Investor presentation of the Acta Group September 2010
Mar 10, 2016
Investor presentation of the Acta GroupSeptember 2010
IN THE MIDDLE OF THE FINANCIAL CRISISWE BUILT A NEW ACTA
“From an advisory company
to a leading Nordic
financial services group”
Agenda
• Product offering and services
• Acta in brief
• Markets
• Regulatory environment• Regulatory environment
• Competitors
• Acta’s position
Disclaimer: Unaudited 2Q10 and 1H10 figures. No forward-looking statements in this presentation must be understood as any guarantees for the future.
Product offering
Mutual funds * Bonds * Unit linked * Real estate * Shipping * Private Equity * Infrastructure * Index products
Services
• Wealth management
• Investment advisory
• Investment brokering
• Investment trading online
• Corporate finance and advice
• Business services
• Trading & reporting
Objectives
• Business ideaProvide clients with good long-term returns
• VisionActa is a leading Nordic financial services groupActa is a leading Nordic financial services group
� Profitable investments for clients
� Based on competence and quality
� Attractive for shareholders
� Attractive for employees
The Nordic region -one of the most affluent regions
in the world
• Acta holds a strong market position in Norway and
Sweden, and also has a few customers in Denmark
and Finland
• Strong local presence
• 12 advisory offices in Norway
• 12 advisory offices in Sweden
• Investment brokers in Stavanger, Stockholm
and Copenhagen
• 277 permanent employees
• 156 in Norway
• 120 in Sweden
• 1 in Denmark
Assets under Management
• Acta holds a strong market position in Norway and
Sweden, and also has a few customers in Denmark and
Finland
• 89,000 clients
• 37,000 in Norway with an average of NOK 1.2
million in AUM
1 64
5
2 2
Assets under management per asset class (NOK BN)
million in AUM
• 52,000 in Sweden with an average of NOK 0.5
million in AUM
• NOK 68 BN in AUM
• NOK 43 BN in Norway and NOK 25 BN in Sweden
• NOK 28 BN in equity and NOK 40 BN in debt
5
44
Other Shipping Mutual/Hedge Funds
Unit link Index products Real estate
Private Equity Infrastructure
Financial highlights
• Gross subscriptions in 2Q10 at NOK 841 million
• Net income in 2Q10 at NOK 5 million
• Last 4 quarters’ EBIT at ± 0 before one-off costs
• Restructuring business model – increasing recurring revenues
• Strong balance sheet with more than NOK 200 million in cash
and no interest bearing debt
• Market capitalization of NOK 680 million per 27th August 2010
Strategy• Main business: Financial advisory through local presence in major cities
• Norway and Sweden in separated units. Different cultures – different markets
• Experience and knowledge shared between the countries
• Additional business: Investment brokering and Markets in separated units• Developed on the side of Advisory services
• Support: Centralized, with Norwegian and Swedish competence
• Acta provides financial expertise� Neutral advice and distribution in the Nordic region
� Develop investment products
� Unite trading and reporting
AdvisoryNorway Sweden
Investment
broking
Markets
Support
Market potential
• 25 million people in the Nordic region1)
• GDP per capita 2)
Norway: $79.000 Denmark: $56.100
Sweden: $44.000 Finland: $44.500Sweden: $44.000 Finland: $44.500
United States: $46.400 European Union: $33.000
The Nordic HNW client is 50 years old, made his wealth through
entrepreneurship or employment earnings, invests heavily in equities, but
also maintains significant fixed income and cash holdings. He is also
increasingly interested in alternative investments 3)
1) Source: norden.org
2) Source: International Monetary Fund 2009
3) Source: Report - Wealth Management in the Nordic Region 2008, by Datamonitor
Segments
• The strategic segment, as defined by Acta in 2005, are individuals with net investable assets (NIA) of between NOK 100,000 and NOK 10 million.
