Preliminary year-end report for 2001 Avanza reports an operating profit of MSEK 8.9 for the full year 2001. *The profit before restructuring costs and goodwill amortisation improved to MSEK 8.9 (-45.2), which is equivalent to an operating margin of 9.5 per cent. *The Q4 profit before goodwill amortisation totalled MSEK 11.4, which is equivalent to an operating margin of 32.4 per cent. *Operating income rose 252 per cent in 2001 to reach MSEK 93.5 (26.6). *Q4 saw a goodwill write-down of MSEK 215.7. *The Board of Directors proposes that no dividend payment be made for 2001. Comments from the President "Just less than a year ago, the industry was considered to be in crisis. In Q4, however, Avanza began to gain the benefits of the merger and although there were only four positive months during 2001, the company is reporting an operating profit. And it is doing so despite the fact that the market is only beginning to show the first signs of recovery", according to Nicklas Storåkers, the company President. "The most active private investors have now returned to the stock market. Renewed activity on the part of broader groups of investors will further enhance this potential." "At the same time, Avanza is broadening its operations to include institutional services. There is considerable interest among major institutions in enhancing management efficiency and cutting costs." Review of operations The Stockholm Stock Exchange dropped 17 per cent in 2001, and the general market trend was very weak for more or less the entire period up to and including September. This had a negative impact on Avanza's operations in the form of lower activity and a smaller inflow of new customers, among other things. On the other hand, the stock market showed definite signs of recovery in Q4. Trading activity improved 25 per cent to 1.0 (0.8) transactions per active customer and month compared with Q3. For the full year 2001, the figure was 1.0 (2.8) transactions per active customer and month. As a result of price increases in Q4, among other things, the average commission per contract note (transaction note) rose 16 per cent to SEK 101 compared with SEK 87 in Q3. Operating income per active customer and year came to an average of approximately SEK 1,600 in 2001. Avanza's institutional operations also expanded in Q4. Institutional services comprise two areas: institutional brokerage services and services for the corporate actions. Both deposits and lending increased in Q4 as a direct consequence of the increase in stock market activity. On 31 December 2001, deposits including funds managed on behalf of third parties totalled MSEK 1,227, while lending came to MSEK 214. During the last quarter of the year, commission income less direct costs accounted for 63 per cent of total operating income, while the remaining 37 per cent comprised net interest income, custodian account fees and other revenues. On 31 December 2001, the number of open custodian accounts was 95,300 (39,000). In Q4, the net inflow of new active customers totalled +900 (+1,900), and the total number of active customers at the turn of the year was 73,000 (37,000). The total value of custodian accounts at Avanza on 31 December 2001 totalled SEK 8.4 billion. Avanza's market share on the Stockholm Stock Exchange in December was 5.7 (3.7) per cent of the number of transactions and 1.0 (0.6) per cent of the turnover. In terms of the number of transactions, Avanza was the second largest independent Internet broker and the sixth largest player overall on the Stockholm Stock Exchange. The pace of technical development of new products and services remained high in 2001. The development rate was, however, inhibited by the IT- related work connected with the spin-off of HQ.SE Fonder and the merger of Avanza and HQ.SE Aktiespar. New services launched during the year included share trading on Jiway and a new kind of custodian account for endowment assurance. The accessibility (availability) level during the year was 98.9 per cent. Both operational accessibility and the stability of Avanza's IT systems were disrupted to some extent during the autumn in connection with the integration of Avanza and HQ.SE Aktiespar. Measures have since been taken and accessibility has returned to satisfactory levels. Financial results and position The Group The profit before restructuring costs and goodwill amortisation came to MSEK 8.9 (-45.2) for the period. The corresponding Q4 profit was MSEK 11.4 (-23.5), giving an operating margin before goodwill amortisation of 32.4 (neg.) per cent. The outcome in Q4 2001 was in