Interim report 1 january - 30 september 2001

INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2001 · OPERATING INCOME SEK 357 (757) MILLION · EARNINGS BEFORE TAX AND MINORITIES SEK -23 (247) MILLION Performance and financial position Group Hagströmer & Qviberg (H&Q) reports for the period January 1 to September 30, 2001 earnings before tax and minorities of SEK -23 (247) million. The low market activity in general, and for the technology sector in particular, has contributed to substantially lower income. Earnings have additionally been affected by income and expenses of a transient nature. Cost-reduction programmes were initiated and implemented during the second and third quarters, whereby the number of employees has been reduced by around 100 and current expenses, excluding bonuses, have been reduced by almost SEK 130 million on an annual basis in relation to the level during the first quarter. During the second quarter the business in Oslo was reorganised. This has thereafter been consolidated, which has affected income and earnings positively from the third quarter inclusive. Earnings before tax and minorities for the third quarter amounted to SEK -25 (32) million. The earnings improved towards the end of the period, and were positive for September. In total operating income was SEK 357 (757) million, a decrease of 53 percent. H&Q Technology contributed 30 (54) percent of the operating income and H&Q Private Banking 53 (44) percent. Income from commissions and fees decreased by 46 percent to SEK 279 (517) million. Of the income from commissions and fees, SEK 74 (134) million was income from financial advisory and underwriting. Net income from financial transactions including dividends decreased by 88 percent to SEK 28 (244) million. Corporate finance-related holdings and divestment of the share holding in Starthouse had a negative impact on the result with SEK -47 (27) million. Other income amounted to SEK 58 (11) million. Of this the divestment of the premium bonds business contributed SEK 65 million, the writedown of a receivable from SPP/Alecta SEK -6 million and share in profits of associated companies SEK -1 million. Operating expenses amounted to SEK 380 (510) million, a decrease of 25 percent. Personnel expenses decreased by 32 percent to SEK 255 (376) million, and other expenses by 7 percent to SEK 125 (134) million. Personnel expenses included non-recurring expenses for staff redundancies of SEK 14 million. Other expenses included an allocation for anticipated credit losses of SEK 2 million. The group's liquid funds amounted to SEK 1,094 (-469 as per December 31, 2000) million. Shareholders' equity amounted to SEK 362 (469 as per December 31, 2000) million, corresponding to SEK 73 (92 as per December 31, 2000) per share. Capital adequacy for the group amounted to 30 (24 as per December 31, 2000) percent. During the period the number of employees has decreased by 25 percent and was 253 as per September 30, 2001 (336 as per December 31, 2000). During the third quarter the number of employees decreased by 39 as a result of remedial measures implemented, and rose by 9 with the consolidation of the business in Oslo. The average number of employees during the period was 303 (330). Parent company The parent company reports a net turnover for the period amounting to SEK 0 (0) million and earnings before tax of SEK -22 (-3) million. The divestment of the share holding in Starthouse had a negative effect on earnings during the second quarter of SEK 10 million. The holding in the Luxembourg-based H&Q New Technology Fund, which was established during the second quarter and in conjunction with this acquired eight corporate finance-related share holdings in the group, amounted on September 30, 2001 to SEK 43 million. During the month of September an options scheme that was oversubscribed was issued to personnel, which gave rights to subscribe for a maximum of 275,000 shares at a price of SEK 133 SEK per share. H&Q Technology Operating income for the period amounted to SEK 107 million, a decrease of 74 percent in relation to the previous year. Lower market activity, fewer completed advisory and underwriting assignments, and worsened conditions for arbitrage and market maker business explain the decline compared with the previous year. Earnings were negative, which can be entirely attributed to write-downs pertaining to corporate finance- related holdings and negative earnings for the offices in the USA. During the third quarter operating income rose by 43 percent in relation to the second quarter, but decreased by 64 percent in relation to the third quarter of the previous year. The business in Oslo, which conducts financial advisory with 9 employees, is part of this business unit and is consolidated from the third quarter inclusive. The number of employees was 76 (84 as per December 31, 2000). H&Q Private Banking Operating income for the period amounted to SEK 190 million, a decrease of 43 percent in relation to the previous year. Generally lower market activity and lower market values explain the decline, which has been partly countered by increased sales of structured products. Earnings were positive. During the third quarter operating income decreased by 36 percent in relation to the second quarter and by 52 percent in relation to the third quarter of the previous year. Total managed capital decreased to SEK 16 (24 as per December 31, 2000) billion as a result of lower market values. The net inflows of new clients and volumes were positive. For the period the net inflow of capital amounted to SEK 2.3 billion, of which SEK 0.7 billion during the third quarter. The number of employees was 106 (150 as per December 31, 2000). Outlook The completed cost-reduction programmes will have full effect from the fourth quarter. Expenses have thereby been reduced to levels that, together with other actions taken, have laid a foundation for profitability. The level of activity in the market is still low, but can be expected to rise during the fourth quarter. Against this background positive earnings are anticipated in the operations for the remainder of the year. Stockholm, October 18, 2001 Anders Böös, Chief Executive Officer, Telephone +46 8 696 17 00 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/18/20011018BIT00060/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/18/20011018BIT00060/bit0001.pdf The full report