annual report 2009.
IN THE MIDDLE OF THE FINANCIAL CRISIS WE BUILT A NEW ACTA.
WE create good long-term return for our customers
content. Facts
4
Historical highlights
5
Chief Executive Officer’s comments
6
Highlights of the year
10
Main figures for Acta
12
Clients
16
Markets
22
Products
24
Risk management and internal control
26
Organisation
30
Acta Group and Acta Holding ASA - Directors’ report 34
41
Acta Group - IFRS Consolidated income statement
41
Consolidated balance sheet
42
Consolidated statement of changes in equity
44
Consolidated cash flow statement
45
Notes to the consolidated accounts
46
Acta Holding ASA - NGAAP
67
Company income statement
67
Company balance sheet
68
Company cash flow statement
70
Notes to the company accounts
71
Auditor’s report
78
Articles of association
79
Shareholder information
80
Corporate governance
84
Offices
90 ACTA Annual report 2009
3
FACTS. Acta is a financial group serving the Nordic market consisting of the parent company Acta Holding ASA and the subsidiaries Acta Asset Management AS, Acta Kapitalforvaltning AS, Acta Försäkringsplanering AB, Acta Corporate Services AS and Axir AS.
Acta has provided investment advice since 1990 with clients in Norway, Sweden and Denmark. Since its inception, Acta has grown to the point at which we now have 87 000 clients with assets worth NOK 73 billion managed by Acta. Acta works together with leading fund managers all over the world and offers more than 300 investment products in shipping, real estate, private equity, renewable energy, index products, unit linked insurances, mutual funds, infrastructure and corporate bonds.
The Group’s head office is in Stavanger. Acta has 24 advisory offices in Norway and Sweden. As of 31 December 2009, the Group had 246 employees of which 146 are investment advisors. Acta is under supervision by the respective Financial Services Authorities in Norway, Sweden and in Denmark.
4
ACTA Annual report 2009
Historical highlights. 1990
The company is established in Stavanger and initially operates purely as a distributor of loan and insurance products.
1990-1997
Operations in Norway expand at a rapid pace. In 1997 Acta has NOK 2 billion of assets under management for its customers.
1998 2000
Acta merges with Sundal Collier & Co.
2001
Acta expands and develops into a financial conglomerate. Acta Bank, Acta Link and Acta Online are established. On 16 July 2001 Acta is listed on the Oslo Stock Exchange.
2002
The steep decline of the stock market has a negative effect on Acta’s development. It is decided that Acta Bank, Acta Link and Acta Online are to be sold. This takes place over a two-year period.
2003
The turning point comes. The second quarter is the first to show a positive result since 2000. Assets under management have reached NOK 18 billion. The expansion gathers pace. New offices are opened in both countries and the recruitment of new staff is intensive.
2007
The best year ever for Acta. The expansion continues. Acta is established in Denmark and opens an office in Copenhagen. In the course of 2007 assets under management in the Nordic countries grow to NOK 90 billion. New and stricter rules for financial consulting are introduced through the MiFID Directive.
2008
Acta is hit hard by negative press coverage in connection with criticism of the distribution of so-called structured products. In addition the global economy is shaken by a financial crisis not seen since the 1930s. Acta has to adapt to the new regulatory frameworks and undertake a major consolidation of its operations.
2009
The financial markets recover and a new Acta with new management is formed. Acta has used this turbulent period to mark a new course and has emerged with greater strength from the events the group has been through.
Acta commences operations in Sweden and establishes an office in Stockholm. Ten years on, assets under management reach NOK 10 billion. So begins an eventful and dramatic phase. Acta and Sundal Collier & Co. decide to part company. March sees the start of a stock market decline that lasts three years.
ACTA Annual report 2009
5
I am convinced that the products and portfolios we put together will give our clients a good return on their investment in years to come. Geir Inge Solberg, CEO
CHIEF EXECUTIVE OFFICER’S COMMENTS
QUALITY - EVERY STEP OF THE WAY. 2009 marked the start of a new era for Acta. In the wake of a dramatic financial crisis Acta implemented a number of changes and adaptations.The course that was marked followed a guiding light: Quality – every step of the way.
ACTA Annual report 2009
7
CHIEF EXECUTIVE OFFICER’S COMMENTS
Introduction 2009 was a year of recovery in the financial markets - and the formation of a new Acta. Acta has used this turbulent period well. We have marked a new course and emerged with greater strength from the events the company has been through. Acta has become a better company. Today Acta is the only pure investment advice company of any significant size left in the market. Industry requirements have become so stringent that the majority of our competitors are no longer in operation.
Changes and quality The financial crisis and new regulatory frameworks led to Acta having fewer employees in 2009. At the same time we have strengthened other areas in the company, particularly within qualityassurance. Now in 2010 we are in the process of recruiting more advisors and expect to grow in the future. Acta’s advisors in Norway are currently in the process of completing a certification test that will ensure higher quality in their meetings with clients. The advisors are tested on the topics of finance, customer service, laws and regulations. It now appears that Acta will be one of the first financial operators in Norway to certify all its advisors. This is a certification process we are very proud of and one that will raise the standard both of Acta’s financial advice and in the industry in general. Our Swedish advisorshave had an authorisation process for many years. Acta has also worked extensively on new guidelines and procedures for our actual investment advice for clients, and tightened control of how this is carried out. A group that we call the Pre-control Team goes through all investment advice and transactions and approves these before they are implemented. We have also expanded our internal quality control functions to ensure that we all follow both the detailed legal rules and the guidelines we have prepared ourselves. This provides additional reassurance that the advice we give is appropriate and that the documentation is complete.
New client concepts - stable client base The changes have also resulted in guidelines for how Acta is to work with different customer groups in the future. Three new methods to serve clients were launched in 2009 based on how much each client wishes to place in investments through Acta. Acta Direct is the new service for our smaller clients and those who wish to take their own investment decisions without requiring investment advice. Acta Direct clients can invest in a large range of products and receive guidance and answers to their questions through our new customer centres staffed by competent Acta employees. Larger clients who request investment advice will be served as before by our competent investment advisors from 24 offices
8
ACTA Annual report 2009
around Norway and Sweden. This service concept is now called Acta Invest. Acta Invest clients prefer closer follow-up and receive advice about the composition of their own investment portfolio. The third customer segment is called Acta Partner and is aimed at our largest clients. Acta Partner clients gain access to a team of advisors who put together portfolios for the most advanced investors.The clients are introduced to tax and legal resources. The new service methods and control measures mean that the client’s considerations, even more than before, are at the forefront of everything we do. This applies both when selecting the specific investment products we will offer clients and when we give advice on how to structure portfolios. For example, this means that clients will receive a more through explanation of all types of risk related to the products, and they will receive more comprehensive information before investments are made and more time to considertheir decisions. This also means that some customers will not be permitted to invest in certain investment products if these are not suitable. Acta’s client base continued to be stable throughout 2009. In December 2009, Acta has a total of 87 000 clients. Of these, 34 000 were from Norway and 53 000 from Sweden. It is gratifying that clients continue to remain loyal.
The Lehman case The Lehman case has been most unfortunate and we regret the situation facing some of our customers in the wake of the unexpected Lehman bankruptcy. This bankruptcy was completely beyond Acta’s control. We have done our utmost to try to find solutions to the problems this caused for our clients. Many of these foreign currency bonds that were issued by Lehman Brothers and distributed via Acta, were financed using loans through Kaupthing Bank. A proposal was presented in February 2010 whereby clients with loans were offered a compensation plan entailing the writing down of 40 per cent of the loan. More than 80 per cent of the affected clients accepted this offer from Kaupthing..
Two new products - mutual funds rise in value Acta continues to introduce investment opportunities to clients. In 2009, Acta launched two new products, corporate bonds through the company Cobond AS and commercial real estate in London through London Opportunities AS. Cobond AS was offered to Acta’s clients via JR Söderberg, the family office of the well-known Swedish industrial family JR Söderberg. Corporate bonds were an exciting investment opportunitylast year with financial markets emerging from a crisis. The strategy underpinning Cobond AS is to exploit existing market conditions and buy corporate bonds at a low price, and then sell them when the markets return to normal. The financial crisis also led to a dramatic fall in the price of commercial real estate in London. This led to buying opportunities
CHIEF EXECUTIVE OFFICER’S COMMENTS
in London’s financial district at heavily reduced prices. The company London Opportunities aims to exploit this fall in prices and expects an increase in this real estate market when the economyis in better shape. Acta’s most popular investment product in 2009 was mutual funds. We expanded our range of funds with several exciting additions. Our clients invested heavily in mutual funds from the autumn of 2008 and throughout 2009. These clients have had a pleasant journey. Acta’s core selection gave an average return of 38.5 per cent while the higher-risk selection produced an impressiveaverage return of some 65.8 per cent.
Alternative investments in 2010 The financial crisis that struck the financial markets in 2008 led to investors all over the world abandoning investments involving risk and moving into risk-free alternatives. We have never lost faith in what we are most renowned for – alternative investments. Acta is convinced that the products and portfolios we put together will give our customers good returns in the future. There will always be a risk related to investments, and the extent of that risk will always be related to the returns required. Acta focuses on the long-term view and spreading risk over different forms of investment. This will be profitable over time even for those who have lost money in times of crisis. The financial crisis has taught us something about the liquidity of portfolios. We must plan to ensure that a client’s investment portfolio always has sufficient liquidity. Many alternative investmentscannot be quickly cashed in and clients should therefore always have some funds invested in liquid securities. We maintain our belief that affluent Norwegians and Swedes should have an independent financial advisor, in order to be presented with new ideas and gain a different perspective. We in Acta can provide clients with more investment opportunities and more energy. I believe that Acta is the most dynamic operator within mutual funds and alternative investments. The whole world, our clients and we in Acta have been part of the credit bubble of recent years, which burst in the autumn of 2008. The authorities in the EU, and in Norway, now want the financial market to be more regulated – and this is understandable. Of course we want to be part of this. Acta plans on being a good partner for our clients in the future too. This means that we have to develop. The changes we have been through make us even better equipped for the future.
Geir Inge Solberg Born: 1956 Marital status: Married, three children Education: Master in Business and Economics from the Norwegian School of Economics and Business Administration (NHH) In August Geir Inge Solberg took over the position of CEO in Acta. Solberg grew up in Bergen and has a Master in Business and Economics from the Norwegian School of Economics and Business Administration (NHH). Solberg has worked within finance since completing his studies in 1981. He began his career at Bergen Bank and some years later he moved to Bergens Skillingsbank where he became bank manager for private customers. He was also insurance and markets director at Vital. Solberg started Norway’s first unit linked insurance company in 1997, before the Chairman of the Board of Acta Holding, Alfred Ydstebø, brought him to Acta in 2000. In Acta, Solberg worked as insurance director and later investment director until he was asked to make the move to CEO in August.
Best regards,
Geir Inge Solberg
ACTA Annual report 2009
9
highlights of the year. 11.02.2009
29.04.2009
Weak fourth quarter, but a robust financial position and well prepared for a tough market in 2009.
Profitable operations during challenging market conditions.
13.03.2009 New advisory director in Sweden.
12.05.2009 Acta adapts its organisation for new client service concepts. Final report from the Norwegian Financial Supervisory Authority as expected.
Jan feb mar 10
ACTA Annual report 2009
apr may jun
28.10.2009
21.12.2009
Acta is back on track.
Acta acquires Axir.
Long-term stock option programme for all employees in the Acta Group.
25.06.2009 Acta received the final report from the Swedish Financial Supervisory Authority after the inspection of Acta Kapitalforvaltning’s Swedish branch.
12.08.09 New Acta and a new CEO. Geir Inge Solberg takes over the top spot.
Changes in share price Acta Holding, Oslo Stock Exchange.
aug sep
oct
nov dec ACTA Annual report 2009
11
Main figures for acta
Main group figures. main group figures 2009
2008
2007
2006
2005
Transaction revenues
195
615
1 990
1 623
1 118
Recurring revenues
293
320
258
166
100
2
3
22
26
15
489
938
2 270
1 814
1 234
46
161
612
441
274
1
-2
5
5
4
Total variable expenses
47
159
616
446
278
Activity-based salary and personnel expenses
15
43
59
36
9
Other activity-based operating expenses
77
159
161
126
94
Total activity-based expenses
93
201
220
161
103
Fixed salary and personnel expenses
241
304
264
204
148
Other fixed operating expenses
118
129
90
71
54
Total fixed expenses
359
433
354
276
202
All amounts in millions of NOK
Other revenues Total operating revenues Variable salary and personnel expenses Other variable operating expenses
27
20
10
9
14
-36
125
1 069
919
646
Net financial items
-9
39
37
18
6
Income taxes
-9
53
314
265
184
-36
111
792
672
469
Depreciations and write-downs Operating earnings
Net income for the year Key group figures
2009
2008
2007
2006
2005
Gross subscriptions (MNOK)
3 161
9 872
26 356
20 475
14 559
Gross margin (%) 1) Assets under management (MNOK)
6.2%
6.2%
7.6%
7.9%
7.8%
73 375
88 579
90 118
70 233
48 795
Return on equity (%) 2)
-11%
18%
90%
88%
80%
Operating margin (%) 3)
-7%
13%
47%
51%
52%
Earnings per share (NOK)
-0.14
0.44
3.15
2.67
1.86
Diluted earnings per share (NOK)
-0.14
0.44
3.15
2.67
1.86
Book equity per share (NOK)
1.28
1.42
3.52
3.05
2.34
Dividend paid per share (NOK)
0.00
2.55
2.65
2.00
1.25
4.1
2.5
22.7
33.0
17.9
Number of shares at end of period (million)
251.7
251.7
251.7
251.7
251.7
Number of shares, diluted (million)
251.8
251.7
251.7
251.7
251.7
Share price as of 31.12. (NOK)
Gross margin = Transaction revenues/Gross subscriptions. Return on equity = Net income before taxes/Average equity. 3) Operating margin = Operating earnings/Total operating revenues. 1) 2)
Group financial figures have been prepared in accordance with IFRS.
12
ACTA Annual report 2009
8
100
7 80 6
5
60
4 40
3
2 20 1
0
0 2005
2006
2007
2008
2009
2005
Gross margin (%)
2006
2007
2008
2009
Return on equity (%)
60
3.5
3.0
50
2.5 40 2.0 30 1.5 20 1.0 10
0.5
0
0.0 2005
2006
2007
2008
2009
2005
Operating margin (%)
2006
2007
2008
2009
Earnings per share (NOK)
3.0
4.0
3.5
2.5
3.0 2.0 2.5
1.5
2.0
1.5
1.0
1.0 0.5 0.5
0.0
0.0 2005
2006
2007
2008
Book equity per share (NOK)
2009
2005
2006
2007
2008
Dividend paid per share (NOK)
2009
Main figures for acta
main segment figures.
2009
2008
2007
2006
2005
Acta Norway
1 637
3 784
16 017
11 707
9 857
Acta Sweden
1 524
6 088
10 339
8 768
4 702
New Markets
0
0
0
0
0
Corporate
0
0
0
0
0
3 161
9 872
26 356
20 475
14 559
Acta Norway
47 239
56 692
58 527
47 119
35 247
Acta Sweden
26 137
31 887
31 591
23 114
13 548
New Markets
0
0
0
0
0
Corporate
0
0
0
0
0
73 375
88 579
90 118
70 233
48 795
Acta Norway
262
468
1 498
1 145
906
Acta Sweden
227
469
772
669
327
New Markets
0
0
0
0
0
Corporate
0
0
0
0
1
489
938
2 270
1 814
1 234
Acta Norway
-3
79
794
614
533
Acta Sweden
-15
108
308
329
143
New Markets
-9
-37
-25
-3
-3
Corporate
-9
-26
-8
-21
-27
-36
125
1 069
919
646
Acta Norway
-9
79
589
449
390
Acta Sweden
-10
74
226
235
103
New Markets
-12
-27
-18
-2
-2
-5
-14
-4
-10
-22
-36
111
792
672
469
All amounts in millions of NOK Gross subscriptions
Total Assets under management
Total Operating revenues
Total Operating earnings
Total Net income
Corporate Total
14
ACTA Annual report 2009
30 000
100 000
25 000
80 000
20 000
60 000 15 000
40 000 10 000
20 000
5 000
0
0 2005
2006
2008
2007
2009
2005
Gross subscriptions
2006
2007
2008
2009
Assets under management
1 200
2 500
1 000
2 000
800 1 500 600 1 000 400
500
200
0
0 2005
2006
2008
2007
2009 2005
Operating revenues
2006
2007
2008
2009
Operating earnings
500
100 000
400
80 000
300
60 000
200
40 000
100
20 000
0
0 2005
2006
2007
2008
2005
2009
Number of branch managers, advisors - Total
Norway
2006
2007
2008
Number of clients - Total
Sweden
New Markets
Corporate
2009
Some clients require expert help and close follow-up while others prefer to manage their portfolio online. The three new client concepts cover all types of investors.
16
ACTA Annual report 2009
clients
Client policy in Acta
Three new client concepts. Acta’s core business is to help clients with their investments – whether in face-to-face meetings, on the telephone, internet or via e-mail. Today we have four different companies serving clients under Acta Holding. Acta Asset Management offers the two new concepts of Invest and Partner. This company provides investment advice. Acta Kapitalforvaltning offers the concept Acta Direct, providing order management. Acta Försäkringsplanering is a licensed insurance broker and runs the concepts of Direct, Invest and Partner. We also have the company Axir that was formally taken over in early 2010. Many of Axir’s customers fit in well with the Invest and Partner service concepts.
Acta’s three client programmes are aimed at three client groups Acta Partner For Acta’s major clients or corporate clients planning to carry out large-scale investments and requiring expert help. Acta Partner clients gain access to a team of advisors. They also receive help from external experts within business law and tax.
Acta Invest For investors who have large and complex portfolios. Acta Invest clients receive active and professional advice and comprehensive post-investment support. Acta Invest clients receive a tailor-made portfolio matching the desired return and risk.
Acta Direct For independent investors who require easy access to attractive savings products. The service covers simple internet access to a large and unique selection of products, market-based recommendations through Acta’s investment brokers and clear reporting. Acta Direct clients buy and sell on their own but with personal guidance by internet, telephone or e-mail from our investment brokers.
The benefits of being an Acta Partner client Acta Partner clients gain access to a team of Acta’s most experienced advisors who follow up investments and help the client reach their investment goals. • For companies and Acta’s largest clients • Advice from a team of experts • Access to tax advice and legal experts • A broad portfolio with good potential for dividend payments and returns • Access to advanced investment instruments
ACTA Annual report 2009
17
clients
Access to a team of experts Acta Partner clients gain access to their own expert team led by experienced investment advisors who thoroughly familiarise themselves with your financial situation and the goals you have for your investments. An expert team determines the level of risk and return that is required and helps with tax, legal and insurance questions.
Tailor-made portfolio Clients gain access to more than 300 investment products from the leading supplier’s on the market as well as an individually adapted portfolio that ensures a good spread of risks and excellent potential for annual dividends and good returns.
Market analyses Clients gain access to the latest investment trends and updates on the situation in the world’s markets through advisors, client magazines, internet presentations and newsletters.
Reports Reports are sent by post and a unique web page is established where the clients can follow the progress of their investments via the internet at any time. Annual tax reports are also sent to clients.
The benefits of being an Acta Invest client Acta Invest clients are assigned a certified investment advisor who monitors investments made and helps clients to reach their savings goals. • A specifically tailored portfolio of savings products • Advice • Close follow-up • Access to a wide range of investment products
Advice Acta Invest clients are assigned their own certified financialadvisor. An investment portfolio is drawn up together with the client that is tailor-made for their situation,required returns and risk.
Close follow-up Acta Invest clients have a close relationship with their advisor.
18
ACTA Annual report 2009
The advisors continuously follow market movements and keep their client updated with regard to market movements that can affect their portfolio. The client receives updates on what is happening in global markets through client magazines, internet presentations and e-mail.
The best savings products in your portfolio Acta’s presence in financial environments allows us to pick up signalsand trends at an early stage. With access to more than 300 investment products from the leading supplier’s on the market we put together a portfolio that is adapted to the individual client and that ensures a good spread of risks. The portfolio has excellent potential for annual dividends and good returns.
Follow the progress of your investments The clients can follow the progress of their investments on a unique web page via the internet at any time. They can also receive investment reports by post in addition to annual tax reports.
The benefits of being an Acta Direct client In the Acta Direct customer programme clients invest when they themselves decide to do so – with help from the on internet or from our investment brokers. Clients gain access to exciting savings
clients
products, high quality, straightforward information about the products, the latest market analyses and general recommendations from Acta’s experts. • Straightforward product information • Good guidance from Acta’s brokers • Clear reports and updates by post and online • Market analyses and general recommendations from Acta’s experts • Opportunity to invest in 300 products, some exclusive to Acta
by e-mail or telephone as required. This team consists of investment brokers who present general savings opportunities and clarify the risk involved in the products without providing advice specifically adapted to the client’s situation. Clients make their own independentchoices. The investment brokers contribute with practical guidance, and help you to carry out buying and selling. The brokers also contact clients proactively, for example to inform them of opportunitiesin the market.
Wide product range
Follow the progress of your investments
Clients have access to more than 300 savings products from the leading suppliers on the market, and can choose between exciting investment products including mutual funds, real estate, unit linked insurance, warrants, shipping, renewable energy and private equity. Our experts recommend products they believe will have a good potential for annual dividends and good returns.
Clients receive reports by post and a unique web page is established where the clients can follow the progress of their investments via the internet. Clients also receive annual tax reports.
Rapid response and good help from Acta’s brokers Acta Direct gives access to a team of brokers who reply
Analyses from Acta’s experts Clients receive updates on what is happening in global markets. News is presented via client magazines, internet presentations and e-mail.
ACTA Annual report 2009
19
clients
Clients and quality assurance. In order for Acta to operate, a number of support functions and departments are required. The product department, as an example, analyses markets and finds investment solutions with external suppliersin which customers wish to invest.
Customer satisfaction surveys are carried out several times a year to ensure that the client’s requirements always come first. Part of the remuneration package for advisors depends on the client’s level of satisfaction. An administration department in Stavanger ensures that all transactions and investment orders are carried out in the correct way and at the right time. After the extensive reorganisation carried out by Acta in the summer the quality and control departments have been strengthened and been allocated extra resources. We have introduced new procedures and working models for those who meet clients and those who work in other parts of the organisation. There is a long process that clients do not see which takes place
20
ACTA Annual report 2009
both before and after the advisory meeting. Here we will provide a glimpse behind the scenes and show what happens in the departments in Acta that you normally do not have contact with. Some of this work has been carried out in Acta for many years while some of it is new.
Certification of advisors In 2009 certification requirements were introduced for all financial advisors in Norway. Acta’s HR department is responsible for the certification of advisors and office managers. This arrangement was established as a collaborative measure between Finance Norway (FNH), The Finance Sector of Norway, The Norwegian Savings Banks Association and The Norwegian Mutual Fund Association (VFF). Investment advisors undergo a theory test consisting of 110 questions to assess the advisors’ level of competence within areas including personal finances, macroeconomics, ethics, regulations,products and financial markets. In addition they must complete a practical test that primarily focuses on best practice for the provision of investment advice. The aim of these tests is to ensure high quality and a high level of professional ethics in the advice given to our clients. Investment advisors must take an updated version of this test every two years. Acta attaches great importance to this – our goal is to be the first company in the industry to certify all its advisors.
Compliance department Compliance comes from “to comply with”. In other words the compliance department is responsible for ensuring that Acta
clients
Work at the office
c omplies with applicable laws and regulations. The department’s task is to make sure that central functions and local advisory offices follow the applicable laws and regulations as well as internal guidelines and instructions. An important part of this work is to ensure that we are continuouslyup to date with relevant laws and regulations; but it is also vital to be aware of current industry practice. The Group’s compliance department has many employees with different backgrounds and experience. The department’s areas of work are extensive. In addition to a good understanding of the financial industry, competence within law, finance, customer service and marketing is also required. A very important task is to ensure that we have good processes in place to ensure a high degree of knowledge of applicable laws and regulations among the employees in the organisation and have good channels for continuous updating in the event of change. Acta is a large corporation with offices in many locations in three countries and it is important that the entire organisation keeps itself up to date.
