

46 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel The Board of Directors regards the working environment in Agasti as good. The Agasti Group is characterised by highly qualified employees with a positive attitude and low sickness absenteeism. Sickness absenteeism for the financial year totalled 10,624 hours, which corresponds to approximately 2.2 percent of the total working hours, compared with 2.7 percent in Agasti has not had any reported injuries, property damage or accidents of any significance in The nature of the Group s activities is such that they have a very minor direct impact on the external environment. Agasti has the goal of ensuring diversity in the Group, and shall recruit, develop and maintain the best employees, independent of gender, age, ethnicity or reduced functional ability. In certain job categories, the Agasti Group currently has a relatively uniformly composed group of employees. Agasti shall ensure diversity through steered recruitment processes, where priority is placed on professional qualifications and competencies for the given role, as well as greater variation in the Group s diversity. This will be an ongoing activity associated with the Agasti Group s recruitment processes. Individual departments have challenges in ensuring diversity among the qualified candidates. This is especially evident in administrative job categories in staffing and support functions. Here, the work to increase diversity will continue. Central processes linked to the payment of salaries, working conditions and personnel policy have been established. These are intended to ensure that employees can maintain a balance between their career and family life, and safeguard employees against harassment and discrimination. Agasti carries out annual employee surveys to identify challenges linked to employee satisfaction and personnel management, and the results for 2012 showed a marked improvement from 2011 despite the major changes the organisation has been through. The Board of Directors and management of Agasti place emphasis on equal opportunities between the genders and endeavour to facilitate this through its personnel policy in terms of salary, promotion and recruitment. However, Agasti has a clear gender division where men form the majority within management positions and positions within advisory services. Women have a similarly dominant position within staffing and support functions. Agasti has an equal salary principle, which states that there shall be equal basic pay for equal work. However, men have a higher average salary than women, since the majority of management employees are men, and advisors have a higher salary level on average than positions within staffing and support functions. Of the Group s 213 full-time employees, 116 were women and 152 were men. The company actively seeks women to take leading positions, including positions on the Board of Directors. At the end of 2012 the company s Board of Directors consisted of three women, including the Chairman of the Board and three men, including the Vice Chairman of the Board. In 2012 the Group carried out a comprehensive cost reduction programme, which led to a 20 percent reduction in the number of employees. In Sweden, four offices closed. In Norway, all advisory services were transferred from Acta Asset Management AS to Navigea Securities AS. The investment management unit underwent a demerger from Navigea Securities AS to Obligo Investment Management AS. In addition, during the first quarter of 2013 three business transfers were carried out in order to continue the work on further streamlining the business areas; respectively, that corporate finance and the broker desk in Navigea Securities AS are transferred to Agasti Wunderlich Capital Markets AS, that Custodian Services in Acta Asset Management AS are transferred to Navigea Securities AS, and that, in Sweden, we carry out a streamlining of insurance brokerage and customer services in Navexa Securities AB whilst Investment Advisory Services are about to be transferred to Navigea Securities AS Swedish branch. Comments on the annual accounts In the view of the Board of Directors and Chief Executive Officer, the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in equity and the consolidated cash flow statement, and the notes attached for the Group and the company income statement, the company balance sheet and the company cash flow statement with attached notes for Agasti Holding ASA, provide a full and fair account of the operations for the year and the financial position of the Group at the end of the year. No conditions have occurred after the end of the financial year that affect this assessment of the Group or company s results and financial position that are not presented in the Director s report or the annual accounts. 46

47 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel Revenues The Group s revenues totalled NOK 366 million in 2012, compared with 489 million in The reduction in relation to last year is mainly due to a significant reorganisation of the Group s business model following the decision of the Financial Supervisory Authority of Norway to revoke Acta Asset Management AS licences to operate investment services. Transaction revenues ended at NOK 29 million. The equivalent figures for 2011 were 130 million. The downturn in relation to 2011 was partly due to lower gross subscriptions for the Group s savings and investment products, which decreased from NOK 3,434 million in 2011 to NOK 1,681 million in The subscription volume was again negatively impacted as for large parts of the year, the Group s investment advisors were busy informing customers about the opportunities and benefits of entering into customer agreements with Navigea Securities AS, following the decision of the Financial Supervisory Authority of Norway to revoke Acta Asset Management AS licences. Transaction revenues are, and will continue to be affected by the fact that a majority of the Group s clients within the Wealth Management segment have chosen to hold their investments with the Agasti Group through advisory accounts, and are therefore only charged a fee based on their equity under management. Client equity under management have fallen from NOK 27 billion at the beginning of the year to NOK 24 billion as at 31 December The reduction is primarily due to the fact that several of the Group s Wealth Management clients have chosen to end their client relationships following the decision of the Financial Supervisory Authority of Norway to revoke Acta Asset Management AS licences. The largest and most satisfied clients, representing over 90 percent of the equity under management, have throughout the year chosen to enter into new client agreements with Navigea Securities AS. Recurring revenues ended at NOK 337 million in 2012, which is a reduction of NOK 22 million from NOK 359 million in The reduction in recurring revenues throughout the year is a result of the fact that client funds under management have been reduced from NOK 27 billion to NOK 24 billion and that the price is set down on Advisor accounts. The Agasti Group has a strong focus on building long-term recurring revenues, making the business model very robust. In 2012, recurring revenues covered 93 percent of the fixed and activity-based costs compared with 78 percent in Agasti Holding ASA does not have external operational activities of its own and only had revenues of NOK 13 million from internal service provision in the Group. Earnings The Agasti Group s operating income ended at NOK 56 million in 2012, compared with NOK -71 million in The result after tax was NOK -54 million. The equivalent figures for 2011 were NOK -72 million. The improvement in the result was primarily due to a sharp reduction in the Group s operating costs, partially offset by lower operating revenues. The operating expenses are affected by significant provisions made in connection with the restructuring of the Agasti Group. In 2012, variable and activity based costs ended at NOK 38 million and NOK 88 million respectively, which is a total reduction of NOK 105 million compared with the corresponding figures for Fixed contractual costs ended at NOK 272 million in 2011, which is a reduction of NOK 29 million compared with The reduction in the Group s costs is a result of the cost reduction programme which was introduced in February 2012 and gained full effect from the third quarter of the same year. The Group s tax expenses for the year are six million NOK compared with four million NOK in Effective tax rate is 10.2 percent for The equivalent figure for 2011 was 5.5 percent. The parent company, Agasti Holding ASA had operating earnings of NOK 8 million, compared with NOK 11 million the year before. The company had a net income of NOK 32 million compared with NOK 89 million the year before. The net income includes Group contributions received from the operational subsidiaries of NOK 22 million, affected by the write-down of shares in subsidiaries at a total of NOK 44 million. The Board of Directors and Chief Executive Officer expect that the Group s strong focus on cost control combined with various strategic initiatives will improve results in the future. 47

48 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel Balance sheet The Group s total capital at the end of 2012 was NOK 339 million compared with NOK 490 million at the end of The change reflects the Group s earnings and equity, reduction in current liabilities, as well as a reduction in the Group s provisions as commented on earlier in the report. The consolidated equity in Agasti at the end of the year was NOK 184 million, which represents an equity ratio of 54.5 percent. The equivalent figures for 2011 were NOK 235 million and 48.0 percent respectively. Cash flow and liquidity In 2012 the Group had a negative cash flow from operational activities of NOK 142 million. The discrepancy between the operating income and cash flow can mainly be ascribed to kickbacks paid to clients, as well as the cash effect of actual restructuring costs, compensation to clients and other provisions from Cash flow from investing activities was negative at NOK 49 million, from investing in fixed assets, as well as investing in financial assets. Cash flow from investment activities was nil. Liquidity at the start of the year was good, and is still satisfactory at year-end. Net liquid funds for the Group at the end of 2012 are NOK 114 million. In addition, the Group had unused overdraft entitlements totalling NOK 9 million. The Group expects a continued acceptable liquidity situation in Segment information Throughout the entire year, the Agasti Group has reported on the Wealth Management, Markets and Other segments. Wealth Management This segment includes the Group s investment advisory activities and brokerage activities in addition to corresponding support functions. Throughout 2012, Acta Asset Management AS, Navexa Securities AB and Navigea Securities AS have been responsible for the Group s operations linked to investment advisory and brokerage services. As a result of the Financial Supervisory Authority of Norway s decision to revoke Acta Asset Management AS licences to continue its operations, all clients were contacted and offered the opportunity to enter into a new client agreement with associated company Navigea Securities AS. Clients representing over 90 percent of the equity under management chose to continue their client relationship with the Agasti Group. Many of the Group s smaller clients chose to leave Agasti to the benefit of market participants that specialise within this client segment. Throughout the year, the Agasti Group has maintained its strong position within the market for savings and investment solutions. The Group has a well-established distribution apparatus in both Norway and Sweden consisting of advisory offices, in addition to investment centres for order processing, investment brokerage and customer service. At year-end, the Agasti Group had 43,000 clients in Norway and Sweden within this segment. The Agasti Group s business model within Wealth Management involves focusing on offering an increased level of service to the largest clients, while smaller clients will be offered adequate and efficient service through investment centres. The operating revenues in the segment totalled NOK 267 million in The equivalent figure for 2011 was NOK 333 million. The year s operating income totalled NOK -59 million compared with NOK -67 million in The improvement of NOK 8 million was due to a reduction in operating expenses, which partially made up for a reduction in transaction revenues and recurring revenues. The Agasti Group s clients within Wealth Management have the opportunity to choose to hold their investments in Advisor accounts or Order accounts. Advisor account, with only fixed fees based on customer equity invested through the Agasti Group, is an alternative to the traditional transaction-based fee structure. At the end of December 2012, around 8,000 clients had approximately NOK 9 billion invested through Advisor accounts. Gross subscriptions in savings and investment products offered by the Agasti Group ended at NOK 1,681 million, which is NOK 1,753 lower than in Since a significant proportion of clients investments are held in different variants of the Advisor account, and that here clients do not pay transaction fees, revenues in the short term will be affected by new sales to a lesser extent. Subscriptions to new investments are however important, since the Group will, in virtually all new sales, be entitled to receive recurring revenues on the investments in the future. 48

49 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel Markets This segment includes the Group s activities within Capital Markets and Investment Management. The companies Navigea Securities AS, Agasti Capital Markets AS and Obligo Investment Management have had responsibility for the Group s operations within Markets in From the fourth quarter of 2012 all activities relating to Investment Management in the Group will be conducted out by the company Obligo Investment Management AS. This company focuses solely on investment management, investor relations and business operations, in order to secure and improve the cash flow to both the Group s clients and the Group. Obligo Investment Management AS has strengthened its team of employees considerably during the latter half of 2012, and has strong ambitions to take on more investment mandates, both internal and external. With effect from January 2013, Obligo Investment Management AS has taken over the management of all structures that clients of the Agasti Group have invested in within real estate, shipping, private equity, infrastructure and renewable energy. These transactions have strengthened the Group considerably with increased annual recurring revenues of approximately 10 percent in In August 2012, Agasti Capital Markets entered into an agreement to purchase 50 percent of Wunderlich Securities AS, with the purchase of the remaining 50 percent in February Wunderlich Securities AS, now called Agasti Wunderlich Capital Markets AS, has a solid position within the real estate, energy and private equity sectors. These are business areas and areas of expertise that fit very well into the Agasti Group s strategic business model. Operational revenues was NOK 99 million in 2012 compared with NOK 156 million in The operating income ended at NOK 31 million, compared with 105 million in Activities in the Markets segment will be further developed in the times ahead, and therefore be well equipped to take on new responsibilities within product development, administration of investment portfolios and corporate finance in the future. Other Under the Other activities segment, Group administration and Group internal administrative services within finance and economy, personnel, IT, communications and markets are reported on, in addition to costs relating to the operation of Acta Kapitalforvaltning AS. A significant proportion of the IT operations is contracted out to external partners. Other normally has no external income, but covers costs through providing services to other segments through internal service agreements, entered into under arm s length conditions. The total operating income for the segment was NOK -28 million, compared with NOK -109 million the previous year. The major improvement from the previous year can mainly be explained by the fact that 2011 figures were heavily influenced by non-recurring items, provisions and write-downs mainly related to strategic projects and increased provisions at year-end in order to be able to meet potential future claims from clients. Regulatory and legal matters As previously mentioned, in April 2012 the Financial Supervisory Authority of Norway decided to revoke the subsidiary, Acta Asset Management AS licences to operate investment services. The Board of Directors of Acta Asset Management AS disagrees with the decision and has therefore appealed the decision to the Norwegian Ministry of Finance. Just under 450 dissatisfied investors, who during the years 2006 and 2007 invested in bonds issued by Lehman Brothers, and which were distributed by Acta Kapitalforvaltning AS, a subsidiary of Agasti Holding ASA, have brought legal action against Acta Kapitalforvaltning AS. The investors dispute the obligation to repay the loans to the bank, and have also turned to Acta Kapitalforvaltning AS as advisor to claim coverage for any loan that is not covered by the bank, and in certain cases, lost equity. Acta Kapitalforvaltning AS considers the risk linked to these actions to be relatively limited, since the company is only responsible for the advisory service, and this is provided on an individual basis. This assessment is also supported by the Swedish National Board for Consumer Complaints (ARN), which in March 2010 reached the principle decision that Acta Kapitalforvaltning AS is not liable towards investors due 49

