Revenue growth of 15% compared to last year Q revenues up to NOK 251m from NOK 218m in Q3 2014

Transcription

1 Interim report Revenue growth of 15% compared to last year revenues up to NOK 251m from NOK 218m in Increased profitability Operating margin of 18% relative to 17% in EPS of NOK 0.08 compared to NOK 0.06 last year Robust capitalisation and liquid balance sheet Group capital adequacy ratio of 24% (3.0 times the regulatory minimum requirement)

2 ABOUT ABG SUNDAL COLLIER ABG Sundal Collier is an independent Nordic investment banking powerhouse, established for more than 30 years, founded on a hard-working partnership culture and the ability to attract and develop top talent. Our strategy is to be an advisor and an intermediary, and our core product offering comprises corporate advisory, corporate financing and investor research and brokerage services. We provide our in-depth industrial knowledge across a broad range of sectors in our Nordic home market to companies and investors in the Nordics and internationally. Our corporate advisory team offers unparalleled transaction experience in combination with the value of our long standing connections to regional and international investors and corporations. Our market leading Nordic and international securities distribution platform provides access to financing for corporates and is well set up for naturally matching trading flows and delivering best execution for clients. Our approx. 250 partners and employees are located in the Nordic offices in Norway, Sweden and Denmark and the offices in the key international markets of the US, UK and Germany. OUR VISION AND MISSION Our ambition is to be the preferred Nordic Investment bank in our defined markets. We are committed to delivering long-term superior value for all key stakeholders by: Providing the best advice in relation to strategic challenges Providing the optimal external corporate financing Improving clients return on investment Being the place to be for talented staff Running a cost focused and highly profitable operation 1

3 KEY FIGURES Y-o-Y YTD YTD Y-o-Y Revenues NOKm % % Personnel costs NOKm % % Non-personnel costs NOKm % % Total operating costs NOKm % % Operating profit NOKm % % Net financials NOKm 5 5-5% % Profit before tax NOKm % % Taxes NOKm % % Net profit NOKm % % EPS (basic) NOK % % EPS (diluted) NOK % % Book value per share NOK % % Headcount (average) # % % Revenues per head (average) NOKm % % Operating costs per head (average) NOKm % % Operating cost / Revenues % 82.3% 82.8% 76.0% 79.4% Total compensation / Revenues % 56.2% 57.8% 54.9% 55.6% Operating margin % % 17.7% 17.2% 24.0% 20.6% Revenues (NOKm) Operating margin % EPS (basic) (NOK) % 29% % 23% 21% 23% 17% 23% 18%

4 COMMENTS FROM THE CEO Market volatility increased in, among other things impacted by the declining growth and de-facto devaluation in China and Volkswagen s attempts to manipulate emission tests. Although the situation in Greece appears to have been solved and improvements in the labour markets and real wages in Europe and the US have led to increased private consumption, investments continue to grow at a moderate pace and investors risk appetite seems to have been reduced. Consequently, equity markets in general remained soft in, with Denmark being the strongest performer in the Nordic area, declining by only 2.0%, followed by Sweden (-6.7%), Finland (-7.3%) and Norway (-7.5%). Transaction volumes in the Nordic equity markets were in line with those of the same period last year. The vibrant market for IPOs observed in the first half of was temporarily put on hold, with several planned transactions being postponed into or ABGSC has been given the mandate to manage several planned IPO transactions, but these rely on markets being open and investors being receptive to new listings. Recent developments in the markets seem supportive of these planned transactions. Despite reports of a very active international M&A market, sentiment in the Nordics has remained moderate, as in previous quarters. The continued decline in the oil price (-21%) in the quarter in combination with a 25bp interest rate cut from the Central Bank of Norway has led to a deprecation of around 8-9% for the NOK vs. the USD and EUR in the quarter. The continued weakening of the NOK has had a positive impact on consolidated revenues while a considerable fixed cost base located outside Norway has been similarly inflated despite relatively flat costs in local currencies. Although fixed costs have increased by approx. NOK 13m compared to the same quarter last year, we estimate the net earnings impact to be immaterial. We are pleased to note that the ABGSC business model is highly robust, as revenues and profitability are up compared to last year in spite of the recent dip in market activity. The best prescription in a challenging environment is to continue to rank highly with our clients on the back of the delivery of a high quality product on a daily basis, and focusing on winning and executing new corporate mandates. Knut Brundtland, CEO 3