Thorough analysis The provision of investment advice is based on a thorough situation analysis undertaken during the personal meeting. This analysis is in turn based on the client’s situation and goals. From this analysis and a subsequent suitability test the advisor draws up an investment proposal. This makes things easier for the client, who does not need to go through the situation analysis each time a new investment is to be carried out. At the same time the advisors receive a new tool to find suitable products for suitable clients. This change entails that it will become clearer which products in the range are suitable for the client to invest in. When the client’s knowledge and experience is weighed up against his or her investment goals an investment profile is created that the advisor and client can use later when choosing investment solutions.
Acta’s local offices have an important role in quality assurance work. The office manager is responsible for its operations and ensures that procedures and control functions are in place. The manager has documents and guidelines drawn up by the compliancedepartment to assist in this work. As well as organising work at the office, the manager has a more direct role. Normally the office manager is not involved in customer meetings and investment advice, but in certain cases the manager must give their approval before transactions can be carried out. When the customer has signed a subscription form and the advisor has registered the order in the computer system, all forms are passed on to the office’s sales and control coordinator. Coordinators have an important control function and have always been a part of Acta’s offices. But this role has become increasingly important with expanding requirements for documentationintroduced by the government. Coordinators check that the process was properly completed; including proper identification checks and that the client has time to reflect on their decision. The coordinator also ensures that all paperwork is signed and that the order is correctly registered in the IT systems.
A final check It is a matter of course that Acta strives for high quality in its investment advice operations. But it is just as important that the documentation of such advice is of a high quality. Documentation requirements are increasingly strict and Acta has established a team with the task of controlling the documentation that accompanies new transactions. The pre-transaction control department is charged with reviewing and controlling situation analysis and investment proposals. It is not the advice or provision of advice that is controlled,but that the client has received all the information that he or she should receive in accordance with laws and internal guidelines. That which is discussed in advisory meetings must be documentedand the department is clear that this if for the benefit of the customer. Only when the final internal check has been completed can the transaction be carried out. What began as a requirement analysis by an advisor has now – via procedures designed by the compliance department and controls carried out by key persons on both the local and central level – become a buy order. To finish, the administrativedepartment in Stavanger carries out the purchase.
ACTA Annual report 2009
21
Brazil, Russia, India and Hong Kong expect high value creation in the coming years. Ann-Elisabeth Tunli Moe, Director - Investment Research & Asset Allocation
MARKETS
FROM FINANCIAL CRISIS TO STOCK MARKET RALLY. The sentiment in financial markets changed from extreme pessimism to rising optimism in the first quarterof 2009. This marked the start of a periodof hectic activity and strong stock market rallies. Oslo Stock Exchange’s OSEBX index climbed 65 per cent in 2009. In 2008 the index fell 54 per cent. Insurance companies had to sell shares to reduce the risk in their portfolios. Funds sold shares to increase liquidity in order to pay investors who sold fund units. Hard-pressed investors were forced to sell shares to meet loan repayments or other liabilities. Sellers were in the majority. Potential buyers saw no reason to hurry; the chances were high that they would be able to buy the same shares even cheaper the next day. North Sea Oil hit a low of 34 dollars a barrel in the week after Christmas 2008. One year later the price had risen to 80 dollars a barrel. The oil price has a great effect on share prices on Oslo Stock Exchange. But it was not only oil-producing countries that experienced
marked stock market gains on the previous year. When the majority of compulsory sales had been carried out and investors again beganto focus on the opportunities offered by stock markets, share prices rose rapidly – particularly in the new emerging markets of Eastern Europe, Latin America and Asia. In Euro terms the MSCI indexes for Brazil and Russia rose by 139 per cent and 124 per cent respectively in 2009. The equivalent indexes in India and Hong Kong produced returns of 85 per cent and 55 per cent respectively for the year. These four countries are referred to by the acronym “BRIC”. High growth in overall value creation is expected for the BRIC countries in coming years and this will also create an opportunity for higher returns than that expected in the more established markets. The financial crisis that reached its peak in the autumn of 2008 quickly spread to the real economy. Development was met with zero-interest rate policy and fiscal policy crisis measures over much of the world. The development of financial markets following the inevitable phasing out of the fiscal policy crisis measures is now a central topic in economic and political discussions. Sooner or later national budgets must be balanced at levels that are sustainable in the long term, which is not the case in many countries. Many are concerned about whether politicians will be capable of taking the necessary and unpopular decisions to increase taxes or reduce spending – or preferably both. There is a danger that expansive monetary policy will result in undesirably high inflation in many countries in years to come.
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PRODUCTS
A WIDE PRODUCT RANGE. Acta is a leading investment advisory corporation in the Nordicmarket which offers more than 300 savingsand investment solutionsto private investors and companies. Acta has providedinvestment advicesince 1990 and has been instrumental in the introduction of alternative investments to the private market. Here is a brief description of Acta’s product range. Mutual funds Acta’s clients have access to the leading funds from the best fund managers. Clients have access to a large number of different funds, from broad-based funds that invest all over the world to specialised funds that invest in individual industries or in specific regions. Acta employs substantial resources to analyse both funds and
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fund managers. We find the funds that have a good track record for asset management and have good prospects for the future. During our methodical work we find a certain number of particularly interestingfunds which we follow more closely. There are normally between 25 and 30 funds on Acta’s fund focus list. Acta is an independent distributor of mutual funds and offers around 70 funds from the fund managers that Acta’s product departmentsconsider as being the most attractive.
Index products Acta offers two types of structured products. The first is index-linked bonds which are currently only offered to Acta’s Swedish clients. Index-linked bonds combine a bond part with a stock option part. The bond part is used to secure the principalso that investors, under normal circumstances, receive at least their invested capital on maturity (less costs). The stock option part is linked to the development of specific markets such as for example the stock market, currency market or raw material market. Acta also offers warrants in the Norwegian market. A warrant is a stock option where the return is linked to the development of a specific market. Acta offers warrants with various terms and aimed at different markets. Usually a warrant is linked to the development of the stock market, currency market or raw material market. A warrant gives a right, but not an obligation, to buy or sell an underlying asset for a predetermined price at a specific point in time. Investing in warrants provides the opportunity for high returns but also entails high risk.
PRODUCTS
Private equity Acta offers private equity funds via investment companies. Acta was one of the first to offer this form of investment to private individuals. Such investments were previously the preserve of large institutional investors and extremely wealthy individuals. Acta’s private equity portfolio mainly consists of private equity funds, but also contains a number of direct investments. We aim to gain access to the very best private equity funds and work with well-renowned affiliates.
Infrastructure
hiring the vessel are responsible for operation, maintenance and the crew. Those hiring the ship must also cover the costs resulting from an interruption in operations and the resulting loss of income. By investing in a ship where the rental income is agreed for many years at the time of purchase, earnings and returns will be more stable. The main risk involved in this type of investment is therefore related to the ability of those hiring the ship to pay the rental charges as well as the residual value of the ship at the end of the rental period. Companies are built up consisting of several different types of ship and different maturity dates for the rental contracts to ensure a good risk spread.
Acta was the first in Scandinavia to offer infrastructure as a form of investment for private persons. Investors in infrastructure via Acta become part-owners in airports, waterworks or electricity networks, among others. Infrastructure investment is a type of investment upon which society depends. This means that such investments are well- protected against changes in economic cycles. The aim of this form of investment is to gain access to longterm, predictable earnings, stable demand and a good rate of return. Acta enables clients to invest in companies that buy various kinds of infrastructure investments.
Unit-linked insurances
Real estate
Corporate bonds
Acta offers investments in various real estate companies including those that purchase and manage commercial property and private rental accommodation. Such real estate companies primarily invest directly in real estate. The rental income from the buildings in which investment is made provides the opportunity for continuous returns and annual dividend payments. The portfolio companies are managed for up to 10 years, but may also be sold before this based on market-related assessments. Acta offers real estate investments with different target returns and different risk profiles. Clients can invest in long-term portfolios, where the focus is on long-term tenants and predictable cash flow, or in so-called opportunistic companies that aim to achieve rapid value growth in real estate markets that have fallen considerably. Long-term real estate investments have historically provided good rates of return and annual dividend payments. This is Acta’s most popular investment product.
In the spring of 2009, Acta introduced investment in corporate bonds through the company Cobond AS. Corporate bonds are interest-bearing instruments issued by a company. The price of corporate bonds fell sharply in the aftermath of the financial crisis. The strategy underpinning Cobond AS is to exploit this fall to buy corporate bonds at a low price and hold them until the bonds mature or sell them when the markets return to normal. The market for corporate bonds is characterised by largescale buy and sell orders and is generally inaccessible to smaller investors.
Shipping Investors in shipping become co-owners in a shipping portfolio where investment is made in vessels which are then hired or leased to shipping companies. Shipping investments are carried out through so-called “bareboat” agreements with those hiring the ships. This means that Acta’s clients invest in the ship, while those
Unit-linked insurances are savings products that combine insurance with investment in a mutual fund. Unit Link is a savings plan fund offered by Acta through, among others, Vital Forsikring, SEB and Skandia. This savings form combines favourabletax rules related to saving in insurance products with the good returns possible through a mutual fund. Saving or insurance is normally associated with a fixed interest rate or guaranteed minimum return from a bank or insurance company. The returns from unit-linked insurances are linked to the returns that the saver himself achieves through his fund positions.
Renewable energy Acta also launched investment products in renewable energy in the spring of 2009. The company Fornybar Energi 1 AS invests in wind, solar and hydroelectric power plants in Europe. These power plants are owned and managed for a period of up to seven years, but can also be sold before this if the growth in value is exceptionally good. Acta expects a major demand for renewable energy in the future. There is broad private and public agreement on the need to increase research and expansion in the sector to counteract climate change. This gives a solid foundation for growth for investments in renewable energy.
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risk management and internal control
Risk management and internal control. Through good risk management and internal control Acta shall ensure efficient operations and the appropriate handling of risks which are of importance in achieving the business goals of the group. Over the last year, Acta has implemented major changes in its management systems and internal control procedures to further strengthen this area of operations. Extensive organisational changes have been made and the emphasis on risk management in the management of operations has been strengthened. Acta’s approach to risk is not to eliminate risk but to ensure that risks are identified, assessed, limited and monitored in a balanced manner. The Board of Directors decides the degree to which Acta shall take risks. Risk management is integrated at all levels in Acta and is part of all decision making processes. In order to improve quality within the commercial processes in Acta new client concepts have been implemented consisting of close dialogue and communication with clients. Furthermore, we have introduced the mandatory certification
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of all financial advisors in Norway within the field in line with the equivalent requirements that have existed in Sweden for many years. A new incentive programme has been established with a long-term perspective for the employees, including a stock option agreement and bonus scheme. This is a measure that will ensure long-term and sustainable results, as well as attract – and keep – good employees. To ensure uniform business management and quality in the Acta Group a common set of internal instructions and guidelines has been established. Acta has established a separate quality assurance department called Pre-control. Pre-control is charged with safeguarding the quality of the investment advice provision process – checking that the customer has received the service he/she is entitled to in accordance with internal guidelines and regulatory conditions. The result of this work constitutes a part of the continuous improvement work in Acta, together with the other control work undertaken in Acta. The formal organisation of Acta’s control functions was further developed in 2009 to ensure good management and control. An independent compliance function was established in all the companies in the group, in addition to a central compliance function that monitors changes in laws and regulations, assists the compliance functions in the different companies and carries out controls in the different companies. Implementation has been successful and allows Acta to promote itself as a quality-conscious financial corporation with good management and control – for the benefit of its clients and shareholders.
risk management and internal control
Roles and responsibilities in risk management and the internal control structure in Acta The Board of Directors and the audit committee The Board of Directors in Acta Holding has the ultimate responsibility for the group’s business operations including all ongoing risk management and internal control. The Group Board of Directors has prepared ethical guidelines, guidelines for how to deal with conflicts of interests and internal guidelines for own account and insider trading. A risk management and internal controlpolicy has also been established for the Group. The Group Board of Directors has established a clear division of responsibilities between the Board and executive management through instructions for the Group Board of Directors and the Group CEO. The group has a clear organisational structure. The Group Board of Directors has determined the overall Group risk profile, as well as annual risk limits. These risk limits are determined in relation to overall goals and strategies stipulated by the Group Board of Directors. The various principles are transferred down to the group’s subsidiaries. In 2006, Acta set up an audit committee made up of three Board members as a preparatory body for the Board of Directors. The audit committee undertakes quality assurance of the group’s internal control, internal audit and risk management systems and ensures that these function effectively. The audit committee ensures that risk management and internal control arrangements are established in accordance with laws and regulations, decisions, Norwegian Financial Supervisory Authority orders and guidelines given by the Board to management. An important part of this work is to follow up on management’s execution of its control responsibility. The audit committee meets with the external and internal auditor at least once each year. The audit committee reports to the Group Board of Directors. The Group Board of Directors assesses its work and its competencewith regard to risk management and internal control in the group at least once each year.
Managing Director The Managing Director is responsible for establishing appropriate internal control and risk management in line with the principles stipulated by the Group Board of Directors. The Managing Director is responsible for ensuring the high quality of all work. Acta has established a structure whereby line management carry
out systematic controls of and follow up on the quality of all processes. This is a part of the continuous improvement work in business operations. As a part of the control work the Managing Director receives constant quality reports from various units. In addition to the continuous management reporting process, an overall assessment of risk management and internal control is made each year and presented to the Group Board of Directors. This report presents the most significant risks in Acta and how these are managed. The same principles apply to the Managing Directors of subsidiarycompanies where appropriate.
Compliance and risk manager function In order to strengthen risk management and internal control Acta has established a compliance and risk manager function, both for the group and in the individual companies. The Risk manager is responsible for coordinating the risk management processes in the respective companies as well as ensuring that risk reporting presents a correct and complete picture. This also entails administrating the guidelines for risk management and undertaking training and competence building. The function also assists the Managing Director in reporting risk to the Boards of Directors of the various companies/Group Board of Directors. The Compliance function was established to ensure that Acta complies with the increasingly complicated rules applying to its operations. This covers both external regulations stipulated by the authorities and internal guidelines within Acta. The Compliance
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risk management and internal control
all sections carry out risk assessments. The individual managers in the Group are responsible for helping to identify, assess and managerisk and internal control arrangements within their areas.
Risk management framework
function has been established in all companies and reports directly to the Managing Director. The function is aware of the relevant regulations in force at any given time and ensures that these are included in Acta’s internal guidelines. A specific control plan has been drawn up for the function so that constant spot checks are carried out within the central regulations as part of the process of ensuring that the organisation complies with the rules. The function must also ensure that the risk management methods for which the group CEO and Managing Directors are responsible are in accordance with the policy for risk management and internal control decided by the Group Board of Directors.
Internal audit unit Acta has established an internal audit unit to ensure that the Board’s intentions are complied with. The internal audit unit checks that internal control procedures are established and work as intended. The unit also assists the Board of Directors, Managing Director and subsidiaries with accounting expertise and capacity, including follow up and control of work in selected subsidiaries. The internal audit unit reports the results of its audit activities to the Board of Directors in the subsidiaries, audit committee and the Group Board of Directors. The unit checks to ensure that necessary action is taken.
External audit Acta’s external auditor carries out the mandatory financial audit. The external auditor reports to the annual general meeting. The external auditor also takes part in meetings with Acta’s audit committeeand the Group Board of Directors.
Risk management in Acta The risk management process is fundamental in achieving the group’s goals. Acta’s approach to risk is not to eliminate risk but to ensure that risks are identified, assessed, limited and monitored in a balanced manner. Risk management in Acta is linear, whereby
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ACTA Annual report 2009
Acta has established a uniform risk management method for the Group. The principles for how risk management is to be implementedin Acta are laid down in a separate framework based on internationally recognised principles such as the Committee of Sponsoring Organizations of the Treadway Commission, COSO, recommendations given by the Norwegian Corporate Governance Board (NUES), and regulatory requirements from the Norwegian Financial Supervisory Authority. This covers the entire risk management process and defines the principles and templates to be used in the process. The framework provides guidelines and explains the processes for how effective risk management is to be implemented. The common risk management method aims at ensuring a common understanding of risk in the Group. Furthermore, the Group Board of Directors stipulates the overall risk profile in Acta. The risk review covers risk assessments, action plans and reporting. Identified risks are followedup on a quarterly basis as part of management reporting. Risk management in Acta consists of the following stages: risk mapping, risk assessment, risk handling with the creation of an action plan, monitoring and reporting.
Risk mapping Risk mapping in Acta begins with the group determining the priority of focus areas to apply to the forthcoming period. These, together with the current business plans for the respective subsidiary will create the basis for deciding the areas subject to risk assessment. The Board of Directors and management of the respective subsidiary will define these together. The aim of this approach is to document significant activities, relevant goals and the risks that can threaten the achievement of these goals. The Acta Group has defined a set of risk categories. Risk mappingis undertaken at the strategic, process and project levels. In this way all important risks are included and a complete risk picture is created to be handled and monitored.
Risk assessment, controls and action Management and relevant key personnel carry out the assessment of significant risks. Risk assessment is undertaken by assessing identified risks with regard to the probability of a risk occurring
risk management and internal control
and the consequence if it does occur, assuming that existing controlsare functioning. For the risks that are found to lie beyond the risk tolerance, further hand-ling is decided and if applicable, risk-reducing measures are put in place. At least once a year all significant risks are reviewed for all companies, based on defined goals and strategies for the Group. The Managing Director systematically decides whether the risk management and internal control arrangements are sufficient to handle identified risks in an appropriate manner. Risk assessments are fundamental in the Managing Director’s report to the Group Board of Directors.
Monitoring and reporting Information about changes in the level of risk is an important part of management’s control information and a significant part of operations management. Therefore risk assessments and risk reporting must coincide with other business management and reporting. Management is involved in the work of establishing a regime for the periodic monitoring of control parameters, both performance indicators (KPI) and risk indicators (KRI). The activities stated above are documented and a summary with conclusions about the risk situation and need for new measures is prepared for the specific company. The Managing Directorpresents the Board of Directors with an overall evaluation of the risk situation for handling at least once a year. The Board of Directors monitors the individual risks throughout the year.
Monitoring of risk and controls
The most important strategic risk is the development of financial markets and clients’ willingness to invest in Acta’s products. In 2009, the matter regarding of bonds from Lehman Brothers was an important risk for Acta. This case has now been resolved. The Group Board of Directors and executive management continuously monitor the strategic risk and implement adaptations with regard to the risk picture.
Operational risk Operational risk is defined as the risk of losses resulting from insufficientor failed internal processes, human error, system failure or losses due to external incidents. Operational risk also covers the risk that business operations do not comply with laws and regulations,as well as risks connected with the use of ICT systems. The quality of the advisory process is an important operational risk for Acta that the group has concentrated its efforts upon. The group has established a good system for the management of operational risk and the operational risk is considered to be low.
Financial risk Credit risk relates to the risk of clients or other counterparties failing to meet their obligations in accordance with agreed terms and that security pledged will not cover amounts outstanding. Acta has credit risk related to banks and counterparties. Interest risk arises in connection with the funding of operations and the group is also exposed to currency risk, particularly related to activities in Sweden. These risks are continuously monitored and the risk level is considered to be low.
Information about changes in the risk picture and in the underlying risk areas is also an important part of management’s control information and an important part of risk management. In cases where monitoring concludes that there is a need for further action and controls, the manager responsible must ensure that all improvement measures are implemented by the stipulated deadlines.
Risk factors for Acta Acta is exposed to several types of risk. The most important are defined within the risk categories of strategic risk, operational risk and financial risk.
Strategic risk Acta’s strategic risk exposure is important to the group’s earnings.
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Organisation
NEW GROUP MANAGEMENT.
From left to right:
Sveinung Byberg
Stein Morten Bjelland
Managing Director of Acta Kapitalforvaltning since August 2009. Graduated from Handelshøyskolen BI (Norwegian School of Management), experience from GE Consumer Finance. Employed in Acta since 2005.
Deputy Managing Director of Acta Asset Management since 2009. Degree in marketing with experience from GE Capital Scandinavia. Came to Acta in 2001.
Tom Pettersen Advisory Director Norway since August 2009. Degree in business marketing from Handelshøyskolen BI (Norwegian School of Management). Employed in Acta since 2000.
Jan Sigurd Vigmostad Head of Acta Markets since August 2009. Business economist with an MSc degree (siviløkonom) from the Norwegian School of Economics and Business Administration (NHH). Employed in Acta since 1997.
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ACTA Annual report 2009
Christian Kvist Managing Director of Acta Försäkringsplanering since autumn 2008. Degree in marketing from IHM Business School. Employed in Acta since 2004.
Jostein Viken Managing Director of Acta Asset Management AS since 2009. Business economist with an MSc degree (siviløkonom) from the Norwegian School of Economics and Business Administration (NHH). Employed in Acta since 1995.
THE GROUP MANAGEMENT
Mathias Andersson
Geir Inge Solberg
Advisory Director Sweden since 2009. Authorised financial advisor with experience from Skandia. Employed in Acta since 2000.
CEO since 2009. Business economist with an MSc degree (siviløkonom) from the Norwegian School of Economics and Business Administration (NHH) and experience from Vital. Employed in the Acta Group since 2000.
Morten Flørenæss Managing Director of Acta Corporate Services. Authorised auditor. Employed in Acta since 2000.
Christian Tunge Chief Financial Officer since December 2006. Degrees in business economics, law and international management, experience from Statoil.
Rune Wangsmo
Ann-Elisabeth Tunli Moe Investment Research and Asset Allocation Director since August 2009. Master of Science in economics. Employed in Acta since 2000.
Simon Kling (not present when picture was taken.) Marketing Director since September 2009. Diploma in business economics from Företagsekonomiska Institutet. Employed in Acta since 2005.
Public Relations Director since February 2006. Degree in economics from the University of Cologne. Former financial reporter at Dagens Næringsliv.
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Organisation
NEW ORGANISATION. The Acta Group consists of the parent company Acta Holding ASA and the wholly owned subsidiaries Acta Kapitalforvaltning AS, Acta Försäkringsplanering AB, Acta Asset Management AS, Acta Corporate Services AS, and with effect from March 2010, Axir AS. Acta Holding ASA has no operational activities in its own right aside from ownership duties, group duties and exercising active ownership of its subsidiaries. Acta Kapitalforvalting AS is a securities company with a concession to receive and arrange orders on behalf of customers and certain other affiliated services. The company operates “Acta Direct” – the group’s service concept for smaller clients and those who wish to take their own investment decisions. Acta Försäkringsplanering AB is licensed as a Swedish insurancebroker, and is also the agent for Acta Asset Management
Corporate structure
in Sweden. The company runs the group’s principal operations in Sweden, namely the provision of investment advice to clients. Acta Asset Management AS is a securities company with a concession to provide investment advice and receive, arrange and execute orders on behalf of customers and certain other affiliated services. The company runs the group’s principal operations in Norway, namely the provision of investment advice to clients. Axir AS is a securities company licensed to provide investment advice, receive, arrange and execute orders on behalf of customers, buy and sell financial instruments on own account, place public tenders, arrange issues and guarantees in addition to certain other services. Acta Corporate Services AS provides internal administrativeservices.
Acta Holding asa Acta Corporate services as
Acta kapitalforvaltning as
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ACTA Annual report 2009
Acta asset management as
Acta Försäkrings planering ab
AxiR As
THE BOARD OF DIRECTORS
Stein Aukner - Vice Chairman Aukner is a partner in Norscan Partner AS, where he provides advice within finance, economics and strategy. Business economist with an MSc degree (siviløkonom) from the Copenhagen Business School.