50 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel to inexpedient advice in connection with the bankruptcy of Lehman Brothers. Acta Kapitalforvaltning AS expects that the court will come to the same conclusion as the ARN. The legal actions that have now been brought against Acta Kapitalforvaltning AS do however, involve a certain level of risk, both economically and in terms of reputation, since the company may be responsible for errors or omissions in the advice in certain cases, something which the ARN has also maintained. Economically, the maximum exposure is estimated to be around SEK 168 million provided that all the plaintiffs win their claims, and that lost equity must also be compensated. Any legal costs and accrued interest will be in addition. Acta Kapitalforvaltning AS disputes the claims. Regarding reputational damage, much of this has already occurred, in that the case has circulated in the media since September In January 2009, the Norwegian Financial Services Complaints Board (Finansklagenemnda) announced its ruling on a complaint against a major Norwegian bank s sale of two leveraged structured products. The Board s decision was not unanimous. Three of the five members voted in favour of the complainant. Immediately after the verdict was announced, the bank stated that it would comply with the decision of the Board. In the winter, the Norwegian Supreme Court took up the matter and a decision is expected to be announced in the spring. Acta Kapitalforvaltning AS notes that the matter is related to two specific products from a particular bank. Acta Kapitalforvaltning AS deems that a comparison with all structured products is not justified. Acta Kapitalforvaltning AS believes that the risk of a group action lawsuit from customers who have chosen to invest in similar products distributed by the company and which may result in major losses are relatively limited. Unlike the bank, which has been the customer s financial advisor, lender, producer and organiser, Acta Kapitalforvaltning AS has only been responsible for financial advice in relation to its customers. Acta Kapital forvaltning AS admits liability for the advice given. The risk of a group action is also considered to be relatively limited because of the fact that all advice is given on an individual basis. In August 2012 Agasti Holding ASA acquired the Swedish provider of savings and investment services, H&P Fondförvaltning AB. The acquisition was subject to approval from the Swedish Financial Supervisory Authority. The Swedish FSA has now declined Agasti Holding s application to acquire H&P Fondförvaltning AB. Agasti Holding ASA disagrees with the decision made by the Swedish FSA and has therefore appealed the decision. An acquisition of H&P Fondförvaltning AB is not essential for the development of our Swedish operations. Capital adequacy requirements Agasti Holding ASA is subject to capital adequacy requirements on a consolidated basis, cf. the Securities Trading Act Consolidated requirements for subordinated capital as at 31 December 2012 are estimated based on the highest of the requirements for securities companies, plus cover for credit risk calculated based on the Group s combined assets. Net equity and subordinated capital is estimated as NOK 91 million and shows a surplus of NOK 38 million with regard to the authorities requirements of 8 percent of the calculation basis. As previously reported, Acta Asset Management AS has received a letter from the Financial Supervisory Authority of Norway revoking the company s licences. The Board of Directors of Acta Asset Management AS has appealed the decision. The Group s consolidated requirement for subordinated capital will to a certain extent be affected by the final outcome of this case. On the basis of the rules on major interests derived from subordinated capital, restrictions exist regarding the opportunity to transfer funds between companies in the Group. Risk assessment The Board of Directors has carried out a review of the risk management in the Agasti Group. The Board of Directors and CEO consider the most significant risks for the Agasti Group s operations to be a possible failure in the advisory processes where recommended investment solutions do not match the requirements and suitability of the client. Product selection processes where there is the possibility of a failure in the quality control of fund managers will also represent a risk for the Group. An increase in the number of client complaints in general and particularly the legal processes regarding products containing bonds issued by Lehman Brothers is also one of the most significant risk factors for the Group. The total number of complaints about the advice that have been made since the introduction of new and stricter requirements for the advisory process is extremely low. The majority of the complaints that the Group has received date from the period before the MiFID directive came into force in November

51 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel Strategic risk A decline in the demand for products offered by the Agasti Group represents a strategic risk factor for the Group. The same is true of a decline in revenues in the form of lower margins than desired. The Agasti Group has implemented action plans to counteract the negative effects of these risks. Furthermore, the failure of the business model itself, whereby financial profits are not achieved, is a risk that must be classified as strategic. The failure of routines and other conditions of a serious nature at our most important business partners, as well as the risk that the Agasti Group is unable to comply with the regulatory requirements that apply to the Group at any given time, will also be important strategic risk factors. The Agasti Group has detailed these risks in an analysis and implemented measures. The Group considers the strategic risk factors to be manageable. Operational risk Failures in the most central processes in the Group represent an operational risk. Errors in the advice we give to clients, transaction errors, products that do not perform as expected as well as errors and failures in computer systems used in the Group are all examples of operational risk. The Agasti Group and its subsidiaries have carried out these risk assessments and implemented measures to ensure that this risk is as minimal as possible. Financial risk The Agasti Group has low exposure to financial instruments. The Group s liquidity is held in the form of bank deposits and/or treasury bills with short terms and very low exchange rate risk. At the end of 2012, the Group has limited interest-bearing liabilities and therefore has relatively low interest rate risk related to borrowed capital. The financial market risk is otherwise mainly limited to future income being affected by changes in market prices of the company s products, as well as general market fluctuations. A persistent negative trend in the savings and investment market in general may result in dissatisfied customers because of poor returns on their invested capital. Such a development may result in a risk of reduced business transactions with existing clients. Future portfolio income will vary with fluctuations in market prices of the client portfolios being managed. The currency risk in the Agasti Group is mainly linked to a significant part of the company s business operations being located in Sweden. On the basis of the development and expectations in the currency and interest markets, the Board has assessed the currency risk as moderate, and has no plans regarding currency hedging at the present time. As at , Agasti Holding ASA had outstanding guarantees for around NOK 8 million, in addition to unconditional guarantees for individual tenancy agreements entered into by the subsidiaries. The rental guarantees have a remaining duration of between one to five years. Outstanding guarantees beyond unconditional guarantees for tenancy agreements are related to an unconditional loan guarantee for 50% of a loan with a nominal value of NOK 15 million provided by a third party. On 31 December 2012, the remaining loan constituted NOK 16.8 million, including accrued interest. Based on an overall assessment, Agasti Holding ASA has allocated NOK 5.1 million to cover any losses resulting from the guarantee. The provision is equivalent to 60 percent of the expected payment under the guarantee. The risk that a customer or other counterparty does not have the economic ability to fulfil their obligations is regarded as relatively low. The total receivables and accrued income constitutes NOK 56 million as at Historically, losses on receivables have been low. Events after balance sheet date Via its wholly owned subsidiary, Obligo Investment Management AS, Agasti Holding ASA has taken over the management of all structures that clients of the Agasti Group have invested in within private equity, infrastructure and renewable energy. In November 2012, with effect from January 2013, an agreement was entered into with ABG Sundal Collier Norge ASA on the management of all our clients investments within property and shipping. The latter also included a buyout of the companies ABG Sundal Collier Real Estate AS and ABG Sundal Collier Real Estate Inc. In January 2013, the Swedish FSA informed Agasti Holding ASA that the company s application to acquire the Swedish provider of savings and investment services, H&P Fondförvaltning AB, was denied. Agasti Holding ASA has appealed the decision. 51

52 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report tittel In February 2013, through its wholly owned subsidiary Agasti Capital Markets AS, Agasti Holding ASA acquired 100 percent of the shares in Wunderlich Securities AS. An agreement was reached on acquisition of the first 50 percent in August Parts of the settlement were conducted through a private placement in which the sellers signed up for 3,500,00 shares at a rate of Future prospects The acquisition of the two investment management companies from ABG Sundal Collier Norge ASA, in combination with the takeover of certain investment management mandates from Swedbank First, makes the Agasti Group, through its subsidiary Obligo Investment Management AS, an even stronger player in the Nordic market for investment management services. With more than NOK 51 billion in equity and liabilities under management, of which the majority is in alternative investments, the Agasti Group has the best starting point from which to further consolidate its market position in these areas. The Agasti Group now has a robust and knowledge-driven management platform that will contribute to improving the cash flow from our clients alternative investments with the Group. Going forward, the ambition is to take on more mandates, both internal and external. The acquisition of Wunderlich Securities AS, now Agasti Wunderlich Capital Markets AS, combined with the strategic alliance with Wunderlich Investment Company, Inc. in the USA, means that the Agasti Group possesses one of the industry s most experienced and qualified teams within real estate, private equity, shipping and energy and oil services. Assets under management is estimated to increase by approximately NOK 1.2 billion due to this transaction. The acquisition of the companies from ABG Sundal Collier Norge ASA, the takeover of investment management mandates from Swedbank First and the acquisition of Wunderlich Securities AS, are all in line with previously stated aims to strengthen the Group s presence in the Investment Management and Capital Markets business areas. These transactions will contribute both in the short and long term, to considerably improving the Group s competitive edge and offering to clients. The Agasti Group will continue to develop the Investment Management and Capital Markets business areas. Agasti will actively use the strategic alliance with Wunderlich Investment Company, Inc. in the USA to attract new business, both in the Nordic market and the US market. The strengthening of the Markets segment, combined with further development of the Wealth Management segment, will also increase the Agasti Group s competitive edge as a full service provider of financial investment services with top-level expertise at every stage of the value chain. The Board of Directors and the CEO expect a good long-term market for savings and investment solutions offered by companies in the Agasti Group. As one of the dominating market participants in Scandinavia, and with Europe s most attractive clients in our catchment area, we have a solid basis for profitable operation both in the medium and long-term. Profitability There is a healthy cost control across the entire Group, and the Board will continue to focus on this in the future. As the situation looks today, combined with strategic initiatives within Investment Management and Capital Markets, this will ensure profitable operations in Statements relating to assessments of future conditions will always be associated with a significant degree of uncertainty and risk. All statements, excluding those of a historical nature, must therefore not be understood as any form of guarantee or security regarding future development. Dividends The Board of Directors of Agasti Holding ASA has proposed that dividends shall not be paid for the financial year

53 THE AGASTI GROUP AND AGASTI HOLDING ASA - Directors report Distribution and transfers Agasti Holding ASA The Board of Directors proposes that the net income of NOK 31,875,000 for 2012 should be distributed as follows: All amounts in thousands of NOK Transferred from other reserves Dividends 0 Total transfers As at 31 December 2012, NOK 87,496,000 was available as free capital in Agasti Holding ASA. Oslo, 19 March 2013 Merete Haugli stein Aukner ole Peter Lorentzen Chairman of the Board Vice Chairman of the Board Board Member Pia Gideon sissel Knutsen Hegdal erling Meinich-Bache Board Member Board Member Board Member Alfred Ydstebø CEO 53

54 Consolidated statement of comprehensive income - IFRS AGASTI GROUP STATEMENT OF COMPREHENSIVE INCOME - IFRS - AS of 31 DECEMBER 2012 All amounts in thousands of NOK Note Operating revenues Wages and salaries Depreciations 6, Write-downs 6, Other operating expenses Total operating expenses Operating earnings Financial income Financial expenses Net financial items Net income before taxes Income taxes NET INCOME Other revenues and expenses Currency translation differences Total Other revenues and expenses COMPREHENSIVE INCOME OF THE YEAR Earnings per share Earnings per share - diluted Effective tax rate 10.2% -5.5% 54

55 Consolidated statement on financial position - IFRS AGASTI GROUP STATEMENT OF FINANCIAL POSITION (BALANCE) - IFRS - AS of 31 DECEMBER 2012 All amounts in thousands of NOK Note assets Non-current assets Goodwill Other intangible assets Deferred tax assets Fixed assets Other financial assets Total assets Current assets Other financial assets Current receivables Bank deposits Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Share premium reserve Other paid-in equity Total paid-in equity Other equity Total retained earnings Total equity Liabilities Accounts payable Liabilities to credit institutions Tax payable Taxes and public fees payable Provisions and other current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES % 48.0% 55

56 Consolidated statement of changes in equity - IFRS AGASTI GROUP STATEMENT OF CHANGES IN EQUITY - IFRS - AS of 31 DECEMBER 2012 All amounts in thousands of NOK Share capital Share premium account Conversion Other paid difference 1) in Equity Losses/ Other equity Equity capital Balance as per 01 January Dividends Net income Conversion difference Profit for the year Deposits from and payments to owners Purchase of own shares Sales of own shares Stock option programme Balance as per 31 December Balance as per 01 January Net income Conversion difference Profit for the year Deposits from and payments to owners Stock option programme Balance as per 31 December ) The translation difference is attributed to the translation of the assets and liabilities of Acta Kapitalforvaltning AS branch, Acta Finans AB, Acta Asset Management AS and Navigea Securities AS operations in Sweden from SEK to NOK. 56

57 Consolidated statement of cash flow - IFRS AGASTI GROUP STATEMENT OF CASH FLOW - IFRS - AS of 31 DECEMBER 2012 All amounts in thousands of NOK Note OPERATING ACTIVITIES Net income before tax expenses Taxes paid in reporting period Depreciations/Write-downs 6, Write-downs of financial assets Stock options charged against income Change in current receivables Change in accounts payable Change in other accruals Net cash flow from operating activities INVESTING ACTIVITIES Payments for acquisition of fixed assets 6, Payments in connection with investment in convertible bonds Payments for acquisition of other financial assets Net cash flow from investing activities FINANCING ACTIVITIES Payment of dividends Purchase of own shares Sales of own shares Net cash flow from financing activities Net change in bank deposits, short-term investments, etc Bank deposits, short-term investments, etc. as per Bank deposits, short-term investments, bank overdrafts etc. as per Unused overdraft facilities Bank deposits and investments Overdraft facilities Net bank deposits, bank overdrafts etc. as per

58 Contents - NOTES ON THE CONSOLIDATED ACCOUNTS - ifrs Contents notes Group Note 1 Accounting principles 59 Note 2 Segment information 65 Note 3 Salary costs, total employees, remuneration, loans to employees, etc 67 Note 4 Combined items in the income statement 71 Note 5 Financial instruments 71 Note 6 Goodwill and other intangible assets 73 Note 7 Fixed assets 74 Note 8 Shares in subsidiaries 75 Note 9 Share capital and shareholder information 76 Note 10 Dividends 78 Note 11 Current receivables 78 Note 12 Financial assets Marketable securities 78 Note 13 Provisions and other current liabilities 78 Note 14 Income taxes 80 Note 15 Related parties 81 Note 16 Financial risk 82 Note 17 Subordinated capital Agasti Group 83 Note 18 Assets pledged as collateral and guarantees 83 Note 19 Exit liability for long-term unit-linked savings schemes in Sweden 84 Note 20 Events after balance sheet date 84 58

