AnnuAl RepoRt 2007
A nnu A l R epo Rt 2007
HQ AB (publ), 103 71 Stockholm, Sweden. Visitors: norrlandsgatan 15, entrance D. telephone +46 8 696 17 00 www.hq.se
+ HQ 2007
Addresses 83
Addresses
HALMsTAd
Strandgatan 14, 302 46 Halmstad, Sweden Telephone +46 35 27 11 82 Telefax +46 35 27 11 94
NOrrKÖPING
Box 1103, 600 41 Norrköping, Sweden Visitors: G:a Rådstugugatan 1 Telephone +46 11 36 12 00 Telefax +46 11 23 83 20 sTOcKHOLM
HQ AB, 103 71 Stockholm, Sweden Visitors: Norrlandsgatan 15, Entrance D
Telephone +46 8 696 17 00 Telefax +46 8 696 17 01 www.hq.se
GOTHeNBUrG
Box 2143, 403 13 Gothenburg, Sweden Visitors: Kungstorget 14
Telephone +46 31 701 66 00 Telefax +46 31 701 07 55
MALMÖ
Box 4430, 203 15 Malmö, Sweden Visitors: Skomakaregatan 2 Telephone +46 40 665 53 00 Telefax +46 40 12 40 01
UMeÅ
HQ Private Banking in alliance with Länsförsäkringar Box 75, 901 03 Umeå, Sweden Visitors: Nygatan 19
Telephone +46 90 77 20 70 KALMAr
HQ Private Banking in alliance with Länsförsäkringar
Box 141, 391 21 Kalmar, Sweden Visitors: Norra Långgatan 27 Telephone +46 480 270 30
VIsBY
HQ Private Banking in alliance with Länsförsäkringar Gotland
Österväg 17, 621 45 Visby, Sweden Telephone +46 498 24 92 28
CitigatestoCkholm.Com Printing: strokirk-landströms PhotograPhy: stefan Bladh and magnus neideman translation: nordström translations aB
cONTeNTs
04 Business performance 2004-2007 05 The best year in HQ’s history 06 comments from the ceO 08 Business concept 10 Private Banking 18 Investment Banking 24 Human capital 26 The HQ share 28 Five years in summary 29 corporate governance report 33 Administration report
37 recommended disposition of profit 38 consolidated income statement 39 consolidated balance sheet
40 consolidated statement of changes in equity 41 Parent company financial statements
43 Parent company statement of changes in equity 44 cash flow statements
45 Accounting policy and notes to the financial statements
54 Notes
77 Auditor’s report
78 excerpts from the articles of association 79 scheduled reports and AGM
80 Board of directors 81 Management and auditors 82 definitions
83 Addresses
xxxxxx 3
+ HQ 2007
ExPLORE, INNOVATE AND PERFORM
HQ Bank is an ideas-driven company run by entrepreneurs, for en- trepreneurs. Business is conducted from offices in several locations in Sweden and via external distributors in Sweden and abroad.
Our success is based on two factors: The products and services we innovate and the people who deliver them. By offering a stimulating environment to our people, we create the right conditions for deli- vering financial success to our clients.
Meticulous, in-depth needs analysis is the foundation of everything
we do. A team of specialists – where the sum is always greater than
the individual contribution – ensure that we deliver the optimal solu-
tion, whether or not that is an HQ product.
+ HQ 2007
100,000
75,000
50,000
25,000
0 8,000
6,000
4,000
2,000
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2004
Outflow Inflow Assets under management
2005 2006 2007
Q4
160
120
80
40
0 240
180
120
60
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2004
IB PB Other PB repeat revenue as a proportion of expenses excluding profit sharing, %
2005 2006 2007
Q4
280
210
140
70
0 120
90
60
30
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2004
Variable expenses Fixed expenses Number of employees
2005 2006 2007
Q4
120
90
60
30
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Q1 Q2 Q3
Expenses excluding profit sharing Repeat revenue
2004 2005 2006 2007
Q4 Q1 Q2 Q3 Q4
04 BUSINESS PERFORMANCE 2004–2007
QUARTERLy REVENUE By SEgMENT, SEKm
FIxED AND VARIABLE ExPENSES PER QUARTER, SEKm
REPEAT REVENUE AND TOTAL ExPENSES ExCLUDINg PROFIT SHARINg, SEKm VOLUME UNDER MANAgEMENT AND FLOwS, SEKm
BUSINESS PERFORMANCE 2004–2007
1 Including HQ Fonder as of October 28, 2005
+ HQ 2007
THE BEST yEAR IN HQ’S HISTORy 05 Operating revenue SEK 986 (931) million, +6 percent.