line with the expectations described in the interim report of 30 September 2001. Restructuring costs of MSEK 30.3 for the integration of HQ.SE Aktiespar and Avanza were charged to the profit during the year. Goodwill amortisation for the year totalled MSEK 50.7 (3.6). During Q4, there was also a goodwill write-down of MSEK 215.7 as a result of the change in the market climate, bringing total goodwill to MSEK 40.0 (216.0). The pre-tax operating loss for 2001 was MSEK 287.8 (-68.5). Commission income for 2001 came to MSEK 74.1 (20.1), while operating income totalled MSEK 93.5 (26.6). This is equivalent to increases of 269 and 252 per cent respectively on the same period the previous year. These increases are mainly attributable to acquisitions, although an improvement in net interest income, as well as higher custodian account fees and growth in the institutional trading services all contributed positively to the increase in income. While the recovery in business activity during Q4 made a positive contribution to commission income, the generally weak market climate during the year inhibited growth overall. Net interest income totalled MSEK 27.3 (14.6), an 87 per cent increase on the previous year. Operating expenses excluding restructuring costs and goodwill amortisation came to MSEK 84.6 (71.8). Shareholders' equity on 31 December 2001 totalled MSEK 178.2 (350.5) or SEK 6.7 (16.7) per share. The Group's liquid assets totalled MSEK 356.7 (199.2). The Parent company Avanza AB is reporting a loss before appropriations and tax of MSEK 243.7 (-8.1) for the period. This includes the write-down of financial assets, which had a negative impact on the profit/loss of MSEK 259.0 during the year. Net sales totalled MSEK 0.0. The company's liquid assets came to MSEK 0.7 (4.5). Outlook for 2002 During 2002, the development of Avanza's operations will primarily focus on our existing customer base. The company will be investing in the development of new products and services requested by our customers. Our main focus will be on advanced services for securities trading and related support systems. New products will be launched during the first quarter of 2002. Both commission income and the inflow of new customers are directly dependent on stock market trends. There has, however, been a rise in the share of the company's operating income that is not directly dependent on these trends. The figure for Q4 2001 was MSEK 4.3 per month. Following the merger of Avanza and HQ.SE Aktiespar, the company now has a highly streamlined and very cost-efficient organisation. The operating expenses before goodwill amortisation in 2002 are estimated to total MSEK 8.5-9.0 per month. In addition, goodwill amortisation is expected to come to MSEK 0.7 per month. Other matters Spin-off of HQ.SE Fonder The spin-off of the HQ.SE Fonder business area was completed in May 2001 in accordance with the resolution adopted by the Annual General Meeting of shareholders. HQ.SE Fonder was subsequently listed on the New Market (Nya Marknaden). Acquisition of Avanza Holding The acquisition of Avanza Holding was announced in June 2001. The company was consolidated on 1 August 2001 and the operative integration of Avanza and HQ.SE Aktiespar was completed in October 2001. The purchase sum for Avanza Holding was MSEK 73.1, paid in the form of 5,633,303 newly issued shares. Avanza Holding's operations consisted of online securities trading. The company had 46,300 open custodian accounts, of which 28,600 were active customers. Change of company name On 19 September 2001, an extraordinary general meeting of shareholders adopted a resolution to change the name of HQ.SE Aktiespar AB to Avanza AB. In connection with this change, the company's ID on the Stockholm Stock Exchange was also changed from HQSE to AZA. Dividend The Board of Directors proposes that no cash dividend be paid for the 2001 financial year. Annual General Meeting The Annual General Meeting will be held at 5 p.m. on 9 April at Ingenjörshuset in Stockholm. The annual report will be available at the company's offices from the middle of March and will also be distributed to shareholders. Financial calendar Annual report March 2002 Annual General Meeting 9 April 2002 Interim report, January-March 2002 25 April 2002 Interim report, January-June 2002 August 2002 Interim report, January-September 2002 October 2002 Stockholm 11 February 2002 The Board of Directors ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/02/11/20020211BIT01310/bit0003.doc http://www.waymaker.net/bitonline/2002/02/11/20020211BIT01310/bit0003.pdf