5 MARKETS DIVISION The Markets division consists of all secondary sales and trading activities. With offices in Oslo, Stockholm, Copenhagen, London, Frankfurt and New York, we offer a powerful, integrated platform for the global delivery of financial services such as brokerage, trading and execution of equities, convertible bonds, bonds, derivatives, structured products and FX. Revenues in the Markets division primarily comprise secondary commissions on client trades and sales fees from primary ECM and DCM corporate transactions. During a year, secondary commissions tend to follow a seasonal pattern with slightly lower activity during holiday periods. Key figures and comments NOKm Y-o-Y YTD YTD Y-o-Y Equities % % Non-Equities (Fixed Income, CB & FX) % % Revenues % % Revenues - 4 quarter rolling avg % % NOKm Y-o-Y YTD YTD Y-o-Y Revenues % % Fixed operating costs % % Operating profit before variable comp % % Headcount (average) % % Revenues per head (average) % % Operating costs per head (average) % % Revenues from Markets of NOK 141m were up 12% from NOK 125m last year. Revenue from Equities was up 28% y-o-y, driven by higher client activity within the secondary segment and positive contribution from FX. In addition, revenue from Non-Equities was down 24% y-o-y, primarily driven by fewer primary transactions for bonds. The market for convertible bonds has also remained quiet, with few completed transactions and limited trading activity in the Nordic space in recent quarters. The average headcount for Markets was 73, down 11% y-o-y with average revenue per head increasing by 27%. Operating profit before variable compensation was up from NOK 32m to NOK 36m compared with the same period last year. 4

6 INVESTMENT BANKING DIVISION The Investment Banking division comprises all primary operations and corporate advisory services. We combine superior industry knowledge within the most important sectors in the Nordic markets with extensive transaction experience within ECM, DCM, M&A and financial restructuring. Revenues in the Investment Banking division are mainly transaction fees, which to a large extent are based on a successful completion of the respective transactions. Key figures and comments NOKm Y-o-Y YTD YTD Y-o-Y Revenues % % Fixed operating costs % % Operating profit before variable comp % % Headcount (average) % % Revenues per head (average) % % Operating costs per head (average) % % Net Investment Banking revenues totalled NOK 110m in, up 18% from the same period last year. The quarter was seasonally slow with few completed transactions, but the business mix continues to be well diversified across products, industries and locations. The average headcount for Investment Banking in the quarter was 70, up 8% y-o-y. Average revenue per head increased by 11%. Operating profit before variable compensation is up from NOK 44m to NOK 55m compared to the same period last year. Selected announced transactions M&A transactions in included the sale of Daldata, a Norwegian accounting software and cloud service provider, to the Scandinavian private equity house Procuritas, the sale of City Self Storage, one of the leading European self-storage operators, the sale of operations in Spain for Selvaag Gruppen as well as the sale of the Scandinavian group of surgical clinics and private hospitals of Teres Medical Group to Aleris, one of Scandinavia s leading private healthcare companies. Within the DCM area, ABGSC acted as sole arranger and bookrunner in the issuance of a SEK 150m senior unsecured bond for 4finance, a market leading provider of short-term loans to customers throughout the world with recent expansion into new continents. Also during, ABGSC has continued to advice the Aberdeen-based E&P company Iona Energy on the restructuring of its USD 275m bond. ECM transactions in included the NOK 1.6bn secondary sale in the leading Nordic sports retailer XXL by XIN Holding, a subsidiary of private equity firm EQT, where ABGSC acted as joint bookrunner in the transaction. We also acted as joint bookrunner in a NOK 844m private placement for floating energy solutions provider Höegh LNG. 5

