High activity and gross subscriptions, but low margins
Although subscriptions are at a very satisfactory level, margins are low and the financial results for the quarter are dissatisfactory. Acta will take actions in order to take greater part in the value chain which combined with already implemented measures will improve earnings.
High market activity
We are very pleased to report gross subscriptions of NOK 1,032 million in the quarter, which is more than twice as much as in the third quarter in 2009 (NOK 477 million) and corresponds to a subscription rate per advisor of NOK 7 million. Acta has continued to be very active with respect to client activities during the quarter. Acta Invest has held 11,500 meetings with clients and Acta Direct has handled 12,000 phone calls in the quarter. At the end of 2008 Acta started advising clients to increase their exposure in the equity market through Mutual funds and Unit linked. Many clients chose to follow this advice, and have seen their investments yield good returns in 2009. Acta has advised clients who have experienced good returns on investments in these asset classes to consider realizing some of the profit they made in 2009. Alternative investments such as Real estate and Infrastructure may be favourable to enter into at this time. Acta will be active in offering such investment possibilities, and launched a new real estate portfolio with public tenants in January.
Pressure on margins
Mutual funds and Unit linked are typically low margin products, and being the most popular asset classes this quarter, they have contributed to lower margins over the quarter. Due to the strong competition in the market, many suppliers have decided to remove their subscription fees on Mutual funds. In the fututre, Acta is aiming to increase its share in the value chain by establishing a corporate finance department, and has ambitions of increasing its share of advisory business related to clients' portfolios. The quarterly accounts have been charged with costs related to the work Acta has dedicated in order to reach an agreement with Kaupthing in the Lehman Brothers issue in Sweden.
Portfolio account
Since summer 2009 Acta has been developing a portfolio account where clients will be given the opportunity to pay for financial advisory services through an annual management fee based on their assets under management with Acta. Acta believes clients who typically are active and make a number of transactions will welcome this alternative fee structure when it is launched in the course of second quarter 2010. - In addition to giving clients an alternative to the traditional transaction based fee structure, the portfolio account model will increase Acta's fixed fee base and thereby further reduce the operational risk, says CEO Geir Inge Solberg.
Active in a consolidating market
Acta has for some time now observed an ongoing consolidation in the industry whereby a number of small and medium-sized market participants have either withdrawn from the market or sought affiliation with larger suppliers of financial advisory services. Acta has taken part in this consolidation, and is very satisfied with the company Axir's decision to join forces with Acta and create an even stronger and more competitive company. Axir has approximately 2,000 clients with approximately NOK 2 billion in assets under management. The majority of these assets are invested in a wide range of funds. - Axir is a company with top expertise and an excellent client base that will fit very well with Acta's current operations, says Solberg.
Financial highlights in 4th quarter 2009
* Gross subscriptions of NOK 1,032 million, compared with NOK 1,627 million in the same period in 2008. Total gross subscriptions in 2009 were NOK 3,161 million.
* Revenues of NOK 114 million, compared with NOK 121 million in the corresponding quarter in 2008. Total revenues in 2009 were NOK 491 million.
* Recurring revenues of NOK 72 million, with a fixed costs ratio of 88%. Total recurring revenues in 2009 were NOK 293 million.
* Total operating costs including depreciation of NOK 123 million, compared with NOK 176 million in the corresponding quarter in 2008. Total operating costs in 2009 were NOK 527 million.
* Operating earnings of NOK -9 million, compared with NOK -55 million in the same period in 2008. Operating earnings for 2009 ended at NOK -36 million.
* Assets under management of NOK 73 billion, compared with NOK 77 billion in the previous quarter.
* The Group has a robust financial position and has a net liquidity position of more than NOK 260 million and no interest-bearing debt.
A complete English version of the interim report and the presentation of the 4th quarter of 2009 are attached on www.newsweb.no and on
Acta's Investor Relations web pages www.acta.no.
Contact details:
Geir Inge Solberg, Chief Executive Officer, +47 908 78 043
Christian Tunge, Chief Financial Officer, +47 450 65 850
Rune Wangsmo, Public Relations Director, +47 995 41 507
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)