• Investment brokers: (NIA > NOK 100k ) comprise 14 % of the population in Norway, 10 % in Sweden
• Advisory: (NIA > NOK 500k) comprise 5 % of the population in Norway, 3 % in Sweden
• Denmark with similar figures
• Acta’s strategic segment is between the traditional savings banks’ branch network and private banking target groups
• ’Private banking light’
• This segment have been neglected by other players in the Nordic market and Acta is working upwards towards High Net Worth Individuals (HNWI) / Private banking segment
Total market - High Net Worth Individuals1)
Sweden
Denmark
HNWI 2006E AUM EUR Billion
50 - 55
70 - 75
HNWI IN % of GNP
34
33
0 50 100 150 200
Total
Norway
Finland30 - 35
165 - 185
0 10 20 30 40
24
9 -12
26
1) Defined as capital from clients with more than NOK 2 million in investable holdings
1) Source: McKinsey, Arctic Securities
15 - 20
Market fee structure
Up-
front
Up-front fees will constitute a smaller portion of total
revenues
Margins and transaction fees under pressure
Management fees will be more important
Barriers to entry will increase for new players
Existing market participants will have an advantage
Arra
nge
r
Ma
na
gem
en
t
Su
ccess
Competitive situation• Acta is experiencing less competition from other suppliers of investment advisory services
• Competition is fiercest in the HNWI segment – primarily from banks
• Several smaller and medium-sized competitors have either gone into bankruptcy or decided to
discontinue their operations as a result of the implementation of a new Securities Trading Act / MiFID
and the impacts from the global financial crisis
• Acta has an competitive advantage of having an effective control and compliance function.• Acta has an competitive advantage of having an effective control and compliance function.
• Capital adequacy requirements and the stricter regulatory regime increases the barrier for new
market participants
The major Banks
A few players with a national distributionnetwork
Norway The major Banks
A few players with a national distributionnetwork
Sweden
Regulatory conditionsand Acta’s response
Neutral
advice
Remuneration
Independent advice
Radical changes in industry- MiFID – regulators interpretation
Neutral
fee
structure
Neutral
remuneration
system
Fee structure
Remuneration
Financial crisis ex post
- Demand for liquidity and simple fund-structures
Portfolio account
• No or low initial subscription costs
• Reallocation of portfolio free of
charge
• Transaction fees under pressure
Assets under management - NOK 68 BN
40
Equity Debt
• Transaction fees under pressure
• Clients pay annual fees
• From 1.25% to 2.25% of equity
• Clients receive credit amounts from
suppliers
• Incentives between investor and
advisor aligned � investment
returns
28
Net recurring revenues will increase
by slightly more than 1 percentage
point compared to the situation
today
Stock marketsdi
ndek
s
400
450
500
550
+ 47%
S&P 500 Index
1200
1400
1600OSE Benchmark
Kilde: Reuters EcoWin, Acta Asset Management2008 2009 2010
Osl
o B
ørs
Hov
ed
150
200
250
300
350
400
+ 109%- 64%
Source: Reuters EcoWin, Acta Asset Management2007 2008 2009 2010
Inde
x
600
800
1000
1200
Acta is well positioned
• Market size not a constraint – stable growth
• Broader services provided
• Financially robust
• Regulations and capital requirements met• Regulations and capital requirements met
• Fewer competitors in the market
• Enthusiastic organization
• Portfolio account demanded by clients
OutlookBuilding a solid foundation for the future
• Long term business model in focus – increasing future recurring revenues
• NOK 2.5 billion reallocated to portfolio account
Short term – Q310
• Recruiting existing and new clients to portfolio account
• Launch of portfolio account in Sweden
Medium term – 2011Medium term – 2011
• Recruiting 40 new advisors/brokers
Long term
• Within two years the ambition is to have 50 per cent of the client equity invested through portfolio account
• Within four years the ambition is to have 75 per cent of the client equity invested through portfolio account
Highlights second quarter 2010
Gross subscriptions of NOK 841 million
Revenues of NOK 115 million
Operating earnings of NOK 3 million
Recurring revenues of NOK 67 million, coverage factor to fixed costs of 91%
Assets under management of NOK 68 billion
Successful launch of portfolio account in Norway
SubscriptionsGross subscriptions (mnok) Gross subscriptions per asset class
419
182
439
260
311
750
Sweden Norway
61 % 59 %
15 %
32 %
20 %
26 %
9 %
3 %
6 %
6 %
6 %
37 %
10 %