7 FINANCIAL STATEMENTS Financial review ABGSC did reasonably well in a seasonally weak quarter with total revenues up 15%, to NOK 251m vs. NOK 218m in last year. For the first nine months, revenues were NOK 923m compared to NOK 757m for the same period last year. Total operating costs in increased by 14%, from NOK 181m in last year to NOK 206m. The y-o-y change is driven by increased variable remuneration costs being a function of increased revenues. Although the average headcount and underlying fixed costs in local currencies remained relatively flat, the continued depreciation of the NOK relative to foreign currencies increased the fixed cost base by approx. NOK 13m when translating from local currencies into NOK compared to same quarter last year. Corresponding revenues in foreign currencies provide a natural hedge, and thereby make the net impact immaterial. Net financial income was NOK 5m in, compared to NOK 5m in. Pre-tax profit was NOK 49m in. The tax charge was NOK 13m. Net profit was NOK 36m in the quarter vs. NOK 29m last year. Basic earnings per share (EPS) were NOK 0.08 for, compared to NOK 0.06 in the same period last year. The corresponding figures for the first nine months of the year were NOK 0.36 and NOK 0.27 respectively. The balance sheet remains very strong and liquid, with a significant portion of the asset base consisting of bank deposits in combination with a balanced net working capital. The Group s capital adequacy ratio as of 30 September was 24% (3x the regulatory requirement). Personnel costs (NOKm) Non-personnel costs (NOKm) Total compensation / Revenues % 59% 55% 55% 58% 53% 56% 54% 56%

8 Condensed consolidated income statement (unaudited) NOKm YTD YTD Brokerage revenues Corporate Finance revenues Total revenues ,149.4 Fixed personnel costs Other operating costs Depreciation Total operating costs Operating profit before variable compensation Variable personnel costs Operating profit after variable compensation Net financial result Profit before tax Taxes Net profit Condensed other comprehensive income NOKm YTD YTD Net profit Items that may be reclassified to profit or loss Exchange differences on translating foreign operations Hedging of investment in foreign subsidiaries Income tax relating to items that may be reclassified Items that will not be reclassified to profit or loss Remeasurement of pension liability Income tax relating to items not reclassified Total other comprehensive income Total comprehensive income for the period

9 Condensed consolidated balance sheet (unaudited) NOKm 30/09/ 30/09/ 31/12/ Total intangible assets Plant and equipment Financial non-current assets Total non-current assets Receivables 3, , ,257.4 Investments Cash and bank deposits , ,014.2 Total current assets 4, , ,466.6 Total assets 4, , ,615.1 Paid-in capital Retained earnings Total equity , ,248.2 Other long-term liabilities Short-term interest bearing liabilities Other short-term liabilities 3, , ,348.0 Total liabilities 3, , ,366.9 Total equity and liabilities 4, , ,615.1 Condensed statement of changes in equity NOKm YTD YTD Shareholders equity - opening balance , , , ,195.8 Comprehensive income for the period Payment to shareholders New issuing of shares Change in own shares Other Shareholders equity - closing balance , , ,248.2 Condensed consolidated cash flow statement NOKm YTD YTD Cash and cash equivalents - opening balance , , Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents - closing balance , , ,

10 Notes 1) Accounting principles The quarterly report is prepared in accordance with IAS 34 Interim Financial Reporting and International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and all interpretations from the Financial Reporting Interpretations Committee (IFRIC), which have been endorsed by the EU commission for adoption within the EU. The quarterly report is prepared using the same principles as those used for the annual report. The quarterly report is unaudited. 2) Judgments, estimates and assumptions The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on a continuous basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. When preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group s accounting policies and the key sources of estimation uncertainty, were the same as those that applied to the consolidated financial statements as of the period ended 31 December. 3) Risk and uncertainty As described in ABGSC s annual report, ABGSC s total risk exposure is analysed and evaluated at the group level. Risk evaluations are integrated in all business activities both at the group and business unit levels, increasing ABGSC s ability to take advantage of business opportunities. There has not been any significant change in the risk exposures or the risks and uncertainties described in the annual report. 4) Related parties There have not been any changes or transactions with any related parties that significantly impact the Group s financial position or result for the period. 9