Operating profit SEK 405 (350) million, +16 percent.
Operating profit excluding Trading SEK 420 (276) million, +52 percent.
Profit after tax SEK 290 (250) million, +16 percent.
Diluted earnings per share SEK 10.5 (9.2), +14 percent.
Operating margin 41 (38) percent.
Assets under management SEK 79.2 (77.6) billion including net inflow of SEK 8.3 (8.4) billion.
Operating profit increased by 16 percent to SEK 405 (350) million. Profit after tax was SEK 290 (250) million, cor- responding to SEK 10.5 (9.2) per share. Profit was adversely affected by Trading, which is reporting a loss of SEK 15 million for the year. Earnings trends remained strong in all other areas with profit growth of 52 percent to SEK 420 (276) million.
Total revenue increased by 6 percent to SEK 986 (931) million. The lower growth rate is entirely attributable to HQ’s Trading operations, which were adversely affected by the financial turbulence that defined the market in the second half. As part of the decision to cease Trading operations in their current form, the portfolio has also been reduced.
Operating expenses were unchanged at SEK 581 (581) million. Provisions for profit sharing decreased by SEK 33 million to SEK 173 million due to the trend in Trading. As a result of new recruitment during the latter part of 2006, employee benefit expense increased by 12 percent to SEK 238 (213) million. Other expenses increased by 4 percent due to investments in business development projects aimed at further streamlining HQ’s business model and value proposition. Several new products were also launched during the year, which increased marketing expenses.
Profit for the year was also decreased by non-recurring expenses related to implementing MiFID regulations.
The operating margin increased to 41 (38) percent. Excluding Trading, the operating margin rose by 22 percent to 44 (36) percent, which confirms the economies of scale in HQ’s business model. Increased business volumes, particularly in HQ Private Banking, can be managed with existing resources.
Total assets under management increased by SEK 1.6 billion to SEK 79.2 billion. The net inflow of new client vol- umes reached SEK 8.3 billion despite the financial turbulence during the year. Organic growth in Private Banking was 13 percent.
The board of directors proposes increasing the dividend by 67 percent to SEK 10 (6) per share.
THE BEST yEAR IN HQ’S HISTORy
Rörelseresultat Intäkter
600
450
300
150
0
80
60
40
20
0
% SEKm
SEKm
2003 2004 2005 2006 2007 Operating profit
Operating margin 1,200
900
600
300
0
2003 2004 2005 2006 2007 Revenue
Operating profit
(Pro forma including HQ Fonder)Revenue
(Pro forma including HQ Fonder)
+ HQ 2007
06 COMMENTS FROM THE CEO
Despite the adverse market climate during the second half of 2007, HQ Bank is reporting its best year-end re- sults ever. Revenue increased by 6 percent and operating profit by 16 percent, which demonstrates the scalability and stability of our business model. Adjusted for Trading operations, operating profit rose by a substantial 52 percent. This performance was achieved by talented em- ployees with steadfast focus on delivering added value and repeat revenue, as well as cost awareness.
Although I have been with the group for a long time, I would like to emphasise as the new CEO that we remain committed to our proven successful business concept. We will continue exploring, innovating and performing, with focus on repeat revenue and added value.
Strong financial performance
In a financial summation of the year, I would like to highlight the following:
Growth continued and volume of assets under management was SEK 79.2 billion at year-end, compared to SEK 20.8 billion at year-end 2003. It goes without saying that the volume of assets under management is the foundation for sustained strong performance.
Despite the turbulent market climate, the net inflow in Private Banking was SEK 8.3 billion and yielded organic growth of 13 percent.
In 2003, repeat revenue covered 16 percent of fixed costs. That figure is now 102 percent.
The operating margin increased to 41 percent despite investments in our business model. The operating margin in 2003 was 21 percent.
The proposed dividend of SEK 10 per share corre- sponds to 94 percent of net profit for the year.
The company has adopted new financial targets to bet- ter reflect HQ’s current business, with focus on stable and repeat revenue flows, and to more adequately guide and track financial performance. Please see page 8 for more information.
Sweden’s best private bank
Early in 2008, the prestigious magazine Euromoney named HQ the best private bank in Sweden. Euro- money’s annual report is based on a comprehensive reader survey of advisors, financial institutions and investors, who ranked HQ at the top in eleven of the sub-classes for private banking, including “best advisor in structured products and entrepreneur services”. It was naturally gratifying to be honoured with this award for the first time.
Equities was voted the leader in case driven analysis for the year. Still further evidence of our successful management is the HQ Rysslandsfond, which was ranked the best Sweden-based equity fund of the last decade, of any orientation, in an survey compiled by DI.se. The fund has delivered an impressive return of 711 percent during the period.