Ellen Math Henrichsen Henrichsen is the Managing Director of Måltidets Hus. She has a Bachelor’s degree in commerce from the University of Windsor in Ontario, Canada.
Alfred Ydstebø - Chairman of the Board
Harald Sig. Pedersen Pedersen has held distinguished positions in business for many years and currently operates his own consultancy firm. Business economist with an MSc degree (siviløkonom) from the Copenhagen Business School.
Ydstebø has played a central role in the development of the Acta Group, including as CEO from 1993 to 2005. He has an MBA from Handelshøyskolen BI (Norwegian School of Management).
Ragnhild Kvålshaugen Kvålshaugen holds a doctorate in economics and is an associate professor at BI Norwegian School of Management. Prior to this she was a senior researcher at SINTEF and an advisor at Bankakademiet.
ACTA Annual report 2009
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DIRECTORS’ REPORT
ACTA GROUP AND ACTA HOLDING ASA
DIRECTORS’ REPORT. The Acta Group The Acta Group consists of the parent company Acta Holding ASA and the wholly owned subsidiaries Acta Kapitalforvaltning AS, including Acta Kapitalforvaltning AS’ Swedish branch Acta Kapitalförvaltning and Acta Kapitalforvaltning AS’ Danish branch Acta Kapitalforvaltning, Acta Försäkringsplanering AB, Acta Asset Management AS and Acta Corporate Services AS and with effect from March 2010 Axir AS.
Overview of our activities and where we operate Acta has become the largest independently owned investment advisor in the Nordic region since the group was established in 1990, and we have ambitions to strengthen this position further. Acta has a well-developed distribution network and is represented in Norway, Sweden and Denmark. Acta’s head office is in Stavanger and the group has 24 permanent advisory offices and three client centres for order processing and investment brokerage located in the most important population centres in Scandinavia. The group’s principal operations are the development, selection and distribution of investment products as well as individual investment advice and the processing of investment orders. In addition, the group executes and brokers orders and keeps securities in safe custody on behalf of clients. Acta works primarily in the segment for clients who have between NOK 100 000 and NOK 25 million at their disposal for savings and investments. Acta Holding ASA has no operational activities in its own right aside from ownership duties, group duties and
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exercising ownership of its subsidiaries. The group’s operations are managed from the head office in Stavanger. Acta Kapitalforvalting AS is a securities company with a concession to receive and arrange orders on behalf of customers and certain other affiliated services. The company operates “Acta Direct” – the group’s service concept for smaller clients and those who wish to take their own investment decisions. Acta Försäkringsplanering AB is licensed as a Swedish insurance broker, and is also the agent for Acta Asset Management in Sweden. The company runs the group’s principal operations in Sweden, namely the provision of investment advice to clients. Acta Asset Management AS is a securities company with a concession to provide investment advice and receive, arrange and execute orders on behalf of customers and certain other affiliated services. The company runs the group’s principal operations in Norway, namely the provision of investment advice to clients under the client concept “Acta Invest”. Axir AS is a securities company licensed to provide investment advice, receive, arrange and execute orders on behalf of customers, buy and sell financial instruments on own account, place public tenders, arrange issues and guarantees in addition to certain other services. Acta Corporate Services AS provides internal administrative services.
Going concern assumption In accordance with Section § 3-3 of the Norwegian Accounting Act, we hereby confirm that the accounts have been prepared based the assumption that the business is a going concern.
DIRECTORS’ REPORT
Corporate governance and company management Acta Holding ASA has one share class, and each share carries one vote at the company’s general meeting. In March 2010, the Board of Directors exercised the authority given by the company’s general meeting to issue 4 677 866 new shares as 80 per cent payment for the acquisition of Axir AS. The remaining 20 per cent will be paid for through the issue of new shares at a later date. The Board of Directors has not exercised its authority to purchase treasury shares. In 2009, the Board of Directors awarded share options to all employees in accordance with the authorisation granted by the general meeting. All subsidiaries are wholly owned, and there are thus no conflicts of interest with minority shareholders. There have been no material transactions between the group and the shareholders, the Board of Directors, or the management. Potential conflicts of interest between the Board of Directors and these groups are dealt with by the Board of Directors. The Board of Directors of Acta Holding ASA complies with the current “Norwegian Code of Practice for Corporate Governance” at any given time. The Board of Directors has provided an account of Corporate Governance in Acta in a separate chapter in the annual report.
Information on the working environment, equal opportunities and impact on the external environment In connection with the restructuring of the group many employees left Acta. This resulted in a substantial reduction in the group’s organisation. At the end of 2009, the group had 251 employees, 246 of whom worked full-time and 5 worked part-time in less than 50 per cent of full-time equivalent positions. The number of fulltime employees was reduced by 237 during the year. At the end of the year, 134 of the full-time employees were employed in the Norwegian operations, 111 were employed in the Swedish operations,and 1 person was employed in the Danish operations. At the end of 2009, 21 persons were employed in substitute and temporary positions. 18 full-time employees were on leave at the end of the year. Acta Holding ASA had three employees at the end of the year. The workforce reduction was carried out in close cooperation with the employees. The Board of Directors regards the working environment in Acta as good. The Acta Group is distinguished by highly qualified employees with positive attitudes. Sickness absenteeism totalled 23 149 hours in the financial year, which corresponds to approximately 2.1 per cent of the total working hours, compared with 2.7 per cent in 2008. The Board of Directors is satisfied with
this development, particularly in light of the challenging year we have put behind us. The reduction of sickness absenteeism is still a priority task. There were no reported personal injuries, property damage or accidents of any significance in 2009. The nature of the group’s activities is such that they have a very minor direct impact on the external environment. Acta’s goal is to ensure diversity within the group, and will recruit, develop and retain the best employees, regardless of gender, ethnicity or physical impairment. Acta will ensure this through directed recruitment processes. Central processes connected with payment and working conditions, and a personnel policy which takes the need to combine career and family life into account, together protect employees against bullying and unfair treatment. Acta carries out two employee surveys per year to identify challenges to employee satisfaction. The Board of Directors and management of Acta attach importance to equal opportunities between the genders and endeavour to facilitate this through personnel policy in terms of salary, promotion and recruitment. Of the group’s 246 full-time employees, 76 are women and 170 are men. The company’s Board of Directors consisted of two women and three men at the end of 2009. The company actively seeks women to take leading positions, including positions on the Board of Directors.
Comments on the annual accounts In the view of the Board of Directors and Chief Executive Officer, the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in equity and the consolidated cash flow statement, and the notes attached for the group and the company income statement, the company balance sheet and the company cash flow statement with attached notes for Acta Holding ASA provide a full and fair account of the operations for the year and the financial position of the group at the end of the year. No circumstances have arisen since the end of the financial year to affect this assessment of the companies’ or group’s results and financial position that are not presented in the director’s report or the annual accounts.
Revenues The group’s revenues totalled NOK 489 million in 2009, compared with NOK 938 million in 2008. The reduction in demand for the group’s savings and investment solutions along with clients demanding liquid products with lower margins combined to cause this decline compared with last year. A major reduction in the number of employees throughout the year has also had a negative
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35
DIRECTORS’ REPORT
the highest gross subscriptions have been in equity funds and insurance solutions, with 45 and 35 per cent, respectively, of the total gross subscriptions. Throughout 2009, Acta continued to offer its clients secondary trading of shares in established investment companies. Assets managed for clients fell from NOK 89 billion at the beginning of the year to NOK 73 billion as at 31 December 2009. This decline is primarily due to index products maturing, currency effects and falls in the value of real estate. Recurring portfolio revenue totalled NOK 293 million in 2009 compared with NOK 320 million in 2008. At the end of the year more than 90 per cent of the client assets under management contained an element that generates recurring revenue for the group, while almost 100 per cent of new sales contain recurring revenue elements. In 2009, recurring revenue covered 65 per cent of the fixed and activity-based costs, compared with 50 per cent in 2008. Acta Holding ASA has no operational activities in its own right and no operating revenues in 2009. effect on revenues. Furthermore, the negative press coverage throughout the year in connection with products distributed by Acta has had an impact on operations. On the other hand, historically low interest rates together with the generally positive developments in the stock market were positive for subscriptions throughout the year. Acta’s primary focus in 2009 was on adapting to the new regulatory framework in the market and offering our existing clients excellent care and first-class advisory services. Stricter and more demanding framework conditions, combined with the repercussionsof the global financial crisis, have necessitated major changes to Acta’s organisation. As a result of the current market situation it was decided to change the company’s business model in 2009. Acta’s advisory business will now concentrate on the provision of personal service to clients with extensive funds to invest. It was decided that smaller clients would no longer receive one-to-one follow-up but instead be served by central competence centres. Although Acta essentially maintained the office network the overall number of employees required was reduced. The number of branch managers and investment advisors at the advisory offices was reduced by 184 persons – from 330 to 146 persons. The Board of Directors is of the opinion that Acta had an efficient smooth running organisation and motivated employees in the beginning of 2010. For 20 years, Acta and collaborating funds managers and banks have developed and marketed products that are well suited to the Nordic savings market. In terms of revenue, the sales and distribution of insurance products have been Acta’s most important asset classes, apart from recurring portfolio revenues. Acta maintained its dominant position in the real estate syndication market in both Norway and Sweden, and this market represented the second most important asset class for Acta in terms of revenue in 2009. In 2009, Acta launched corporate bonds as a new asset class. The real estate product London Opportunities was also launched in 2009. For the group,
36
ACTA Annual report 2009
Earnings The Acta Group reported operating losses of NOK -36 million in 2009, compared with operating earnings of NOK 125 million in 2008. After tax the loss was NOK -36 million, a reduction of NOK 148 million compared with 2008. This decline reflects a substantial revenue reduction of NOK 448 million due to the combination of significant decline in gross subscriptions from clients of NOK 6 711 million, from NOK 9 872 million in 2008 to NOK 3 161 million in 2009 and a different product mix. This revenue reductionwas counteracted in part by a NOK 220 million reduction in the variable and activity-based costs due to a significant decline in the volume of business. Fixed costs were reduced by NOK 74 million in relation to 2008. This reduction is attributed primarily to lower personnel costs due to a significantly smaller organisation. The annual accounts were subject to a NOK 40 million charge for restructuring expenses, of which NOK 5 million is related to tax. The group’s tax charge for the year was NOK -9 million, compared with NOK 53 million in 2008. The effective tax rate was 19.3 per cent for 2009. The corresponding figure for 2008 was 32.1 per cent. The net income for the parent company/Acta Holding ASA totalled NOK -29 million, which primarily reflects group contributionsand dividends received from the operative subsidiaries,as well as write-downs. A valuation of the shares in the subsidiary Acta Kapitalforvaltning has been undertaken. This valuation shows that shares in Acta Kapitalforvaltning AS have a value of NOK 134 million, and against this background is written-down with NOK 108.138 million. Acta Holding ASA reported operating earnings of negative NOK 11 million. The earnings achieved in 2009 and the group’s development in general is considered weak, but acceptable nevertheless under the circumstances in light of the major changes Acta implemented during 2009.
DIRECTORS’ REPORT
Balance Sheet The group’s total assets declined from NOK 614 million at the end of 2008 to NOK 411 million in 2009. This change reflects primarily a reduction in cash and cash equivalents totalling NOK 178 million. Acta’s consolidated equity was NOK 321 million at the end of the year, which represents an equity ratio of 78.1 per cent. The corresponding figures for 2008 were NOK 357 million and 58.1 per cent, respectively. The NOK 36 million reduction from the end of 2008 is primarily attributable to the NOK 36 million loss in 2009.
Cash flow and liquidity In 2009 the group had a negative cash flow from operating activities of NOK 127 million, where the payment of taxes and the negative earnings for the year represented the largest items. The cash flow from investment activities was negative at NOK 16 million, and cash flow from financing activities was zero. Liquidity was satisfactory at the beginning of the year and still satisfactory at the end of the year. The group’s net cash and cash equivalents totalled NOK 262 million at the end of 2009. The group also had unused overdraft facilities totalling NOK 60 million. The group expects that the liquidity situation will continue to be good in 2010.
Segment information Norway In 2009, Acta maintained its position as one of the leading players in the savings and investment market in Norway. At the end of the year the company was represented throughout Norway by 12 permanent advisory offices, in addition to a centrally-located client centre for order processing and investment broking in Stavanger. At the end of the year, Acta had around 34 000 clients in Norway. The number of permanent employees was 132, compared with 244 one year previously. The number of branch managers, investment advisors and client consultants declined from 144 to 69 in the course of the year. Operating revenues totalled NOK 262 million in 2009, compared with NOK 468 million in 2008. Operating earnings totalled a loss of NOK -3 million, compared with NOK 79 million in 2008. The Financial Supervisory Authority of Norway conducted an on-site inspection of Acta Kapitalforvaltning’s Norwegian operations in September 2008. The following month the company was informed that the Authority had uncovered some conditions which could be criticized, but that they were not of such a character that would cause the concessions under which the company operated to be withdrawn. A final report from the Authority was delivered in May 2009, in which the Authority ordered a correction, because the Authority did not believe that the venture’s practices fully satisfied the requirements of the Securities Trading Act. Acta
apitalforvaltning has complied with the instructions and orders K imposed by the Financial Supervisory Authority of Norway and has made the necessary changes to ensure that the company’s operations meet the requirements of the authorities at all times. During 2009 Acta continued to strengthen the Compliance function and now carried out a pre-control process for certain client investments before such investments are made.
Sweden Acta has had operations in Sweden since 2000. At the end of the year the company was represented by 12 permanent advisory offices, in addition to a centrally-located client centre for order processing and investment broking in Stockholm. Our client base remained stable at approximately 53 000 during the year. The number of permanent employees was 113, compared with 235 a year ago. The number of branch managers, investment advisors and client consultants declined by 108 persons, from 184 to 76, during the period. The operating revenues totalled NOK 227 million in 2009, down from NOK 469 million in 2008. Operating earnings totalled a loss of NOK 15 million, compared with NOK 108 million in 2008. In Sweden, Acta has marketed and distributed products that contain a bond portion issued by Lehman Brothers Treasury B.V, whose parent company is under bankruptcy protection, totalling more than NOK 1 billion. The products are arranged by Kaupthing Bank Sweden and Acta has thus no direct exposure to LehmanBrothers. This case has been a major strain for clients and the Swedish organisation, and Acta has therefore allocated significant resources to help affected clients to safeguard their investments as well as possible. In February 2010, it was announced that Acta Kapitalforvaltning and Kaupthing Bank hf. had found a solution regarding the bonds that Acta had sold its clients in 2006/2007 issued by Lehman Brothers. The agreement entails that the clients who had financed their investment using loans through Kaupthing and who wish to accept the proposal will repay 60 per cent of their loans to Kaupthing in return for Kaupthing taking over the bonds. Taking into account tax effects, this entails just under 50 per cent for the majority of clients. The proposal was generally received positively by our clients and over 80 per cent have accepted Kaupthing’s offer. Around 450 of the clients affected have complained to Acta Kapitalforvaltning and are considering legal action. The company considers the risk of such law suits to be relatively limited as Acta Kapitalforvaltning is only responsible for the provision of advice and this was given on an individual basis. This assessment is also supported by the fact that in all decisions regarding this case the Swedish National Board for Consumer Complaints (ARN) has found that Acta Kapitalforvaltning is not liable to pay compensation to its clients. No provisions have been made in the accounts for claims by clients related to Lehman Brothers.
ACTA Annual report 2009
37
DIRECTORS’ REPORT
New Markets
Other regulatory matters
The New Markets segment was established at the beginning of 2005, and it focuses on growth opportunities for the company in both new and existing markets. The segment had one employee at the end of 2009, in addition to resources allocated to the segment from the rest of Acta. Acta operates in the Danish market, and all of Acta’s clients in Denmark are served from the office in Copenhagen, with support from the head office in Stavanger. Operating earnings totalled a loss of NOK 9 million in 2009, compared with a loss of NOK 37 million in 2008.
In the summer of 2009, Acta Kapitalforvaltning received the final reports from both the Financial Supervisory Authority of Norway and the Financial Supervisory Authority of Sweden after the inspection of Acta’s operations which had taken place since the autumn of 2008. During the inspection and the following process both countries’ supervisory authorities pointed out issues which they found to be of a serious nature. Acta Kapitalforvaltning responded to these reports and initiated measures to ensure compliance with the requirements imposed by the authorities. The issues pointed out by the Norwegian FSA have been rectified while there is an ongoing process with the Swedish FSA regard to meeting the requirements in its final report. Acta has and has always had a good and constructive dialogue with both the Norwegian and Swedish FSA and works actively to preserve this good relationship for the future. Acta has no other outstanding issues with the regulatory authorities. During 2009, the Acta Group strengthened the Compliance function to ensure that the entire group operated within the applicable laws and regulations at all times.
Corporate At the end of 2009, Acta Holding ASA had three employees and no operational activities aside from ownership responsibilities, important group duties and actively exercising ownership in the subsidiaries. Acta Corporate Services AS had 29 employees at the end of the year including four on leave and provides internal administrative services in accounting, marketing, human resources and IT. Substantial portions of the IT operations have been outsourced to external partners. The company has no external revenues, but covers its costs by providing services to all other group entities in accordance with internal service agreements. The combined operating earnings for the segment were negative NOK 9 million, compared with minus NOK 26 million in the previous year, and primarily account for an operating loss in Acta Holding ASA due to costs that have not been allocated to subsidiaries.
Regulatory matters Capital adequacy requirements Acta Holding ASA is subject to capital adequacy requirements on a consolidated basis, cf. Section § 8-12 of the Securities Trading Act. The consolidated requirements for equity and subordinated capital as of 31 December 2010 are estimated based on the highest of the requirements for investment companies plus cover for credit risk calculated based on the group’s combined assets. Net equity and subordinated capital is estimated as NOK 256.5 million and shows a surplus of NOK 193.6 million with regard to the government requirement of 8 per cent of the calculation bases. Provisional calculations show that there will not be any significant increase in the required consolidated equity and subordinated capital for 2010. Acta Kapitalforvaltning AS returned its licence to provide investment advice in 2009 and is now only authorised to provide order processing with the reduced capital adequacy requirements this entails. Due to the capital adequacy requirements there are restrictions on the opportunities to transfer funds between the companies in the group.
38
ACTA Annual report 2009
Risk assessment The Board of Directors has carried out a review of risk management in the Acta Group. The Board of Directors and CEO consider the most significant risk for the Acta Group’s operations to be a failure in the advisory processes in that recommended investment solutions do not match the requirements of and suitability to the client. Product selection processes where there is a failure in the quality control of fund managers will also represent a risk for the group. An increase in the number of client complaints in general and particularly related to the aforementioned products containing bonds issued by Lehman Brothers is also one of the most significant risk factors for the group. We now see that the number of complaints has fallen following the introduction of new and stricter requirementsfor the advisory process. Acta also has significant challenges with regard to improvingits standing and reputation – particularly in the Swedish market. Acta will work hard to ensure good communication with the media, clients and regulatory authorities on order to ensure that Acta promotes itself as the serious and high quality group we believe ourselves to be.
Strategic risk A decline in the demand for products offered by Acta, whether due to a generally weak market or because of poor reputation, will represent a strategic risk factor for the Group. The same is true of a decline in income in the form of margins lower than desired. Acta has implemented action plans to counteract the negative effects of these risks. Furthermore, the failure of the business model itself whereby financial profits are not achieved is a risk that
DIRECTORS’ REPORT
must be classified as strategic. The failure of routines and other conditions of a serious nature at our most important business partners, as well as the risk that Acta is unable to comply with the regulatory requirements made of the group at any given time, will also be important strategic risk factors. Acta has detailed these risks in an analysis and considers the strategic risk factors to be manageable.
Operational risk Failures in the most central processes in the group represent an operational risk. Errors in the advice we give to clients, transaction errors, products that do not perform as expected as well as errors and failures in computer systems used in the Group are all examples of operational risk. The Acta Group and its subsidiaries have carried out these risk assessments and implemented measures to make this risk as low as possible.
Financial risk The Acta Group has little exposure itself to financial instruments. The group’s liquidity is in the form of bank deposits and/or Norwegian government certificates with a short maturity and a very low price risk. The group does not have any interest-bearing debt beyond the aforementioned overdraft facility, and it has thus limited exposure to interest rate risks relating to debt capital. Otherwise, the financial market risk is primarily limited by the fact that future earnings will be affected by market price fluctuations for the company’s products, as well as general market fluctuations. A continuing negative trend in the savings and investmentmarket in general may result in dissatisfied clients due to the poor return on their invested capital. Such a development may entail a risk of reduced business with existing clients. An increase in the number of complaints from clients may entail an increased risk of lawsuits, but the risk of class action and such, actually succeeding is considered to be relatively limited. Future portfolio revenue will vary with fluctuations in market prices for the client portfolios under management. The foreign exchange risk in the Acta Group is largely associated with the fact that a significant portion of the group’s operations are in Sweden. The profit attributable to the Swedish organisation represents around 30 per cent of the group’s operating earnings, compared with around 85 per cent in 2008. The Danish operations represent a relatively limited share of Acta’s overall operations. Based on the development and expectations in the foreign exchange and interest rate market, the Board of Directors has assessed the foreign currency risk to be moderate, and it has no plans for currency hedging at the present time. As of 31 December 2009, Acta Holding ASA had outstanding guarantees valued at around NOK 15 million, in addition to unconditional guarantees for certain property rental agreements entered into by Acta Kapitalforvaltning AS. The rental guarantees have a remaining duration of between one to five
years. The total guarantee obligation for these is NOK 8.3 million. The risk that contracting parties will not have the financial capacity to fulfil their obligations is regarded as relatively low. Receivables and accrued revenues totalled NOK 66 million as of 31 December 2009. Losses on receivables have historically been negligible.
Future prospects 2009 was an extremely challenging year for Acta. The group has carried out major adjustments at a time of major uncertainty in the financial markets. A new strategy was decided for the company and the new business model was introduced in August. The entire organisation implemented the restructuring very well, and is now in a good condition with respect to meeting the current market conditions. The gross subscriptions in the last quarter of 2009 were very satisfactory at over NOK 1 billion. Margins however, were low and not satisfactory. Despite the fact that Acta reported a small deficit for the last quarter of 2009, the Board of Directors and the CEO have great faith in the chosen business model and that this will prove profitable over time. At the end of 2008, Acta’s analyses showed that the stock market was approaching what could be seen as a low point, and the company therefore began to actively advise its clients to increase their exposure to the stock market. Clients who chose to follow this advice can report a good return on their investment in 2009. At the beginning of 2010 Acta’s macro-economists believed that a correction could occur in the market and therefore advised clients who had achieved a good return on their fund investments in 2009 to realise some of their profits and instead focus on investments that are less subject to fluctuations of the economic cycle such as for instance real estate and infrastructure. It is reasonable to assume that a proportion of clients will follow this advice and reallocate some of their assets into alternative investment mandates as described above. Acta will continue to develop new savings and investment products to attract more business and add client value to maintain and even increase its market share. The Board and group chief executive expect margins to improve compared to the weak figures reported for the last three months of 2009. During 2009, Acta introduced a product neutral remuneration model which has been welcomed by both clients and employees. Since the summer of 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 will welcome this neutral and alternative fee structure when it is launched in the course of 2010. By increasing the recurring revenues Acta will further reduce its operational risk. Throughout 2009, Acta saw consolidation throughout the industry. A number of smaller and medium-sized market participants decided to either withdraw or sought partnerships
ACTA Annual report 2009
39
DIRECTORS’ REPORT
with larger suppliers of financial advisory services. Acta’s acquisition of Axir is an example of this. This acquisition is evidence of Acta’s strong faith in the industry in general and the company in particular. The Board of Directors and the group CEO expect this consolidation to continue in 2010. Reduced competition from other suppliers of financial advisory services combined with advantageous macro-economic indicators are positive factors for Acta’s future operations. It is fair to assume that savings in alternatives to traditional bank deposit will become even more popular as interest rates are still at a historically low level. Furthermore, Acta believes that the population in Scandinavia will have to take greater responsibility for savings for retirement, as governments will face difficulties meeting future pension needs on their own. Acta is well represented and has a good foothold in this market, and has a tradition for being a competitive supplier of financial advisory service to the population in one of the wealthiest regions in the world. The Board of Directors and the group CEO are expecting a good long-term market for Acta’s savings and investment products. As one of the dominant market players in Scandinavia, and with Europe’s most attractive clients in our catchment area, we have a solid foundation for profitable operations in both the medium and long-term perspective. Acta believes there are favourable investment opportunities in today’s market situation and that Acta is well-equipped to identify and commercialize these possibilities. Acta will introduce initiatives that together with measures already implemented will allow Acta to take a greater part in the value chain and thus improve profits. Plans include the establishment of a corporate finance department to strengthen product development and the adaptation of different investment products.