11 5) Segment information ABGSC s two business segments are Markets and Investment Banking. The management system is matrix-based, where revenues and expenses are recorded by both business segment and geographical markets. Assets and liabilities except from items subject to direct allocation, and equity and cash flow are recorded by geographical markets. Bonus and profit sharing, financial results and income taxes are all treated as unallocated items in the internal reporting. Markets YTD YTD Revenues - external NOKm Revenues - allocated to/from other operating segments NOKm Total revenues NOKm Fixed operating costs NOKm Operating profit before variable compensation NOKm Investment Banking NOKm YTD YTD Revenues - external NOKm Revenues - allocated to/from other operating segments NOKm Total revenues NOKm Fixed operating costs NOKm Operating profit before variable compensation NOKm Total assets 30/09/15 30/09/14 Markets NOKm 3,389 4,151 Investment Banking NOKm Unallocated NOKm 365 1,196 Total NOKm 4,294 5,403 Total liabilities 30/09/15 30/09/14 Markets NOKm 3,068 3,855 Investment Banking NOKm Unallocated NOKm Total NOKm 3,375 4,250 Operating revenues from external customers by geographical segments YTD YTD Norway NOKm Sweden NOKm Other Europe NOKm US NOKm Total NOKm

12 SHAREHOLDER MATTERS Share transactions During the quarter, ABGSC purchased 70,000 ASC shares from resigned partners at a price of NOK 0.23 per share. During the same period, ABGSC sold 240,000 treasury shares to partners to settle forward contracts previously entered into. ABGSC held 8,932,925 treasury shares at the end of the period. Number of shares Shares outstanding (period end) (1,000) 458, , , , ,168 - Treasury shares (period end) (1,000) 47 3,986 2,503 9,128 8,933 + Forward contracts outstanding (period end) (1,000) 46,227 43,997 57,116 36,512 36,272 Diluted shares (period end) (1,000) 504, , , , ,507 Shares outstanding (average) (1,000) 457, , , , ,168 - Treasury shares (average) (1,000) 60 1,304 3,165 5,883 9,078 + Forward contracts outstanding (average) (1,000) 45,576 44,831 48,058 46,444 36,454 Diluted shares (average) (1,000) 503, , , , ,544 Shareholder structure Shares held by Directors and staff Shares held by Directors and Staff / Shares outstanding 23% 23% 23% 23% 23% Shares and fwd contracts held by Directors and Staff / Diluted shares 30% 30% 31% 29% 30% Shareholders by country (shares outstanding) Norway 61% 63% 63% 61% 61% Great Britain 18% 17% 18% 18% 17% USA 12% 11% 11% 13% 14% Sweden 5% 5% 4% 4% 4% Other 4% 4% 4% 4% 4% 11

13 Largest shareholders 20 largest shareholders as of 30 September (registered in VPS as of 2 October ): Shareholder Number of shares % J.P. Morgan Luxembourg (nominee) 42,184, % Sanden A/S * 38,399, % Ferd AS 35,790, % Perestroika AS 30,005, % State Street Bank (nominee) 18,359, % Morgan Stanley & Co (nominee) 10,271, % DNB Bank ASA 10,142, % State Street Bank (nominee) 9,856, % Erling Neby AS 9,200, % ABG Sundal Collier Holding ASA (own shares) 8,932, % Fidelity Investment 6,520, % Citibank (nominee) 4,719, % A/S Skarv 4,500, % Peter Schofield 4,353, % Sasan AS 4,324, % Millenium AS 3,800, % Goldman Sachs & Co (nominee) 3,712, % KLP Aksje Norge Indeks 3,576, % SEB Private Bank S.A (nominee) 3,457, % Madra invest AS 3,300, % Total top ,406, % Other 210,761, % Total 466,167, % * Jan Petter Collier, who is a board member in ABG Sundal Collier Holding ASA, and family own a total of 40,631,000 shares including shares owned by Sanden AS. An updated list of the 20 largest shareholders can be found under the Investor Relations section on the ABGSC web site ( Share price development The ABG Sundal Collier Holding ASA share is listed on the Oslo Stock Exchange with the ticker symbol "ASC" NOK ASC share price and trading volumes Jun 7 Jul 14 Jul 21 Jul 28 Jul 4 Aug 11 Aug 18 Aug 25 Aug 1 Sep 8 Sep 15 Sep 22 Sep 29 Sep ASC exchange trading volume (1,000 shares) ASC share price OSEBX (indexed) Shares (k) The closing price per share as of 30 June was NOK 6.68 and NOK 6.78 as of 30 September. The highest closing price observed during the period was NOK 7.85 and the lowest was NOK ,000 1,800 1,600 1,400 1,200 1,