Although we were very early to focus on Emerg- ing Markets, and with successful results, Sweden is still our closest growth market. The majority of assets under management are invested in Swedish securities.
Our success is based on two factors: The products and services we innovate and the people who deliver them. Accordingly, it is critically important to create the conditions that allow us to attract and retain the right employees and provide a stimulating work environ- ment where we can all grow.
Alternative Investments
In response to increasing demand from our clients, we will be intensifying expansion of the business in Alterna- tive Investments in 2008, which is consistent with HQ’s strategy to focus on generating repeat revenue. For our clients, this will provide access to new fields of invest- ment, decreased dependence on equities for capital growth and a generally lower level of risk. The business has great potential and reinforces HQ Private Banking as a complete wealth manager and added-value pro- vider while generating synergies within the HQ group.
Unique and attractive products also create significant opportunities for distribution via external channels.
We completed a thorough analysis of the segment in 2007 and met with several potential partners. We entered into an alliance in December with a private equity fund manager. Under the terms of the agree- ment, HQ will be able to offer investments in global private equity funds through a fund-of-funds solution.
This will give HQ clients the opportunity to invest in private equity funds that are otherwise reserved for the largest institutional investors, as well as exposure to an asset class that has historically outperformed the stock market.
COMMENTS FROM THE CEO
+ HQ 2007 Outlook
The second half of 2007, like early 2008, was to a certain extent defined by unstable capital markets and it is difficult to foresee the trends in the short term.
An adverse climate will naturally also have an impact on HQ’s business, but an increasingly high proportion of repeat revenue has strongly contributed to greater stability and has successively lowered the level of risk in operations. This provides HQ with scope to work proactively even in less expansionary times.
A poorer stock-market climate is also a market of opportunity, since there are factors indicating a structural transformation of the financial industry in 2008. On the strength of a consistent strategy and the extraordinary people who implement it, HQ has built a platform and a leading position in private banking that will facilitate an active role in any consolidation.
Stockholm, February 2008
Mikael König
CHIEF EXECUTIVE OFFICER
HQ’s objective is to provide a complete product portfolio in this segment in the future. We will offer solutions in bonds and real assets such as real estate, forest and infrastructure, in addition to hedge funds, structured products and private equity. We expect the expansion to produce higher client benefit, higher profitability and added value for shareholders, while making HQ an appealing partner.
Improved distribution power
Despite several successful years, we are still a minor player in the Swedish market from the overall perspec- tive. While that confers several advantages relative to the big banks, we must also work diligently to strengthen our distribution power. Accomplishments toward that end in 2007 included a strategic alliance with Aktia, a Finnish savings bank with 76 branches.
Aktia has chosen to enhance its market offering with emerging market funds from HQ Bank. As of August, five HQ funds are also represented in Swedbank’s new fund marketplace, in an alliance that is off to a very promising start.
One of our objectives for 2008 is to further increase awareness of HQ Bank throughout Sweden. A sig- nificant portion of our current Private Banking clients are from Stockholm. Gaining the same market shares elsewhere in the country would double the volume of assets under management. We are currently repre- sented in eight locations in Sweden and are cultivating new clients from these offices.
COMMENTS FROM THE CEO 07
+ HQ 2007
In 2002 HQ Bank initiated the long-term strategic effort towards more distinct focus on added-value services and repeat revenue, with the aim of becoming the market leader in all of its niches. The concept has been highly successful and has transformed the HQ group from a private brokerage into one of Sweden’s leading managers of wealth.
Vision
HQ shall be the leading manager of wealth in the Nordic Region.
Mission statement
As an ideas-driven added-value provider of financial services, HQ shall be the first choice for entrepreneurs, institutions and private individuals in the Swedish market.
Financial targets
To better reflect HQ’s current business, with a focus on stable and repeat revenue flows, and to more adequately guide and track financial performance, the board of directors of HQ AB has established the fol- lowing new financial targets:
The operating margin shall average a minimum of 35 percent.
Net inflow of assets under management within Private Banking shall be a minimum of 10 percent per year.
Repeat revenue as a proportion of total expenses excluding profit sharing shall be a minimum of 100 percent.
Capital adequacy shall be a minimum of 10 percent.
Dividend target
At least 80 percent of net profit shall be transferred to shareholders in the long term.
Overall strategy
By continuously exploring new business opportuni- ties and innovating financial solutions, HQ will deliver long-term added value to its clients and shareholders.
Added value is created for the client through focus on the big picture combined with the specialist exper- tise of the team.