Profitability There is sound cost control throughout the group and the Board of Directors will continue to focus on this in the future. However the major focus for the future will be income-generating activities
and measures. Assuming that current market conditions continue, the Board of Directors expects Acta to improve profitability in 2010.
Dividend For the 2009 financial year, the Board of Acta Holding ASA has proposed not to pay dividend to its shareholders. The company’s dividend policy remains unchanged from 2008, and it aims to pay out the highest possible share of the net income as dividends, taking into account legal requirements as well as financial solidity and liquidity needs. Considerations of liquidity and capital adequacy requirements were the key reasons for the proposal not to pay dividend for the 2009 financial year.
Distribution and appropriations - Acta Holding ASA The Board of Directors proposes that the net income of NOK -28 669 thousands for 2009 should be distributed as follows: All amounts in thousands of NOK Dividend
NOK
Appropriated from other reserves
NOK 28 669
Total appropriations NOK 28 669
As of 31 December 2009, Acta Holding ASA had NOK 203 920 thousands in distributable equity. We hereby confirm that to the best of our knowledge the annual accounts for the period from 1 January to 31 December 2009 have been prepared in accordance with IFRS and NGAAP and that the information gives a true and fair view of the company’s and group’s assets, liabilities, financial position and profit or loss as a whole and that the information in the Directors’ report gives a true and fair view of the development, profit or loss and financial position of the company and the group, together with a description of the principal risks and uncertainties facing the company and the group.
Stavanger, 26 March 2010
40
Alfred Ydstebø Chairman of the Board
Stein Aukner Vice Chairman
Ellen Math Henrichsen Member of the Board
Harald Sig. Pedersen Member of the Board
Ragnhild Kvålshaugen Member of the Board
Geir Inge Solberg CEO
ACTA Annual report 2009
0
acta group - consolidated income statement - ifrs
ACTA GROUP CONSOLIDATED INCOME STATEMENT – 1 JANUARY–31 DECEMBER – IFRS Note
2009
2008
Operating revenues
2
489 382
937 567
Wages and salaries
3
301 542
507 118
All amounts in thousands of NOK
Depreciations
6, 7
23 186
18 885
Write-downs
7
3 523
920
Other operating expenses
4
197 249
285 723
Total operating expenses
525 501
812 646
Operating income
-36 119
124 921
Financial income
4
8 450
50 758
Financial expenses
4
17 391
11 505
-8 941
39 252
-45 059
164 173
-8 691
52 750
-36 369
111 423
-339
2 796
-36 708
114 219
Net financial items Net income before taxes Income taxes
13
Net income Currency translation differences Comprehensive income for the year Earnings per share
9
-0.14
0.44
Earnings per share, diluted
9
-0.14
0.44
19.3%
32.1%
Effective tax rate
ACTA Annual report 2009
41
acta group - consolidated balance sheet - ifrs
ACTA GROUP CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER – IFRS All amounts in thousands of NOK
Note
2009
2008
Assets Non-current assets Goodwill
6
6 131
6 131
Other intangible assets
6
46 147
42 295
Deferred tax assets Property, plant and equipment
13
12 585
6 144
7
18 831
35 627
83 693
90 196
Total non-current assets Current assets Current receivables
66 109
84 652
66 109
84 652
Bank deposits
261 520
439 417
Total bank deposits and short-term investments
261 520
439 417
Total current assets
327 629
524 069
Total assets
411 322
614 266
Total receivables
42
ACTA Annual report 2009
11
acta group - consolidated balance sheet - ifrs
ACTA GROUP CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER – IFRS All amounts in thousands of NOK
Note
2009
2008
45 303
45 303
11 168
11 168
Equity and liabilities Equity Share capital
9
Share premium account Other paid-in equity
1 075
0
Total paid-in equity
57 546
56 471
Other reserves
263 812
300 521
Total retained earnings
263 812
300 521
Total equity
321 358
356 992
Liabilities 14 158
12 760
Debt to credit institutions
Accounts payable 17
0
34 841
Taxes payable
13
0
89 978
18 089
29 661
57 716
90 034
Total current liabilities
89 963
257 274
Total liabilities
89 963
257 274
411 322
614 266
Taxes and public fees payable Provisions and other current liabilities
Total equity and liabilities
12
ACTA Annual report 2009
43
acta group - consolidated statement of changes in equity - ifrs
ACTA group consolidated statement of changes in equity – IFRS
All amounts in thousands of NOK
Share capital
Share premium account
Other paid-in equity
Currency translation difference 1)
Uncovered losses/other equity
Total equity
Balance sheet as of 1 January 2008
45 303
11 168
0
1 380
826 714
884 566
2 796
111 423
114 219
-641 793
-641 793
Profit for the year Dividends paid to shareholders (paid in 2008) Balance sheet as of 31 December 2008
45 303
11 168
0
4 176
296 344
356 992
Balance sheet as of 1 January 2009
45 303
11 168
0
4 176
296 344
356 992
-339
-36 369
-36 708
Comprehensive income for the year (before appropriations) Stock options to employees Balance sheet as of 31 December 2009
1 075 45 303
11 168
1 075
1 075 3 837
259 975
321 358
1) The currency translation difference is attributed to the translation from SEK to NOK of assets and liabilities belonging to Acta Kapital forvaltning AS’ Swedish branch, Acta Försäkringsplanering AB’s and Acta Asset Management AS’ operations in Sweden, and translation from DKK to NOK of assets and liabilities belonging to Acta’s business in Denmark.
44
ACTA Annual report 2009
actakonsernet - consolidated cash flow statement - ifrs
ACTA GROUP CONSOLIDATED CASH FLOW STATEMENT – IFRS All amounts in thousands of NOK
2009
2008
Operating activities Net income before taxes on ordinary activities
-45 059
164 173
Taxes paid in reporting period
-89 978
-315 675
Depreciation and write-downs
26 710
19 805
1 388
0
Stock options charged against income Change in accounts payable Change in other accruals Net cash flow from operating activities
1 398
-7 863
-21 037
-342 855
-126 580
-482 415
Investing activities Payments for acquisition of fixed assets
-16 137
-45 911
Payments for investments in subsidiaries
0
-337
Net cash flow from investing activities
-16 137
-46 248
Financing activities Payment of dividends
0
-641 793
Net cash flow from financing activities
0
-641 793
-142 717
-1 170 456
404 576
1 572 236
-339
2 796
261 520
404 576
60 000
29 859
Net change in bank deposits, short-term investments, etc. Bank deposits, short-term investments, etc. as of 01.01. Effect of exchange rate fluctuations on cash and cash equivalents Bank deposits, short-term investments, bank overdrafts, etc. as of 31.12. Unused overdraft facilities
ACTA Annual report 2009
45
ACTA GROUP - contents NOTES TO the CONSOLIDATED ACCOUNTS - ifrs
CONTENTS.
46
47
Note 1 Accounting policies
52
Note 2 Segment information
54
Note 3 Wages and salaries, number of employees, remuneration, loans to employees, etc.
57
Note 4 Combined items in the profit and loss statement
57
Note 5 Financial instruments
58
Note 6 Goodwill and other intangible assets
59
Note 7 Fixed assets
60
Note 8 Shares in subsidiaries
61
Note 9 Share capital and shareholder information
62
Note 10 Dividend
62
Note 11 Current receivables
62
Note 12 Provisions and other current liabilities
63
Note 13 Tax expenses
64
Note 14 Related parties
64
Note 15 Financial risk
65
Note 16 Equity and subordinated capital and capital adequacy - Acta Group
65
Note 17 Assets pledged as collateral and guarantees
66
Note 18 Exit liability for long-term unit-linked savings agreements in Sweden
66
Note 19 Events after the date of the balance sheet
ACTA Annual report 2009
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
NOTES TO CONSOLIDATED ACCOUNTS - ifrs. Note 1 Accounting policies 1.1 Basis of preparation for consolidated accounts
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations laid down by the International Accounting Standards Board (IASB), which have been approved by the EU. The annual accounts consist of the Acta Group’s income statement, balance sheet, consolidated statement of changes in equity, cash flow statement and notes. The annual accounts constitute a whole, and have been compiled in accordance with the historical cost principle with the exception of cases that are described below. The address of the head office of Acta Holding ASA is Børehaugen 1, 4006 Stavanger, Norway. The annual accounts were approved by the Board on 26 March 2010. The accounting principles that are stated below have been applied consistently for all the periods presented in the consolidated accounts.
1.2 Consolidation principles The consolidated accounts include the parent company, Acta Holding ASA, and the companies that Acta Holding ASA controls. Such control exists when the parent company has a decisive direct or indirect influence on the financial and operational management of the subsidiaries, and thereby benefits from their activities. When assessing control, potential voting rights that can immediately be exercised or converted are taken into account. The subsidiaries’ financial accounts are included in the consolidatedaccounts from the date the control is achieved and up to its cessation. Companies that are included in the consolidation are listed in Note 8. Intercompany accounts and any unrealised gains and losses or revenue and expenses arising from transactions within the group are eliminated during the preparation of the consolidatedaccounts. The consolidated accounts have been drawn up on the basis of uniform principles by applying the same accounting principles in the subsidiaries as in the parent company. Shares in subsidiaries have been eliminated. The historical cost is applied to identifiable assets and liabilities in subsidiaries, which are recorded in the consolidated accounts at cost price for the group. The difference between the purchase sum for the shares and the group’s share of the acquired company’s equity on the purchase date is analysed and attributed to assets and liabilities in the subsidiary. Any residual value is treated as goodwill in the consolidated accounts.
1.3 Estimates and assessments Preparation of the consolidated accounts in accordance with IFRS includes assessments, estimates and prerequisites that affect what accounting principles are applied and the reported amounts for assets, liabilities, income and expenses. The actual amounts may deviate from the estimated amounts.
Estimates and the underlying amounts are reviewed and assessed continuously. Changes to accounting estimates are recognised in the accounts during the period in which they occur and all future periods that are affected. The areas with significant estimate uncertainty, as well as the prerequisites and assessments for the application of the group’s accounting principles, are described in the following notes: - Note 3 – Share-based payment/share options - Note 6 – Goodwill and other intangible fixed assets - Note 7 – Classification of lease agreements - Note 13 – Application of tax loss to be carried forward - Note 18 – Exit liability for long-term unit-linked savings agreements
1.4 Foreign currency Transactions in foreign currency are translated at the exchange rate in effect on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Norwegian kroner using the exchange rate in effect on the balance sheet date. Currency gains/ losses arising from translation are included in the profit and loss statement. Non-monetary assets and liabilities that are measured at historical cost in foreign currency are translated at the exchange rate in effect on the date of the transaction. Non-monetary assets and liabilities with a nominal value in foreign currencies, which are stated at fair value, are translated into Norwegian kroner by using the exchange rate in effect on the date the fair value was determined.
1.5 Translation of foreign units The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from consolidation, are translated into Norwegian kroner at the foreign exchange rates in effect on the balance sheet date. The revenues and expenses of foreign operations are translated into Norwegian kroner at rates approximating the foreign exchange rates in effect on the dates of the transactions. Foreign exchange differences arising from translation are specifiedas a translation difference in the equity. They are recognised in the profit and loss statement upon disposal of the foreign unit.
1.6 Revenue Revenue is recognised in the profit and loss statement when it is earned. Revenue from the sale of services is normally recorded on the date of delivery. Commission earnings on subscriptions to funds, insurance (unit-linked), real estate shares, and shares in shipping, private equity, infrastructure and renewable energy companies are recognisedwhen written agreements have been made with clients and clients’ payment of the agreed subscription amount and commission have been confirmed. Revenue from subscriptions of index-linked products with guarantees is recognised when
ACTA Annual report 2009
47
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
bindingagreements have been made with the clients. Recurring revenue and management fees are recognised continuously on the basis of estimated income. Estimates are based on a calculated average of the portfolio of the fund supplier and the commission rate in question pursuant to the agreement. Fees from real estate, shipping, private equity, infrastructure and renewable energy syndication are recognised as income when the fees have been earned in accordance with agreements. Performance-based fees are recognised when the portfolios are liquidated. Structural margins from guaranteed index-linked products are posted as revenue when the underlying hedging instruments are traded and margin calculations have been finalised. Dividends are recognised when the right to receive payment has been established. Income from interest and other financial income are recognised as they accrue.
1.7 Expenses Expenses are generally accrued as the goods or services are received. Commission-based remuneration to advisors is recognised when a payment commitment arises in accordance with agreements and it is probable that the remuneration will be paid. Interest expenses and fees are recognised as they are incurred.
1.8 Provisions Provisions are charged to the accounts when the group has an obligation generated by a previous incident, it is probable that there will be a financial settlement resulting from this obligation, and the size of the amount can be measured reliably. If the effect is material, the provision will be calculated by discounting anticipated future cash flows with a pre-tax discount rate that reflects the market’s pricing of the time value of money and, if relevant, the risks specifically linked to the obligation. Restructuring provisions are included when the group has approved a detailed and formal restructuring plan, and the restructuring has either started or been announced.
1.9 Defined-contribution pension schemes Commitments to make contributions to such pension schemes are recognised as costs in the profit and loss statement when they are incurred.
1.10 Share-based payment transactions Employee options are measured at fair value at the time of allotment. The options are valued in accordance with the Black and Scholes model. The estimated value is recognised as a personnel expense set-off against other equity paid in. The expense is allocated over the period until the employee earns an unconditional right to the shares.
48
ACTA Annual report 2009
1.11 General rules for valuation and classification of assets and liabilities Assets that are expected to be realised in the group’s ordinary operational cycle or within twelve months of the balance sheet date, and assets in the form of cash or cash equivalents, are classified as current assets. All other assets are classified as fixed assets. Liabilities that are expected to be settled in the enterprise’s ordinary operational cycle, which fall due for settlement within twelve months of the balance sheet date, or in cases where the group does not have an unconditional right to postpone the settlement of the liability for at least twelve months after the balance sheet date, are classified as current liabilities. All other liabilities are classified as non-current liabilities.
1.12 Fixed assets Assets are depreciated on a straight-line basis over their economic useful life and are charged to the profit and loss statement. Estimated economic life is as follows: • machinery and equipment 3–5 years • fittings and fixtures 4–7 years Leasehold improvements are classified as a fixed asset and included under the fixed assets item on the balance sheet. Leasehold improvements are depreciated over the duration of the lease. Expenses incurred for the replacement of parts of property, plant and equipment are included in the value recorded on the balance sheet for a unit of real estate, plant or equipment when such expenses are assumed to give the enterprise future financial benefits related to the replacements, and the expenditure on the replaced parts can be measured in a reliable manner. All other expenses are included in the profit and loss account in the period they are incurred. When various parts of equipment have a different economic life, they are accounted for separately. Residual value is reassessed annually if it is not insignificant. The book value of fixed assets which are depreciated are tested for possible decline in value if there are indications of a permanent fall in value. If the book value of a fixed asset is higher than the recoverable value of the asset, the fall in value is taken against income. The recoverable value is the highest of the net sales value and utility value of the asset. Tangible fixed assets are grouped and valued at the lowest level for measuring cash flows. If a need for depreciation is identified, the fixed assets will be valued at the lowest of book value and recoverable value.
1.13 Intangible assets Goodwill is recognised on the balance sheet at historical cost less any accumulated impairment losses. Goodwill is distributed among cash flow generating units and tested annually for
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
impairment in value. Negative goodwill from acquisitions is included directly in the profit and loss statement. Other acquired intangible assets are recognised on the balance sheet at historical cost, less accumulated depreciation and impairmentlosses. Tests for a possible decline in value are carried out at the end of each year. Subsequent expenses relating to intangible assets recorded on the balance sheet are recognised only when they increase the future economic benefits related to this asset. All other expenses are charged to the profit and loss statement in the period they are incurred. Depreciation is calculated from the date assets are available for use, and are recognised in the profit and loss statement on a straight-line basis over the estimated useful life of the intangibleassets, unless such life is indefinite. Methods for writing off, lifetimes and residual values are reviewed annually, and are modified as necessary. On the balance sheet, estimations are made as to whether there are indications of depreciation connected with balanced values of non-financial assets, with the exception of assets with deferred tax. If such indications are present, the asset’s recoverable value is estimated. For goodwill and immaterial assets which are not as yet available for use, or which have an undefined useable lifetime, the recoverable value is estimated at the same time every year. Recoverable value for an asset, other than cash-generating units, is the highest user value and actual value less sales expenses. In estimating user value, the estimated future cashflows are discounted to current values with a market-based pre-tax discounting rate. Rates take into account the time value of monies and asset-specific risks. With the goal of testing depreciation, assets which are not tested individually are grouped into the smallest identifiable group, or groups, of assets. In carrying out a test for the higher limit for an operational segment through estimation of depreciation on goodwill, the cash-generating units to which the goodwill is allocated are combined, so that the level of depreciation tested reflects the lowest level at which goodwill is monitored for internal reporting targets. Goodwill is allocated to the cash-generating unit which is expected to gain the advantage of the synergy connected to the merger. Depreciation is included in the results if the balanced value for an asset or cash-generating unit exceeds limited recoverable values. With calculation of depreciation connected with cashgenerating units, the balanced value of any goodwill is reduced first. Thereafter any recoverable value proportionate to the remaining assets in the unit is apportioned. Loss due to depreciation of goodwill is not reversed. Other assets are assessed on the balance sheet as to whether there are indications of losses through depreciation are no longer present or are reduced Loss through depreciation is reversed if estimates in the calculation of the recoverable value have changed Reversing
can take place only until the reversed balanced value equals the value which would not have been balanced, net after writing down, if loss through depreciation has not previously been accounted for.
1.14 Financial instruments Loans, receivables and other liabilities are recognised in the profit and loss statement at the amortised cost. Income and expenses are calculated according to the internal rate of return method by calculation of the commitment’s internal rate of return. The internalrate of return is determined by discounting the contractual cash flows during the expected duration. The amortised cost is the present value of such cash flows discounted by the internal rate of return.
1.15 Taxes Income tax on the profit for the period consists of tax payable and the change in deferred tax. Income tax is recognised in the profit and loss statement with the exception of tax on items that are charged directly to equity. The tax effect of the latter items is charged directly to equity. The tax payable constitutes the expected tax payable on the taxable profit for the year using the rates prevailing on the balance sheet date, plus any corrections to tax payable for previous years. Deferred tax is allocated on the basis of the balance sheet liabilitymethod by taking into consideration temporary differences between the value of assets and liabilities recorded on the balance sheet in the financial reporting and tax values. Consideration is not given to temporary differences related to goodwill that are not tax deductible, the original inclusion of assets or liabilities that do not influence the financial or tax result, and differences related to investments in subsidiaries that are not expected to be reversed in the foreseeable future. Allocation to deferred tax is based on expectations regarding the realisation of or settlement for asset or liability values recorded on the balance sheet, and it is estimated on the basis of the tax rates applicable on the balance sheet date. Deferred tax assets are only included if it is probable that the assets can be utilised through future taxable income. Deferred tax assets are reduced if it is no longer probable that they will be realised.
1.16 Leasing agreements The Acta Group’s leasing agreements are accounted for in accordancewith the following rules:
Operational leasing agreements Leasing agreements where the major part of the risk and return that is associated with the asset is not transferred to the group are classified as operational leasing agreements. The rent payments are classified as operational expenses and are recorded linearly in the profit and loss account over the term of the agreement.
ACTA Annual report 2009
49
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
1.17 Segment reporting The companies carry out geographical segment reporting. This segmentation is in line with the method Group management uses to report figures and evaluate them. The accounting policies for segment reporting are otherwise the same as used in the consolidated accounts. Transactions between different segments are valued using the arm’s length principle.
1.18 Changes to accounting policies and notes Changes to accounting policies: In 2009 the Group adopted the following new and amended standards:
Amendment to IFRS 2 Share-based Payment - Group Cash-settled Share-based Payment Transactions The amendments to IFRS 2 expand on the guidance related to cash-settled share-based payment transactions. The definition of share-based payment has also been changed. In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, IFRIC 8 and 11 are withdrawn. The amendment is set to come into effect on 1 January 2010 but has yet to be approved by the EU. The group expects to adopt the amendment as of 1 January 2010. The new guidance is not expected to have a material impact on the group’s financial statements.
IFRS 3 (revised) Business combinations IFRS 7 Financial Instruments: Disclosures (amendment) The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.
IAS 1 Presentation of Financial Statements (revised) The revised standard requires ‘non-owner changes in equity’ to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been represented so that it also conforms with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
IFRS 9 Financial instruments IFRS 9 replaced the classification and measurement rules in IAS 39 Financial Instruments – Recognition and Measurement. According to IFRS 9, financial assets that contain standard loan terms must be measured at amortised cost, unless one chooses to record them at fair value, while other financial assets shall be measured at fair value. IFRS 9 (R) is due to enter into effect on 1 January 2013, but has yet to be approved by the EU. The group expects to adopt the amendment as of 1 January 2013.
IFRS 2 Share-based Payment (amendment)
IAS 24 (revised) Related Party Disclosures
This amendment deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation there of subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The amendment does not have a material impact on the group or company’s financial statements.
In relation to the current IAS 24 the revised standard contains a clarification and simplification of the definition of related parties. IAS 24 (revised) is due to enter into effect on 1 January 2011, but has yet to be approved by the EU. The group expects to adopt the revised IAS 24 as of 1 January 2011.
1.19 Implementation of IFRS Accounting policies and note information from the following IFRS and IFRIC interpretations have not been applied for preparation of the consolidated accounts as of 31 December 2009:
50
Compared to the current IFRS 3, the revised standard introduces certain changes and clarifications as regards the application of the acquisition method. Specific matters that are addressed include goodwill in connection with step acquisitions, minority interests and contingent considerations and acquisition costs. Acquisition costs apart from share issue and loan financing expenses are to be expensed immediately. IFRS 3 (R) is due to enter into effect on 1 July 2009. The group plans to apply IFRS 3 (R) as from 1 January 2010.
ACTA Annual report 2009
IAS 27 (revised) Consolidated and Separate Financial Statements In relation to the current IAS 27 the revised standard provides further guidance as to the accounting for changes in an ownership interest in a subsidiary and for the disposal of a subsidiary. The introduction of the revised standard entails that when the group loses control of a subsidiary any remaining ownership interest in the former subsidiary must be measured at fair value and the profit or loss be included in the income statement. In addition the current rules related to the allocation of loss between the majority and minority interest have also been amended to the effect that
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
any deficit is to be charged to the non-controlled ownership interest (minority interest) even if this results in the latter having a negative balance. The revised standard is due to enter into effect on 1 July 2009. The group expects to adopt IAS 27 (R) as of 1 January 2010.
IASB’s annual improvement project Through its annual improvement project the IASB has adopted amendments to a number of standards. These amendments will enter into force with effect from the 2010 financial year. These amendments have yet to be approved by the EU.
IFRS 2 Share-based Payment: Deposits made when establishing a jointly-controlled unit and for business combinations under the same control are outside the area of application of IFRS 2.
IFRS 8 Operating Segments: Clarification is now included of the fact that only segment assets and liabilities that report specifically for internal decision-making purposes have to be detailed in the segment information.
