Interim report january 1 - june 30, 2001

INTERIM REPORT JANUARY 1 - JUNE 30, 2001 · OPERATING INCOME SEK 282 (583) MILLION · PRE-TAX PROFIT SEK 2 (215) MILLION Performance and financial position Group Hagströmer & Qviberg (H&Q) reports for the period January 1 to June 30, 2001 a pre-tax profit of SEK 2 (215) million. A low level of market activity in general, and for the IT/Telecom sector in particular, has contributed to decreasing income. In addition, earnings have been burdened by costs of a non-recurring nature. During the period the premium bonds business within PP Privata Placeringar has been divested to GE Capital Bank AB for SEK 66 million. Results for the second quarter have been negatively affected by write- downs of SEK 32 million for corporate finance-related holdings, SEK 10 million for the share holding in Starthouse, and SEK 6 million in pension demands on SPP consequent to a dispute over repayments. The results were also burdened by SEK 11 million in reserves made for laying off redundant personnel and SEK 2 million for anticipated credit losses. During the second quarter consent was awarded for a Luxembourg-based mutual fund, H&Q New Technology Fund, specialising in follow-on financing of rapidly growing private IT/Telecom companies. In total operating income was SEK 282 (583) million, a decrease of 52 percent compared to the first half of the previous year. H&Q Technology contributed 29 (58) percent of operating income and H&Q Private Banking 51 (42) percent. Other income, primarily the transfer of the premium bonds business to GE Capital Bank AB, accounted for 20 (-) percent. Income from commissions and fees decreased by 49 percent to SEK 201 (391) million. Of the income from commissions and fees, SEK 49 (100) million was from financial advisory services and underwriting, which represents an increase compared to the first quarter of the year of 45 percent. Net income from financial transactions including dividends decreased by 88 percent to SEK 24 (206) million, of which corporate finance-related holdings gave a result of SEK -34 (31) million. Operating expenses were SEK 280 (368) million, a decrease of 24 percent compared to the same period in the previous year. Of the operating expenses, SEK 192 (276) million was attributable to personnel expenses and SEK 88 (92) million to other expenses. Additional effects from the ongoing reduction of the cost level are expected during the third quarter of this year. Earnings per share after dilution was SEK 0.3 (30). Shareholders' equity was SEK 395 (469 as per December 31, 2000) million, corresponding to SEK 76 (92 as per December 31, 2000) per share. Return on equity was 7 (87) percent. The group's liquid funds were SEK 319 (-469 as per December 31, 2000). Capital adequacy for the group was 32 (24 as per December 31, 2000) percent. The number of employees in the group decreased from the first quarter by 19 percent and was 283 (316 as per June 30, 2000; 336 as per December, 31 2000). The average number of employees during the first half of the year was 325 (315). Parent company The parent company reports a net turnover for the period of SEK 0 (0) million and a pre-tax result of SEK -18 (1) million. A sale of shares in incubator company Starthouse negatively impacted earnings by SEK 10 million. H&Q Technology Operating income for H&Q Technology, excluding write-downs of corporate finance-related holdings as above, declined by 62 percent compared to the first half of the previous year and by 22 percent compared to the first quarter of this year. Lower market activity, fewer capital acquisition and advisory assignments and worsened conditions for arbitrage and market maker operations explain the decline compared to the first half of the previous year. During the second quarter, 8 corporate finance-related share holdings, after write-down as above, were transferred to the H&Q New Technology Fund for SEK 43 million. At the same time H&Q has invested a corresponding amount in the fund as an investment. Remaining holdings hereafter comprise convertibles and options in 8 companies, with a total book value amounting to SEK 22 million. The earnings outlook for H&Q Technology is related to the performance of the IT/Telecom sector. The downturn that this sector has experienced means that it has not been possible to complete many underwriting and advisory assignments, while activity on the secondary market has been low. The number of employees within H&Q Technology was 75 (76 as per June 30, 2000; 84 as per December 31, 2000). H&Q Private Banking The low market activity during the first half of the year entailed lower income and earnings for H&Q Private Banking. Operating income decreased by 40 percent compared to the first half of the previous year, and by 7 percent compared to the first quarter of this year. The net inflow of new clients and custody account volumes were positive during the period. As a result of lower market value, total managed capital decreased to SEK 20 (24 as per December 31, 2000) billion. Around 80 percent of total managed capital is attributable to the target groups of entrepreneurs, companies and institutions. During the second quarter a deepened partnership was entered into with Union Bancaire Privée (UBP). The number of partnerships associated with H&Q Private Banking's operations within Financial Planning, Brokerage and Asset Management is 17. The earnings outlook for H&Q Private Banking is related to the volume of managed capital and the activity on the stock market. Lower market values and flexibility have had a negative impact on income and earnings. The number of employees within H&Q Private Banking was 124 (149 as per June 30, 2000; 150 as per December 31, 2000). Outlook The outlook for the third quarter is tied to the continued performance of the market. Activity during the third quarter is normally lower due to seasonal variation. Meanwhile costs are expected to be lower due to the effects of measures already implemented. No considerable improvement in earnings is anticipated during the third quarter. However, it should be emphasised that developments, even in the short term, are currently highly difficult to forecast. Stockholm, August 1, 2001 Anders Böös, Chief Executive Officer, Telephone: +46 8-696 17 00 Scheduled reports Interim Report Jan - Sep 2001 Oct 18, 2001 Year-End Report Feb 2002 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/01/20010801BIT00120/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/01/20010801BIT00120/bit0001.pdf The full report