One of the most important fundamentals in this respect is the ability and insight of employees to always deliver their best, even if they cannot do everything alone. A team of specialists where the sum is always greater than the individual contribution. A team that grows by delivering financial success.
The HQ approach, with a thorough needs analysis, alliances, external distribution and teams made up of specialists, can be summed up in the strategy: explore, innovate and perform.
Explore new markets, opportunities, approaches and solutions.
Innovate new structures, alliances, financial prod- ucts and services.
Perform by delivering clear and measurable added value to clients and shareholders.
HQ’s success is based on two factors: The products and services we innovate and the people who deliver them.
BUSINESS CONCEPT
08 BUSINESS CONCEPT
ORgANISATIONAL STRUCTURE
Administration HQ
Private Banking
High Net Worth Individuals Emerging Markets
HQ Fonder
External Distribution
Investment Banking
Securities
Trading
Alternative
Investments
+ HQ 2007
4030
20
10
0
%
Minimum target 60
45
30
15
0
%
2003 2004 2005 2006 2007
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
2003 2004 2005 2006 2007 Average target
120
90
60
30
0
%
Minimum target
60
45
30
15
0
%
Minimum target
BUSINESS CONCEPT 09
BUSINESS CONCEPT
Sven Hagströmer Fondkommission founded
1981
1990
1992
1994 1998
2002
2004
2005
2006
2007 Mats Qviberg joins and
Hagströmer & Qviberg is founded
Hagströmer & Qviberg AB floatation
H&Q Corporate Finance founded
H&Q Trading founded H&Q starts trade in Russian equities
Concentration on Private Banking
Division of group, including spin-off of HQ Fonder
Financial Planning launched Focus on Emerging Markets
HQ Fonder listed on O- list of Stockholm Stock Exchange
Structured Products launched
H&Q Research changes strategy to absolute return
H&Q Fond i Fond founded
HQ Fonder merged with Hagströmer & Qviberg Alfred Berg’s private unit acquired H&Q Pensions founded
Voted Sweden’s best private bank by Euromoney Intensified concen- tration on Alterna- tive Investments HQ begins selling funds in Norway and Finland
1999
Launch of HQ Bank Alliance with Läns- försäkringar Hagströmer &
Qviberg changes name to HQ HQ begins selling funds in the Netherlands A quarter century of success
First funds in HQ Fonder launched
1988
Operating margin
Repeat revenue/total expenses excluding profit sharing
Net inflow, assets under management, Private Banking
Capital adequacy
10 xxxxxx
+ HQ 2007
PRIVATE BANKINg
HQ Bank has been voted Sweden’s best private bank by Euromoney, a prominent financial magazine.
The Euromoney annual report is based on a comprehensive reader survey among advisors, financial
institutions and investors, who ranked HQ Bank top in half of the sub-classes in private banking, inclu-
ding “best advisor in structured products and entrepreneur services”.
xxxxxx 11
+ HQ 2007
+ HQ 2007
12 PRIVATE BANKINg
With a highly scalable and proven successful business model, HQ Private Banking has evolved to become the Swedish leader in the sector according to Euromoney, a prominent financial magazine. During the past year HQ Private Banking has won additional market shares and further developed its range of services. Assets under management have increased from SEK 16 billion at the end of 2003 to SEK 67 billion at the end of 2007, an achievement based on successful asset management and a continuous net inflow of capital.
Operating revenue increased by 28 percent to SEK 767 (598) million.
Net inflow of assets under management during the year was SEK 8.3 billion, which represents organic growth of 13 percent.
The business unit reported operating profit of SEK 385 (252) million, an increase of 53 percent.
The operating margin was 50 (42) percent.
HQ entered into strategically important alliances with Swedbank and Aktia during the second half of 2007.
Focus on the total solution
HQ Private Banking provides professional and com- plete asset management solutions for private individu- als, entrepreneurs, and companies as well as small and medium-sized institutions. The concept includes answers and solutions to most financial matters of concern to private individuals, entrepreneurs, enter- prises and foundations. Our starting point is a tailored needs analysis. Through an ideas-driven organisation that explores, innovates and performs, we generate added value for our clients.
HQ Private Banking’s objective is to provide a full range of services to accommodate each individual’s preferred level of risk and return requirements. HQ Private Banking starts each new client relationship by drawing up a complete picture of the client’s finances.
Working with an open architecture is a central tenet of the business philosophy. HQ Bank cannot be best at everything, but will always attempt to find the best so- lution for its clients, whether that means recommend- ing HQ products or third-party products. HQ finds the route to higher added value for each individual client by focusing on the big picture and combining that focus with specialised knowledge.