59 NOTES ON THE CONSOLIDATED ACCOUNTS NOTES ON THE CONSOLIDATED ACCOUNTS Note 1 Accounting principles 1.1 Basis for preparation of consolidated accounts The consolidated accounts are presented in accordance with International Financial Reporting Standards (IFRS) and interpretations from the International Accounting Standards Board (IASB), which are approved by the EU as of 31 December The annual accounts consist of the Agasti Group s income statement, balance sheet, consolidated changes in equity, cash flow and notes. The annual accounts constitute a whole and are prepared using the historical cost principle, with the exception of financial instruments, which are entered at fair value through profit or loss and financial instruments available for sale are entered at fair value. The head office of Agasti Holding ASA has the address P.O.Box 1753 Vika, 0122 Oslo, Norway. The annual accounts were submitted by the Board on 19 March The accounting principles described below are used consistently for all the periods presented in the consolidated accounts. 1.2 Consolidation principles The consolidated accounts include the parent company Agasti Holding ASA and the companies that Agasti Holding ASA controls. Such control exists when the parent company has a decisive direct or indirect influence on the financial and operational management of the subsidiaries, and thereby benefits from their activities. In the assessment of control, the potential voting rights that may be immediately exercised or converted are taken into account. The financial accounts of the subsidiaries are included in the consolidated accounts from the point at which control is achieved and until its cessation. Companies that are included in the consolidation are listed in note 8. Intercompany accounts and any unrealised gains and losses or revenue and expenses arising from transactions within the Group, are eliminated during the preparation of the consolidated accounts. The consolidated accounts have been drawn up on the basis of uniform principles by applying the same accounting principles in the subsidiaries as in the parent company. Shares in subsidiaries are eliminated. 1.3 Critical accounting estimates and judgements The preparation of the consolidated accounts includes that the management makes estimates and judgements and assumptions that have an impact upon the effect of the application of the accounting principles. This will therefore affect the entered amounts for assets and liabilities, income and costs. Estimates and judgements are continually evaluated and are based on historical experience and various other factors, including expectations of future events, which are believed to be reasonable on the balance sheet date. Changes in accounting estimates are entered in the period in which the estimates are changed, and in all future periods that are affected. Share-based payment/share options When valuing options, there is uncertainty linked to the estimation of the assumption of risk free interest rate at the time of redemption. See Note 3. Estimated impairment of Goodwill See Note 6 for information about goodwill. Goodwill constituted less than 3 percent of the Group s balance sheet at the end of Fair value of financial instruments Fair value of financial instruments that are not traded in an active market is determined using various valuation techniques. The Group evaluates and selects methods and assumptions that, wherever possible, are based on the market conditions on the balance sheet date. In valuing financial instruments for which observable data is not available, the Group will make assumptions about what the market will use as the basis for the valuation of similar financial instruments. The valuations require a high level of discretion in the calculation of liquidity risk, credit risk and volatility. A change in the mentioned factors can affect the determined fair value of the Group s financial instruments. See also Note 5 Financial instruments. 59

60 NOTES ON THE CONSOLIDATED ACCOUNTS Income tax, including deferred tax assets The Group is subject to income taxes within Norway and Sweden. Significant judgement is required in determining income tax in the consolidated accounts, including assessments of the recognition of deferred tax assets. The Group recognises deferred tax assets with the amount likely to be utilised against future taxable income. Comprehensive assessments must be carried out in order to determine the amount that can be recognised, including the expected date of utilisation and the level of positive tax results, as well as tax planning strategies and the existence of taxable temporary differences. Contingencies As a consequence of the operations in Norway and Sweden, the Agasti Group will regularly be part in a number of legal disputes. Any effects on the accounts are assessed in each individual instance. The Group evaluates, among other things, the likelihood of an unfavourable outcome. See Note 13 Provisions and other current liabilities Exit liability for long-term unit-linked savings schemes The calculation of exit liability for long-term unit-linked savings schemes is partly based on expectations, partly on experience, on the insurance client s willingness and ability to pay the periodic premium amount in accordance with the insurance/ savings agreement entered into, and how this changes over time. The calculation requires extensive use of judgement and the historical exit value may be affected by, among other things, changes in market conditions, changes in taxation rules and other framework conditions. See Note Currency Transactions in foreign currency are converted using the exchange rate in effect at the time of the transaction. Monetary assets and liabilities in foreign currency are converted to Norwegian kroner by using the exchange rate on the balance sheet date. The exchange rate difference as a result of conversion is included in the income statement. Non-monetary assets and liabilities that are measured at historical cost in foreign currency are converted at the exchange rate at the time of the transaction. Non-monetary assets and liabilities with a nominal value in foreign currencies, which are stated at fair value, are translated into Norwegian kroner by using the exchange rate in effect on the date the fair value was determined. 1.5 Conversion of foreign units The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from consolidation, are translated into Norwegian kroner at the foreign exchange rates in effect on the balance sheet date. The revenues and expenses of foreign operations are translated into Norwegian kroner at rates approximating the foreign exchange rates in effect on the dates of the transactions. Foreign exchange differences arising from translation are specified as a translation difference in the equity. They are recognised in the profit and loss statement upon disposal of the foreign unit. 1.6 Revenue Income is entered in the accounts when it is earned. Entry of income normally occurs at the time of delivery for the sale of services. Commission earnings on subscriptions to funds, insurance (unit-linked), real estate shares, and shares in shipping, private equity, infrastructure and renewable energy companies are recognised when written agreements have been entered into with clients and clients payment of the agreed subscription amount and commission have been confirmed. Revenue from new subscriptions to structured products is recognised when binding agreements are entered into with clients. Insertion fees are recognised when the client adds new funds to the portfolio account. Recurring revenues and management fees are recognised on an on-going basis, based on estimated income. The estimate builds upon a calculated average of the portfolio with the fund provider, and the relevant commission rate according to the agreement. Consultancy and portfolio account fees are calculated on the basis of the client s holdings and recognised on an on-going basis. The fees for the syndication of real estate, shipping, private equity, infrastructure and renewable energy companies etc. are recognised when the fees are accrued according to agreements Performance-based fees are recognised at the time of liquidation of the portfolios. 60

61 NOTES ON THE CONSOLIDATED ACCOUNTS The structure margin from structured products is recognised when underlying security instruments are traded and margins are finally determined. Dividends are recognised when the right to receive payment is determined. Interest income and other financial income is recognised when earned. 1.7 Expenses Expenses are generally accrued in line with receipt of goods and services. Commission-based remuneration to advisors is recognised when a payment commitment arises in accordance with agreements and it is probable that the remuneration will be paid. Interest income and other financial income is recognised when earned. 1.8 Provisions A provision is entered when the Group has a liability as a result of a previous incident, where it is probable that an economic settlement will occur as a result of this liability and the amount s size can be reliably measured. If the effect is significant, the provision is calculated by discounting the expected future cash flow with a discount rate before tax, which reflects the market s price setting of the time value of money and, if relevant, risks specifically linked to the liability. Restructuring provisions are entered when the Group has approved a detailed and formal restructuring plan, and the restructuring has either started or been announced. 1.9 Defined contribution pension schemes Obligations for contributions to defined contribution pension schemes are entered as expenses in the income statement when incurred Share-based payment transactions Employee stock options are measured at fair value at the time of distribution. The stock options are valued according to the Black & Scholes model. The calculated value is recognised as personnel costs, with a corresponding entry in other paid-in equity. The cost is divided over the period until the employees become unconditionally entitled to the stock options Main rules for valuation and classification of assets and liabilities Assets that are expected to be realised in the Group s ordinary operating cycle or within twelve months after the balance sheet date, and assets in the form of cash or cash equivalents, are classified as current assets. All other assets are classified as fixed assets. Liabilities that are expected to be settled in the Group s normal operating cycle, which fall due for settlement within twelve months after the balance sheet date, or where the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date, are classified as current liabilities. All other assets are classified as non-current liabilities Fixed assets Fixed assets are entered at cost price with deductions for accumulated depreciations and write-downs. Fixed assets are depreciated linearly over the asset s expected lifetime, taking into account any residual value. The estimated economic lifetime is as follows: Machines and equipment 3-5 years Fixtures and fittings 4-7 years Leasehold improvements are classified as fixed assets and included in fixed assets in the balance sheet. Leasehold improvements are depreciated over the lease s lifetime. Expenses incurred in replacing parts of property, plant and equipment are entered in the balance sheet as the value for an item of property, plant and equipment when such expenses are expected to give the company future economic benefits related to the replacements, and the costs for the replaced parts can be reliably measured. All other expenses are entered in the accounts in the period they are incurred. When parts of equipment have different economic lifetimes, they are entered in the accounts as separate parts. Residual value is reassessed annually if this is significant. The values of fixed assets entered in the balance sheet, which are depreciated, are tested for a reduction in value if indications of such exist. If an asset s entered value is higher than the asset s recoverable value, a loss of value is entered in the accounts. The recoverable value is the highest of the net sales value and the fixed asset s use value. Fixed assets are grouped and assessed at the lowest level for measurement of cash flow. If there is an identifiable need for write-down, the asset is valued at the lower of the value entered in the balance sheet and the recoverable value. 61

62 NOTES ON THE CONSOLIDATED ACCOUNTS 1.13 Intangible assets Intangible assets acquired separately are entered in the balance sheet at cost. The cost of intangible assets acquired through acquisitions is recorded in the balance sheet at fair value. Entered intangible assets are entered at cost, reduced for any depreciations and write-downs. Internally generated intangible assets, excluding development costs included in the balance sheet, are not included in the sheet, but expensed on an on-going basis. The economic lifetime is either definite or indefinite. Intangible assets with a definite lifetime are depreciated over the economic lifetime and tested for write-downs in the event of indications of such. The depreciation method and period is assessed at least once a year. Changes in the depreciation method or period are treated as estimated changes. Intangible assets with indefinite lifetimes are tested for write-downs at least once a year, either individually or as a part of a cash flow generating unit. Intangible assets with an indefinite lifetime are not depreciated. The lifetime is assessed annually, with consideration of whether the assumption of an indefinite lifetime is justifiable. If not, the change to definite lifetime is handled prospectively. Patents and licences Amounts paid for patents and licences are entered in the balance sheet and depreciated linearly over the expected useful life. The expected lifetime for patents and licences varies from five to ten years. Software Expenses linked to the purchase of new software are entered in the balance sheet as an intangible asset, if these expenses are not a part of the original hardware cost. Software is normally depreciated linearly over four to five years. Expenses incurred as a result of maintaining or upholding the future benefit of software are expensed if the changes in the software do not increase the future economic benefit of the software Business combinations Business combinations are entered in accordance with the purchase method. Transaction expenses are entered when they are incurred. The consideration of an acquisition is measured at fair value at the date of acquisition and consists of cash and issued shares in Agasti Holding ASA. In the event of acquisition of a company, all acquired assets and liabilities are assessed for classification and mapping in accordance with contract terms, economic circumstances and relevant conditions at the time of acquisition. Acquired assets and liabilities are entered in the balance sheet at fair value in the opening balance. Allocation of goodwill in the event of business combinations is changed if new information regarding fair value applicable on the date for takeover of control is obtained. The allocation can be changed up to 12 months after the date of acquisition. Minority interests are calculated at the minority s share of the identifiable assets and liabilities. Selection of the method used is carried out for each individual business combination. In the event of a step acquisition, previous ownership stakes are measured at fair value at the time of acquisition. Value changes on previous ownership stakes are entered in the profit or loss accounts. Goodwill is calculated as the sum of the consideration and the entered value of minority interests and the fair value of previously owned shares, with deductions for the net value of identifiable assets and liabilities calculated at the date of acquisition. Goodwill is not depreciated, but tested for a reduction in value at least once a year, or in the event of an indication of a reduction in value. In connection with an assessment of write-downs, goodwill is allocated to the cash flow generating units or groups of cash flow generating units that are expected to receive synergies from the business combination. The part of the equity s fair value that exceeds the consideration (negative goodwill) is posted as revenue immediately at the time of acquisition Financial instruments Loans, receivables and other liabilities are entered at amortised cost. Income and costs are calculated according to the internal rate of return method in the calculation of the engagement s internal rate. The internal rate is determined by discounting contractual cash flows within the expected duration. Amortised cost is the current value of such cash flows discounted by the internal rate of return Taxes Income tax on net income for the period consists of tax payable and change in deferred tax. Income tax is entered in the accounts with the exception of tax on items that are entered directly against the equity. The tax effect of the last mentioned items is entered directly against the equity. 62

63 NOTES ON THE CONSOLIDATED ACCOUNTS Tax payable constitutes the expected tax payable on the year s taxable income at applicable tax rates on the balance sheet date, and any corrections of tax payable for the previous year. Deferred tax is recognised using the balance sheet method, by taking into account the temporary differences between the value of assets entered in the balance sheets and the liabilities in the financial reporting of taxable values. Consideration is not given to temporary differences related to goodwill that are not tax deductible, the original entry of assets or liabilities that do not affect the accounting result or taxable income, as well as differences relating to investments in subsidiaries that are not expected to be reversed in the foreseeable future. The provision for deferred tax is based on expectations regarding the realisation of or settlement for the value of assets and liabilities entered in the balance sheet, and is calculated with the tax rates that apply on the balance sheet date. Deferred tax assets are only included to the extent that it is probable that the asset can be exploited through future taxable profits. Deferred tax assets are reduced to the extent that it is no longer probable that they will be realised Leasing agreements The Agasti Group s leasing agreements are entered in the accounts in accordance with the following rules: Operating leasing agreements Leases where the most significant risks and returns associated with ownership of the asset are not acquired by the Group are classified as operating lease agreements. Lease payments are classified as an operating expense, and are recognised linearly over the contract period Segment reporting The company has segment reporting based on business areas. This grouping coincides with the way in which the Group management receive reported figures and evaluate them. The accounting principles for segment reporting are the same as for the Group accounting in general. Transactions between segments are valued using the arm s length principle Events after balance sheet date New information after the balance sheet date, of the company s financial position at the balance sheet date, is included in the annual accounts. Events after the balance sheet date that do not affect the company s financial position at the balance sheet date, but which will affect the company s future financial position are disclosed if they are significant Changes in accounting principles and notes Changes in accounting principles: The accounting principles applied are consistent with those applied in the previous accounting period, except for the changes in IFRS, which have been implemented by the Group in the current accounting period. Below are listed the changes that have been relevant for the Group in the IFRS effective for the 2012 accounts, and the effect this has had on the consolidated annual accounts. The following new and amended accounting standards and interpretations were first applied in 2012: IFRS 7 Financial instruments information The change involves enhanced disclosure requirements for financial assets that have been transferred where the Group has a continuing involvement in connection with the transferred assets. The aim is to provide users with a better basis to understand the relationship between transferred financial assets that are not deducted in their entirety and the associated liabilities. Furthermore, the change involves providing information about the Group s continuing involvement in financial assets, which are derecognised in their entirety. This is so that users will be able to evaluate the nature and risks associated with the company s continuing involvement in derecognised financial assets. The changes have not had any impact on the consolidated accounts Implementation of IFRS The standards and interpretations adopted until the time of preparing the Group accounts, but where the effective date is in the future are specified below. The Group s intention is to implement the relevant changes on the effective date, provided that the EU approves the changes prior to preparation of the Group accounts. 63