IAS 7 Statement of Cash Flows: Clarification is included that only expenses entered in the balance sheet must be included in the cash flow from investment activities.
IAS 17 Leases: The specifics of the criteria for classification as a financial lease agreement for land is removed.
IAS 18 Revenue: Further guidance is included for the assessment of whether an entity is acting as a principal or as an agent.
IAS 36 Impairment of Assets: Clarification is included that an operating segment is the highest level at which goodwill can be allocated in a business combination.
IAS 38 Intangible Assets: Clarification is included that if an intangible asset is only identifiable together with another intangible asset the two can be presented as one asset provided that the period of use is approximately the same.
The information that is reported is the information that the Acta management uses internally to evaluate the results of the segment and determine how resources are to be allocated to the segments. For the purposes of internal and external reporting, the group’s segmentation is geographical. Acta is currently engaged in business activities governed by the Norwegian Securities Trading Act that involve marketing, distribution, advisory services, execution of orders, trading and settlement of investors’ portfolios of financial products in Norway and Sweden. In Sweden, Acta is licensed as a Swedish insurance broker. The group uses three cost groups: variable, activity-based and fixed costs. These are broken down further into costs related to salaries and personnel and other costs. Variable costs include the costs that are closely and directly related to sales revenues, as well as bonuses and other performance-based remuneration of the group’s employees. The activity-based salary and personnel expenses are related to recruitments, personnel development and other expenses associated with personnel-related activities. Other activity-based operating expenses cover various marketing activities, client recruitment, travel, legal and consulting fees, as well as various expenses that vary in relation to the group’s level of activity. Fixed expenses consist of fixed salaries paid to the group’s employees, leasing of premises and equipment, auditor’s fees, contractual IT expenses, insurance and other expenses related to agreements entered into, and they vary to a lesser extent with short-term fluctuations in the group’s level of activity. The group reports the net financial results for the segments in accordance with the internal reporting routines. Transaction revenue is divided into two groups: revenue from securities funds and insurance and income from other investment products. Other investment products include real estate, shipping, infrastructure, private equity, renewable energy, hedge funds, bonds and index-linked bonds. In 2005 the company established a new segment, New Markets. This segment works on growth opportunities for the company in both new and existing markets. This segment is in principle not subject to reporting requirements, but information has also been prepared for this segment as well to provide a better overall view. Corporate eliminations include group administration and internal administrative services within finance, accounting, human resources, IT and marketing. This segment has no external income. It covers its costs, however, by providing services to other segments through internal service agreements entered into based on the arm’s length principle. Financial information on the segments is given on the next pages.
Note 2 Segment information Geographic segments IFRS 8 was implemented for segment reporting for the 2007 financial year. The accounting standard requires that the group uses a management approach for the identification of the segments.
ACTA Annual report 2009
51
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 2 Segment information (continues)
All amounts in thousands of NOK
Acta Norway
Acta Norway
Acta Sweden
Acta Sweden
2009
2008
2009
2008
Revenues from funds and insurance
29 070
15 532
78 478
53 316
Revenues from other investment products
56 251
265 035
30 953
280 741
176 314
186 509
116 304
133 239
Recurring revenues Other revenues Total operating revenues Variable salary and personnel expenses Other variable operating expenses Total variable expenses Activity-based salary and personnel expenses
689
1 130
1 294
1 688
262 324
468 205
227 029
468 985
20 783
65 285
22 348
87 622
58
-369
1 228
-1 836
20 841
64 916
23 576
85 786
6 514
20 096
7 857
18 446
Other activity-based operating expenses
32 476
77 191
33 950
64 307
Total activity-based expenses
38 990
97 286
41 808
82 753
106 397
169 384
100 466
149 455
Fixed salary and personnel expenses Other fixed operating expenses Total fixed expenses Depreciation Write-downs
91 621
54 447
70 470
37 302
198 018
223 831
170 936
186 757
4 888
2 993
4 666
5 322
79 179
-14 954
2 527
Operating earnings
-2 940
996 108 366
Net financial position
-8 581
33 884
-3 106
992
Tax costs
-2 288
34 400
-7 771
35 056
Annual results
-9 233
78 663
-10 289
74 302
21 062
26 675
11 836
13 675
Other information Segment assets Fixed assets
44 296
70 887
17 641
10 019
Bank deposits and government certificates
Current receivables
198 404
399 463
28 700
35 888
Total assets
263 762
497 025
58 177
59 582
Segment liabilities Taxes and public fees payable
9 955
18 758
4 221
8 639
Other current liabilities
31 387
102 472
22 983
19 127
Total liabilities
41 342
121 230
27 204
27 765
282
9 355
103
6 551
Investments in fixed assets 1)
52
Including eliminations
ACTA Annual report 2009
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
New Markets
New Markets
Corporate 1)
Corporate 1)
Total Group
Total Group
2009
2008
2009
2008
2009
2008
1
35
107 550
68 884
19
397
87 223
546 173
17
101
292 635
319 849
-8
-156
1 975
2 662
29
377
0
0
489 382
937 567
14
1 689
2 980
6 268
46 125
160 863
0
0
0
0
1 286
-2 204
14
1 689
2 980
6 268
47 411
158 659
57
2 249
997
1 958
15 425
42 749
1 402
9 540
9 401
7 649
77 229
158 687
1 459
11 790
10 397
9 607
92 654
201 437
4 612
16 808
29 280
-32 142
240 754
303 505
2 436
5 497
-46 555
31 994
117 972
129 240
7 048
22 305
-17 275
-148
358 727
432 745
441
1 431
13 191
10 059
23 186
19 805
-8 933
-36 839
-9 292
-25 786
-36 119
3 523 124 921
-176
-1 166
2 923
5 543
-8 940
39 252
2 832
-10 646
-1 464
-6 061
-8 690
52 750
-11 942
-27 360
-4 906
-14 182
-36 368
111 423
108
1 662
54 075
48 184
87 081
90 196
0
8
4 172
3 738
66 109
84 652
985
938
33 430
3 129
261 520
439 417
1 094
2 608
91 677
55 050
414 710
614 266
237
0
3 677
2 265
18 090
29 661
201
1 390
17 303
104 624
71 874
227 613
438
1 390
20 980
106 889
89 964
257 274
0
1 186
15 753
29 156
16 137
46 248
ACTA Annual report 2009
53
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 3 Wages and salaries, number of employees, remuneration, loans to employees, etc. 2009
2008
Wages and salaries
203 071
331 897
Bonus/profit sharing
All amounts in thousands of NOK
10 526
23 040
Pension costs, contribution plans
9 056
10 993
Calculated advantage of stock option programme
1 025
0
Employer’s National Insurance contributions
49 453
77 584
Other benefits
28 411
63 603
301 542
507 118
338
554
Total Average number of full-time equivalents
Pension scheme contributions
Bonus/ profit sharing 3)
Period
Salary/ 1) Directors’ fees
CEO (from August)
2009
875
17
-
Investment Director
2009
863
24
400
5
Investment Director
2008
1 458
39
9 472
16
CFO
2009
1 215
40
20
13
2008
1 204
39
2 612
15
2009
338
9
2009
965
2009
338
20
7
2009
439
17
9
2009
542
17
2009
503
Benefits to employees in leading positions and Board members in 2009 All amounts in thousands of NOK Geir Inge Solberg
Christian Tunge Jostein Viken
Managing Director (from October)
Christian Kvist 2)
Managing Director (VD)
Other benefits 3
2
Acta Asset Management AS 209
Acta Försäkringsplanering AB Sveinung Byberg
Managing Director (from September) Acta Kapitalforvaltning AS
Morten Flørenæss
Managing Director (from August) Acta Corporate Services AS
Tom Pettersen
Advisory Director (from March)
516
15
Norway Mathias Andersson 2)
Advisory Director (from March)
4
Sweden Alfred Ydstebø 4) Stein Aukner Ellen Math Henrichsen Harald Sigurd Pedersen
Chairman of the Board
2009
313
Acta Holding ASA
2008
250
Vice Chairman of the Board
2009
250
Acta Holding ASA
2008
150
Member of the Board
2009
188
Acta Holding ASA
2008
150
Member of the Board
2009
7
Acta Holding ASA Ragnhild Kvålshaugen
Member of the Board
2009
150
Acta Holding ASA
2008
150
1) Salary/directors’ fees etc. are shown for the period in which the leading employee held his/her position. 2) Amount translated from Swedish to Norwegian kroner using an exchange rate of 83.259. 3) 2008: Includes distributions from the “K2” incentive programme in April 2008. The costs of the programme are accounted for over the duration of the programme from 2005 to 2007. 4) Alfred Ydstebø has a consultancy agreement with Acta Holding ASA. See also Note 14 Related parties.
54
ACTA Annual report 2009
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Benefits paid to employees in leading positions Remuneration for the CEO is set by the Board’s compensation committee, which also sets the guidelines for the remuneration for other employees in leading positions, including both the level of fixed salary and the principles for and scope of bonus schemes. Employees in leading positions have ordinary bonus agreements, with limits that are set on an annual basis, normally between 40 and 100 per cent of their base salary, dependent on their position. If targets are revised or results are better than budgeted, bonuses may be set at up to 150 per cent of the bonus limit. Estimated bonuses earned are charged as an expense on an ongoing basis. The Board of Directors of Acta Holding ASA decided to replace the cash-based “K3” incentive programme that was launched in 2008 with a long-term incentive programme, including share options, covering all Acta employees. Benefits paid to employees in leading positions and Board members who left the Group in 2009 Period
Salary/ 1) Directors’ fees
Pension scheme contributions
Bonus/ profit sharing 3)
Other benefits
until Aug. 09
3 401
40
680
9
Acta Holding ASA
2008
2 111
39
14 955
53
Managing Director
until Aug. 09
1 822
40
500
5
Acta Kapitalforvaltning AS
2008
1 770
39
9 541
40
Country Manager, Sweden
until March 09
1 557
18
2008
1 118
60
9 278
33
1 938
119
All amounts in thousands of NOK Simen Mørdre 4) Robert C. Aakre 5) Jan Karlsson 3) 6)
CEO
Peter Egholm Jensen 3) 7)
Country Manager, Denmark
until Aug. 09
1 890
162
2008
1 421
150
Marit Arnstad
Member of the Board
until May 09
38
2008
150
Salary/directors’ fees etc. are shown for the period in which the leading employee held his/her position. 2) 2008: Includes distributions from the “K2” incentive programme in April 2008. The costs of the programme are accounted for over the duration of the programme from 2005 to 2007. 3) 2009 amount translated from Swedish to Norwegian kroner using an exchange rate of 83.259 and from Danish Kroner using an exchange rate of 118 795. 4) As previously agreed ordinary monthly salary was paid for the whole of 2009. In addition Mørdre is entitled to severance pay of NOK 2 550 000, of which 50% was paid in August 2009 (presented under ”Wages and salaries”) and the remainder in January 2010. 5) As previously agreed ordinary monthly salary was paid for the whole of 2009. In the same way, as previously agreed ordinary monthly salary will be paid for the whole of 2010 thereby totalling NOK 1 800 000 on certain conditions. The Group has no obligations over and above this. 6) In addition to ordinary monthly salary until the final day of employment, in 2009 severance pay of the equivalent of 14 months’ salary totalling SEK 1 540 000 was paid. 7) As previously agreed ordinary monthly salary was paid for the whole of 2009 in addition to retained vacation pay. At the end of 2009 there were no outstanding liabilities. 1)
The CEO and CFO of the Acta Group and the Managing Director of the subsidiary Asset Management AS have agreements that provide 18 months’ severance pay, Country Manager Norway and Marketing Director have an agreement that provides 12 months’ severance pay if their employment is terminated without a valid reason or as a result of major changes in their duties, due, for example, to a merger or acquisition. No members of the Board or other leading employees have severance pay agreements. Former CEO Simen Mørdre, former Managing Director of the subsidiary Acta Kapitalforvaltning AS, Robert C. Aakre and former Country Manager in Denmark, Peter Egholm Jensen left the Group during the summer/autumn of 2009. Mørdre, Aakre and Jensen received ordinary monthly salary for the rest of 2009. In addition to this Mørdre received severance pay equal to 13 months’ salary, while Aakre will receive ordinary monthly salary for the whole of 2010. Jensen will not receive further benefits in 2010. The Acta Group established a defined contribution pension scheme for all permanent employees in Norway and Sweden as of 1 January 2005. The contribution percentage for 2009 was four per cent of fixed salaries between 1G–6G and six per cent of fixed salaries between 6G–12G in Norway. In relation to the mandatory company pension requirements that entered into force in Norway as of 1 July 2006, the Acta Group has a pension scheme beyond the minimum requirement of two per cent of salaries between 1G and 12G. In 2009 the contribution percentage for employees in Sweden was five per cent of the fixed salaries. In the course of 2009 the Board of Directors in Acta Holding ASA granted a selected group of individuals in Acta’s top management stock options in accordance with the stock option programme launched in 2008. In 2009, the Board of Directors in Acta Holding ASA decided to replace this programme with a new one covering all employees in the company. The scheme is a part of a long-term incentive programme for employees in Acta with the aim of contributing to good results and helping to attract new employees as well as keep current ones. At the time of the approval of the annual accounts a total of 8.86 million stock options are granted, of which employees in leading positions hold 3.69 million stock options. The stock option programme is in accordance with the authorisations granted by the annual general meeting on 30 April 2008 and 6 May 2009. The strike price for the options was set to NOK 20.04 for the options granted in 2008, NOK 2.07 for the options granted in March 2009, NOK 3.91 for the options granted in October 2009 and NOK 3.38 for the options granted in February 2010. The strike price shall be reduced by the accumulated dividend paid in the period after the options have been awarded. The dividend for 2007, paid after the award of the options in 2008 was NOK 2.55 per share. Up to 50 per cent of the stock options granted in 2008 can be exercised in 2010 and up to 50 per cent can be exercised in 2011. For both years the options must be exercised within specified periods. Up to 50 per cent of the stock options granted in March 2009 can be exercised in 2011 and up to 50 per cent can be exercised in 2012. For both years the options must be exercised within specified periods. 100 per cent of the stock options granted in October 2009 and February 2010 can be exercised in 2011 and 2012 respectively. For both years the options must be exercised within specified periods. At the end of 2009 the share price was NOK 4.14. ACTA Annual report 2009
55
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 3 Wages and salaries, number of employees, remuneration, loans to employees, etc. (continues) 2009 Number of stock options Outstanding stock options at the beginning of the year Awarded during the year Redeemed during the year Terminated during the year
1)
2008 Number
Number
WARP 1)
850 000
20.04
0
4 697 009
3.64
850 000
0
WARP 1) 20.04
0
950 000
14.37
0
Outstanding at the end of the year
4 597 009
4.45
850 000
Redeemable at the end of the year
0
20.04
0
Weighted average redemption price. Amount in NOK. The weighted average lifetime of outstanding stock options as at 31 December 2009 is 1.9 years.
The weighted average redemption price of outstanding stock options at the end of the year:
Awarded in 2009
Awarded in 2008
Number
WARP 1)
Number
WARP 1)
24.11.10
100 000
20.04
425 000
20.04
22.11.11
4 297 009
4.20
425 000
20.04
200 000
2.07
Maturity date
21.11.12 Total
1)
4 597 009
0 850 000
Weighted average redemption price. Amount in NOK.
Acta has used the Black-Scholes model in valuing the options. The risk-free interest rate used in the model is the treasury bill rate/ government bond rate with maturity as close as possible to the allocation date. Because of the dilution effect on the existing shares the price of the stock options is found numerically. In the model the following assumptions are used as the basis for new allocations:
Expected dividend yield (%) Historical volatility (%) Expected lifetime for the stock option (years)
Oct. 2009
March 2009
Feb. 2008
1.32
7.10
12.31
80.45
76.62
43.99
2.07
2.67
3.8
Expected volatility is calculated from historical volatility based on daily data over the same timescale as the term of the stock options. Stock options affect on the accounts: All amounts in thousands of NOK Description Acquisition of stock options Change in provisions for employer’s National Insurance contributions Net stock option income/expenses Liabilities 1)
1)
56
Refers only to employer’s National Insurance contributions.
ACTA Annual report 2009
2009
2008
-1 075
0
-313
0
-1 388
0
313
0
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 4 Combined items in the profit and loss statement 2009
2008
Office rent and expenses
66 036
59 197
IT expenses
46 811
61 522
Fees to auditors, lawyers and consultants
All amounts in thousands of NOK
21 925
24 676
Telecom and postal expenses
7 196
14 139
Travel
7 874
11 925
17 530
76 381
859
1 139
Marketing activities Norwegian Central Securities Depository Financial Supervisory Authority of Norway Reimbursements of claims to clients Other operating expenses Total other operating expenses Statutory auditing Other audit related services
2 228
3 572
13 621
10 711
13 170
22 462
197 250
285 723
682
598
88
81
Services related to tax papers and similar
121
84
Other services beyond auditing
316
762
1 208
1 525
5 360
24 967
Total auditor’s fees Auditor’s fees are presented exclusive of VAT.
Interest income, bank deposits Interest income, government certificates
0
14 873
Other financial income
3 091
10 918
Total financial revenues
8 450
50 758
723
9 453
Bank interest and charges Other financial expenses
16 668
2 052
Total financial expenses
17 391
11 505
2009
2008
Accrued income not received
40 578
60 514
Other current receivables
24 992
22 736
Total financial assets
65 570
83 250
Note 5 Financial instruments Financial instruments measured at amortised cost All amounts in thousands of NOK Financial assets
Financial liabilities Interest-bearing overdraft facility
0
34 841
Accounts payable
14 158
12 760
Provisions and other current liabilities
57 716
89 619
Total financial liabilities
71 874
137 220
ACTA Annual report 2009
57
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 5 Financial instruments (continues) Financial instruments measured at amortised cost in the Acta Group Bank deposits and other current receivables are classified as loans and receivables and are measured at amortised cost. Overdraft liabilities, accounts payable to suppliers and other current liabilities are classified as financial liabilities and are measured at amortised cost. All items are current and reach maturity within one year. The book value is essentially the same as the actual value. Based on agreements established with contracting parties and the Acta Group’s control of the actual cash flows, the risk of value fluctuations for accrued revenues and other current receivables recognised in the balance sheet is not regarded as significant. For informationon the overdraft facility, refer to Note 17.
Note 6 Goodwill and other intangible assets Goodwill All amounts in thousands of NOK Historical cost as of 1 January
Intangible assets
2009
2008
18 071
18 071
Additions
2009
2008
52 131
25 293
15 684
26 838
67 815
52 131
21 668
9 836
Disposals Historical cost as of 31 December
18 071
18 071
Accumulated write-downs as of 31 December
11 940
11 940
Accumulated depreciations and write-downs as of 31 December
11 940
11 940
21 668
9 836
6 131
6 131
46 147
42 295
11 832
7 752
Accumulated depreciations as of 31 December
Book value as of 31 December Depreciations for the year Write-downs for the year Economic life Depreciation schedule
4–5 years Linear
Goodwill and other intangible assets consist solely of external expenses. Goodwill is not amortised. However, impairment tests are conductedannually. The recognised goodwill is related to the acquisition of Svenska Spar AB in the autumn of 2004 and certain minor acquisitions made in Norway prior to this. These acquisitions have since been integrated into and continued in the other Swedish and Norwegian activities in Acta. The cash-generating units correspond thus to the segments as they are presented in Note 2 Segments. Recoverable amounts for both of the mentioned goodwill items are calculated based on their expected utility value. These calculations use estimates for future cash flows based on actual historical operating earnings, a three-year business plan and a discount rate before tax of 12 per cent. The estimates are based on key prerequisites such as the number of offices, number of employees in sales-related positions, number of clients and the expected demand for the products of the various cash-generating units from existing and new clients. Operating earnings from the cash-generating units were approximately NOK -15 million in 2009 for Sweden, a decline from approximately NOK 108 million in the previous year, as well as around NOK -3 million in 2009 for Norway, a decline from approximately NOK 79 million in the previous year. In 2009, the Acta Group carried out an extensive restructuring process. The number of employees and cost levels were reduced significantly. A new service concept was launched and the follow-up of a significant number of clients has been made more efficient. Clients with assets under management of up to SEK 300 000/NOK 500 000 will be served from one client centre in Norway, one in Sweden and one in Denmark. In addition, several of the group’s services have been made available online. Other clients are actively assisted by personal investment advisors from 12 offices in each of the countries of Norway and Sweden. In the course of 2010, Acta will launch new products and new services that will increase the services offered to the group’s clients and also improve the group’s earnings. In accordance with the group’s 2010 budget that was approved by the Board of Directors, positive operating earnings are expected in 2010 for both the cash-generating units. Prognoses for the following two years show further growth in both the number of advisors and earnings, with an increasing share of recurring income and operating earnings. The group’s board considers the possibilities for positive results in both Norway and Sweden as good. The group considers the book value as at 31 December 2009 as sufficient. Intangible fixed assets consist of investments in the standard systems Abasec (portfolio system) and Microsoft Dynamics (CRM system). The software is recognised on the balance sheet at historical cost plus any expenses to make the software ready to use. The expected economic life and depreciation period is five years.
58
ACTA Annual report 2009
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 7 Fixed assets All amounts in thousands of NOK
2009
2008
Expenditures on rented premises Historical cost as of 1 January
33 211
27 109
Additions
125
6 102
Disposals
1 890
Historical cost as of 31 December
31 446
33 211
Accumulated depreciation as of 31 December
24 003
20 183
Disposals – accumulated write-downs Net accumulated write-downs as of 31 December Accumulated depreciation and write-downs as of 31 December
-945 2 254
467
25 312
20 649
6 134
12 562
Depreciation for the year
3 820
3 347
Write-downs for the year
1 788
167
4–7 years
4–5 years
Linear
Linear
167 289
154 025
Additions
329
13 264
Disposals
4 232
Book value as of 31 December
Economic life Depreciation schedule Machinery and equipment Historical cost as of 1 January
Historical cost as of 31 December
163 385
167 289
Accumulated depreciations as of 31 December
117 255
109 721
Disposals – accumulated write-downs
-2 794
Net accumulated write-downs as of 31 December
36 227
34 504
150 688
144 225
12 697
23 064
Depreciation for the year
7 534
7 787
Write-downs for the year
1 723
754
3–7 years
3–5 years
Linear
Linear
Accumulated depreciation and write-downs as of 31 December Book value as of 31 December
Economic life Depreciation schedule
The write-downs are mainly related to the liquidation of specific sales offices as part of the group’s restructuring in 2009. The economic life for expenditures on rented premises, machinery and equipment is normally five years based on actual assessments of the condition of the fixed asset or when rental agreements are extended.
Annual rent for non-balanced operating lease payments The group has entered into various operating leasing agreements for office premises, PC equipment and office machines. Most of the leasing agreements have an extension option. Future minimum lease payments in connection with irrevocable leasing agreements fall due as follows:
ACTA Annual report 2009
59
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 7 Fixed assets (continues) Future minimum rent All amounts in thousands of NOK
2009 1)
2008
Less than one year
33 241
40 852
Between one and five years
52 976
89 152
Total
86 217
130 003
The reduction from 2008 to 2009 is primarily related to a residual lease term that is 12 months shorter, as well as the liquidation of certain lease agreements as part of the group restructuring process.
1)
Lease payments All amounts in thousands of NOK Leasing agreements, premises
2009
2008
46 747
45 759
Leasing agreements, IT equipment
6 866
10 240
Leasing agreements, various machinery and equipment
1 969
322
55 582
56 321
Total
Note 8 Shares in subsidiaries The companies listed below are all wholly owned by Acta Holding ASA.