HQ Private Banking’s value proposition comprises the following four segments:
High net worth individuals
Asset Management – Needs-adapted discretionary and advisory asset management and stock brokerage services.
Financial Planning – Complete financial solutions and advice regarding overall financial planning based on the individual needs analysis. Financial Planning comprises four service areas: Entrepreneur Service, Pensions & Insurance, Taxes & Legal Affairs and Foun- dation Advisory Service.
Emerging Markets
Stockbrokerage and equity research in global emerging markets for institutions and private individuals.
HQ Fonder
Attractive and market-adapted savings products based on active securities management for private individuals.
External Distribution
Brokerage of structured products, mutual funds and asset management services for institutions, strategic partners and independent financial advisors.
The foundation is the needs analysis
A thorough and profound needs analysis forms the basis of the overall financial advice that HQ Private Banking has been providing since 1998. The analysis provides an understanding and knowledge of the needs of each individual client. The client and HQ then jointly define the overall aims, risk level and all other factors from a total-finances perspective. Advice spans a broad area and includes tax advice, pension solu- tions, legal structures, broad questions of allocation and recommendations for individual investments.
Teamwork is crucial in being able to continually de- liver added value, as no single advisor can solve every problem or pinpoint every opportunity. The teams consist of a lead asset manager, financial planners and pension advisors. If necessary, these groups are augmented with advisors whose specialist expertise lies in entrepreneur services, emerging markets, etc.
Irrespective of how it is made up, the team consists of a number of individuals, some of Sweden’s foremost specialists in their fields, who work in a fast-paced, flexible, non-bureaucratic and responsive environment.
This business model improves the probability of gen- erating added value for the client. Higher added value provides us with satisfied clients and in the longer term means higher volumes of assets under manage- ment and higher earnings.
PRIVATE BANKINg
+ HQ 2007
PRIVATE BANKINg 13 HIgH NET wORTH INDIVIDUALS
HQ Bank’s High Net Worth Individuals unit comprises Asset Management and Financial Planning.
Asset Management
Asset management, as HQ sees it, is not about a series of products. It is about creating the best pos- sible return for each client, based on the client’s risk and return objectives and plans for the future. The products are simply a palette of tools for achieving that aim. In order to find the best tools, Asset Management actively works to develop and improve the product range. There is a continuous process of evaluating internal and external asset managers. In the course of the evaluation, Asset Management does not apply any absolute model, but the responsible individuals in Al- location & Strategy seek out asset managers and funds that clearly demonstrate expertise deemed significant
at any particular time to delivering strong performance.
Finding the right mix is a crucial component of suc- cessful asset management. The group does not use an index as a benchmark, but rather looks for investments that on their own merits can be expected to generate added value over time.
The extensive range of products includes Active Case, Active Fund, Active Management and several model portfolios. HQ Private Banking launched indi- vidual discretionary asset management in 2007, which allows the client to freely select allocations based on HQ Private Banking’s discretionary platform.
Of the 14 discretionary asset management services managed by Allocation & Strategy, 13 outperformed the index in 2007 and 11 generated positive returns.
PRIVATE BANKINg
Client manager Client FinanCial planning
Needs analysis
Asset management and overall finances Focus on the big picture
Asset management – Risk profile – Strategic allocation
– Allocation of Swedish and foreign shares, al- ternative investments and interest-bearing securities
– Sector selection – Equities selection
Overall finances – Entrepreneur Services – Pensions & Insurance – Taxes & Legal Affairs – Foundation Advisory Service
Reporting and feedback (Agenda, portfolio reporting, completed action)
TEAM
Contact/meeting, possible change of strategy (needs analysis)
+ HQ 2007
14 PRIVATE BANKINg
Financial Planning
High net worth individuals, whether they are entrepre- neurs, property owners or private individuals, are faced with a great many financial and legal decisions. Few want to pay high taxes or insurance fees and none want to make a bad deal when their life’s work is sold, or dis- advantage their children in connection with a business transfer. Tax regulations, myriad insurance regulations, planning of pension withdrawals and matters of family law all have bearing on the decisions. Wise and early planning is essential.
Asset management services give HQ’s Private Bank- ing clients access to the added value services included in Financial Planning: Entrepreneur Services, Pensions
& Insurance, Taxes & Legal Affairs and Foundation Advisory Service. The departments cooperate to ensure optimal financial planning for the client. The common denominator for the staff in all service areas is long- standing professional experience assisting entrepre- neurs in their respective areas of expertise.