64 NOTES ON THE CONSOLIDATED ACCOUNTS IAS 1 Presentation of financial statements The changes to IAS 1 require that the items in a statement of other comprehensive income (OCI) should be grouped in two categories. Items that may be reclassified to profit or loss at a future date (e.g. the net gain on securing of net investment, exchange differences on translation of foreign operation into the reporting currency, net change in cash flow security and net gains or losses on financial assets classified as available for sale) to be presented separately from items that will never be reclassified (e.g. actuarial gains and losses associated with defined benefit plans). The changes affect only the presentation and have no impact on the financial position or results. The changes are effective for the financial year commencing 1 July 2012 or later, and will be implemented in the Group s first annual report after implementation. IAS 28 Investment in Associates and Joint Ventures (unofficial translation) As a consequence of the new standards, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investment in Associates has changed its name to IAS 28 Investment in Associates and Joint Ventures, and now describes application of the equity method for investments in joint ventures in addition to associated companies. The changes apply for fiscal years starting on 01 January 2013 or later, but the EU has not approved the changes. No evaluation of the impact that the change will have on the Group s financial statements has been carried out at present. IFRS 7 Financial instruments information The changes mean that companies are required to provide information about offset rights and related agreements (e.g. collateral). The information will provide users of the accounts with useful information to evaluate the effect of offset agreements on the Group s financial position. The new notes are required for all recognised financial instruments that are presented net in accordance with IAS 32 Financial instruments presentation. The disclosure requirements also include recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, regardless of whether they are presented net in accordance with IAS 32. The changes will not affect the Group s financial position or results. The changes apply for fiscal years starting on 01 January 2013 or later, but have still not been EU approved. IFRS 9 Financial instruments IFRS 9, as it is published as of today, reflects the first phase of IASB s work on replacing the current IAS 39, and applies to classification and measurement of financial assets and liabilities as defined in IAS 39. Initially, the standard was to come into force for the financial year commencing 01 January 2013 or later, but changes in IFRS 9 adopted in December 2011, delayed the date on which the standard would come into effect to 01 January Later phases of this project are related to the accounting of hedging relationships and write-downs of financial assets. The Group will evaluate the potential effects of IFRS 9 in accordance with the other phases, as soon as the final standard including all phases is published. Changes in IFRS 10, IAS 27 and IFRS 12 relating to Investment Entities (unofficial translation) The changes in IFRS 10 mean that entities defined as investment entities shall no longer consolidate their subsidiaries. With one exception, an investment entity is required to consolidate a subsidiary where that subsidiary provides services that relate to the investment entity s investment activities Other investments in subsidiaries, joint ventures and associated companies will be recognised at fair value changes through profit or loss. Investment entities that are required to recognise all their subsidiaries at fair value with value changes through profit or loss in accordance with IFRS 10, present the separate financial statement as their only accounts. Note disclosure requirements have been extended. The changes come into force for fiscal years starting on 01 January 2014 or later, but the EU has not yet approved the changes. No evaluation of the impact that the change will have on the Group s financial statements has been carried out at present. IFRS 12 Disclosure of Interests in Other Entities (unofficial translation) (n/a) IFRS 12 applies for companies that have interests in subsidiaries, joint ventures, associated companies, or non-consolidated structured entities. IFRS 12 replaces the disclosure requirements that previously followed from IAS 27 Consolidated and separate financial statements, IAS 28 Investments in associates, and IAS 31 Interests in joint ventures. A number of new disclosure requirements have been introduced in addition. The changes do not affect the Group s financial position or results. IFRS 12 applies for fiscal years starting on 01 January 2013 or later. 64

65 NOTES ON THE CONSOLIDATED ACCOUNTS IFRS 13 Fair Value Measurement (unofficial translation) The standard provides principles and guidance for the measurement of fair value for assets and liabilities that standards require or allow to be measured at fair value. IFRS 13 applies for fiscal years starting on 01 January 2013 or later. The change will not have any significant effect on the Group s assets and liabilities. The Group expects to adopt IFRS 13 as of 01 January IAS 1 Presentation of financial statements The changes to IAS 1 entail a clarification of the difference between voluntary comparative figures and minimum requirements. Usually, presentation of a previous period s comparative figures will meet the minimum requirements. The changes do not affect the Group s financial position or results. The changes apply for fiscal years starting on 01 January 2013 or later, but the EU has not approved the changes. IAS 32 Financial instruments, Presentation The change entails a clarification of income tax derived from distributions to holders of equity instruments be entered in accordance with IAS 12. The changes are effective for the financial year starting on 01 January 2013 or later, but the EU has not approved the changes. No evaluation of the impact that the change will have on the Group s financial statements has been carried out at present. Note 2 Segment information Business-related segments IFRS 8 requires that the Group uses a management approach for the identification of the segments. The information reported is that which Agasti Holding ASA s management uses internally to evaluate the segments results and to decide how resources shall be allocated to the segments. For internal and external reporting purposes, the Group uses business-related segments. The Agasti Group currently carries out business subject to the Norwegian Securities Trading Act, with, among other things, distribution, advisory services, execution of orders, trading and settlement of investors portfolios of financial products in the Wealth Management segment. The Markets segment includes the Group s operations within corporate finance, institutional sales, product development, the organisation of projects, companies and structured products, as well as the administration of investment portfolios. The Group uses three cost groups: variable, activity based and fixed costs. These are further divided into costs linked to salaries and personnel, and other costs. Variable costs include costs that are closely related to sales income, as well as bonuses and other performance based remuneration of the Group s employees. Activity based salary and personnel costs are linked to recruitment, personnel development and other costs linked to personnel related activities. Other activity based operating expenses cover various market activities, client recruitment, travel, lawyer and consultant fees, and various costs that vary in relation to the Group s activity level. Fixed costs consist of fixed salaries for the Group s employees, rental of premises and equipment, auditor s fees, contractual IT costs, insurance and other costs related to agreements and that to a lesser degree vary with short-term fluctuations in the Group s activity level. The Group reports the net financial income for the segments, in line with internal reporting routines. Transaction related income is divided into two groups: income from mutual funds and insurance, and income from other investment products. Other investment products include among others property, shipping, infrastructure, private equity, renewable energy, hedge funds, index-linked bonds, and Portfolio account insertion fees. The Group changed the segment reporting during Business-related segments are more descriptive of the Group s activities than geographical segments. Under Other activities/ Eliminations, the Group administration and Group internal administrative services within finance and economy, personnel, IT, markets and compliance are reported on, in addition to costs relating to Acta Kapitalforvaltning AS. Other activities normally has no external income, but covers costs through providing services to other segments through internal service agreements, entered into under arm s length conditions. Financial information is given in the table below. 65

66 NOTES ON THE CONSOLIDATED ACCOUNTS Note 2 Segment information Wealth Management Markets Other activities/ Eliminations Group total All amounts in thousands of NOK Transaction revenues Fixed revenues Total operating revenues Variable salary and personnel expenses Other variable operating expenses Total variable expenses Activity-based salary and personnel expenses Other activity-based operating expenses Total activity-based expenses Fixed salary and personnel expenses Other fixed operating expenses Total fixed expenses Depreciations Write-downs Operating earnings Financial income Financial expenses Net financial items Income taxes Net income Effective tax rate 0% -3% 3% 29% 27% 27% 10% -5% Other information Segment assets Non-current assets Other financial assets Current receivables Bank deposits Total assets Segment liabilities Taxes and public fees payable Other current liabilities Total liabilities Investments in fixed assets Geographical areas Income statement Norway Sweden Other activities/ Eliminations Group total Total operating revenues Balances Total fixed assets

67 NOTES ON THE CONSOLIDATED ACCOUNTS tittel Note 3 Salary costs, total employees, remuneration, loans to employees, etc. All amounts in thousands of NOK Salaries Bonus/profit sharing Pension costs, defined contribution plans Estimated benefit options scheme National insurance contributions Other benefits Total Average total full-time equivalent positions Benefits paid to employees in leading positions: Contribution All amounts in thousands of NOK Period Salary based pension Bonus/ profit sharing Other benefits Alfred Ydstebø 1) CEO (from August 2012) Agasti Holding ASA Christian Tunge 3) Chief Financial Officer Agasti Holding ASA Jørgen Pleym Ulvness 1) CEO (from August 2012) Agasti Capital Markets AS 2011 Geir Inge Solberg 4) CEO (from June 2012) Obligo Investment Management AS Christian Kvist 5 ) 6) Acting CEO (from June 2011) Navexa Securities AB Ole Jørgen Jacobsen CEO (from April 2011) Navigea Securities AS Robert Bergerud CEO (from January 2011) Acta Kapitalforvaltning AS Stein Morten Bjelland CEO (from March 2012) Acta Asset Management AS Morten Flørenæss CEO Agasti Business Services AS ) Salaries 2012 etc. are shown for the period in which the employees have been in the post. 2) Chairman of the Board until August 2012 after which he was appointed CEO of Agasti Holding ASA. 3) Acting CEO from March to August ) CEO of Agasti Holding ASA until March CEO of Obligo Investment Management AS from June ) Amount converted from SEK to NOK using the exchange rates 86,425 in 2011 and 85,89 in ) Left the position in February Benefits to employees in leading positions The CEO s remuneration is determined by the Board s remuneration committee. The Board s remuneration committee sets guidelines for remuneration of other employees in senior positions, including fixed salaries and the principles for and scope of bonus schemes. Employees in leading positions have ordinary bonus agreements with annually fixed limits, and normally limited to between 40 and 200 percent of basic salary, depending on position. The estimated accrued bonus is expensed on an on-going basis. Some employees in senior positions receive severence pay during the notice period if dismissed without good reason as a result of large changes in tasks, e.g. due to takeover or fusion. 67

68 NOTES ON THE CONSOLIDATED ACCOUNTS Note 3 Salary costs, total employees, remuneration, loans to employees, etc. (continued) Employee in leading position Company Position Period of notice Pay after termination of employment Alfred Ydstebø Agasti Holding ASA CEO 6 months 12 months Christian Tunge Agasti Holding ASA CFO 6 months 12 months Jørgen Pleym Ulvness Agasti Capital Markets AS CEO 3 months 12 months Ole Jørgen Jacobsen Navigea Securities AS CEO 6 months 12 months Christian Kvist 1) Navexa Securities AB Acting CEO 6 months 6 months Geir Inge Solberg Obligo Investment Management AS CEO 6 months 12 months 1) Left the position in February 2013 Benefits to employees in leading positions (continued) The Agasti Group established a defined contribution scheme for all permanent employees in Norway and Sweden with effect from 1 January In Norway, the contribution rate for 2012 was four percent of fixed salaries between 1G and 6G and six percent of fixed salaries between 6G and 12G. In relation to the requirements regarding mandatory occupational pensions (OTP) that came into force on 1 July 2006, Agasti Group has a pension plan which exceeds the minimum requirement of two percent of salary over 1G up to 12G. In 2012, the contribution percentage for the employees in Sweden was five percent of fixed salary. In 2009, the Board of Agasti Holding ASA distributed share options to selected members of the Group s management group in accordance with an option programme launched in In 2009, it was decided to replace this option programme with a new one that covers all employees in the Group. In 2012, the board of directors of Agasti Holding ASA adopted a new incentive scheme for selected managers in the group. The scheme is part of a longterm incentive scheme for Agasti managers, which will contribute to creating positive results and attracting new employees as well as retaining existing employees. At the time of the approval of the annual accounts, a total of 10,736 million stock options are outstanding, of which employees in leading positions hold respectively 6,911 million stock options. The allocation is in accordance with the authorisation granted by the annual general meetings on 6 May 2009, 11 May 2010, 25 May 2011 and 23 May The options allocated in 2009 and 2010, which remained outstanding at the start of 2012, all became due during 2012 without any redemption taking place. The options allocated in 2011 with an expiry date in 2012 became due without redemption taking place. The strike price for the options was set to NOK 3.14 for the options granted in February 2011, NOK 3.66 for the options granted in May 2011, NOK 2.14 for the options granted in August 2011, NOK 1.50 for the options granted in November 2011, NOK 1.10 for the options granted in February 2012, NOK 1.33 for the options granted in August 2012 and NOK 1.58 for the options granted in November The strike price shall be reduced by the accumulated dividend paid in the period after the options have been awarded. No dividend was paid for the financial year The dividend for the financial year 2010 was set at NOK 0.10 per share at the Agasti Holding ASA general meeting. No dividend was paid for the financial year For the financial year 2012, the board of Agasti Holding ASA has proposed to the company s general meeting not to pay dividend to its shareholders. 1/3 of the stock options granted in February and May 2011 can be exercised by primary insiders and a specific group of other employees in 2013 and 1/3 in 2014, for both years, the options must be exercised within specified periods. 100% of the stock options granted to other employees in February 2011, May 2011, August 2011, November 2011 and February 2012 can be exercised within specified periods in 2013 and /3 of the stock options granted to selected managers in the Group in August and November 2012 can be exercised in 2013, 1/3 in 2014 and 1/3 in 2015, for all years the options must be exercised within specified periods. At the end of 2012, the share price was NOK As of 31 December 2012, Agasti Holding ASA had not issued any other financial instruments that may result in a demand for issuing of new shares other than the mentioned share options. 68