17 %
8 % 5 %3 %5 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %Bonds
Renewable EnergyInfrastructurePrivate equityShipping
Real Estate
Index
Gross subscriptions of NOK 841 million
Mutual funds and Unit linked with highest demand
284 295
593
425530
182
02Q09 3Q09 4Q09 1Q10 2Q10
28 %
59 %
40 %
0 %
10 %
20 %
2Q10 2Q09 YTD 2009
Index productsUnit Linked
Mutual/Hedge funds
Return on clients’ assets and subscriptions
26,90 %
20 %
30 %
40 %
Average client portfolio mutual fund returns
Mutual funds/Unit
linked67 %
Other33 %
2009
• Returns in NOK, not annualised
• Return on clients’ investments within given fund selection
-5,50 %
2,30 %
26,90 %
-10 %
0 %
10 %
2Q10 YTD Last 12 months
Return on assets for average client portfolio for 2Q10
is -0.6% and 0.4% for the first half of 2010
Mutual funds/Unit
linked79 %
Other21 %
1H10
Assets under management
1 64
5
5
44
2 2
Assets under management (bnok) Assets under management per asset class1)
51 50 47 46 43
27 27 26 25 25
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
90,00
Norway Sweden
78 77 7371 68
Decrease in AUM of NOK 2.3 billion compared to previous quarter
Maturity of Index products of NOK 2.5 billion
Partly offset by NOK 0.8 billion in gross subscriptions
44
Other Shipping Mutual/Hedge Funds
Unit link Index products Real estate
Private Equity Infrastructure
1) Billion NOK
0,00
10,00
2Q09 3Q09 4Q09 1Q10 2Q10
Key financial data
Total revenues down NOK 18 million
compared to the second quarter of 2009
Recurring revenues of NOK 67 million
Reduction in revenues reflects lower
margins and maturity of Index products
Total costs reduced by NOK 54 million
compared to second quarter 2009
2Q 2Q 1-2Q 1-2Qmnok 2010 2009 2010 2009 2009Transaction revenues 47 61 74 125 195Recurring revenues 67 71 135 148 293Other revenues 1 0 2 0 2
Total revenues 115 132 211 274 489
Variable operating costs 12 14 20 26 47Activity based costs 23 25 42 49 93Fixed costs 73 114 150 210 359 compared to second quarter 2009
Net income in the second quarter was
NOK 5 million (NOK -32 million), which
translates to an EPS of NOK 0.02,
compared with NOK -0.13 in the
equivalent quarter of 2009.
1) After tax
Fixed costs 73 114 150 210 359Depreciation a.o. 4 12 11 18 27
Operating earnings 3 -34 -12 -30 -36
Net income 5 -32 -5 -27 -36
EPS 0.02 -0.13 -0.02 -0.11 -0.14
ROE1) - annualised 6% -37% -3% -15% -21%
89,000 clients37,000 in Norway and 52,000 in Sweden
•Stable number of clients both in Norway and Sweden compared to previous quarter
•Average assets under management per client
48 000 52 000 53 00052 000
50 000
60 000
70 000
80 000
90 000
100 000
Sweden Norway
management per client
•Norway NOK 1.2 million
•Sweden NOK 0.5 million
•Average NOK 0.8 million
•Total revenues from existing clients1)
•Norway 85 percent
•Sweden 98 percent
1) YTD - New clients defined as clients with no placed orders prior to 1st Jan 2010
35 000 34 000 34 000 37 000
0
10 000
20 000
30 000
40 000
50 000
2007 2008 2009 2Q10
Revenues
141 132
103114
97115
100
150
200
2502009 2010
Total revenues (mnok)
7871 73 7268 67
30
40
50
60
70
80
90
1002009 2010
Recurring revenues (mnok)
0
50
1Q 2Q 3Q 4Q
Quarterly revenues down NOK 18 million from 2Q09Lower margins
Weak gross subscription volumes in Sweden
Recurring revenues of NOK 67 million, down from NOK 71 million from 2Q09Recurring revenues in line with budget
0
10
20
30
1Q 2Q 3Q 4Q
Costs in line with target
75 - 100400
450
500
Fixed Activity-basedFixed & activity-based costs (mnok)
Activity-based costs in 2Q10 ended at
NOK 23 million
210150
300 - 325
49
42
75 - 100
0
50
100
150
200
250
300
350
1H 2009 1H 2010 Target 2010
Fixed operating costs were reduced by
NOK 41 million or 36% compared with
the second quarter in 2009
20 per cent of total second quarter
operating costs are activity-based and
thus scalable
Variable operating costs
12
14
11 1112
10
20
2009 2010Variable operating costs at NOK 12
million, compared to NOK 14 million in
2Q09
Of total second quarter operating costs,
10% are variable9
0
10
1Q 2Q 3Q 4Q
New remuneration system from 3Q10
Fixed & activity-based operating costs
Fixed & activity-based operating costs (mnok) Recurring revenues/costs 1)
59
36
45
24
25
26 19 23
100
150
200
Activity Based Costs Fixed Costs
50 %
60 %
70 %
80 %
90 %
100 %
110 %
Fixed costs reduced by NOK 41 million from 2Q09
Activity-based costs down NOK 2 million from 2Q09
Recurring revenues covers 91% of fixed costs in the quarter
1) Strong third quarter ratio all years due to replacement of salaries with accrued vacation pay in Norway in July.