Entrepreneur Services
Entrepreneur Services works primarily with owner-op- erated small and medium-sized enterprises with annual sales of up to SEK 200 million. Entrepreneur Services include business brokerage and capital acquisition.
In business brokerage assignments, HQ assists cli- ents with advisory services in connection with carrying out the purchase or sale process. Entrepreneur Services also works with outside partners to achieve the optimal solution for the client, which may include lawyers and accountants, but in some cases also other business brokers with particular niche expertise.
In the area of capital acquisition, Entrepreneur Services addresses a limited group of asset owners and arranges the “Meeting Point”, a forum where entrepreneurs and expansive growth companies have an opportunity to present their companies and value propositions.
Many enterprises will be facing ownership transfers in the next ten years, and according to the Confedera- tion of Swedish Enterprise, there may be as many as 180,000 companies in need of assistance through the entire process.
Pensions & Insurance
The department started its operations in the autumn of 2005 and offers pension advisory service and full-scale brokerage of pension policies. The aim of Pensions &
Insurance is to contribute to an overall solution in the life assurance segment that generates added value.
Most people have a fairly good estimate of their “unre- stricted” assets, but unfortunately the same cannot be said of their “restricted” assets. This restricted capital is made up of occupational pensions accrued through
employment, various types of private pension policies, endowments and the like. These can often involve significant sums, particularly for people who have worked for many years. Many people do not know what risk level or returns they have on their restricted capital – the capital that is intended to secure their income when they retire.
HQ Pension acts as an advisor in relation to insurance and pension matters, first and foremost for existing clients. The unit forms teams of experienced managers from Asset Management in order to review the client’s overall investments. Coordination creates effective asset management for both unrestricted assets, that is, assets in custodian accounts, and restricted assets. By taking an overall view of all assets, asset management can be individualised to minimise risk and enhance returns. The department’s motto is
“Focus on asset management”.
Taxes & Legal Affairs
Every transaction leads to a tax consequence, whether the transaction involves securities, a closed company or commercial real estate. It is wise to be aware of the tax consequences before the transaction is executed and discover what opportunities are available to reduce taxes. HQ’s Private Banking clients are given free access to employees who are tax experts. They are involved in the client needs analysis process and are in- tegral to giving HQ an accurate picture of client struc- tures and balance sheets. The tax experts also provide essential feedback in open and objective discussions of the alternatives and their consequences. An employee from Taxes & Legal Affairs is always part of the team available to HQ’s complete Private Banking clients.
Foundation Advisory Service
HQ has been offering legal counsel to foundations since autumn 2006. Foundation Advisory Service pro- vides advice in all matters related to foundations and in connection with formation of foundations.
EMERgINg MARKETS
The task of HQ Emerging Markets is to identify at- tractive business opportunities in global emerging markets. The operations have a natural base in HQ’s longstanding experience with the Russian equity market. Since 2004 the unit has also closely tracked Greater China (China, Hong Kong and Taiwan) and South Korea. The global financial map is constantly being redrawn and its dynamic nature is imposing stringent demands to develop and recruit the right skills to HQ.
The business was expanded in 2007 to include the African continent. At present, HQ is trading in about ten African markets, the most important of which are South Africa, Nigeria and Egypt. Interest in the African
PRIVATE BANKINg
+ HQ 2007
PRIVATE BANKINg 15 trend on the OMX Nordic Stock Exchange Stockholm.
Several years of successful management enabled continued net inflows and several new contracts with key distributors.
HQ Fonder has been a wholly owned subsidiary of HQ AB since 2005. The operations of HQ Fonder extend to management of investment funds. The fund company has about twenty employees, including seven fund managers. The business was reinforced with a new head of administration in 2007. The employees are distinguished by substantial experience acquired in varying market climates. Several employees have had the same role for many years. The HQ Strategifond, HQ’s largest, is one example: it has had the same man- ager since 1996 and has consistently generated very strong returns. The hallmarks of the working climate at HQ Fonder are focus on high performance and great independence linked with responsibility.
HQ Fonder has made a name for itself in the mar- ket and the media as a progressive, medium-sized fund manager that has launched several exciting new fund products over the years. Today, HQ Fonder’s products are available to both clients of HQ Bank and external distributors in Sweden and northern Europe, as well as the Swedish Premium Pension (PPM) system.
Continually generating strong returns for clients is the route to achieving the overall aim: to be considered the foremost asset manager in Sweden. For this reason HQ Fonder has chosen to specialise in the following three fields:
Swedish Equity Market – Organisation, expertise, willingness to explore and proximity are important ingredients in successful fund management.