69 NOTES ON THE CONSOLIDATED ACCOUNTS Note 3 Salary costs, total employees, remuneration, loans to employees, etc. (continued) Benefits paid to Board members: All amounts in thousands of NOK Board members fees 1) Member of the Board Company Office Period Alfred Ydstebø 2) Agasti Holding ASA Chairman of the Board (until August ) Merete Haugli Agasti Holding ASA Chairman of the Board (from August 2012) Agasti Holding ASA Board Member (until August ) Stein Aukner Agasti Holding ASA Vice Chairman of the Board Acta Asset Management AS Board Member 200 Pia Gideon 3) 4) Agasti Holding ASA Board Member Navexa Securities AB Board Member Ole Peter Lorentzen Agasti Holding ASA Board Member Sissel Knutsen Hegdal Agasti Holding ASA Board Member (from June 2012) Erling Meinich-Bache Agasti Holding ASA Board Member (from June 2012) Agasti Capital Markets AS Board Member (from June 2012) Morten Bjørnsen Navigea Securities AS Chairman of the Board (from March ) Navexa Securities AB Chairman of the Board (from March ) Agasti Capital Markets AS Board Member (from August 2012) Geir Lie 5) Navigea Securities AS Board Member Fredrikke Aaeng 5) Navigea Securities AS Board Member Jörgen Rexö 3) Navexa Securities AB Board Member Harald Sig. Pedersen Acta Kapitalforvaltning AS Board Member (from July 2012) 100 Eirik Iversen Acta Kapitalforvaltning AS Board Member (from May 2012) 150 1) Board Members fees etc. are shown for the period in which the Board Member has held the office. 2) Chairman of the Board until August 2012 after which he was appointed CEO. 3) Amount converted from SEK to NOK using the exchange rates in 2011 and in ) Pia Gideon s Board remuneration from Navexa Securities AB includes remuneration received as a consultant. 5) Left the position in January Options Number VGIK1 Number VGIK1 Outstanding at the beginning of the year Awarded during the year Redeemed during the year Expired during the year Terminated during the year Outstanding at the end of the year Redeemable at the end of the year 0 0 1) Weighted average redemption price. Amount in NOK. The weighted average lifetime of outstanding stock options as of 31 December 2012 is 1.4 years. 69

70 NOTES ON THE CONSOLIDATED ACCOUNTS Note 3 Salary costs, total employees, remuneration, loans to employees, etc. (continued) The weighted average redemption price of outstanding stock options at the end of the year: Maturity date Number VGIK1 Number VGIK Total ) Weighted average redemption price. Amount in NOK. Agasti has used the Black & Scholes model in valuing the options. The risk-free interest rate used in the model is the treasury rate/government bond rate with maturity as close as possible to the allocation date. Due to the dilution effect on the existing shares, the price of the option is found numerically. In the model the following assumptions are used as the basis for new allocations: Allocation Expected dividend yield (%) Historical volatility (%) Expected lifetime for the stock option (years) Feb May Aug Nov Feb Aug Nov Expected volatility is calculated from historical volatility based on daily data over the same timescale as the term of the stock options. Stock options effect on the accounts: Description (All amounts in thousands of NOK) Acquisition of stock options Change in provisions for employer s National Insurance contributions Net stock option income/expenses Change in liabilities 1) ) Refers only to employer s National Insurance contributions. 70

71 NOTES ON THE CONSOLIDATED ACCOUNTS Note 4 Combined items in the income statement All amounts in thousands of NOK Costs relating to premises IT costs Fees for auditors, lawyers and consultants Telephone and postage costs Travel activities Printed materials and stationery Marketing activities VPS The Norwegian Central Securities Depository Financial Supervisory Authority of Norway Payments and change in provisions for estimated compensation to clients and process costs relating to received customer complaints 1) Other operating expenses Total other operating expenses ) In 2012 NOK 9.5 million has been paid in compensation to customers relating to customer complaints. See Note 13. Statutory audit Other audit-related services Assistance with tax return, etc Other services excluding auditing Total auditing fee The fees are given excluding VAT. Interest, bank deposits Other financial income Total financial income Bank interest and fees Other financial expenses Total financial expenses Of other financial expenses in 2012, NOK 3.4 million relate to allowance for liquidity premium of unlisted shares in various investment portfolios that Acta Kapitalforvaltning AS has acquired in connection with the settlement of client issues. The remaining costs are primarily related to realised and unrealised foreign currency gains and losses associated with invoicing and settlement in foreign currency. Note 5 Financial instruments Per 31 December 2012 All amounts in thousands of NOK Financial instruments at fair value through profit or loss Financial instruments valued at amortised cost Financial instruments held to maturity Total Loans to and deposits with credit institutions Shares Notes and bonds, held until maturity Other assets Total financial assets Liabilities to credit institutions Other liabilities Total financial liabilities

72 NOTES ON THE CONSOLIDATED ACCOUNTS Note 5 Financial instruments (continued) Per 31 December 2011 All amounts in thousands of NOK Financial instruments at fair value through profit or loss Financial instruments valued at amortised cost Financial instruments held to maturity Total Loans to and deposits with credit institutions Shares Other assets Total financial assets Other liabilities Total financial liabilities Financial instruments at fair value Fair value of financial assets, classified as available for sale and held for trading puposes is determined by reference to the market price at the balance sheet date. For non-quoted financial assets fair value has been estimated using valuation techniques based on assumptions that are not supported by observable market prices. The following financial instruments are not measured at fair value: Cash and cash equivalents, accounts receivable, other current receivables and bank overdrafts. The book value of cash and cash equivalents and bank overdrafts approximates fair value because these instruments have short maturities. Similarly, the balance sheet value of accounts receivable and accounts payable approximates fair value as they are entered as normal conditions. Financial instruments at amortised cost Most assets and liabilities in the Agasti Group s balance sheet are valued at amortised cost in the accounts. Amortised cost involves valuing balance sheet items in accordance with original contractual cash flows, adjusted for any depreciation if necessary. Such valuations will not always give values consistent with the market s assessment of the same instruments. Deviations are due to different perceptions of the macro outlook, market conditions, risk and returns, as well as differences in access to accurate information. The table above provides an overview of the estimated fair value of items recognised at amortised cost. The value is estimated based on quoted prices in active markets where such information is available, internal models which calculate a theoretical value in the absence of active markets, or comparison between the prices of instruments in the portfolio in relation to the most recent transaction prices. Valuations are based on the individual instruments properties and values on the balance sheet date. However, these values do not include the total value of client relationships, market access, brands, organisation, personnel and structural capital. Such intangible assets are generally not recognised. In addition, most client relationships are evaluated and valued in context for several products as a whole, where products in the balance sheet are seen in connection with other products and services that the client also uses. The individual assets and liabilities therefore do not provide an adequate indication of the overall value of the Group s operations. Financial instruments held until maturity Financial instruments classified as held until maturity consist of a convertible bond issued by the Wunderlich Investment Company, Inc. On 5 September 2012, Agasti Capital Markets AS invested in a subordinated convertible bond with a nominal value of USD 2.5 million with an annual coupon rate of 7.5 per cent, payable quarterly and with a conversion price of USD 16 per share. The convertible bond has a term of less than 5 years with a maturity date of 31 July The bond valued at amortised cost as of 31 December 2012 at NOK million. 72

73 NOTES ON THE CONSOLIDATED ACCOUNTS Note 6 Goodwill and other intangible assets Goodwill Intangible assets All amounts in thousands of NOK Original cost per 1 January Additions by separate acquisition Exit value Original cost per 31 December Accumulated depreciations per 31 December Accumulated write-downs per 31 December Accumulated depreciations and write-downs per 31 December Entered value per 31 December Year s depreciations Year s write-downs Economic lifetime 4-5 years Depreciation plan Linear Goodwill is not depreciated. However, an impairment test is carried out each year. The Agasti Group undertakes on-going evaluations of whether the value of goodwill and other intangible assets with undefined lifetimes is intact, and carries out a complete impairment test of all business units at least annually. The individual goodwill items and intangible assets in the Agasti Group balance sheet are allocated to assessment units according to which businesses benefit from the acquired asset. Selection of the business unit is carried out on the basis of whether it is possible to identify and separate cash flows related to the business. The recoverable amount is based on the expected business life. The business life is obtained from the sum of the estimated current value of expected cash flows for a planning period and projected cash flows after the planning period. The cash flows for the planning period are usually three years, and are based on budgets and plans approved by the management. Budgets and plans must be realistic from the perspective of the historical results in the unit. When calculating the useful life, a discount rate before tax of 12 percent is utilised. Beyond the planning period, an annual growth of 2.5 percent is assumed, which corresponds to expected long-term inflation. The discount rate is based on an assessment of the market s required rate of return for the type of activities included in the assessment unit. The required rate of return reflects the risk in the activities. Impairment tests are initially carried out on cash flows after tax in order to use the market s rate of return directly. If the test shows that there may be a need for impairment, a more thorough review of the unit is undertaken, which also includes an assessment of the value of cash flows before tax. In the assessment for the fiscal year 2012, a discount rate based on an adjusted capital asset pricing model is used, with a normalised risk-free interest rate in the unit s home market and a normalised risk premium of 4 percent. Beta values are estimated for each assessment unit. The estimates are built upon central assumptions such as total offices, total employees in sales related positions, total clients, assets under management and expected demand for the various cash generating unit s services and products, both from existing and new clients. Goodwill relating to acquisition of Axir ASA The entered goodwill relating to the acquisition of Axir ASA in spring 2010 amounts to NOK 8.8 million. The company is continued in the Agasti Group by Acta Markets AS, which changed its name to Navigea Securities AS, and in the Norwegian business operations. In 2012, Navigea Securities AS had an operating income of NOK 16.7 million. 73

74 NOTES ON THE CONSOLIDATED ACCOUNTS Note 6 Goodwill and other intangible assets (continued) Calculations of use value and simulated changes in key assumptions show that there is no need for write-downs. The Group s management evaluates the possibilities for positive results in the assessment unit as good. The booked values as of 31 December 2012 are assessed as sufficient. Intangible assets Intangible assets consist of investments in the standard systems Abasec (portfolio system) and Microsoft Dynamics (CRM system). The software is entered in the balance sheet at original cost, with the addition of external expenses for preparing the software for use, less accumulated depreciations. The expected economic lifetime and depreciation period is five years. Note 7 Fixed assets All amounts in thousands of NOK Leasehold improvements Original cost per 1 January Additions by separate acquisition Exit value Original cost per 31 December Accumulated depreciations per 31 December Disposals - accumulated depreciations Accumulated write-downs per 31 December Disposals accumulated write-downs Accumulated depreciations and write-downs per 31 December Entered value per 31 December Year s depreciations Year s write-downs 0 0 Economic lifetime 4-7 years 4-7 years Depreciation plan Linear Linear Machinery, fixtures and equipment Original cost per 1 January Additions by separate acquisition Exit value Original cost per 31 December Accumulated depreciations per 31 December Disposals accumulated depreciations Accumulated write-downs per 31 December Disposals accumulated write-downs Accumulated depreciations and write-downs per 31 December Entered value per 31 December Year s depreciations Year s write-downs Economic lifetime 3-7 years 3-7 years Depreciation plan Linear Linear The economic lifetime for leasehold improvements and machines, fixtures and equipment can normally be depreciated over five years based on concrete assessments regarding the asset s nature or by extension of the rental agreement. 74

75 NOTES ON THE CONSOLIDATED ACCOUNTS Note 7 Fixed assets (continued) Annual rental of non-recorded assets The Group has entered into several different operational rental agreements regarding office premises, ICT equipment and office machines. The majority of the rental agreements have an extension option. Future minimum rental linked to non-cancellable rental agreements are as follows: Future minimum rent All amounts in thousands of NOK ) 2011 Under one year Between one and five years Over five years 0 0 Total ) The increase from 2011 to 2012 is primarily related to a new lease agreement for Agasti s head office at Bolette brygge 1 in Oslo and renewal of individual rental contracts in Norway and Sweden, partly counteracted by other lease agreements of twelve months. Rent from non-balance sheet fixed assets entered against costs Rental costs All amounts in thousands of NOK Leasing agreements, premises, including common costs Leasing agreements, parking facilities Leasing agreements, meeting facilities etc Leasing agreements, various machinery and equipment Total Note 8 Shares in subsidiaries The companies listed below are all wholly owned by Agasti Holding ASA. Company Country Registered office Principal operations Navigea Securities AS Norway Oslo Securities companies Navexa Securities AB Sweden Stockholm Insurance undertakings Obligo Investment Management AS Norway Oslo Management and administration of investment companies Agasti Capital Markets AS Norway Oslo Management of ownership interests in other companies etc. Agasti Business Services AS Norway Stavanger Inter Group service provision Acta Asset Management AS Norway Stavanger Securities companies Acta Kapitalforvaltning AS Norway Stavanger No activity Acta Kapitalförvaltning AB Sweden Stockholm No activity 75

76 NOTES ON THE CONSOLIDATED ACCOUNTS Note 9 Share capital and shareholder information As per 31 December 2012, share capital in Agasti Holding ASA consisted of 257,530,750 shares with a nominal value of NOK There is only one share class. Ownership structure Number of shares Ownership stake The 20 largest shareholders in the company as of 31 December 2012 were: Coil Investment Group AS % Ludvig Lorentzen AS % Perestroika AS % Best Invest AS % Bjelland Trading AS % Mons Holding AS % IKM Industri-Invest AS % Sanden A/S % Tenold Gruppen AS % Skandinaviska Enskilda Banken A/S % Nordea Bank Norge ASA % Sissener Sirius ASA % Bnyxe - Equity Tri-Party (3) % International Oilfield Services AS % Steinar Lindberg A.S % Extellus AS % Care Holding AS % Wunderlich Securities, Inc % Solbrekk, Anders Ingvald % Brattetveit AS % Total 20 largest shareholders % Total other shareholders % Total number of shares % Total Total outstanding shares Total outstanding shares Average total shares in Average total undiluted shares in Earnings per share (year s result Group / average total shares) Undiluted earnings per share (year s result Group / average total undiluted shares) At the ordinary general meeting on 23 May 2012, the Board of Agasti Holding ASA was granted authorisation to issue new shares in Agasti Holding ASA in one or several private and/or public placements. The authorisation applies for up to 25.5 million shares with a nominal value of NOK 0.18, which means that the Board can, in accordance with the authorisation, increase the share capital by up to NOK 4,590, 000. Any premium shall be added to the share premium reserve. If the nominal value of the shares should change within the period of authorisation, the authorisation shall be changed accordingly. The authorisation is valid until the next ordinary general meeting, but no later than 30 June The authorisation replaces the authorisation received at the general meeting of 25 May