60
Company
Country of domicile
Registered office
Acta Kapitalforvaltning AS
Norway
Stavanger
Investment firm
Acta Asset Management AS
Norway
Stavanger
Investment firm
Acta Försäkringsplanering AB
Sweden
Stockholm
Insurance firm
Acta Kapitalförvaltning AB
Sweden
Stockholm
Investment firm
Acta Corporate Services AS
Norway
Stavanger
Internal administrative services
ACTA Annual report 2009
Main business areas
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 9 Share capital and shareholder information As of 31 December 2009 the company’s share capital consisted of 251 683 432 shares with a nominal value of NOK 0.18 each. There is only one share class. Number of shares
Ownership %
Coil Investment Group AS
35 068 547
13.93%
Caprice AS
15 407 000
6.12%
Best Invest AS
12 808 707
5.09%
Carnegie Investment Bank AB
12 048 850
4.79%
Bjelland Trading AS
Ownership structure The 20 largest shareholders in the company as of 31 December 2009 were:
10 549 000
4.19%
Mons Holding AS
9 060 620
3.60%
Perestroika AS
9 010 000
3.58%
Sanden AS
6 981 568
2.77%
Tveteraas Eiendomsselskap AS
4 500 000
1.79%
Tenold Gruppen AS
4 057 000
1.61%
IKM Industri-Invest AS
4 023 800
1.60%
Arctic Securities ASA
2 583 600
1.03%
Ojada AS
2 500 000
0.99%
International Oildfield Services AS
2 500 000
0.99%
Bank of New York Mellon SA/NV
2 346 705
0.93%
Steinar Lindberg AS
2 100 000
0.83%
Extellus AS
2 000 000
0.79%
Nordnet Bank AB
1 961 448
0.78%
DnB NOR Bank ASA
1 822 000
0.72%
Bank of New York Mellon SA/NV
1 647 560
0.65%
Total 20 largest shareholders
142 976 405
56.81%
Total other shareholders
108 707 027
43.19%
Total number of shares
251 683 432
100.00%
Number of days
Average number
365
251 683 432
Amount Average number of shares outstanding as of 1 January 2009
251 683 432
Average number of shares outstanding as of 31 December 2009
251 683 432
Earnings per share (net consolidated profit / average number of shares)
NOK -0.14
At the Annual General Meeting of 6 May 2009, the Board of Acta Holding ASA was granted authorisation to issue new shares in Acta Holding ASA in one or more private and/or public issues. This authorisation applies for up to 25 million shares with a nominal value of NOK 0.18, which means that, pursuant to the authorisation, the Board of Directors can increase the share capital by up to NOK 4 500 000. Any share premium shall be added to the share premium account. If the nominal value of the shares is changed during the authorisation period, the present authorisation shall be changed correspondingly. The authorisation is valid until the date of the next Annual General Meeting, no later, however, than 30 June 2010. The authorisation replaces the authorisation adopted at the Annual General Meeting of 30 April 2008.
ACTA Annual report 2009
61
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 9 Share capital and shareholder information (continues) Shares owned and/or controlled directly or indirectly by members of the Board and employees in leading positions as of 31 December 2009
Name Alfred Ydstebø
Position
Number of Ownership shares %
Chairman of the Board
Number of stock options
Cost of stock options 3)
35 068 547
13.93%
0
Tom Pettersen
Advisory Director Norway
444 942
0.18%
180 000
30
Jostein Viken
Managing Director Acta Asset Management AS
324 326
0.13%
260 000
170
Stein Aukner 2)
Vice Chairman of the Board
237 500
0.09%
0
Geir Inge Solberg
CEO
220 000
0.09%
400 000
100
Christian Tunge
CFO
100 000
0.04%
460 000
457
Mathias Andersson
Advisory Director Sweden
41 818
0.02%
180 000
37
Sveinung Byberg
Managing Director Acta Kapitalforvaltning AS
18 000
0.01%
90 000
15
Morten Flørenæss
Managing Director Acta Corporate Services AS
10 000
0.00%
90 000
15
Christian Kvist
Managing Director (VD) Acta Försäkringsplanering AB
77
0.00%
90 000
19
Ellen Math Henrichsen
1)
Member of the Board – Acta Holding ASA
0
0.00%
0
Harald Sigurd Pedersen Member of the Board – Acta Holding ASA
0
0.00%
0
Ragnhild Kvålshaugen
0
0.00%
0
1)
Member of the Board – Acta Holding ASA
Owned by Coil Investment Group AS. 2) Includes Aukner Holding AS and Stein Aukner. 3) Amounts in NOK 1000.
Note 10 Dividend No dividend was paid in 2009. The Board has proposed that no dividend be paid in 2010.
Note 11 Current receivables All amounts in thousands of NOK Earned, not yet received revenues Prepaid expenses
2009
2008
40 578
60 749
7 198
9 659
Miscellaneous current receivables
18 333
14 244
Total current receivables
66 109
84 652
Note 12 Provisions and other current liabilities All amounts in thousands of NOK Accrued expenses, unpaid wages, holiday pay, etc Provisions for exit risk (see Note 18)
2009
2008
27 340
54 270
5 282
9 655
Other current liabilities
25 095
26 109
Total provisions and other current liabilities
57 716
90 034
Provisions have been set aside for the estimated compensation to clients based on complaints the company has received. This estimate is based on specific assessments of the actual advisory services in relation to the laws and regulations that were in effect when the agreement was entered into with the client. Allowances are included in the point Other short term debts. Allowances have not been made in accounts related to customer requirements connected to the distribution of products which contain bonds issued by Lehman Brothers B.V, as a result of their bankruptcy proceedings. See Note 19.
62
ACTA Annual report 2009
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 13 Tax expenses All amounts in thousands of NOK Tax payable on taxable net income for the year Incorrect taxes from earlier years
2009
2008
0
51 517
-3 297
-1 301
-6 441
-2 599
Change posted to balance sheet deferred tax Recognised change in deferred tax
5 383 1 047
-250
Tax charge for the year
-8 691
52 750
Effective tax rate 2)
19,3%
32,1%
All amounts in thousands of NOK
2009
2008
Operating assets
5 255
1 988
Accounting provisions
2 796
Sundries 1)
Specification of deferred tax assets and liabilities
Profit and loss account
674 0
Loss carryforwards 3) Share of loss carryforwards not recorded in the balance sheet Total deferred tax assets
5 458
3 860 12 585
7 446
Operating assets
0
-1 301
Total deferred tax liabilities
0
-1 301
12 585
6 144
Net deferred tax assets
Deferred tax assets are related to temporary differences between the accounting and tax value of operating assets to be assigned over the remaininglifetime of the operating asset; accounting provisions as at 31 December 2009 to be assigned during 2010 and receivables from the State related to deductions for losses in 2009 that can be eliminated for the previous two year’s taxable profit. The group’s executive management deem it reasonably certain that the group will achieve a taxable profit in 2010 and thus considers the net assets in the deferred tax assets recorded in the balance sheet as at 31 December 2009 as reasonable. Reconciliation of actual vs. calculated tax expenses 2009
2008
Net income before taxes
-45 059
164 173
Calculated tax expenses (28%)
-12 617
45 968
Permanent differences (28%) 4)
1 672
8 083
All amounts in thousands of NOK
2 254
-1 301
Actual tax expenses
-8 691
52 750
Effective tax rate 3)
19,3%
32,1%
Corrected tax for previous years
5)
1) The difference between the annual accounts and the amended tax position in 2008. 2) Tax expenses with regard to the pre-tax profit. 3) The deferred tax asset related to loss carryforwards in Denmark entered in the profit and loss account against the change in deferred tax for 2009. 4) Includes non-tax deductible expenses, such as entertainment expenses and various customer events, certain gifts and the calculated benefits of stock options awarded. 5) The agio profit from payment of tax in Sweden entered in the profit and loss account against the expenses tax asset in Denmark.
Tax payable on the balance sheet is calculated as follows: 2009
2008
Tax payable on the profit for the year
0
51 517
Tax payable not yet due concerning last year's taxable income
0
38 460
Total tax payable on the balance sheet
0
89 977
All amounts in thousands of NOK
ACTA Annual report 2009
63
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 14 Related parties Acta Holding ASA entered into a consulting agreement with Chairman of the Board Alfred Ydstebø through the company Coil Investment Group AS on 1 January 2006. This consulting agreement encompassed services with a scope corresponding to 50 per cent of a full time equivalent. In 2009 the original agreement was replaced with a new consultancy agreement encompassing services with a scope corresponding to 35 per cent of a full time equivalent. For 2009 and 2008 expenses of NOK 831 000 and NOK 1 050 000, excluding value-added tax, were charged respectively. The agreement applies from 1 August 2009, and it can be terminated upon one month’s notice. Inter-group trade is carried in accordance with specific agreements and at arms’ length and the reconciliation of shared expenses in Acta Holding ASA is distributed among the Group companies in accordance with a key, depending on the different types of expenses.
Note 15 Financial risk The Acta Group’s exposure related to financial instruments is limited to liquidity in the form of bank deposits or Norwegian government certificates with a short maturity and accordingly an insignificant exchange risk. The group had no interest-bearing debt at the end of 2009 and it has thus no interest rate risk exposure relating to debt capital. Otherwise, financial market risk is limited to the fact that future earnings will be influenced by changes in market prices for the enterprise’s products, and by general market fluctuations. An increase in the number of customer complaints may increase risks of legal action, but the risk of class action is assessed as small. Future portfolio revenue will vary with fluctuations in market prices for the client portfolios under management. Foreign exchange risk is not substantial and is mainly associated with the group’s activities in Sweden. Credit risk is limited to current receivables and is not considered significant. The effect on the group’s net income and equity in the event of a change in the NOK exchange rate for balance sheet assets denominatedin foreign currencies, including assets and liabilities under the Sweden segment, is illustrated in the table below.
Foreign currency
Changes in the NOK exchange rate
Segment Sweden
SEK
+5%
Accrued revenues
SEK
+5%
Accrued revenues
USD
All amounts in thousands of NOK Unit
Effect on net income before taxes 2009
Effect on equity 2008
-5%
Accrued revenues Bank deposits Bank deposits
64
EUR SEK DKK
2008
650
-5 455
-650
5 455
-6
-730
-8
-1 014
-5%
8
1 014
6
730
+5%
-170
-251
-122
-181
-5%
170
251
122
181
+5%
-464
-109
-334
-78
-5%
464
109
334
78
+5%
-3 835
-543
-2 761
-391
-5%
3 835
543
2 761
391
+5%
-49
-5%
49 -391
Bank deposits
USD
+5% -5%
Bank deposits
EUR
+5% -5%
Bank deposits
GBP
+5% -5%
ACTA Annual report 2009
2009
-35 35 -843
-281
-607
391
843
281
607
-134
-326
-96
-235
134
326
96
235
-2
-73
-2
-53
2
73
2
53
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 16 Equity and subordinated capital and capital adequacy - Acta Group Acta Holding ASA is subject to capital adequacy requirements on a consolidated basis, cf. Section § 8-12 of the Securities Trading Act. The calculation of subordinate capital and capital adequacy as at 31 December 2009 is shown in the figure below.
All amounts in thousands of NOK
2009
2008
321 358
356 992
Equity and subordinated capital Core capital Deductions for goodwill and other intangible assets
64 863
54 570
256 496
302 422
Net equity and subordinated capital
256 496
302 422
Risk-weighted basis of measurement
139 757
186 483
Capital adequacy, measured as a percentage
183.5%
162.2%
Net equity and subordinated capital Capital adequacy
Capital adequacy, required by authorities, percentage Equity and subordinated capital surplus/deficit
8.0%
8.0%
193 552
153 204
With effect from 1 January 2007 new capital adequacy regulations in line with the EU countries entered into force in Norway. The new regulations are based on the main principles of the Basel Committee’s report of June 2004. The Financial Supervisory Authority of Norway set the subordinate capital requirement for Acta Kapitalforvaltning AS to be NOK 50 million. For Acta Asset Management AS the requirement at the end of 2009 is calculated as NOK 52 million, of which NOK 46 million is to cover operational risk and the remainder of which is to cover credit risk. The consolidated requirements for equity and subordinated capital as of 31 December 2009 are estimated based on the highest of the requirements for investment companies plus cover for credit risk calculated based on the group’s combined assets. Provisional calculations show that the required consolidated equity and subordinated capital for 2010 will be at the same level as for 2009.
Note 17 Assets pledged as collateral and guarantees All amounts in thousands of NOK Recorded debt secured through collateral, etc.:
Borrower
- Overdraft Nordea
Acta Holding ASA
Total
Credit limit
2009
2008
60 000
0
34 841
60 000
0
34 841
Acta Holding ASA has an overdraft facility with a limit of NOK 60 million, and it has guaranteed an overdraft facility with a limit of NOK 15 million related to client funds in Acta Asset Management AS. Nordea has collateral in the shares of Acta Kapitalforvaltning AS, as well as in accounts receivable and bank deposits in Acta Asset Management AS.
Book value of financial assets pledged as security
2009
2008
134 000
212 108
38 813
48 109
Bank deposits in Acta Asset Management AS
107 309
231 009
Total book value of financial assets
280 122
491 226
All amounts in thousands of NOK Shares in Acta Kapitalforvaltning AS Accounts receivable in Acta Asset Management AS 1)
1)
Only unrestricted funds.
ACTA Annual report 2009
65
ACTA GROUP - NOTES TO CONSOLIDATED ACCOUNTS - ifrs
Note 18 Exit liability for long-term unit-linked savings agreements in Sweden In Sweden, Acta markets and brokers long-term unit-linked savings plans for a number of insurance companies. The distribution remuneration received by Acta in the first year is contingent on the insured party saving in accordance with the agreed saving plan.If saving is discontinued, Acta has an exit liability that may entail repaying all or part of the remuneration for distribution. The liability is reduced over time; typically according to a rule that 100 per cent of remuneration received has to be repaid if saving terminates in the first year, 75 per cent on breach of agreement in the second year, 50 per cent on breach in the third year, 25 per cent on breach in the fourth year, and zero per cent in the event of a breach later on. In 2009, Acta received commission income of approximately NOK 35 million from subscription to savings plans. Of this amount, 15 per cent was retained to cover the future exit risk. Additional details are illustrated in the table below: All amounts in thousands of NOK
2009
2008
Provisions for future exit risk as of 1 January
9 655
17 047
Retained income from new savings plans (15%)
5 103
4 756
Supplementary provisions
-3 608
-11 465
Reversed residual provision for Vital Link
-5 099
Exchange rate effect previous years provisions Provisions for future exit risk as of 31 December
-770
-683
5 282
9 655
Changes in sales for 2009 compared with 2008 are largely related to Vital Link’s liquidation of the insurance group in Sweden. Sales are found within and covered by the previous year’s allowances. Acta is not considered to have outstanding risk connected to previous distribution of vital’s multi-year insurance agreements. Allowances as of December 31st 2009 for future sales risk is related to the arrangement of multi-year unit-link savings agreements for a number of other insurance companies and is considered to be sufficient.
Note 19 Events after the date of the balance sheet In Sweden, Acta has marketed and distributed products that contain a bond portion issued by the bankrupt Lehman Brothers Treasury B.V., whose parent company is under bankruptcy protection, with a combined value of more than NOK 1 billion. The products were arranged by Kaupthing Bank Sweden, and Acta has thus no direct exposure to Lehman Brothers. This case has been a major strain for clients and the Swedish organisation, and Acta has therefore allocated over NOK 10 million and several man-years to help affected clients to best safeguard their investments. In February 2010 it was announced that Acta Kapitalforvaltning and Kaupthing Bank hf. had reached an agreement regarding the bonds that Acta had sold its clients in 2006/2007 issued by Lehman Brothers. The agreement entails that the clients who had financed their investment using loans through Kaupthing and who wish to accept the proposal will repay 60 per cent of their loans to Kaupthing in return for Kaupthing taking over the bonds. Taking into account tax effects, this entails just under 50 per cent for the majority of clients. The proposal was generally received positively by our clients and over 80 per cent have accepted Kaupthing’s offer. Around 450 of the clients affected have complained to Acta Kapitalforvaltning and are considering legal action. The company considers the risk of such law suits to be relatively limited as Acta Kapitalforvaltning is only responsible for the provision of advice and this was given on an individual basis. This assessmentis also supported by the fact that in all decisions regarding this case the Swedish National Board for Consumer Complaints (ARN) has found that Acta Kapitalforvaltning is not liable to pay compensation to its clients. No provisions have been made in the accounts for claims by clients related to Lehman Brothers. After the Lehman Brothers was granted bankruptcy protection, the Swedish Financial Supervisory Authority conducted an on-site inspection of Acta Kapitalforvaltning’s operations in Sweden in cooperation with the Financial Supervisory Authority of Norway. In June 2009, Acta Kapitalforvaltning received the final report from the Financial Supervisory Authority of Sweden which pointed out issues they found, some of which were of a serious nature and which the Authority found to be in breach of the applicable regulations. Acta Kapitalforvaltning is now in the process of rectifying these issues and thus expects the case to be closed. On 16 February 2010, the Board of Directors of Acta Holding ASA adopted a proposal for the award of stock options for the year 2010 in accordance with a stock option programme for all Acta Group employees with a framework of 5.5 million per year for each of the years 2009, 2010 and 2011. On 17 February 2010, a total of 4.273 million stock options were awarded of which 1.110 million were awarded to executive management.
Stavanger, 26 March 2010
66
Alfred Ydstebø Chairman of the Board
Stein Aukner Vice Chairman
Ellen Math Henrichsen Member of the Board
Harald Sig. Pedersen Member of the Board
Ragnhild Kvålshaugen Member of the Board
Geir Inge Solberg CEO
ACTA Annual report 2009
acta holding asa - COMPANY income statement - NGAAP
ACTA HOLDING ASA COMPANY INCOME STATEMENT – 1 JANUARY–31 DECEMBER – NGAAP Note
2009
2008
Operating revenues
1
7 897
0
Wages and salaries
2
11 273
17 286
All amounts in thousands of NOK
Depreciations and write-downs
4
41
41
Other operating expenses
3
7 263
14 769
18 577
32 096
-10 681
-32 096
84 893
210 721
Total operating expenses Operating earnings Income on investments in subsidiaries Other financial income
3
5 151
15 501
Writing down investing subsidiary
5
-108 138
0
Financial expenses
3
1 443
9 976
Net financial items
-19 537
216 246
Net income before taxes
-30 217
184 150
-1 548
51 464
-28 669
132 686
-5.1%
27.9%
Income taxes Net income Effective tax rate
11
ACTA Annual report 2009
67
acta holding asa - company balance sheet - NGAAP
ACTA HOLDING ASA COMPANY BALANCE SHEET AS OF 31 DECEMBER – NGAAP All amounts in thousands of NOK
Note
2009
2008
ASSETS Non-current assets Deferred tax assets
11
Total intangible assets Expenditure on upgrading of rented premises
4
Machinery and equipment
4
Total fixed assets
3
95
3
95
7
11
48
85
54
96
Investments in subsidiaries
5
166 769
244 877
Other receivables
8
66 970
97 000
Total fixed asset investments
233 739
341 877
Total non-current assets
233 797
342 068
Current assets Current receivables
68
90 547
232 231
Total receivables
90 547
232 231
Bank deposits
31 094
1 124
Total bank deposits and short-term investments
31 094
1 124
Total current assets
121 641
233 355
Total assets
355 438
575 423
ACTA Annual report 2009
9, 10
acta holding asa - company balance sheet - NGAAP
ACTA HOLDING ASA COMPANY BALANCE SHEET AS OF 31 DECEMBER – NGAAP All amounts in thousands of NOK
Note
2009
2008
EQUITY AND LIABILITIES Equity 6, 7
45 303
45 303
Share premium account
Share capital
7
11 168
11 168
Other paid-in equity
7
Total paid-in equity Other reserves
7
87 048
0
143 519
56 471
203 920
318 562
Total retained earnings
203 920
318 562
Total equity
347 439
375 033
Liabilities Accounts payable
603
343
Debt to credit institutions
0
34 841
Taxes payable
0
51 517
Taxes and public fees payable Provisions and other current liabilities Total liabilities Total equity and liabilities
9, 10
599
495
6 797
113 194
7 999
200 390
355 438
575 423
ACTA Annual report 2009
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acta holding asa - company cash flow statement - NGAAP
ACTA HOLDING ASA COMPANY CASH FLOW STATEMENT – NGAAP All amounts in thousands of NOK
2009
2008
Operating activities Net income before taxes on ordinary activities
-30 217
184 150
Group contribution received – taken to income
-84 893
-210 384
Taxes paid in reporting period
-51 517
-644
Depreciation
41
41
Write-downs
108 138
0
260
-340
Change in accounts payable Change in other accruals Net cash flow from operating activities
-87 385
-8 222
-145 574
-35 399
0
-16
Investing activities Payments for acquisition of fixed assets Payments for investments in subsidiaries Conversion of subordinated loans to shares in subsidiaries Receipts from sale of subsidiaries Net cash flow from investing activities
0
-488
-30 030
0
0
8 637
-30 030
8 133
30 030
0
Financing activities Payments for subordinated loans granted to subsidiaries Receipts from group contributions Payment of dividends Net cash flow from financing activities Net change in bank deposits, short-term investments, etc. Bank deposits, short-term investments, etc. as of 01.01.
70
210 384
735 980
0
-641 793
240 414
94 187
64 810
66 921
-33 717
-100 638
Bank deposits, short-term investments, bank overdrafts, etc. as of 31.12.
31 094
-33 717
Unused overdraft facilities
60 000
25 159
ACTA Annual report 2009
acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
NOTES TO COMPANY ACCOUNTS - NGAAP Note 1 Accounting policies 1.1 Basis of preparation for the accounts
The annual accounts for 2008 have been prepared in accordance with the Norwegian Accounting Act of 1998, Generally Accepted Accounting Principles in Norway (NGAAP) and Good Norwegian Accounting Practice (NGRS). The annual accounts consist of the profit and loss statement, balance sheet, cash flow statement and notes. The annual report and accounts form a whole. The most important accounting policies used for the preparation of the annual accounts are as follows:
1.2 Foreign currency Monetary items in foreign currencies are valued at the exchange rate in effect at the end of the accounting year. Other assets and liabilities in foreign currency are valued in accordance with the general valuation rules.
a temporary nature. The write-down is reversed when there no longer is a basis for the write-down. Fixed assets with a limited useful economic life are depreciated systematically. Long-term loans are recorded on the balance sheet at the nominal amount received at the time the liability was incurred. Current assets are valued at the lesser of historical cost or fair value. Short-term liabilities are recorded on the balance sheet at the nominal amount received at the time the liability was incurred.
1.8 Shares in subsidiaries In the accounts for Acta Holding ASA, shares in subsidiaries are valued according to the cost method. In accordance with this method, dividend/group contributions received are recorded in the parent company’s accounts as income on investments in subsidiaries under financial items if the distribution relates to profits earned during the period of ownership. Other group contributions received are recorded as a reduction in the cost price of the shares. Group contributions paid (net after tax) are entered as an increased investment in subsidiaries.
1.3 Revenue Operating income is primarily attributable to sale of group services to other Acta companies. Revenue is recognised in the profit and loss statement when it is earned. Revenue from the sale of services is normally recorded on the date of delivery. Dividends and group contributions from subsidiaries are recognised as income the same year they are earned in the underlyingcompanies and when such distributions are expected to be adopted and incorporated into the annual accounts of the underlying companies. Interest income is recognised as it is accrued.
1.4 Expenses Expenses are matched with and expensed along with the revenues to which they relate. Expenses that cannot be directly attributed to revenuesare recognised when they are incurred. Interest and fees are recognised in the profit and loss account as they are earned as income or accrued as expenses.
1.9 Receivables Receivables are entered at their nominal value after the deduction of provisions for expected losses. Provisions for losses are made on the basis of an assessment of the individual receivables.
1.10 Taxes The tax charge is matched against the financial statement profit/loss before tax. Tax related to equity transactions is charged directly against equity. The tax charge consists of the tax payable (tax on the taxable incomefor the year) and change in the net deferred tax. The tax charge is allocated to the ordinary profit and the result of extraordinary items in accordance with the tax basis. Deferred tax and deferred tax assets are presented on a net basis on the balance sheet.