Emerging Markets – HQ Fonder has longstanding experience and has had a long-term commitment since the 1996 inception of its emerging markets fund, the HQ Tillväxtmarknadsfond.
equity market is swelling and as a pioneer, HQ enjoys an advantage. Trends were favourable in general for global emerging markets and in particular for India and China. In Russia, many companies have now attained a size that stands up favourably to international com- parison, which is drawing the attention of investors with wider management mandates to this market and providing a broader customer base for HQ.
HQ Emerging Markets has an extensive global net- work. The added value to clients is found primarily in HQ’s experience, acquired skills and the international network.
With a staff of about ten people, the brokerage business is the core of HQ Emerging Markets, offering trading opportunities in most of the world’s emerging markets along with sophisticated knowledge regarding Russia, Asia and Africa. The advisors have many years of experience working with emerging markets and are available to discuss strategy and individual invest- ments.
A Corporate Finance business that targets emerging markets was established in 2007. Capital acquisi- tion for EOS Russia, a company in the Russian power sector, was one of the assignments during the year, executed in partnership with HQ Investment Banking.
HQ plans to expand market coverage from North Africa in 2008 to include parts of the Middle East.
HQ FONDER
HQ Fonder delivered strong performance in 2007. De- spite the less than ideal market climate, HQ Fonder’s clients earned an average return of 7 percent on their investments. In particular, clients who invested in the five funds oriented towards emerging markets were richly rewarded. Funds limited to Swedish equities demonstrated minor downturns, in line with the weak
PRIVATE BANKINg
70 %
50 %
30 %
10 %
–10 %
H&Q Kinafond HQ Rysslandsfond HQ Sverigefond HQ Swedish Equity Fund H&Q Svea Aktiefond HQ Strategifond HQ Strategy Fund HQ Total H&Q Indienfond HQ Tillväxtmarknadsfond H&Q Solid H&Q Global Hedge HQ Utlandsfond H&Q Nordic Hedge HQ Likviditetsfond HQ Afrikafond HQ Swedish High Yield Fund HQ Obligationsfond HQ Gorilla HQ Sverige Select 1 HQ Protego 2
2007 returns, all funds
1 Inception: September 28, 2007
2 Inception: October 10, 2007
+ HQ 2007
16 PRIVATE BANKINg
PRIVATE BANKINg
The pattern involving fund markets under greater pressure is not exclusive to Sweden and an innova- tive player like HQ Fonder has strong potential for sustained growth through taking shares of the major capital invested with the major banks.
ExTERNAL DISTRIBUTION
External Distribution is involved in marketing struc- tured products, funds and certain asset manage- ment services via external channels and distribution platforms. These consist of strategic alliance partners:
banks, advisory organisations and insurance compa- nies, as well as independent financial advisors who act primarily as insurance brokers. Structured products are an essential component of External Distribution’s busi- ness and are the fastest growing investment product of recent years.
The market for structured products is still growing and VPC has reported that new sales in 2007 were ap- proximately SEK 95 billion, up from approximately SEK 60 billion in 2006. Indications are that the favourable trend is set to continue. Capital-protected equity-linked bonds constitute the bulk of structured products.
Investors are looking for various types of specific expo- sure with controlled risk, for instance against selected emerging markets. Properly used, structured products can be a powerful tool for balancing risk and expected return in a client’s portfolio.
HQ’s business philosophy is based on dynamic structures and transparency. New products are created based on demand from the distribution channels for a specific market or exposure combined with HQ’s as- sessment of the same. Once this has been identified, HQ looks, whenever possible, for a dynamic exposure to the market or region, which usually involves an index or a strategy with elements of active allocation/
management, rather than say a static equity or index basket. A dynamic structure is often somewhat more expensive, but is expected to deliver significant added value to the investor. HQ can also demonstrate strong historical returns in a number of dynamic structures.
By transparency, HQ means that the product’s terms and conditions must be easy to understand and it must be equally easy to track its performance for the entire duration. HQ Bank is the only structured prod- ucts provider that trades all bonds on the OMX Nordic Stock Exchange Stockholm and provides daily prices in real-time.
Yet another reason for the optimistic outlook is that several types of advisory services providers and mar- ketplaces formerly designed exclusively for funds are now adapting their products and platforms to include structured products.
Hedge funds/fund-of-funds products – Products
that are an important complement to the rest of the fund offering and an attractive alternative to invest- ment in fixed-income products.
In addition to a continued strong focus on these three areas, the following are essential:
A small, flat organisation in which each individual enjoys a high level of responsibility and trust Positive and stable returns through active manage-
ment of assets
Net inflow in 2007 was SEK 0.2 billion. The total value of assets under management in HQ Fonder’s 21 funds exceeded SEK 25 billion by year-end, distributed as follows: funds that invest in Sweden, SEK 12 billion; in Russia, SEK 5 billion; in China and India, SEK 3 billion;
in Africa, SEK 1 billion; in other countries, SEK 2 billion;
and SEK 2 billion in fund-of-funds investments.