77 NOTES ON THE CONSOLIDATED ACCOUNTS Note 9 Share capital and shareholder information (continued) Shares directly or indirectly owned or controlled by members of the Board and management employees as of 31 December Name Office Number of shares Ownership stake Alfred Ydstebø 1) CEO Agasti Holding ASA % Ole Peter Lorentzen 2) Board Member Agasti Holding ASA % Stein Morten Bjelland CEO Acta Asset Management AS % Geir Inge Solberg CEO Obligo Investment Management AS % Christian Tunge CFO Agasti Holding ASA % Jørgen Pleym Ulvness 3) CEO Agasti Capital Markets AS % Stein Aukner 4) Vice Chairman of the Board Agasti Holding ASA % Ole Jørgen Jacobsen CEO Navigea Securities AS % Robert Bergerud CEO Acta Kapitalforvaltning AS % Morten Flørenæss CEO Agasti Business Services AS % Christian Kvist CEO Navexa Securities AB % Erling Meinich-Bache Board Member Agasti Holding ASA and Agasti Capital Markets AS % Merete Haugli Chairman of the Board Agasti Holding ASA % Pia Gideon Board Member Agasti Holding ASA and Navexa Securities AS % Jörgen Rexö Board Member Navexa Securities AB % Fredrikke Aaeng 5) Board Member Navigea Securities AS % Morten Bjørnsen Chairman of the Board Navigea Securities AS and Navexa % Securities AB Sissel Knutsen Hegdal 6) Board Member Agasti Holding ASA and Navigea Securities AS % Geir Lie 5) Board Member Navigea Securities AS % Harald Sig. Pedersen Board Member Acta Kapitalforvaltning AS % Eirik Iversen Board Member Acta Kapitalforvaltning AS % Harald Jochum De Lange 6) Board Member Navigea Securities AS % 1) Owned by Coil Investment Group AS and Wunderlich Securities Inc. 2) Owned by Ludvig Lorentzen AS and Extellus AS 3) Owned by Coldevin Invest AS 4) Owned by Stein Aukner and Invest-Man AS 5) Left the position in January ) Entered into the position as Board Member in Navigea Securities AS January 2013 Remuneration based on share value Stock options Number of stock options Awarded during the year Exercised/ redeemed during the year Expired during the year Number of stock options Cost of stock options 3) Name Office Alfred Ydstebø 1) CEO Agasti Holding AS Geir Inge Solberg CEO Obligo Investment Management AS Christian Tunge 2) CFO Agasti Holding ASA Jørgen Pleym Ulvness Stein Morten Bjelland CEO Agasti Capital Markets AS CEO Acta Asset Management AS Ole Jørgen Jacobsen CEO Navigea Securities AS Robert Bergerud CEO Acta Kapitalforvaltning AS Morten Flørenæss CEO Agasti Business Services AS Christian Kvist CEO Navexa Securities AB ) Entered into the position August ) Acting CEO from March to August ) Amounts in NOK 1,000. No Board Members or other employee representatives have stock options in Agasti Holding ASA. 77

78 NOTES ON THE CONSOLIDATED ACCOUNTS Note 10 Dividends In 2011, no dividend was paid. The Board has not proposed that a dividend be paid for Note 11 Current receivables All amounts in thousands of NOK Accrued/non-received revenues Pre-paid costs Miscellaneous current receivables Total current receivables Note 12 Financial assets Marketable securities Book value of financial assets All amounts in thousands of NOK Holding company Shares in various investment portfolios Acta Kapitalforvaltning AS Shares in Deliveien 4 Holding AS Navigea Securities AS Interests in Key Recovery Special Investments Navigea Securities AS Limited Class (NOK/EUR/SEK) Total current receivables Acta Kapitalforvaltning AS has acquired shares in investment portfolios in connection with the settlement of client issues. The client has been paid the value of the shares plus any compensation in exchange for Acta Kapitalforvaltning AS acquiring the shares. The investment portfolios are priced four times a year, on 15 March, 15 June, 15 September and 15 December. The pricing carried out on 15 March and 15 September are based on valuations made by independent parties. Interests in the investment portfolios are recognised in the accounts at the last known price, set on , written down by a liquidity premium of 10%. Shares in Deliveien 4 Holding AS are recognised at nominal value and shares in Key Recovery are recognised at the last traded price. The risk in these investment portfolios lies in the price development in the portfolios, which is affected positively or negatively by changes in market prices, foreign exchange rates or interest rates. Note 13 Provisions and other current liabilities All amounts in thousands of NOK Accrued expenses, unpaid wages, holiday pay, etc Provisions for exit risk (ref. Note 19) Kickbacks to clients Provisions for estimated compensation to clients and process costs relating to received customer complaints Provision for liquidation costs Other current liabilities Total provisions and other current liabilities Provisions Kickback to clients Compensation clients Balance 01 January Accrued Provision reversed in Provision applied in Balance 31 December Current

79 NOTES ON THE CONSOLIDATED ACCOUNTS Note 13 Provisions and other current liabilities (continued) Provisions are made for estimated compensation to clients and process costs relating to received customer complaints. The estimates are based on concrete evaluations of the advisory itself, in relation to the relevant laws and regulations at the time of the agreement with the customer, and assessment of necessary legal assistance to secure a professional and thorough treatment of customer complaints. The provisions are made in order to meet potential future claims for compensation from clients, and are carried out following a thorough review of complaints in the subsidiaries Acta Kapitalforvaltning AS and Acta Asset Management AS. Compensation for clients will therefore have less of an impact on the Group s accounts in the period ahead. The provisions will be able to obtain a liquidity effect during the coming years. Just under 450 dissatisfied investors, who during the years 2006 and 2007 invested in bonds issued by Lehman Brothers, and which were distributed by Acta Kapitalforvaltning AS, a subsidiary of Agasti Holding ASA, have brought legal action against Acta Kapitalforvaltning AS. The investors dispute the obligation to repay the loans to the bank, and have also turned to Acta Kapitalforvaltning AS as advisor to claim coverage for any loan that is not covered by the bank, and in certain cases, lost equity. Acta Kapitalforvaltning AS considers the risk linked to these actions to be relatively limited, since the company is only responsible for the advisory service, and this is provided on an individual basis. This assessment is also supported by the Swedish National Board for Consumer Complaints (ARN), which in March 2010 reached the principle decision that Acta Kapitalforvaltning AS is not liable towards investors due to inexpedient advice in connection with the bankruptcy of Lehman Brothers. Acta Kapitalforvaltning AS expects that the court will come to the same conclusion as the ARN. The legal actions that have now been brought against Acta Kapitalforvaltning AS do however, involve a certain level of risk, since the company may be responsible for errors or omissions in the advice in certain cases, something which the ARN has also ascertained, both economically and in terms of reputation. Economically, the maximum exposure is estimated to be around SEK 168 million, provided that all the plaintiffs win their claims, and that lost equity must also be compensated. Any legal costs and accrued interest will be in addition. Acta Kapitalforvaltning AS disputes the claims. Regarding reputational damage, much of this has already occurred, in that the case has circulated in the media since September In January 2009, the Norwegian Financial Services Complaints Board (Finansklagenemnda) announced its ruling on a complaint against a major Norwegian bank s sale of two leveraged structured products. The Board s decision was not unanimous. Three of the five members voted in favour of the complainant. Immediately after the verdict was announced, the bank stated that it would comply with the decision of the Board. In the winter, the Norwegian Supreme Court took up the matter and a decision is expected to be announced in the spring. Acta Kapitalforvaltning AS notes that the matter is related to two specific products from a particular bank. Acta Kapitalforvaltning AS deems that a comparison with all structured products is not justified. Acta Kapitalforvaltning AS believes that the risk of a group action lawsuit from customers who have chosen to invest in similar products distributed by the company and which may result in major losses, are relatively limited. Unlike the bank, which has been the customer s financial advisor, lender, producer and organiser, Acta Kapitalforvaltning AS has only been responsible for financial advice in relation to its customers. Acta Kapitalforvaltning AS admits liability for the advice given. The risk of a group action is also considered to be relatively limited because of the fact that all advice is given on an individual basis. 79

80 NOTES ON THE CONSOLIDATED ACCOUNTS Note 14 Income taxes All amounts in thousands of NOK Tax payable on the year s taxable earnings Corrected tax previous year Recognised change in deferred tax Year s tax expenses Effective tax rate 1) 10.2% -5.5% Specification of assets and liabilities by deferred tax All amounts in thousands of NOK Operating assets Accounting provisions Profit and loss account Loss to carry forward 2) Total deferred tax assets Deferred tax assets not included in the balance sheet Net deferred tax assets Deferred tax assets in Norway are related to losses carried forward and temporary differences between the recognised value and tax value of assets that will be released over the remaining lifetime of the asset, and recognised provisions that will be released over a period of three years. In Sweden, deferred tax assets are related to losses carried forward until January In Norway, the Agasti Group has had taxable income for the last two years. The Group s management believes it is reasonably certain that the Group in Norway will be able to utilise the tax benefit as the temporary differences are released. In Sweden during 2012 a comprehensive restructuring was carried out, which will involve a significant reduction in annual costs. The Group s executive management deems it reasonably certain that a sufficient taxable profit will be achieved in both countries in the next two to five years, and thus consider the net assets in the deferred tax assets recorded in the balance sheet as of 31 December 2012 reasonable. Losses carried forward have no maturity date. Reconciliation of actual against estimated tax expense All amounts in thousands of NOK Net income before taxes Calculated tax cost (28%) Tax rate outside Norway Permanent differences (28%) 3) Change in deferred tax assets from change in tax rate in Sweden Deferred tax assets not included in the balance sheet Actual tax expenses Effective tax rate 1) 10.2% -5.5% 1) tax expenses in relation to pre-tax profit. 2) Deferred tax assets are related to losses carried forward in 2012 in Norway as well as losses carried forward in Sweden to Deferred tax assets related to losses carried forward in Sweden in 2011 and 2012 are entered against the profit and loss account against the change in equity. 3) Does not include non-deductible costs, such as representation, client events and gifts, as well as estimated benefits of distributed options. 80

81 NOTES ON THE CONSOLIDATED ACCOUNTS Note 14 Income taxes (continued) Tax payable in balance sheet calculated as follows: All amounts in thousands of NOK Tax payable on net income for the year Total tax payable on balance sheet Reconciliation of net deferred tax/tax assets All amounts in thousands of NOK Net deferred tax/tax asset 01 January Booked via income statement Booked via other income and expenses 0 0 Conversion differences Net deferred tax/tax asset Note 15 Related parties On 1 August 2009 Agasti Holding ASA entered into a consultancy agreement with the then chairman and shareholder Alfred Ydstebø, corresponding to 35 percent of full time employment. During the period from 1 February 2012 until Alfred Ydstebø was employed as new Chief Executive Officer in August 2012, the consultancy agreement with Ydstebø was extended to 50 percent of full time employment. The agreement was terminated as of 15 August For 2012, NOK 625,000, excluding VAT, has been expensed in accordance with this agreement. In August 2012 the Group entered into an exclusive strategic alliance with Wunderlich Investment Company, Inc., in which Alfred Ydstebø has a controlling interest. In order to strengthen the alliance, USD 2.5 million was invested in the form of a convertible bond. In February 2013, through its wholly owned subsidiary Agasti Capital Markets AS, Agasti Holding ASA acquired 100 percent of the shares in Wunderlich Securities AS. An agreement to purchase the first 50 percent was entered into in August This company was also controlled by Alfred Ydstebø. Beyond this, there have been no material transactions between the company and share holders, the board of directors or management. Potential conflicts of interest between the board of directors and these groups are dealt with by the board of directors. Internal trading in the Group is carried out in accordance with separate agreements and at arm s length, and settlement of common costs in Agasti Holding ASA and Agasti Business Services AS is divided between the Group companies in accordance with keys, depending on the future of the various costs. 81

82 NOTES ON THE CONSOLIDATED ACCOUNTS Note 16 Financial risk The Agasti Group s exposure linked to financial instruments is limited to liquidity held in the form of bank deposits. At the end of 2012, the Group has limited interest-bearing liabilities and therefore has no interest rate risk related to borrowed capital. The financial market risk is otherwise limited to future income being affected by changes in market prices of the company s products, as well as general market fluctuations. An increased total number of customer complaints may result in an increased risk of legal action against the Group, but the risk of class action etc., being successfully taken against the Group is assessed as being relatively low. Future portfolio income will vary with fluctuations in market prices of the client portfolios being managed. Currency risk is not significant, and is mainly linked to part of the Group s business operations being carried out in Sweden. Credit risk is limited to current receivables and is not assessed as being significant. The effect on the Group s earnings and equity of the change in the exchange rate of the values entered in the balance sheet in foreign currency, including assets and liabilities linked to the Group s operations in Sweden segment, is shown in the table below. Change in Unit Currency the NOK exchange Effect on net income before tax Effect on equity All amounts in thousands of NOK Earnings converted from SEK SEK +5% % Invoiced income SEK +5% % Invoiced income USD +5% % Invoiced income EUR +5% % Long-term receivables USD +5% % Current receivables SEK +5% % Current liabilities SEK +5% % Unlisted shares SEK +5% % Bank deposits SEK +5% % Bank deposits DKK +5% % Bank deposits USD +5% % Bank deposits EUR +5% % Bank deposits GBP +5% %