14 The daily average traded volume during the quarter on the Oslo Stock Exchange was 376k shares. According to the Fidessa Fragmentation Index, 98% of the total traded volume over the period took place on the Oslo Stock Exchange. Forward contracts with partners Several partners in the firm have, as part of the partner share incentive programme, entered into forward contracts for the future delivery of shares. Under the programme, new and certain existing partners are given the opportunity to acquire restricted partner shares at a 15% discount (reflecting the restrictions imposed on partner shares). The settlement price is based on the 30 days volume weighted average market price for shares at the initial contract date. The final settlement price will be adjusted to reflect any distribution to shareholders paid prior to settlement. The interest element in the forward contract will also lead to an adjustment of the settlement price in cases where the contract is settled prior to original expiry date. The forward contracts have settlement in the period 2016 to Expiry year Forward contracts (1,000) Forward average price , , , Total 36,272 Policy for distribution to shareholders The Board is committed to return excess capital to shareholders through stable cash distribution and the buy-back of shares over time. Excess capital will be evaluated on a continuous basis, taking into consideration among other market conditions, regulatory requirements, counterparty and market perceptions and the nature of our business. The Board currently has a mandate from the shareholders to acquire a number of ASC shares corresponding to approximately 10% of the share capital. The one year mandate is valid until the end of June Financial calendar ABGSC has approved the financial calendar for the accounting year : 16 February 2016, Earnings release / preliminary full year figures 13

15 SUPPLEMENTARY INFORMATION Historical figures nine quarters Income statement Revenues NOKm Operating costs NOKm Operating profit NOKm Net financial result NOKm Profit before tax NOKm Taxes NOKm Net profit NOKm Balance sheet Total non-current assets NOKm Receivables NOKm 3,633 2,030 3,219 3,101 3,851 1,257 3,412 2,629 3,173 Investments NOKm Cash and bank deposits NOKm ,000 1,042 1, Total current assets NOKm 5,037 3,230 4,451 4,434 5,246 2,467 4,526 3,394 4,185 Total assets NOKm 5,157 3,401 4,618 4,596 5,403 2,615 4,658 3,515 4,294 Total equity NOKm 1,135 1,196 1,249 1,122 1,153 1,248 1, Long-term interest bearing liabilities NOKm Other long-term liabilities NOKm Short-term interest bearing liabilities NOKm Other short-term liabilities NOKm 3,671 2,147 3,211 3,315 4,087 1,348 3,322 2,483 3,357 Total liabilities NOKm 4,022 2,205 3,369 3,474 4,250 1,367 3,341 2,641 3,375 Total equity and liabilities NOKm 5,157 3,401 4,618 4,596 5,403 2,615 4,658 3,515 4,294 Revenue split Equities NOKm Non-Equities (Fixed Income, CB & FX) NOKm Markets NOKm Investment Banking NOKm Revenues NOKm Key figures Headcount (average) # Revenues per head (average) NOKm Operating costs per head (average) NOKm Operating cost / Revenues % 83% 77% 79% 77% 83% 70% 77% 71% 82% Total compensation / Revenues % 56% 59% 55% 55% 58% 53% 56% 54% 56% Operating margin % % 17% 23% 21% 23% 17% 30% 23% 29% 18% Shares outstanding (period end) (1,000) 441, , , , , , , , ,168 Treasury shares (period end) (1,000) -2, ,986-2,503-9,128-8,933 Forward contracts outstanding (period end) (1,000) 53,239 48,818 54,778 45,714 46,227 43,997 57,116 36,512 36,272 Diluted shares (period end) (1,000) 491, , , , , , , , ,507 Earnings per share (basic) NOK Earnings per share (diluted) NOK Book value per share (basic) NOK Book value per share (diluted) NOK Total capital adequacy NOKm 3,910 3,088 3,837 3,657 3,537 2,804 2,820 2,835 2,940 Core capital NOKm Total capital adequacy ratio % 25% 29% 24% 26% 27% 27% 27% 25% 24% Minimum requirement coverage ratio x 3.1x 3.7x 3.0x 3.3x 3.4x 3.3x 3.4x 3.1x 3.0x 14

16 Markets Revenues NOKm Fixed operationg costs NOKm Operating profit before variable comp. NOKm Headcount (average) # Investment Banking Revenues NOKm Fixed operationg costs NOKm Operating profit before variable comp. NOKm Headcount (average) #