1.11 Lease agreements
1.5 Defined contribution pension schemes
The Acta Group’s lease agreements are accounted for in accordance with the following rules:
Commitments to make contributions to such pension schemes are recognised as costs in the profit and loss statement when they are incurred.
Operating lease agreements
1.6 Share-based payment transactions Employee options are measured at fair value at the time of allotment. The options are valuated according to the Black and Scholes model. The estimated value is recognised as a personnel expense set-off against other equity paid in. The expense is allocatedover the period until the employee earns an unconditional right to the shares.
Lease agreements where the major part of the risk and return that are associated with the asset are not transferred to the group are classified as operating lease agreements. The rent payments are classified as operatingexpenses and are recorded linearly in the income statement over the term of the agreement.
1.12 Contingent outcomes and events after the balance sheet date Contingent losses that are probable and quantifiable are expensed.
1.7 General rules for valuation and classification of assets and liabilities Assets intended for long-term ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables that are to be repaid within one year are classified as current assets. Analogous criteria are used for the classification of short-term and long-term liabilities. Fixed assets are valued at historical cost, but they are written down to their fair value when the fall in value is not expected to be of
1.13 Cash flow statement The cash flow statement has been prepared based on the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments.
ACTA Annual report 2009
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acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
Note 2 Wages and salaries, number of employees, remuneration, loans to employees, etc. All amounts in thousands of NOK
2009
2008
Wages and salaries
4 537
7 264
Employer's National Insurance contributions
1 079
950
0
4 744
128
120
Provisions for "K2" incentive programme Defined contribution pension scheme Other benefits Total Average number of full-time employees
5 530
4 208
11 273
17 286
3
4
The Acta Group established a defined contribution pension scheme for all permanent employees in Norway and Sweden as of 1 January 2005. The contribution percentage for 2009 was four per cent of fixed salaries between 1G–6G and six per cent of fixed salaries between 6G–12G. In relation to the mandatory company pension requirements that entered into force in Norway as of 1 July 2006, the Acta Group has a pension scheme beyond the minimum requirement of two per cent of salaries between 1G and 12G. Benefits paid to employees in leading positions and Board members in 2009 All amounts in thousands of NOK Geir Inge Solberg CEO (from August 2009) Christian Tunge CFO Alfred Ydstebø 2)
Chairman of the Board
Stein Aukner
Vice Chairman of the Board
Ellen Math Henrichsen
Member of the Board
Ragnhild Kvålshaugen
Member of the Board
Harald Sigurd Pedersen
Member of the Board
Period 2009 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
Salary/ Pension Directors’ scheme fees contributions 875 17 1 215 1 204 313 250 188 150 188 150 150 150
40 39
Bonus/Profit sharing 1) 0
Other benefits 3
20 2 612
13 15 7
2008: Includes distributions from the “K2” incentive programme in April 2008. The costs of the programme are accounted for over the duration of the programme from 2005 to 2007. 2) See also the note to the accounts of the Acta Group – Note 14 Related parties.
1)
Remuneration for the CEO is set by the Board’s compensation committee, which also sets the guidelines for the remuneration for other employees in leading positions, including both the level of fixed salary and the principles for and scope of bonus schemes. Employees in leading positions have ordinary bonus agreements, with limits that are set on an annual basis, normally between 40 and 100 per cent of their base salary, dependent on their position. If targets are revised or results are better than budgeted, bonuses may be set at up to 150 per cent of the bonus limit. Estimated bonuses earned are charged as an expense on an ongoing basis. The CEO and CFO have agreements that provide 18 months’ severance pay if their employment is terminated without a valid reason or as a result of major changes in their duties, due, for example, to a merger or acquisition. No board members have severance pay agreements. The former CEO and Managing Director of Acta Holding ASA, Simen Mørdre, left the Group during the summer/autumn of 2009. Mørdre received ordinary monthly salary until the end of 2009. In addition to this Mørdre received severance pay equivalent to 13 months’ salary. The Board of Directors of Acta Holding ASA decided to replaced the cash-based “K3” incentive programme that was launched in 2008 with a long-term incentive programme, including share options, covering all Acta employees. In the course of 2009, the Board of Directors in Acta Holding ASA has granted a selected group of individuals in Acta’s top managementstock options in accordance with the stock option programme launched in 2008. In 2009, the Board of Directors in Acta Holding ASA decided to replace this programme with a new one covering all employees in the company. The scheme is a part of a long-term incentive programme for employees in Acta with the aim of contributing to good results and helping to attract new employees as well as keep current ones. At the time of the approval of the annual accounts a total of 8.86 million stock options have been granted, of which executive management in the Group hold 3.69 million stock options. The stock option programme is in accordance with the authorisation granted by the annual general meetings on 30 April 2008 and 6 May 2009. Reference is made to Note 3 in the consolidated accounts for further information.
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ACTA Annual report 2009
acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
Note 3 Combined items in the profit and loss statement All amounts in thousands of NOK Office rent and expenses IT expenses Fees to auditors, lawyers and consultants Telecom and postal expenses Travel
2009
2008
334
387
10
89
1 624
7 801
219
304
650
1 355
Marketing activities
1 291
958
Other operating expenses
3 136
3 875
Total other operating expenses
7 263
14 769
274
141
0
17
Other services besides auditing
314
123
Total auditor’s fees
588
281
4 649
11 502
Statutory auditing Other audit-related services
The fees are stated exclusive of VAT.
Interest income, group companies
502
3 999
Total financial revenues
Interest income, bank deposits
5 151
15 501
Interest expenses, group companies
1 094
6 520
Bank interest and charges
349
3 457
Total financial expenses
1 443
9 976
2009
2008
155
154
0
1
Historical cost as of 31 December
155
155
Accumulated write-downs as of 31 December
149
144
Note 4 Fixed assets All amounts in thousands of NOK Expenditure on leasehold improvements Historical cost as of 1 January Additions Disposals
Net accumulated write-downs as of 31 December Accumulated depreciation and write-downs as of 31 December Book value as of 31 December Depreciation for the year Economic life Depreciation schedule
0 149
144
7
11
4
4
4–5 years
4–5 years
Linear
Linear
187
172
Machinery and equipment Historical cost as of 1 January Additions
15
Disposals Historical cost as of 31 December
187
187
ACTA Annual report 2009
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acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
Note 4 Fixed assets (continues) 2009
2008
Accumulated write-downs as of 31 December
139
102
Accumulated depreciation and write-downs as of 31 December
139
102
48
85
All amounts in thousands of NOK
Book value as of 31 December Depreciation for the year Economic life Depreciation schedule
All amounts in thousands of NOK
37
37
4–5 years
4–5 years
Linear
Linear
Expensed 2009
Agreed annual leasing amount
230
327
Annual operating lease payments Leasing agreements, premises Leasing agreements, office machinery and equipment Total
9
6
239
333
Acta Holding ASA is entitled to an extension of the office lease on market-based terms. The company does not have any entitlement to the acquisition of leased assets.
Note 5 Shares in subsidiaries The companies listed below are all wholly owned by Acta Holding ASA. All amounts in thousands of NOK Company Acta Kapitalforvaltning AS
Aquisition date
Registered office
Carrying value
Equity 31.12.09
Net income 2009
1998
Stavanger
134 000
66 979
-117 743
Acta Asset Management AS
1998
Stavanger
20 659
48 357
84 271
Acta Försäkringsplanering AB
2000
Stockholm
895
10 292
-4 779
Acta Corporate Services AS
2001
Stavanger
10 727
8 599
-199
Acta Kapitalförvaltning AB
2008
Stockholm
488
424
72
166 769
134 651
-38 378
Total
A share value assessment has been carried out of the subsidiary Acta Kapitalforvaltning AS and this shows that shares in the company have a value of NOK 134 million, and against this background the shares are written down with NOK 108 million. The valuation is based on prognoses of approved plans and a discounting rate prior to tax of 12 per cent. These estimates are based on key preconditions such as the number of offices, employee numbers in sales-related positions, the number of customers and the expected demand for the various cash-generating units’ products, both from existing and new customers.
Note 6 Share capital and shareholder information As of 31 December 2009, the company’s share capital consisted of 251 683 432 shares with a nominal value of NOK 0.18 each. There is only one class of share. Reference is made to Note 9 in the consolidated accounts for further information.
Note 7 Equity All amounts in thousands of NOK
Share capital
Share premium account
Other paid-in equity
Other reserves
Total
Equity as of 1 January 2008
45 303
11 168
0
185 876
242 347
132 686
132 686
45 303
11 168
0
318 562
375 033
Change in equity for the year: Net income Equity as of 31 December 2008
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ACTA Annual report 2009
acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
All amounts in thousands of NOK
Share capital
Share premium account
Other paid-in equity
Other reserves
Total
Equity as of 1 January 2009
45 303
11 168
0
318 562
375 033
85 973
-114 642
-28 669
203 920
347 439
Change in equity for the year: Net income Stock option programme Equity as of 31 December 2009
1 075 45 303
11 168
87 048
1 075
Note 8 Long-term receivables Disbursement date
Maturity
2009
2008
Acta Kapitalforvaltning AS
31.12.07
31.12.17
49 970
80 000
Acta Asset Management AS
31.12.07
31.12.17
17 000
17 000
66 970
97 000
All amounts in thousands of NOK Borrower
Total
Long-term receivables consist of subordinated loans to the subsidiaries Acta Kapitalforvaltning AS and Acta Asset Management AS that were granted as a measure to strengthen the companies’ subordinated capital. The interest rate that applies to the receivables corresponds to the three-month NIBOR plus 300 basis points.
Note 9 Intercompany accounts, companies in the same group and related parties All amounts in thousands of NOK
2009
2008
Acta Kapitalforvaltning AS
1 161
21 456
Acta Asset Management AS
1 264
Acta Corporate Services AS
1 489
Acta Kapitalforvaltning AB
290
11
Group contributions from Acta Asset Management AS
210 384
Group contributions from Acta Kapitalforvaltning AS
84 893
Total intercompany receivables
88 818
232 129
Acta Kapitalforvaltning AS
57 112
Acta Asset Management AS
27 732
Acta Försäkringsplanering AB Acta Corporate Services AS Total intercompany liabilities
1 061
22 424
650 1 711
107 269
2009
2008
88 818
232 129
89
102
Note 10 Current receivables and other current liabilities All amounts in thousands of NOK Intercompany accounts, group companies Prepaid expenses Tax payable from previous years Miscellaneous current receivables
1 941 -301
0
90 547
232 231
Intercompany accounts, group companies
1 711
107 269
Accrued expenses, unpaid wages, holiday pay, etc.
2 682
2 191
Other current liabilities
2 405
3 734
Total other current liabilities
6 797
113 194
Total current receivables
ACTA Annual report 2009
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acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
Note 11 Tax expenses All amounts in thousands of NOK Tax payable on taxable net income for the year
2009
2008
-1 640
51 469
Difference between tax papers and annual accounts Change in deferred taxes
-2 92
-3
Tax expenses for the year
-1 548
51 464
Effective tax rate 1)
-5.1%
27.9%
-30 217
184 150
25
-5
Net income before taxes on ordinary activities and tax base for the year Net income before taxes on ordinary activities Temporary differences: Change in temporary differences Permanent differences: Non-taxable income from the liquidiation of the subidiary Acta Prosjektmegling AS Non tax-deductable costs from writing down of shares in Acta Kapitalforvaltning AS Calculated benefit of stock options Other non-deductible items (net) Non-taxable group contribution received Tax base for the year
-327 108 138 1 075 15 -84 893 -5 857
183 818
Specification of tax effect of temporary differences Fixed assets 2)
-11
-339
Net temporary differences
-11
-339
-3
-95
-1 640
51 469
Net deferred tax (+)/deferred tax assets (-) on the balance sheet Tax payable on the balance sheet is calculated as follows: Tax payable on net income for the year Excess/insufficient tax paid for previous years Transferred to receivable for tax payable for previous years
-4 1 640
Tax payable transferred from Acta Prosjektmegling AS due to liquidation Total tax payable on the balance sheet
0 52
0
51 517
Net income before taxes on ordinary activities
77 920
184 150
Calculated tax expenses (28 %)
21 818
51 562
30 584
-98
Specification of other tax effects Permanent differences (28%) 3) Difference between tax papers and annual accounts Group contributions/dividends without any tax effect (28%)
99 -23 770
Tax expenses for the year
-1 548
51 464
Effective tax rate
-5.1%
27.9%
1)
Tax expenses in relation to net income before taxes. 2) Temporary difference transferred from Acta Prosjektmegling AS from liquidation. 3) Includes non-tax eductible expenses, such as entertainment expenses and various customer events, certain gifts and deductible formation expenses as well as writing down of shares d in subsidiaries.
1)
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ACTA Annual report 2009
acta holding asa - NOTES TO COMPANY ACCOUNTS - NGAAP
Note 12 Assets pledged as collateral and guarantees Pledged assets Credit limit
2009
2008
Nordea overdraft facility
60 000
0
34 841
Total
60 000
0
34 841
All amounts in thousands of NOK Recorded debt secured through collateral, etc.:
Acta Holding ASA has an overdraft facility with a limit of NOK 60 million, and it has guaranteed an overdraft facility with a limit of NOK 15 million kroner related to client funds in Acta Asset Management AS. Nordea has collateral in the shares of Acta Kapitalforvaltning AS, as well as accounts receivable and bank deposits in Acta Asset Management AS.
Guarantees Acta Holding ASA had outstanding guarantees valued at around NOK 15 million, in addition to unconditional guarantees for certain property rental agreements entered into by Acta Kapitalforvaltning AS. The rental guarantees have a remaining duration of between one to five years. The total guarantee obligation for these is NOK 8.3 million.
Note 13 Restricted bank deposits 2009
2008
Tax withholdings
537
448
Total
537
448
All amounts in thousands of NOK
Note 14 Financial risk Reference is made to Note 15 in the consolidated accounts for information on the company’s financial risk.
Note 15 Events after the date of the balance sheet On 16 February 2010, the Extraordinary General Meeting of Acta Kapitalforvaltning AS adopted a proposal for the award of stock options for the year 2010 in accordance with a stock option programme for all Acta Group employees with a framework of 5.5 million per year for each of the years 2009, 2010 and 2011. On 17 February 2010, a total of 4.279 million stock options were awarded of which 1.110 million were awarded to executive management.
Stavanger, 26 March 2010
Alfred Ydstebø Chairman of the Board
Stein Aukner Vice Chairman
Ellen Math Henrichsen Member of the Board
Harald Sig. Pedersen Member of the Board
Ragnhild Kvålshaugen Member of the Board
Geir Inge Solberg Managing Director
ACTA Annual report 2009
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Auditor’s report
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ACTA Annual report 2009
ARTICLES OF ASSOCIATION
ARTICLES OF ASSOCIATION FOR ACTA HOLDING ASA. Adopted at the annual general meeting of 31 March 2005, last amended at the Board meeting of 2 March 2010. § 1 Company name and registered office
§ 7 Company signature
The company is a public limited company. The company’s name is Acta Holding ASA. The company’s registered office is located in Stavanger.
One board member together with either the Chairman of the Board or Chief Executive Officer may sign for the company. The Board of Directors may grant power of attorney and special authorisations.
§ 2 Objects As parent company, the company’s objects are to administer its ownership interests within the group and all activities that naturally relate to these interests.
§ 8 Annual general meeting
The company’s share capital totals NOK 46,145,033.64, divided among 256,361,298 shares, each with a nominal value of NOK 0.18. The shares shall be registered with the Norwegian Central Securities Depository (VPS).
The annual general meeting shall be held annually by the end of June. The Board of Directors shall call the general meeting by issuing written invitations with at least 14 days’ notice to all shareholders with a known address. Shareholders who wish to attend must send notification of such to the company within the deadline specified on the notice of the general meeting. The deadline must not be more than five days before the date of the general meeting. Each share carries one vote at the general meeting.
§ 4 Share transfer
§ 9 Location of the general meeting
Notification of any acquisition of shares in the company shall be sent immediately to VPS. The purchaser of a share may only exercise the rights conferred on a shareholder when the acquisition has been registered in the shareholder register or when he or she has reported and paid for the acquisition.
The general meeting shall be held in Stavanger. However, the Board of Directors may decide to hold the general meeting in Oslo when appropriate.
§ 3 Share capital
§ 5 Structure of the Board The company’s Board of Directors consists of three to seven members according to the resolution adopted by the general meeting.
§ 10 Duties of the general meeting The ordinary general meeting shall: 1. Approve the annual accounts consisting of the profit t and loss account, the balance sheet and the annual report, including the consolidated accounts and dividends. 2. Address other items to be dealt with by the general meeting
§ 6 Nomination committee The company’s nomination committee consists of three to five members according to the resolution adopted by the general meeting.
ACTA Annual report 2009
79
Shareholder information
Shareholder information.
Stock exchange listing The shares in Acta Holding ASA were listed on the SMB List of the Oslo Stock Exchange in July 2001. The company was included in the Oslo Stock Exchange’s OSEBX index from 1 January 2004 and on the OB Match List from October 2004 after the Oslo Stock Exchange replaced its previous grouping of companies by industry with grouping by liquidity. The OB Match list consists of the most liquid companies after the 25 largest companies on the OBX list. One of the criteria for the list is that the share is traded a minimum of ten times per day. A total of 383 million Acta shares were traded on the Oslo Stock Exchange in 2009, which gives a turnover rate of 1.5. In 2009 an average of 1.5 million shares in Acta Holding ASA were traded, which breaks down to 121 trades per day. The largest transaction carried out in the Acta share in the course of 2009 was the sale by Otium Finans AS of its 5 per cent share in the company. Back in 2004 the company was given the ‘Information Award’ by the Oslo Stock Exchange and in 2009 Acta was granted the ‘English Award’. These awards are made on the basis of compliance with a number of information requirements, including the availability of information on the company’s website.
Share capital and shares As of 31 December 2009 Acta Holding ASA had a share capital of NOK 45.3 million, divided into 251 683 432 shares, each with a nominal value of NOK 0.18.
Authorisation to issue shares The general meeting of Acta Holding ASA has authorised the company’s Board of Directors to issue new shares. This
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ACTA Annual report 2009
authorisation was granted at the general meeting of 6 May 2009 and applies to the issuance of up to 25 million shares with a nominal value of NOK 0.18. The authorisation is valid until the next ordinary general meeting, but no longer than 30 June 2010.
Authorisation to purchase the company’s own shares The general meeting of Acta Holding ASA has authorised the company’s Board of Directors to purchase the company’s own shares. This authorisation was granted at the general meeting of 6 May 2009 and applies to the purchase of up to 25 million shares with a nominal value of NOK 0.18 within a price range of NOK 1 to NOK 100. The authorisation is valid until the next ordinary general meeting, but no longer than 30 June 2010.
Options In the course of 2009 the Board of Directors in Acta Holding ASA has granted a selected group of individuals in Acta’s top management stock options in accordance with the stock option programme launched in 2008. In 2009 the Board of Directors in Acta Holding ASA decided to replace this programme with a new one covering all employees in the company. The scheme is a part of a long-term incentive programme for employees in Acta with the aim of contributing to good results and helping to attract new employees as well as keep current ones. At the time of the approval of the annual accounts a total of 8.86 million stock options are granted, of which employees in leading positions hold 3.69 million stock options. The stock option programme is in accordance with the authorisations granted by the annual general meetings on 30 April 2008 and 6 May 2009. The strike price for the options was set to NOK 20.04 for the options granted in 2008, NOK 2.07
Shareholder information
for the options granted in March 2009, NOK 3.91 for the options granted in October 2009 and NOK 3.38 for the options granted in February 2010. The strike price shall be reduced by the accumulated dividend paid in the period after the options have been awarded. The dividend for 2007, paid after the award of the options in 2008 was NOK 2.55 per share. Up to 50 per cent of the stock options granted in 2008 can be exercised in 2010 and up to 50 per cent can be exercised in 2011. For both years the options must be exercised within specified periods. Up to 50 per cent of the stock options granted in March 2009 can be exercised in 2011 and up to 50 per cent can be exercised in 2012. For both years the options must be exercised within specified periods. 100 per cent of the stock options granted in October 2009 and February2010 can be exercised in 2011 and 2012 respectively. For both years the options must be exercised within specified periods. As of 31 December 2009, Acta Holding ASA had no outstanding warrants or other financial instruments that might lead to the issue of new shares.
Share price performance The share price was NOK 4.14 at the end of 2009, which gives a market capitalisation of NOK 1 042 million. The highest and lowest quoted prices recorded in 2009 were NOK 4.80 and NOK 1.27, respectively. The price at the end of 2008 was NOK 2.50 in comparison. This gives a price increase of 66 per cent in 2009. No dividends were paid in 2009. The Oslo Stock Exchange’s OSEBX index rose during the same period by 65 per cent, while the financial(OSE40) index rose by 127 per cent. The graph on the next page shows share price and volume movements for Acta Holding ASA from 1 January to 31 December 2009 compared with the Oslo Stock Exchange’s OSEBX index.
Own account trading rules Employees who normally have access to or work with investment services or the management of financial instruments for the enterprise or for the accounts of the enterprise’s clients shall be subject to the own account trading rules in Chapter 8 of the Norwegian Securities Trading Act. Acta is dependent on having a very orderly relationship with the financial market and supervisory authorities, and the management has decided that these rules shall apply to all the employeesin the Acta Group’s investment firms, Acta Kapital forvaltning AS and Acta Asset Management AS and Axir AS, with some few exceptions made for those working in support functions who do not have insight into investment services. The company has compiled a code of conduct for its employees with regard to the securities market.
Dividend policy The company’s dividend policy remains unchanged from 2008, and it aims to pay out the highest possible share of the net income
as dividends, taking into account legal requirements as well as financial solidity and liquidity needs. For the 2009 financial year, the Board of Acta Holding ASA has proposed not to pay dividend to its shareholders. Considerations of liquidity and capital adequacy requirements were the key reasons for the proposal not to pay dividend for the 2009 financial year.
Shareholders Acta’s shareholders consist of institutional investors, small investors and one principal shareholder. The latter has a consultancy agreement with Acta Holding ASA equivalent of a half man- labour year. Acta’s largest shareholder is the chairman of the Board Alfred Ydstebø and related parties and they own through the investment company Coil Investment Group AS approximately 14 per cent of the company’s shares. At the year-end, the 20 largest shareholders held a total of 57 per cent of the company’s shares. As of 31 December 2009, Acta Holding ASA had 4 290 shareholders, a decline of 25 from the previous year. The number of foreign shareholders fell from 217 to 188. The number of Norwegian shareholders increased from 4 098 to 4 102. A list of the 20 largest shareholders as of 31 December 2009 is given in the table below. Shares
%
Coil Investment Group AS
Shareholders
35 068 547
13.93%
Caprice AS
15 407 000
6.12%
Best Invest AS
12 808 707
5.09%
Carnegie Investment Bank AB
12 048 850
4.79%
Bjelland Trading AS
10 549 000
4.19%
Mons Holding AS
9 060 620
3.60%
Perestroika AS
9 010 000
3.58%
Sanden AS
6 981 568
2,77%
Tveteraas Eiendomsselskap AS
4 500 000
1.79%
Tenold Gruppen AS
4 057 000
1.61%
IKM Industri-Invest AS
4 023 800
1.60%
Arctic Securities ASA
2 583 600
1.03%
Ojada AS
2 500 000
0.99%
International Oildfield Services AS
2 500 000
0.99%
Bank of New York Mellon SA/NV
2 346 705
0.93%
Steinar Lindberg AS
2 100 000
0.83%
Extellus AS
2 000 000
0.79%
Nordnet Bank AB
1 961 448
0.78%
DnB NOR Bank ASA
1 822 000
0.72%
Bank of New York Mellon SA/NV
1 647 560
0,65%
Total 20 largest shareholders
142 976 405
56.81%
Total other shareholders
108 707 027
43.19%
Total number of shares
251 683 432
100.00%
ACTA Annual report 2009
81
Shareholder information
Shareholders ranked by number of shares Shareholdings < 1 000
Financial calendar for 2010
Share holders
Shares
%
548
199 248
0.08%
1 000–9 999
2 091
7 059 830
2.81%
10 000–99 999
1 389
35 193 863
13.98%
234
55 893 750
22.21%
Investor relations
23
67 454 637
26.80%
Acta intends to maintain and further develop the company’s good relations and keep an open dialogue with all participants in the capital markets. The Investor Relations function is exercised by the company’s Head of IR, Jo-Inge Fisketjøn, and Chief Financial Officer Christian Tunge. Their contact information is given to the right:
100 000–999 999 1 000 000–9 999 999 > 10 000 000 Total
5
85 882 104
34.12%
4 290
251 683 432
100.00%
Proportion of shares held by foreign investors The EEA agreement secures Norwegian and foreign investors the same right to buy shares. At the end of 2009 the total number of shares held by foreign investors was 32.1 million, or 12.8 per cent, and these shares were held by 188 shareholders. By comparison, at the end of 2008 there were 33.5 million shares, or 13.3 per cent, held by 217 shareholders, while at the end of 2007 the shares held by foreign investors represented 32.1 per cent. A list of shareholders by country is given in the table below.