83 NOTES ON THE CONSOLIDATED ACCOUNTS Note 17 Subordinated capital Agasti Group Agasti Holding ASA is subject to capital adequacy requirements on a consolidated basis, cf of the Securities Trading Act. Calculation of subordinated capital and capital adequacy per 31 December 2012 is in accordance with the statement below. All amounts in thousands of NOK Subordinated capital Core capital Deduction for deferred tax asset Deduction for goodwill and other intangible assets Net subordinated capital Capital adequacy Net subordinated capital Risk-weighted calculation basis Capital adequacy measured in percent 69.5% 93.3% Capital adequacy authorities requirement in percent 8.0% 8.0% Surplus/deficit of subordinated capital From 1 January 2007, new capital adequacy regulations in line with the EU countries came into force in Norway. The new regulations are based on the main principles of the Basel Committee s report of June Consolidated capital adequacy requirements as per 31 December 2012 are estimated based on the highest of the requirements for the securities companies plus cover for credit risk calculated based on the Group s combined assets. For Acta Asset Management AS and Navigea Securities AS, the requirement at the end of 2012 is estimated to be NOK 35 million and NOK 19 million respectively, of which NOK 33 million and NOK 14 million respectively is to cover operational risk and the remaining capital is to cover credit risk. Current calculations show that the consolidated capital adequacy requirement for 2013 for Acta Asset Management is reduced to approximately NOK 27 million, while the requirement for Navigea Securities AS is increasing frorm NOK 19 million to approximately NOK 42 million. Note 18 Assets pledged as collateral and guarantees Booked liabilities that are secured with collateral etc.: All amounts in thousands of NOK Borrower Credit limit Overdraft facility SpareBank 1 SR-Bank Agasti Holding ASA Total Agasti Holding ASA has an overdraft facility with a limit of NOK 60 million. In use of the overdraft, SpareBank 1 SR-Bank has collateral in the shares of the Group s subsidiaries, listed below. In addition, the Group s subsidiaries have made a declaration of negative pledge. Book value of financial assets pledged as collateral (All amounts in thousands of NOK) 2012 Shares in Navigea Securities AS Shares in Navexa Securities AB Shares in Obligo Investment Management AS 1) Shares in Agasti Capital Markets AS 1) Shares in Agasti Business Services AS Shares in Acta Asset Management AS Shares in Acta Kapitalforvaltning AS Shares in Acta Kapitalförvaltning AB 487 Total book value of financial assets ) Incorporated

84 NOTES ON THE CONSOLIDATED ACCOUNTS Note 18 Assets pledged as collateral and guarantees (continued) In May 2008, Agasti Holding ASA pledged an unconditional loan guarantee for 50% of a loan with a nominal value of NOK 15 million provided by a third party. On 31 December 2012, the remaining loan constituted NOK 16.8 million, including accrued interest. Based on an overall assessment, Agasti Holding ASA has allocated NOK 5.1 million to cover any losses resulting from the guarantee. The provision is equivalent to 60 percent of the expected payment under the guarantee. Note 19 Exit liability for long-term unit-linked savings schemes in Sweden Navexa Securities AB, a subsidiary of Agasti Holding ASA markets and manages perennial unit-linked saving agreements in Sweden for several insurance companies. In the first half of 2009, Navexa accrued for a part of the savings plans, a significant part of the overall distribution remuneration for the entire savings period through the customers payment of the first year s savings (up-front). Distribution remuneration from such agreements received by Navexa in the first year requires that the insured party saves in accordance with the agreed savings plan. In the event of discontinued saving, Navexa has an exit liability that can result in the repayment of all or part of the distribution remuneration. The liability is reduced over time, typically in that 100 percent of the received remuneration must be repaid if saving is discontinued in the first year, 90 percent if saving is discontinued in the second year, 70 percent if saving is discontinued in the third year, 60 percent if saving is discontinued in the fourth year and zero percent in the event of later discontinuance of saving. In 2012, Navexa received SEK 50 thousand in up-front payment of provisions income from subscriptions to saving agreements. There is no withheld revenue for new savings agreements in Further details are shown in the table below. All amounts in thousands of NOK Provisions for future exit risk per 01 January Withheld revenues on new savings agreements (15%) 0 18 Exit value Additional provisions Exchange rate effect previous year s provisions Provisions for future exit risk per 31 December Cancellation requirements in 2012 are primarily related to savings agreements entered into in the first half of 2009 or earlier. Any remaining risk of cancellation is considered to be insignificant and as of there is no provision for any future cancellation requirement. Note 20 Events after balance sheet date Via its wholly owned subsidiary, Obligo Investment Management AS, as of January 2013, Agasti Holding ASA has taken over the management of all structures that clients of the Agasti Group have invested in within Private Equity, infrastructure and renewable energy. In November 2012, with effect from January 2013, a similar agreement was entered into with ABG Sundal Collier on the management of all our clients investments within property and shipping. The latter also included a buyout of the companies ABG Sundal Collier Real Estate AS and ABG Sundal Collier Real Estate Inc. Obligo Investment Management will acquire 100 percent of the shares in both these companies for NOK 45 million, plus an additional payment of between NOK 8 and 11 million. In 2012, ABG Sundal Collier Real Estate AS had a turnover of NOK 27.8 million and a net income of NOK 9.3 million. In 2012, ABG Sundal Collier Real Estate, Inc. had a turnover of NOK 12.7 million and a net income of NOK 4.6 million (average exchange rate in 2012 of 5.82). The Group has not finalised the acquisition analysis but preliminary estimates indicate that the estimated added value in the order of NOK million will be related to Goodwill. Included in the value of the goodwill are client relationships, employees with special skills and expected synergies with the Group s existing business. Obligo and the companies included in the transaction complement each other very well and will be an even stronger player in the Nordic market for Investment Management of investment companies. The transaction is in line with 84

85 NOTES ON THE CONSOLIDATED ACCOUNTS Note 20 Events after balance sheet date (continued) Obligo s stated ambitions to enhance its presence within the area of Investment Management, and will in the short and long term, help to enhance the Group s competitiveness significantly. These are companies with which the Agasti Group has a long history, and that have a portfolio managed by 10 highly qualified employees. In January 2013, Finansinspektionen informed Agasti Holding ASA that the company application to acquire the Swedish provider of savings and investments services, H&P Fondförvaltning AB was denied. Agasti Holding ASA has appealed the decision. On 08 February 2013, through its wholly owned subsidiary Agasti Capital Markets AS, Agasti Holding ASA acquired 100 per cent of the shares in Wunderlich Securities AS for NOK million. Part of the settlement was undertaken via a private placement, where the sellers subscribed to 3,500,000 shares at In 2012, Wunderlich Securities had a turnover of NOK 13.4 million and a net income of NOK -0.8 million. The Group has not finalised the acquisition analysis but preliminary calculations indicate that the estimated added value in the order of NOK 2 million will be related to Goodwill. Included in the value of the goodwill are client relationships, employees with special skills and expected synergies with the Group s existing business. Wunderlich Securities has a strong position within the energy/oil services, real estate and private equity sectors, which is among the sectors in which the Agasti Group should have a leading position. The Agasti Group and Wunderlich Securities have worked closely over the past six months to establish what is about to become one of the most experienced and competent teams within real estate, private equity, energy and oil services. Full integration between the companies means that we can fully harness the potential and synergies between the two environments when we come to assist clients with advisory services and provision of capital market transactions. Oslo, 19 March 2013 Merete Haugli stein Aukner ole Peter Lorentzen Chairman of the Board Vice Chairman of the Board Board Member Pia Gideon sissel Knutsen Hegdal erling Meinich-Bache Board Member Board Member Board Member Alfred Ydstebø CEO 85

86 income statement - NGAAP AGASTI HOLDING ASA THE COMPANY S INCOME STATEMENT - 1 JANUARY - 31 DECEMBER - NGAAP All amounts in thousands of NOK Note Operating revenues Wages and salaries Depreciations Other operating expenses Total operating expenses Operating earnings Income on investments in subsidiaries Other financial income Write-downs, investments in subsidiaries Financial expenses Net financial items Net income before taxes Income taxes Net income Effective tax rate -18.4% -33.0% 86

87 balance sheet - NGAAP AGASTI HOLDING ASA COMPANY BALANCE sheet AS of 31 DECEMBER NGAAP All amounts in thousands of NOK Note ASSETS Non-current assets Deferred tax assets Total intangible assets Leasehold improvements Machinery, fixtures and equipment Total fixed assets Investments in subsidiaries Other receivables Total financial assets Total non-current assets Current assets Current receivables 9, Total receivables Bank deposits Total bank deposits and investments Total current assets Total assets

88 balance sheet - NGAAP AGASTI HOLDING ASA COMPANY BALANCE AS OF 31 DECEMBER NGAAP All amounts in thousands of NOK Note EQUITY AND LIABILITIES Equity Share capital 6, Share premium reserve Other paid-in equity Total paid-in equity Other equity Total retained earnings Total equity Liabilities Accounts payable Liabilities to credit institutions Tax payable Taxes and public fees payable Provisions and other current liabilities 9, Total liabilities Total equity and liabilities

89 Cash flow statement - NGAAP AGASTI HOLDING ASA COMPANY CASH FLOW STATEMENT - 1 JANUARY - 31 DECEMBER - NGAAP All amounts in thousands of NOK Operating activities Net income before tax expenses Received group contribution taken to income Taxes paid in reporting period Depreciations 7 17 Write-downs Stock option programme Change in accounts payable Change in other receivables Change in other accruals Net cash flow from operating activities Investing activities Payments for acquisition of fixed assets 0-18 Payments for investments in subsidiaries Net cash flow from investing activities Financing activities Proceeds from received Group contribution and dividends Disbursed outstanding Group contribution Payment of dividends Purchase of own shares Sales of own shares Net cash flow from financing activities Net change in bank deposits, short-term investments, bank overdrafts, etc Bank deposits, short-term investments, bank overdrafts, etc. as per Bank deposits, short-term investments, bank overdrafts, etc. as per Unused overdraft facilities Bank deposits and investments Bank overdrafts Net bank deposits and bank overdrafts as per

90 NOTES TO THE COMPANY ACCOUNTS NOTES TO THE COMPANY ACCOUNTS Note 1 Accounting principles 1.1 Basis for preparation of the company accounts The annual accounts for 2012 are set up in accordance with the Accounting Act of 1998, Norwegian accounting principles (NGAAP) and generally accepted Norwegian accounting best practice (NGRS). The annual accounts consist of the income statement, balance sheet, cash flow statement and notes. The annual accounts constitute a whole. The most important accounting principles that are used in the preparation of the annual accounts are as follows: 1.2 Currency Monetary items in foreign currencies are valued at the year-end exchange rate. Other assets and liabilities in foreign currency are valued according to general valuation regulations. 1.3 Revenue Revenues mainly consist of sales of Group services to other companies in the Agasti Group. Income is entered in the accounts when it is earned. Entry of income normally occurs at the time of delivery for the sale of services. Dividends and Group contributions from subsidiaries are recorded in the same year in which they are earned in the underlying companies, and when such distributions are expected to be resolved, and are included in the underlying companies annual accounts. Interest income is entered as it is earned. 1.4 Expenses Expenses are included with and expensed simultaneously with the income that the expenses are attributable to. Costs that cannot be directly attributed to income are expensed when incurred. Interest and fees are entered as these are earned as income or incurred as costs. 1.5 Defined contribution pension schemes Obligations for contributions to defined contribution pension schemes are entered as expenses in the income statement when incurred. 1.6 Share-based payment transactions Employee stock options are measured at the actual value at the time of distribution. The stock options are valued according to the Black and Scholes model. The calculated value is recognised as a personnel costs, with a corresponding entry in other paid-in equity. The cost is divided over the period until the employees become unconditionally entitled to the stock options. 1.7 Main rule for valuation and classification of assets and liabilities Assets intended for permanent ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables that shall be paid within a year are classed as current assets. Equivalent criteria are used as the basis for the classification of long-term and current liabilities. Fixed assets are valued at historical cost, but written down to actual value when the reduction in value is not expected to be temporary. The write down is reversed when the basis for the write down no longer exists. Fixed assets with a limited economic lifetime are depreciated in accordance with a depreciation plan. Long-term loans are recorded at the nominal received value at the time of establishment. Current assets are valued at the lowest of the cost value and actual value. Long-term liabilities are recorded at the nominal received value at the time of establishment. 1.8 Shares in subsidiaries In Agasti Holding ASA s company accounts, shares in subsidiaries are valued in accordance with the cost method. Group contributions are entered in the parent company s accounts as income in investment in subsidiaries under financial items, in the extent to which the distribution relates to the earnings accrued in the holding period. Other received Group contributions are entered as a reduction of cost price of the shares. Provided Group contributions net after tax are entered as increased investment in subsidiaries. 90

91 NOTES TO THE COMPANY ACCOUNTS Note 1 Accounting principles (continued) 1.9 Receivables Receivables are recorded at nominal value less provisions for expected losses. Provisions for losses are made on the basis of an individual analysis of the individual receivables Taxes Tax expenses consist of tax payable and the change in deferred tax. Deferred tax/tax assets are calculated on all differences between accounting and tax values of assets and liabilities. Deferred tax is calculated at 28% based on the temporary differences that exist between the accounting and tax values, and tax loss carried forward at the end of the financial year. Net deferred tax assets are recognised to the extent that it is likely that it could be utilised. Tax expenses and deferred tax are entered in the accounts directly against equity insofar as the tax items relate to items recognised directly against equity Leasing agreements Agasti Holding ASA s leasing agreements are entered in the accounts in accordance with the following rules: Operating leasing agreements Leases where the most significant risks and returns associated with ownership of the asset are not acquired by the company are classified as operating lease agreements. Lease payments are classified as an operating expense, and are recognised linearly over the contract period Use of estimates Management has used estimates and assumptions that affect the income statement and the valuation of assets and liabilities, as well as contingent assets and liabilities on the balance sheet date during the preparation of the annual accounts in accordance with generally accepted accounting principles Contingencies and events after the balance sheet date Contingent losses that are probable and quantifiable are expensed Cash flow statement The cash flow statement is prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments. Note 2 Salary costs, total employees, remuneration, loans to employees, etc. All amounts in thousands of NOK Salaries Bonus/profit sharing Pension costs, defined contribution plans Estimated benefit options scheme National insurance contributions Other benefits Total Average total full-time equivalent positions Benefits paid to employees in leading positions: All amounts in thousands of NOK Period Salary 1) Contribution based pension scheme Bonus/profit sharing Other Alfred Ydstebø 2) CEO (from August 2012) Christian Tunge 3) Chief Financial Officer ) Salaries etc. are shown for the period in which employees in leading positions have been in the post. 2) Chairman of the Board until August 2012 after which he was appointed CEO. 3) Acting CEO from March to August

