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Acta Holding ASA (OSL:ACTA) The crisis in the global financial markets has had a strong impact on Acta's operations in the third quarter of 2008. A continuous negative trend starting in the second half of 2007 has led to the fact that a number of financial institutions worldwide has entered into bankruptcy proceedings. The market mechanisms have not functioned in a way that has ensured an efficient flow of capital, and governments around the world have implemented programmes to restore faith in the industry.
- Acta is operating in a market that is highly influenced by the banking crisis and the strong volatility in the international equity market. Acta has experienced a fall in revenues, but due to our favourable business model, we have been able to act quickly in order to adapt to the current situation. We have implemented changes to our fee structure that implies an increase in recurring revenues, and we have reduced planned costs by NOK 100 million in 2008. An additional cost reduction programme of up to NOK 200 million has been introduced and will be in full effect from 2009. Unfortunately, this programme also includes a reduction in the number of Acta's employees. We believe the current situation with difficult and challenging financial markets will persist for some time, but that we are well-positioned for regaining profitability, says CEO Simen Mørdre.
As part of an industry-wide inspection of financial advisory companies in Norway, the Financial Supervisory Authority of Norway has conducted an ordinary inspection of Acta Kapitalforvaltning ASA's operations. The FSA informed the company in October that Acta Kapitalforvaltning ASA would keep its licence to provide advisory services.
- We are very pleased, but not surprised by the main conclusion of this inspection. Acta has dedicated a great deal of resources to implementing all the requirements following the new situation for advisory services within the financial sector in Europe, says Mørdre.
Diversification pays off Even if the return on our clients' investments during the quarter has been negative, Acta is pleased to see that the company's philosophy with respect to diversification is paying off. Clients who followed advice from Acta in November 2007 to reduce exposure in mutual funds and reallocate investments in other asset classes are experiencing better performance than if they had held investments in mutual funds. This shows the strength in Acta's advisory concept. A high degree of customer attention is even more important in volatile periods like the current one.
- Acta will continue to be proactive and provide clients with competent advisory services, and we have strong faith in our policy to diversify investments in several asset classes. In the long run, we believe this will pay off as history has already shown, comments Simen Mørdre.
Financial Highlights in 3rd quarter 2008 * Continuous weak financial markets combined with a short quarter due to summer holidays led to gross subscriptions of NOK 791 million, compared with NOK 3,109 million for the same period in 2007 * Revenues of NOK 130 million, compared with NOK 305 million in the same period in 2007 * Recurring revenues of NOK 89 million, with a coverage factor to fixed costs of 92% * Operating earnings of NOK -32 million, compared with NOK 122 million for the corresponding quarter in 2007 * Assets under management of NOK 87 billion, up 5% from NOK 82 billion at the end of September 2007 * The Group has a good financial standing and has a net liquidity position of more than NOK 400 million
A complete English version of the interim report and the presentation of the 3rd quarter of 2008 are attached on www.newsweb.no and on Acta's Investor Relation web pages www.acta.no.