Country of Residence
E-mail: jo-inge.fisketjon@acta.no, tel. 21 00 33 49 E-mail: christian.tunge@acta.no, tel. 21 00 33 54
Internet Acta’s interim reports, interim presentations, annual reports, stock exchange announcements, updated shareholder lists, etc. are publishedregularly on Acta’s website at www.acta.no.
Shares
%
Shareholders
%
Norway
219 573 498
87.24%
4 102
95.62%
Sweden
15 953 695
6.34%
82
1.91%
Belgium
5 111 799
2.03%
9
0.21%
UK
2 303 091
0.92%
27
0.63%
USA
2 261 932
0.90%
20
0.47%
Switzerland
1 853 439
0.74%
6
0.14%
Luxembourg
1 692 110
0.67%
3
0.07%
Denmark
1 622 542
0.64%
16
0.37%
Monaco
500 000
0.20%
1
0.02%
Germany
380 300
0.15%
3
0.07%
Iceland
220 000
0.09%
1
0.02%
80 000
0.03%
2
0.05%
Italy Netherlands
38 975
0.02%
4
0.09%
Finland
34 100
0.01%
3
0.07%
France
30 800
0.01%
3
0.07%
Spain
14 000
0.01%
3
0.07%
Other countries
13 151
0.01%
5
0.12%
251 683 432
100.00%
4 290
100.00%
Total
82
The financial calendar is presented on the next page. The quarterly presentations will be held in Oslo, while the Annual General Meeting will be held in Stavanger. All the presentations are open to the public and will be transmitted on the Internet.
ACTA Annual report 2009
Relative evolution in share price in 2009
200
12 000
180 160 9 000
140 120 100
6 000
80 60 3 000
40 20 0
0
Acta
OSEBX
Total volume
Ownership stake
6% 2%
87%
5%
Norway Sweden Belgium Others
Andre 5% 87 %
Financial calendar for 2010
2% 6%
05.05.10
11.05.10
18.08.10
Interim report for Q1 2010
Annual General Meeting
Interim report for Q2 2010
Belgia Sverige Norge
27.10.10
Interim report for Q3 2010
ACTA Annual report 2009
83
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT. Norwegian Code of Practice The “Norwegian Code of Practice for Corporate Governance” was initially published on 7 December 2004 by the Norwegian Corporate Governance Board (NUES). On the basis of changes in laws and rules and the experience gained by use of the Code of Practice, NUES annually assesses the need to update the Norwegian Code of Practice. Revisions to the Code of Practice were presented on 8 December 2005, 28 November 2006, 4 December 2007 and 21 October 2009. Acta will report in accordance with the Code of Practice in effect at any given time and explain how the company has complied with the individual sections of the Code of Practice. Instances where Acta departs from the Code of Practice are commented on separately. Below is a review of the areas in the Code of Practice.
1. Implementation and reporting on corporate governance The Board of Acta Holding ASA aims to comply with the Code of Practice for Corporate Governance in all material areas. The group has prepared ethical guidelines, guidelines for how to deal with conflict of interests and internal guidelines for own account and insider trading. The guidelines describe laws and rules that apply to all employees, temporary workers and elected officers, both internally and vis-à-vis the group’s stakeholders. The ethical guidelines are based on Acta’s core values that govern all Group business. Acta’s operations are based on the following values: competence, quality, client focus, integrity and involvement. The ethical guidelines are clearly communicated
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ACTA Annual report 2009
in the organisation and define what desirable and undesirable conductis.
2. Business Acta’s vision is to create good long-term returns for our clients. Acta’s business idea is to create good portfolios and long-term value for its clients through comprehensive requirement clarification, close follow-up and a first-class product range. The articles of association for Acta Holding ASA are included in their entirety in the annual report.
3. Share capital and dividends Equity The group’s equity at 31 December 2009 amounted to NOK 321 million, which constituted 78 per cent of the total assets. Acta has a business model which requires little tied-up capital, which is also confirmed by the fact that the need for investment for organic growth is low. The Board of Directors constantly assesses the company’s need for financial strength in light of the company’s goals, strategy and risk profile.
Dividend policy The company’s dividend policy is unchanged from 2008, which means that the company will practice a dividend policy that pays out the highest possible share of the net income as dividends, where legal requirements and the requirement for satisfactory financial solidity and liquidity are taken into consideration. The Board proposes to the general meeting that no dividend will
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
be paid for the financial year 2009. The liquidity situation and capital coverage have been decisive for the Board’s proposal not to pay dividend for the financial year 2009. The dividend policy is also presented in the shareholder information chapter.
Capital increase The general meeting of Acta Holding ASA has authorised the company’s Board of Directors to issue up to 25 million new shares, which represents 10 per cent of the outstanding shares. The mandate was given in order to increase flexibility with regard to potential private share placements with strategic business partners or financial investors, as authorisation for use for new capital requirements, as payment for potential acquisitions or in the issue of stock options or award of shares, stock options and/or subscription rights to leading employees and key personnel etc. The mandate shall apply until the next ordinary general meeting, but not longer than 30 June 2010. The Board of Directors in Acta Holding ASA has granted stock options to all Acta employees in accordance with the mandate granted by the general meeting. In March 2010, the Board made use of the mandate to issue 4 677 866 new shares as 80 per cent payment for the acquisition of Axir AS. The remaining 20 per cent will be paid for through the issue of new shares at a later date. This is in accordance with the authorization granted by the annual general meeting on 6 May 2009. At the annual general meeting the Board of Directors will propose replacing this authorisation with a new authorisation that shall apply until the next ordinary general meeting, but not longer than 30 June 2011, and that still corresponds to 10 per cent of the outstanding shares.
Buy-back of shares The general meeting of Acta Holding ASA has authorised the company’s Board of Directors to purchase the company’s own shares. This authorisation was granted at the general meeting of 6 May 2009 and applies to the purchase of up to 25 million shares with a nominal value of NOK 0.18 within a price range of NOK 1 to NOK 100. Such mandates are common in major listed companies and provide the opportunity to make use of the financial instruments and mechanisms prescribed by the Norwegian Joint Stock Public Companies Act, as well as giving the company an opportunity to optimise its capital structure. The mandate was also granted so that the company can use its own shares as payment in the event of acquisitions, to fulfil the stock option programme for leading employees and key personnel etc. The mandate shall apply until the next ordinary general meeting, but not longer than 30 June 2010. At the annual general meeting the Board of Directors will propose replacing this authorisation
by a new authorisation that shall apply until the next ordinary general meeting, but not longer than 30 June 2011 and that still corresponds to 10 per cent of the outstanding shares.
4. Equal treatment of shareholders and transactionswith related parties Acta Holding ASA has one share class, and each share carries one vote at the company’s general meeting. Equal treatment of the shareholders has also been assured by the fact that in all capital increases subsequent to the stock exchange listing in 2001, existing shareholders have had preferential rights. The only exception has been for private placements to employees where all employees have been able to participate on equal terms and the share issue related to the payment for Axir AS. No transactions took place in the company’s own shares in 2009, but the mandate governing trading in the company’s own shares gives the Board the authority to act freely with regard to the way in which trading and use of shares may take place. All subsidiaries are wholly owned and there are thus no conflicts of interest with minority shareholders. On 1 January 2006, Acta Holding ASA entered into a consultancy agreement with the Chairman of the Board Alfred Ydstebø through the company Coil Investment Group AS. The consultancy agreement originally covered services with a scope equivalent to 50 per cent of a full-time position. In 2009, the original agreement was replaced with a new consultancy agreement covering services with a scope with Acta equivalent to 35 per cent of a full-time position. For 2009, the sum of NOK 831 000 excluding VAT was expensed. The agreement applies from 1 August 2009 and can be terminated by giving one month’s notice. Apart from this, there have been no material transactions between the company and the shareholders, the Board of Directors or the management. Potential conflicts of interest between the Board and these groups are dealt with by the Board.
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CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
5. Free negotiability The company has no limitations on the ownership or sale of the company’s shares.
6. General meeting The annual general meeting ensures the shareholders’ participation in the body that exercises the highest authority in the company and that adopts the company’s articles of association. The Board of Directors will make provisions to enable as many shareholders as possible to exercise their ownership rights by participating in the company’s general meeting.
Convening notice The general meeting is held annually no later than the end of June. The date for the 2010 general meeting has been set at 11 May. Notices convening ordinary and extraordinary general meetings are without exception sent to the shareholders at least 14 days in advance. The company plans to make the convening notices with accompanying documentation available in electronic format not less than 21 days prior to the general meeting. The company’s financial calendar is published as a stock exchange announcement, on Acta’s website and in the annual report. Emphasis is placed on ensuring that the relevant documents contain all necessary information to allow shareholders to form a view on all matters to be considered at the meeting. The annual report has regularly been enclosed with the notice convening the ordinary general meeting. The general meetings are held in accordance with the company’s articles of association, normally in Stavanger.
Registration The company’s articles of association state that the deadline for registration must not be more than five days before the date of the general meeting. The aim is to set the deadline as close as possible to the date of the meeting. The company has practised a flexible registration procedure. Shareholders are invited to vote by proxy and authorisations linked to each item are facilitated. The authority
86
ACTA Annual report 2009
is enclosed with the notice of the general meeting where instructions can also be given regarding voting related to each point to be addressed. The Chairman of the Board will be able to vote on behalf of shareholders as proxy if this is desired. The nomination committee’s recommendations for candidates to positions in the company’s entities are based on the characteristics already represented in the Board among Board members who are not standing for election. One attempts to complement these with members with the desired experience and competence. Due to this, the Board believes that the recommendations from the nomination committee should be voted on collectively rather than individually. As a rule, the Chairman of the Board, the management, including the CEO, the chair of the nomination committee and the auditor are present. The general meeting has been chaired by an independent meeting chair in recent years. In 2009, the general meeting was held on 6 May with 26 per cent of the total capital represented. The minutes of the general meeting are available on the company’s website.
7. Nomination committee At the annual general meeting held on 31 March 2005, the Board tabled a proposal for the inclusion of a nomination committee in the articles of association in accordance with the Code of Practice for Corporate Governance. The task of the nomination committee is to present its opinion to the general meeting on the election of Board members and their remuneration. The committeeshall consist of three members whose term of office is two years. All the members and the chairman of the committee are elected by the general meeting. The committee consists of Ulf-Einar Staalesen (chairman), Jan Petter Collier (member) and Alfred Ydstebø (member). The first two of these members represent the majority in the committee and are independent of the Board and executive management. Alfred Ydstebø is both shareholder and Chairman of the Board and not therefore independent. The Managing Director or other executive managers are not members of the nomination committee. The composition of the nomination committee seeks to balance several aspects, including emphasising the principles of independence and the avoidance of any conflict of interest between the nomination committee and the candidates it puts forward. The nomination committee’s independence from the Board of Directors and the management of the company dictates that the recommendation of nomination committee members to the general meeting should be undertaken by the nomination committee itself. The deadline for submitting suggestions for candidates is 31 December 2010 and can be carried out by contacting Acta Holding ASA, Nomination Committee, Børehaugen 1, 4006 Stavanger. The nomination committee’s recommendation of members is normally sent along with the notice of the general meeting. The resolution on the composition of the nomination committee takes place with a simple majority.
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
8. Corporate assembly and the Board of Directors - composition and independence
holders, and representatives from the executive management should not be members of the Board of Directors. Proposals for the composition of the Board of Directors also emphasise diversity, the ability to cooperate and a balanced gender representation.
Corporate assembly The Acta Group has almost 250 permanent employees, and the majority of these work in the investment firm Acta Asset Management AS, a subsidiary of the parent company Acta Holding ASA. However the number of employees there is less than 200 so there is no requirement for a corporate assembly.
Board of Directors The Board of Directors in Acta Holding ASA consists of five members and its current composition is as follows: Alfred Ydstebø (Chairman of the Board), Stein Aukner (Vice Chairman), Ragnhild Kvålshaugen, Ellen M. Henrichsen and Harald Sig. Pedersen. Detailed information about each Board member may be found on page 33.
9. The work of the Board of Directors The duties of the Board of Directors The Board of Directors has the ultimate responsibility for the management of the group and the supervision of day-to-day management and the group’s operations. In addition to supervisory and advisory duties, the Board’s main tasks consist of participating in formulating the group’s strategy. The Board appoints the CEO.
Instructions for the Board of Directors The Board has prepared instructions for its own work, as well as for the day-to-day management, with particular emphasis on clear internal allocation of responsibilities and duties.
Independence Acta is making great efforts to achieve independence among shareholders, the Board of Directors and the administration. There are no group employees on Acta Holding’s Board of Directors. The Chairman of the Board, Alfred Ydstebø, has a consultancy agreementwith the company. He works in office premises that are separate from the daily activities and the day-to-day management of Acta. Four of the five Board members are independent of the main shareholders. As laid down in the articles of association, the term of office for Board members is two years at a time. The CEO is not a member of the Board.
Board members’ shareholdings As at 31 December 2009, Board members of Acta Holding ASA have the following shareholdings in the company: Alfred Ydstebø, Chairman of the Board, owns 35 068 547 shares through the company Coil Investment Group AS. Stein Aukner, the Vice Chairman of the Board, owns 237 500 shares privately and through the company Aukner Holding AS. Board members are encouraged to own shares in the company.
Election of the Board of Directors The general meeting elects representatives to the Board. The nomination committee prepares a proposal regarding Board members prior to the election, and this is normally sent to the shareholders along with the notice convening the general meeting. Resolutions on the composition of the Board are adopted by simplemajority. For the election of new Board members, proposals regarding its composition are subject to the provisions in the Code of Practice concerning the independence of management. This means that a majority of the shareholder-elected members should be independent of the company’s executive management and material business contacts, at least two of the members elected by the shareholders should be independent of the principal share-
Board committees The general meeting established three board committees in 2006, an audit committee, a compliance committee and a compensation committee respectively. The reason for this was to help ensure thorough and independent consideration of matters concerning financial reporting, compliance and the remuneration of the executive management. The duties of the respective committees are listed below.
The duties of the audit committee: • • • • • •
Preparing quality assurance by the Board of the group’s disclosure of accounts and financial reporting Assessing the company’s material accounting principles and material valuation items Monitoring the company’s internal control arrangements, risk management systems and internal audit function, including internal audit plans and ensuring that the internal audit function has sufficient resources Maintaining regular contact with the company’s elected auditor in respect of the audit of the company’s interim and annual accounts at both the company and consolidated levels Reviewing the external auditor’s plans and budget Reviewing with an external auditor and monitor the independence of the auditor and/or accounting firm used by the company, including monitoring non-audit services provided by the auditor or accounting firm.
The audit committee consists of Ellen M. Henrichsen, Chairman, Ragnhild Kvålshaugen and Alfred Ydstebø. The majority of the audit committee are considered to be independent of the company’s business operations. The mandate of the audit committee fulfils the legal require-
ACTA Annual report 2009
87
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
ments for audit committees for publicly listed companies.
The duties of the compliance committee: • • •
The committee shall assist the Board in exercising its control and management function, particularly with regard to ensuring that the entire Acta Group operates in compliance with current laws, rules and guidelines The committee shall ensure that the company establishes and maintains internal procedures and instructions in relation to the laws and rules in effect and communicates them to the employees The committee shall report to the audit committee at least twice a year
The compliance committee consists of Harald Sigurd Pedersen as Chairman and Alfred Ydstebø as member.
The duties of the compensation committee: • •
Preparing guidelines for the Board for the remuneration of the executive management and its discussion of specific remuneration matters Other material employment issues in respect of the executive management
The compensation committee consists of Alfred Ydstebø as Chairman and Stein Aukner as member. Both members are considered to be independent of the company’s executive management.
Assessment by the Board of Directors of its operations and competence The Board of Directors will carry out an annual assessment of its operations and competence which includes an assessment of the composition of the Board and the manner in which the Board functions both individually and as a group with regard to the goals stipulated for its work.
10. Risk management and internal control The group does not have a special department for internal auditing.However, extensive regulations exist concerning internal control systems as a part of the company’s total quality programme, preparation of the management accounts and the financial accountsand the general financial management. The subsidiaries Acta Asset Management AS and Acta Kapitalforvaltning AS engaged KPMG as an internal auditor in accordance with the Internal Control Regulations in 2005 and 2006 respectively. The group has developed sound routines and procedures for continuous internal control, and the board committees established in 2006 will contribute to sound control of the preparation of the group’s accounts and financial reporting as well as supervision of the company’sinternal control. With effect from 2010 the Board of Directors has carried out
88
ACTA Annual report 2009
an annual review of the Group’s most important risk areas and internal control arrangements in the Group. Refer also to pages 26–29 in the annual report where risk management and internal control are covered in detail.
Financial reporting In addition to board meetings, the Board receives monthly financialreports describing the company’s financial status.
11. Remuneration of the Board of Directors The Directors’ remuneration is decided by the annual general meeting and is consistent with the responsibilities, competence and time used by the Board. The remuneration for 2009 was NOK 250 000 for the Chairman of the Board and NOK 150 000 for other board members. The remuneration is a fixed amount and has no performance related elements. Alfred Ydstebø, the Chairman of the Board, has a consultancy agreement with Acta equivalent to 35 per cent of a full-time position. This agreement, including the remuneration Ydstebø received for this work has been comprehensively handled and approved by the Board of Directors.
12. Remuneration to employees in leading positions The remuneration for the Chief Executive Officer is set by the Board of Directors. The Board also establishes guidelines for the remuneration of other employees in leading positions, including both the level of fixed salary and the principles for and scope of bonus schemes. In February 2008, the Board of Directors decided to implement an option programme for a selected group of individuals in Acta’s executive management with a framework of awarding a maximum of three million stock options, with one option entitling the holder to one share. In 2008, the company launched a long-term incentive programme (“K3”) for the group management, branch managers, partners and other key personnel. The incentives are linked to the achievement of results (operating earnings) and the group’s recurring revenues for the period 2008–2011. In 2009, these programmes were replaced with a new long-term incentive programme including a stock option programme for the years 2009–2011, with an annual award of approximately 5.5 million stock options per year, covering all employees in the Acta Group. Remuneration of employees in leading positions is described in the notes in the annual report.
13. Information and communication The company attaches great importance to informing its owners and investors about the group’s development and economic and financial status. Every attempt is made to ensure that the information is identical and conveyed to all parties simultaneously. Effective communication with the financial
CORPORATE GOVERNANCE AND COMPANY MANAGEMENT
market is assured by sending all material information, according to the existing statutory framework, such as stock exchange announcements, including the company’s financial calendar with the dates for publishing interim reports, general meetings and potential dividend payments. Open investor presentations are arranged in connection with the presentation of quarterly and annual results. Since the first quarter of 2004, all presentations of the company’s interim reports have been webcasted over the Internet and can be viewed directly or on demand. Acta has filed for, and has been granted dispensationfrom the language requirements in the Securities Trading Act. Interim reports will therefore be published only in English. The company has placed emphasis on developing and improving the Investor Relations pages of its website, and in 2004 it received the “Information Award” from Oslo Stock Exchange. In 2009 Acta was granted the ‘English Award’. These awards are made on the basis of compliance with a number of information requirements, including the availability of information on the company’s website. Further improvements to these pages are under continuousconsideration. The Board of Directors has not prepared specific guidelines for contact with shareholders apart from via the general meeting, but has made arrangements for this by providing contact information for the company’s IR function on the company’s website.
14. Acquisition In the event of any takeover bid, the Board of Directors and executive management in Acta have an independent obligation to help to ensure that Acta’s shareholders are treated equally. The Board has a particular responsibility to ensure that shareholders receive sufficient information to be able to consider a bid. The Board supports the provision in the recommendation for the code of practice to the effect that the Board should not without special reasons attempt to prevent or place obstacles in the way of any party making an offer for the company’s business operations or shares and has acted in accordance with this provision. There are no major share issue authorisations other than accounted for, or other possible measures that can be used to create difficulties or obstruct a possible bid for the company’s shares. In the event of an offer for the company’s shares, the Board of Directors will make a statement evaluating the offer and a recommendation to the company’s shareholders. If the Board of Directors does not find it possible to make such a recommendation the reason for this must be stated. In a takeover situation the Board will consider obtaining an independent valuation, and in cases involving large shareholders, Board members, executive management, related parties or others who have held such positions, the Board will normally obtain an independent evaluation. Transactions that in reality entail the transfer of the business will preferably be presented to the general meeting for a final decision.
15. Auditor The auditor presents a plan to the Board of Directors detailing the main points of the planned audit each year. The auditor attends the board meeting at which the annual accounts are approved and other board meetings or audit committee meetings at which material decisions concerning the accounts or internal control are to be taken as well as other meetings at the Board’s request. Both the internal and the external auditor participate in two meetings a year with the audit committee or the Board. The external auditor submits an annual report on his or her work during the previous financial year, on matters that have been the subject of particular attention or discussion with the management, and on the organisation and execution of internal control in the operational subsidiaries. Starting in 2010, the internal auditor will conduct a review of conditionsrelated to risk management and internal control in the Group together with the Board of Directors. Arrangements are made so that the auditor can meet the audit committee or the Board of Directors without the general management of the company being present – if this is required. The external auditor is engaged on ordinary terms for each company in the group. Apart from auditing and giving assistance in compiling and reporting tax matters, the external auditor has limited assignments for the group. Fees for consulting assignments are detailed in a note to the annual accounts.
ACTA Annual report 2009
89
OFFICE OVERVIEW
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90
Stavanger Børehaugen 1 NO-4006 Stavanger +47 21 00 30 00
ACTA Annual report 2009
Borås Västerlånggatan 20 SE-503 30 Borås +46 (0)33 12 68 40
Halmstad Storgatan 18 SE-302 43 Halmstad +46 (0)35 12 73 90
Karlstad Älvgatan 5 SE-652 25 Karlstad +46 (0)54 15 69 60 Kristianstad Cardellsgatan 8 SE-291 31 Kristianstad +46 (0)44 10 65 70 Linköping Kungsgatan 41A SE-582 20 Linköping +46 (0)13 13 01 90 Malmö Stortorget 9 SE-211 22 Malmö +46 (0)40 30 07 20 Stockholm Kungsgatan 8 SE-111 43 Stockholm +46 (0)8 579 440 00 Uppsala Svartbäcksgatan1 SE-751 46 Uppsala +46 (0)18 10 06 70 Västerås Kristinagatan 15 SE-724 61 Västerås +46 (0)21 12 88 70
Tromsø
Trondheim
Ålesund
Hamar Bergen Sandvika
Oslo
Västerås
Karlstad
Haugesund Tønsberg
Stockholm
Fredrikstad
Stavanger/Main Office Linköping Kristiansand
Borås Jönköping
Gothenburg
Halmstad Helsingborg
Kristianstad
Copenhagen Malmö
Uppsala
Acta Holding ASA Børehaugen 1 NO-4006 Stavanger Norway +47 21 00 30 00
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