92 NOTES TO THE COMPANY ACCOUNTS Note 2 Salary costs, total employees, remuneration, loans to employees, etc. (continued) Benefits to employees in leading positions The CEO s remuneration is determined by the Board s remuneration committee. The Board s remuneration committee sets guidelines for remuneration of other employees in senior positions, including fixed salaries and the principles for and scope of bonus schemes. Employees in leading positions have ordinary bonus agreements with annually fixed limits, and normally limited to between 40 and 200 percent of basic salary, depending on position. The estimated accrued bonus is expensed on an on-going basis. The CEO and CFO have agreements with 12 months salary following termination of service if they are dismissed without just cause or as a result of major changes in duties e.g. merger or acquisition. The Agasti Group established a defined contribution pension scheme for all permanent employees in Norway and Sweden with effect from 1 January In Norway, the contribution rate for 2012 was four percent of fixed salaries between 1G and 6G and six percent of fixed salaries between 6G and 12G. In relation to the requirements regarding mandatory occupational pensions (OTP) that came into force on 1 July 2006, Agasti Group has a pension plan, which exceeds the minimum requirement of two percent of salary over 1G up to 12G. In 2009, the Board of Agasti Holding ASA distributed share options to selected members of the Group s management group in accordance with an option programme launched in In 2009, it was decided to replace this option programme with a three year incentive programme that covers all employees in the Group. In 2012, the Board of Directors of Agasti Holding ASA adopted a new incentive scheme for selected managers in the Group. The scheme is part of a long-term incentive scheme for Agasti managers, which will contribute to creating positive results and attracting new employees as well as retaining existing employees. At the time of the approval of the annual accounts, a total of 2,837 million share options have been allocated to employees of Agasti Holding ASA, of which 1.5 million to the CEO. The allocation is in accordance with the authorisation granted by the annual general meetings on 6 May 2009, 11 May 2010, 25 May 2011 and 23 May The options allocated in 2009 and 2010, which remained outstanding at the start of 2012, all became due during 2012 without any redemption taking place. The options allocated in 2011 with an expiry date in 2012 became due without redemption taking place. The redemption price for the options is NOK 3.14 for options allocated in February 2011 and NOK 1.33 for options allocated in August The redemption price for the options shall be reduced by the accumulated dividends paid out during the period after allocation of the options. No dividend was paid for the financial year The dividend for the financial year 2010 was set at NOK 0.10 per share at the Agasti Holding ASA general meeting. No dividend was paid for the financial year For the financial year 2012, the board of Agasti Holding ASA has proposed to the company s general meeting not to pay dividend to its shareholders. 1/3 of the stock options granted in February and May 2011 can be exercised by primary insiders and a specific group of other employees in 2013 and 1/3 in 2014, for both years, the options must be exercised within specified periods. 1/3 of the share options that were allocated in February and May 2011 became due in 2012, without any redemption taking place. Share options granted to other employees in February 2011, can be redeemed at 100% within specified periods in Share options that were granted to selected managers in the Group in August 2012 can be redeemed in 2013 at 1/3 in 2013, 1/3 in 2014 and 1/3 in 2015, for all years the options must be exercised within specified periods. At the end of 2012, the share price was NOK As of 31 December 2012, Agasti Holding ASA had not issued any other financial instruments that may result in a demand for issuing of new shares other than the mentioned share options. For further information, please refer to note 3 in the Consolidated accounts. 92

93 NOTES TO THE COMPANY ACCOUNTS Note 2 Salary costs, total employees, remuneration, loans to employees, etc. (continued) Benefits paid to board members: Board member fee 1) All amounts in thousands of NOK Position Period Alfred Ydstebø 2) Chairman of the Board (until August 2012) Merete Haugli Chairman of the Board (from August 2012) 0 0 Board Member (until August 2012) Stein Aukner Vice Chairman of the Board Pia Gideon 3) Board Member Ole Peter Lorentzen Board Member Sissel Knutsen Hegdal Board Member (from June 2012) 0 0 Erling Meinich-Bache Board Member (from June 2012) 0 0 1) Board Members fees etc. are shown for the period in which the Board Member has held the office. 2) Chairman of the Board until August 2012 after which he was appointed CEO. 3) Amount converted from SEK to NOK using the exchange rates in 2011 and in Note 3 Combined items in the income statement All amounts in thousands of NOK Costs relating to premises IT costs 5 7 Fees for auditors, lawyers and consultants Telephone and postage costs Travel activities Marketing activities Other operating expenses Total other operating expenses Statutory audit Other audit-related services Assistance with tax return, etc Other services excluding auditing Total auditing fee The fees are given excluding VAT. Group interest income Interest, bank deposits Other financial income 14 0 Total financial income Group interest costs Bank interest and fees Guarantees - expensed Total financial expenses

94 NOTES TO THE COMPANY ACCOUNTS Note 4 Fixed assets All amounts in thousands of NOK Leasehold improvements Original cost per 1 January Original cost per 31 December Accumulated depreciations per 31 December Entered value per 31 December 0 1 Year s depreciations 0 2 Economic lifetime 4-5 years 4-5 years Depreciation plan Linear Linear Machinery, fixtures and equipment Original cost per 1 January Additions by separate acquisition 0 18 Original cost per 31 December Accumulated depreciations per 31 December Entered value per 31 December Year s depreciations 7 15 Economic lifetime 4-5 years 4-5 years Depreciation plan Linear Linear Annual rental of non-recorded assets Leasing agreements, premises, including common costs Rental external meeting facilities 14 0 Rental, parking facilities Leasing agreements, various machinery and equipment 9 6 Total Note 5 Shares in subsidiaries All amounts in thousands of NOK Company Year of acquisition Registered office Value entered in the balance Equity Net income 2012 Navigea Securities AS 2010 Oslo Navexa Securities AB 2000 Stockholm Obligo Investment Management AS 2012 Oslo Agasti Capital Markets AS 2012 Oslo Agasti Business Services AS 2001 Stavanger Acta Asset Management AS 1998 Stavanger Acta Kapitalforvaltning AS 1998 Stavanger Acta Kapitalförvaltning AB 2008 Stockholm Total In 2012, the shares in Acta Kapitalforvaltning AS are written down by NOK 5.9 million to equal the book value of NOK 24.2 million. Future cash flow is valued at 0, and the value of shares in the company is assessed at the company s equity of NOK 24.2 million. Agasti Holding ASA has in 2012 provided shareholder funding to Navexa Securities AB at a total of SEK 45.0 million, equivalent to NOK 38.2 million. Entered value of the shares Navexa Securities AB is written down to equivalent shareholder funding provision in

95 NOTES TO THE COMPANY ACCOUNTS tittel Note 6 Share capital and shareholder information Share capital in the company per 31 December 2012 consisted of 257,530,750 shares, each with a nominal value of NOK There is only one share class. For further information, please refer to note 9 in the Group accounts. Note 7 Equity All amounts in thousands of NOK Share capital Share premium account Other paid in equity Other reserves Total Equity 1 January Change in equity for the year: Net income Purchase of own shares Sales of own shares Stock option programme Equity 31 December Equity 1 January Change in equity for the year: Net income Stock option programme Equity 31 December At the ordinary general meeting on 23 May 2012, the Board of Agasti Holding ASA was granted authorisation to issue new shares in Agasti Holding ASA in one or several private and/or public placements. The authorisation applies for up to 25.5 million shares with a nominal value of NOK 0.18, which means that the Board can, in accordance with the authorisation, increase the share capital by up to NOK 4,590,000. Any premium shall be added to the share premium reserve. If the nominal value of the shares should change within the period of authorisation, the authorisation shall be changed accordingly. The authorisation is valid until the next ordinary general meeting, but no later than 30 June The authorisation replaces the authorisation received at the general meeting of 25 May Note 8 Long-term receivables Borrower (All amounts in thousands of NOK) Loan date Maturity Acta Kapitalforvaltning AS Acta Asset Management AS Total Long-term receivables consist of subordinate loans to the subsidiary companies Acta Kapitalforvaltning AS and Acta Asset Management AS, provided as a part of the management of the companies subordinate capital. The interest rate conditions are 3 months NIBOR with an additional 300 basis points. 95

96 NOTES TO THE COMPANY ACCOUNTS tittel Note 9 Outstanding accounts with Group companies and related parties All amounts in thousands of NOK Acta Kapitalforvaltning AS Acta Asset Management AS 3 3 Agasti Business Services AS Navigea Securities AS 19 Acta Kapitalforvaltning AB Agasti Capital Markets AS Navexa Securities AB Group contribution (net) from Navigea Securities AS Group contribution from Obligo Investment Management AS Group contribution from Agasti Business Services AS Total intercompany receivables Acta Asset Management AS Obligo Investment Management AS Navexa Securities AB 55 Navigea Securities AS 378 Group contribution (net) to Acta Asset Management AS 930 Group contribution to Acta Kapitalforvaltning AS Total intercompany liabilities Note 10 Current receivables and other current liabilities All amounts in thousands of NOK Outstanding accounts with Group companies Pre-paid costs Miscellaneous current receivables Total current receivables Outstanding accounts with Group companies Accrued expenses, unpaid wages, holiday pay, etc Other current liabilities Total other current liabilities

97 NOTES TO THE COMPANY ACCOUNTS tittel Note 11 Income taxes All amounts in thousands of NOK Tax payable on the year s taxable earnings Difference between tax return and accounts Change deferred tax Tax effect of received Group contributions Tax effect of provided Group contributions Year s tax expenses Effective tax rate 1) -18.4% -33.0% Net income before tax expenses in relation to year s tax base Net income before tax expenses Temporary differences: Change temporary differences Permanent differences: Write-downs of shares in subsidiaries Estimated benefit options Other non-deductible items (net) Provided Group contribution, taxable Difference between tax return and accounts 0 53 Received Group contributions (taxable) charged to investments in subsidiaries Tax base for the year Specification of tax effect of temporary differences Non-current assets Accounting provisions Net temporary differences Net deferred tax (+)/deferred tax assets (-) on balance sheet Tax payable in balance sheet calculated as follows: Tax payable on net income for the year Paid too much/too little tax previous year 0 0 Total tax payable on balance sheet Reconciliation of actual against estimated tax expense Net income before tax expenses Calculated tax cost (28%) Specification of other tax effects Arrears from previous years 12 Permanent differences (28%) 2) Difference between tax return and accounts 0 0 Group contribution/dividend without tax effect (28%) 0 - Year s tax expenses Effective tax rate 1) -18.4% -33.0% 1) Tax expenses in relation to pre-tax profit. 2) Does not include non-deductible expenses, such as representation and various customer events, individual gifts and non-deductible foundation costs, option costs and write-down of investments in subsidiaries. 97

98 NOTES TO THE COMPANY ACCOUNTS tittel Note 12 Assets pledged as collateral and guarantees Pledged assets (All amounts in thousands of NOK) Credit limit Booked liabilities that are secured with collateral etc.: Overdraft SpareBank 1 SR-Bank Total Agasti Holding ASA has an overdraft facility with a limit of NOK 30 million. In use of the overdraft, SpareBank 1 SR-Bank has collateral in the shares in the Group subsidiaries with the exception of Obligo Real Estate AS and Obligo Real Estate, Inc. In addition, the Group s subsidiaries have made a declaration of negative pledge. For further information, please refer to note 18 in the Group accounts. Guarantees In May 2008, Agasti Holding ASA pledged an unconditional loan guarantee for 50% of a loan with a nominal value of NOK 15 million provided by a third party. On 31 December 2012, the remaining loan constituted NOK 16.8 million, including accrued interest. Based on an overall assessment, Agasti Holding ASA has allocated NOK 5.1 million to cover any losses resulting from the guarantee. The provision is equivalent to 60 percent of the expected payment under the guarantee. In addition, Agasti Holding ASA has pledged unconditional guarantees for individual tenancy agreements entered into by the subsidiaries. The rental guarantees have a remaining duration of between one to five years. The total guarantee obligation for these as at 31 December 2012 is NOK 6.8 million. Note 13 Restricted bank deposits All amounts in thousands of NOK Tax withholdings Total Note 14 Financial risk For information regarding the company s financial risk, please refer to note 16 in the Group accounts. Note 15 Events after balance sheet date Via its wholly owned subsidiary, Obligo Investment Management AS, Agasti Holding ASA has taken over the management of all structures that clients of the Agasti Group have invested in within private equity, infrastructure and renewable energy. In November 2012, with effect from January 2013, an agreement was entered into with ABG Sundal Collier Norge ASA on the management of all our clients investments within property and shipping. The latter also included a buyout of the companies ABG Sundal Collier Real Estate AS and ABG Sundal Collier Real Estate Inc. In January 2013, Finansinspektionen informed Agasti Holding ASA that the company application to acquire the Swedish provider of savings and investments services, H&P Fondförvaltning AB was denied. Agasti Holding ASA has appealed the decision. In February 2013, through its wholly owned subsidiary Agasti Capital Markets AS, Agasti Holding ASA acquired 100 percent of the shares in Wunderlich Securities AS. An agreement was reached on acquisition of the first 50 percent in August Parts of the settlement were conducted through a private placement in which the sellers signed up for 3,500,00 shares at For further information, please refer to note 20 in the Group accounts. 98

99 NOTES TO THE COMPANY ACCOUNTS tittel Oslo, 19 March 2013 Merete Haugli stein Aukner ole Peter Lorentzen Chairman of the Board Vice Chairman of the Board Board Member Pia Gideon sissel Knutsen Hegdal erling Meinich-Bache Board Member Board Member Board Member Alfred Ydstebø CEO 99

100 confirmation Confirmation We confirm that the annual accounts for the period 1 January through 31 December 2012 have, to the best of our knowledge, been prepared in accordance with accounting standards, that the information in the accounts provides a fair representation of the company s and the Group s assets, liabilities, financial status and overall earnings, and that the information in the annual report provides a fair overview of the development, result, and status for the company and the Group, together with a description of the main risk and uncertainty factors that the company and the Group face. Oslo, 19 March 2013 Merete Haugli stein Aukner ole Peter Lorentzen Chairman of the Board Vice Chairman of the Board Board Member Pia Gideon sissel Knutsen Hegdal erling Meinich-Bache Board Member Board Member Board Member Alfred Ydstebø CEO 100

101 auditor s report 101

102 auditor s report 102