Reduced uncertainty and sound cost control

Gross subscriptions and margins showed unsatisfactory figures in the first quarter of 2010. A financially poor result in the Swedish operation is a major explanation for the first quarter result. At the same time, operational uncertainty was strongly reduced as a solution was presented to clients affected by the Lehman Brothers bankruptcy protection. In addition, the Swedish FSA completed the inspection of Acta's operations in Sweden. Acta is now in a position to concentrate on the business going forward and increasing the profitability of its operations.

Uncertainty reduced in Sweden

Ever since Lehman Brothers filed for bankruptcy protection and the Swedish FSA decided to conduct an inspection of Acta's operations in Sweden, a great portion of Acta's management resources has been dedicated to handle these processes. In particular, the Swedish organisation has been negatively affected by the above-mentioned processes in the last quarter, both with respect to increased costs and in the reduction  in time spent for generating revenues. However, Acta is now in a situation where both the Lehman case and the process with the FSA have been closed, and Acta can again fully concentrate on conducting business. In February, Acta announced that the company had reached an agreement with Kaupthing whereby clients who had geared their investments in products where Lehman Brothers had issued bonds could pay 60 per cent of the par value of the loan. Approximately 85 per cent of the affected clients accepted this offer from Kaupthing. A few weeks later, the Swedish FSA announced that the inspection which started in the autumn of 2008 was concluded after Acta had implemented measurements fully satisfactory to the Swedish FSA. - The closing of these time-consuming and important issues reduces the operational risk considerably for Acta going forward, says CEO Geir Inge Solberg.

Operations

Acta reports gross subscriptions of NOK 685 million in the quarter, which is not at a satisfactory level. These figures correspond to a subscription rate per advisor of NOK 5 million (excl. Axir). Even though Acta has continued to be very active with respect to client activities during the quarter, and has held 8,200 meetings (Acta Invest) and handled 12,500 phone calls (Acta Direct) in the quarter, Acta has experienced that clients have a wait-and-see attitude with respect to investments. The challenging situation in Sweden, combined with a generally slow market, are the main explanatory variables for the weak figures. The most popular asset classes this quarter was, as previous quarter, Mutual funds and Unit linked. These are typically low margin products and have contributed to low margins over the quarter. Reported operating earnings in the quarter are NOK -15 million. Direct costs that are attributable to the Lehman case total approximately NOK 5 million this quarter and write-downs and provisions related to the restructuring of Axir total approximately NOK 4 million in the quarter. Acta has sound cost control and reports operating costs of NOK 111 this quarter which is lower than both last quarter (NOK 122 million) and the corresponding quarter last year (NOK 137 million). The recently acquired investment advisory company Axir is now successfully integrated into the Acta Group and is incorporated in Acta's financial statement.

Acta going forward

In a situation where risk is reduced and costs are under control, Acta's focus going forward will be on increasing revenues. Acta has an organisation set up for increased activity, and will continue to be very active with respect to clients' activity, and to increase gross subscription volumes. The recently acquired company Axir has established a corporate finance department where Acta Markets now is integrated. Axir holds all the necessary licences and is in the process of taking on new employees to fill the vacant positions. Acta will then be able to take a greater portion of the value chain in addition to building in-house expertise which will enable Acta to move towards becoming a more complete supplier of financial services. As mentioned earlier, Acta will launch a portfolio account in the second quarter this year, and will thereby increase recurring revenues and strengthen the company's position.   

Financial highlights in 1st quarter 2010

* Gross subscriptions of NOK 685 million, compared with NOK 949 million in the same period of 2009. 

* Total revenues of NOK 97 million, compared with NOK 141 million in the corresponding quarter of 2009.

* Recurring revenues of NOK 68 million, with a fixed costs ratio of 90%.

* Total operating costs including depreciation of NOK 111 million, compared with NOK 137 million in the corresponding quarter of 2009.

* Operating earnings of NOK -15 million, compared with NOK 4 million in the same period of 2009.

* Assets under management of NOK 71 billion, compared with NOK 73 billion in the previous quarter.

* The Group has a robust financial position and has a net liquidity position of more than NOK 220 million and no interest-bearing debt.

A complete English version of the interim report and the presentation of the 1st quarter of  2010 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)