115 96
115 95
114
68 81 76 73
18 19 23
-
50
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
20 %
30 %
40 %
50 %
2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10
Fixed costs
Operating earnings
42
-9
-15
3
-10
0
10
1Q 2Q 3Q 4Q
2009
2010 Operating earnings of NOK 3 million
The improvement in operating earnings is
driven by lower operating costs as a result
of the restructuring carried out in 2009,
partly offset by lower revenues.
-34
-15
-40
-30
-20partly offset by lower revenues.
Lower cost base and reduced operational
risk make Acta well positioned to ensure
future profitability
Balance sheet
Total assets at the end of the second
quarter were NOK 423 million, up from
NOK 415 million the previous quarter.
Acta has very limited risk on its balance
sheet
MNOK 30.06.10 30.06.09 31.12.09
Fixed assets 18 29 19Goodwill 16 6 6Other intangible assets 48 40 46Deferred tax asset 25 27 13Trade receivables 65 72 41Other receivables 29 24 26Bank deposits/Treasury bills 222 253 262
Total assets 423 452 411
The Group’s liquidity situation is still
strong, with net bank deposits of NOK
222 million at the end of the quarter
The Group is financially robust
Equity 336 331 321
Accounts payable 1 0 14Taxes payable 11 10 0Overdraft facility 0 0 0Other taxes and duties payable 15 21 18Salaries/commissions payable 24 48 27Other short term debt 37 42 30
Total debt 86 121 90
Total equity and debt 423 452 411
Norway
80
6456
625966
-
50
100
1Q 2Q 3Q 4Q
8
-19
10
-2-5
4
-25
-15
-5
5
15
25
1Q 2Q 3Q 4Q
465
284 295
593
425
530
0
400
800
1Q 2Q 3Q 4Q
2009 2010
Gross subscriptions (mnok) Operating earnings (mnok)Revenues(mnok)
1Q 2Q 3Q 4Q
4 4 4
9
67
-
5
10
15
1Q 2Q 3Q 4Q
1Q 2Q 3Q 4Q
70 70 6980 76
0
50
100
150
2Q09 3Q09 4Q09 1Q10 2Q10
15301512 1471 1389
12651173
0
1000
1Q 2Q 3Q 4Q
Gross subscriptions/Advisor 1) (mnok) AUM/Client (knok)
1) Includes branch managers, advisors and brokers
Advisors 1)
Sweden
6168
4752
37
49
0
50
100
1Q 2Q 3Q 4Q
-1
-11
-3
4
-6
1
-20
-10
0
10
20
1Q 2Q 3Q 4Q
483
419
182
439
260311
0
400
800
1Q 2Q 3Q 4Q
2009 2010
Gross subscriptions (mnok) Revenues (mnok) Operating earnings (mnok)
148
8776 76 83
0
50
100
150
200
2Q09 3Q09 4Q09 1Q10 2Q10
3 3
2
6
3 4
0
5
10
1Q 2Q 3Q 4Q
528504 511 493
473 479
0
400
1Q 2Q 3Q 4Q
Gross subscriptions/Advisor 1) (mnok) AUM/Client (knok)
1) Includes branch managers, advisors and brokers
Advisors 1)