Two new funds were launched in 2007: the HQ Sverige Select fund and the HQ Protego fund. Sverige Select, which requires a minimum investment of SEK 250,000, invests in a limited selection of Swedish equi- ties and addresses higher net worth investors. Protego invests primarily in structured products.
By the end of the year, the number of directly registered clients had exceeded 28,000. However, the number of end clients is significantly greater since as- sets are also funnelled to HQ Fonder through external distributors and PPM.
Continually strengthening distribution power is a high-priority objective at HQ. A selection of HQ Fonder’s funds was introduced in the Dutch market in late 2006 and HQ entered into alliances in Norway and Finland in 2007. In Sweden the agreement with Skandia was expanded to include the HQ Afrikafond, while a selection of HQ funds has now been available since September via Swedbank’s fund marketplace.
Abroad, the venture in the Netherlands has been par- ticularly successful, where HQ’s African and Russian funds have garnered keen interest. The alliance with Swedbank is also off to a very promising start.
Market
The long-term trend shows waning interest in investing
in traditional funds, although that has been bolstered
in Sweden by the advent of PPM and growing invest-
ments in occupational pension funds. Not counting
the latter, net investments in classic equity funds
have been negative since 2000. One reason may be
competition from continuing value appreciation in
the residential real estate sector. Investors have also
received innovations like structured products with
growing enthusiasm.
xxxxxx 17
+ HQ 2007
PRIVATE BANKINg
HQ Fonder performed well in 2007 and delivered an average return of 7 percent. In particular, clients who
invested in the five funds oriented towards emerging markets were richly rewarded. According to DI.se, HQ
Rysslandsfond has outperformed all other Swedish funds for the past ten years, regardless of orientation.
18 xxxxxx
+ HQ 2007
INVESTMENT BANKINg
In order to focus on creating added value for clients, research is conducted in terms of absolute return:
whether a share is worth buying or selling in absolute terms, not in relation to an index. HQ has further elected to orient the department towards case-driven research focused primarily on Swedish equities.
This is a successful concept, as evident in HQ Bank’s top ranking in Prospera’s most recent survey of case-
driven research.
xxxxxx 19
+ HQ 2007
+ HQ 2007
20 INVESTMENT BANKINg
The operational investments made in recent years are successively yielding the desired effects. Financial performance was very good in 2007 for all units except Trading, which suffered from the grim market climate in the second half.
Operating revenue was SEK 205 (322) million. The decrease in revenue is directly attributable to Trad- ing, which is reporting a revenue decline of SEK 136 million.
Other areas of Investment Banking are performing well on the strength of a stable platform and sus- tained profitability built up over several years.
The business unit reported operating profit of SEK 55 (130) million (SEK 70 (55) million excluding Trading).
The operating margin was 27 (40) percent.
A decision has been taken to cease Trading opera- tions in their current form and intensify the Alterna- tive Investments venture.
The Investment Banking business unit is dedicated to research and trading in stocks and derivatives on be- half of clients and on HQ’s own account. We also offer capital acquisition services and advice in conjunction with mergers, acquisitions and initial public offer- ings. The client segment is made up mainly of Nordic institutions and enterprises. A decision was taken in 2007 to cease Trading operations in their current form and implement a strong expansion within Alternative Investments.
The business comprises three areas:
Securities Trading
Alternative Investments
Using advice and ideas that dare to be different and un- conventional, we generate added value for our clients.
In order to remain at the cutting edge and develop new added-value services, HQ Investment Banking is committed to continual professional development and recruitment of specialist skills. Explore, innovate and perform will remain the guiding principles for all service areas within Investment Banking.
SECURITIES
Securities, which had 36 employees at year-end 2007, is divided into Equities and Corporate Finance.
Equities
Equities is responsible for research and trade in stocks and derivatives on behalf of clients. In order to focus on creating added value for clients, research is conducted in terms of absolute return: whether a share is worth buying or selling in absolute terms, not in relation to an index.
Aimed at sharpening the focus, the department has chosen to direct case-driven research mainly at Swed- ish equities, since the unit’s core expertise is in the Swedish market. No sector is excluded, but the orienta- tion is selected based on the sectors assessed at any given time as being the most interesting in the market and the most capable of producing added value for the client. In addition to equity research, the department produces economic analysis, strategy reports and sec- tor analysis.
Clients can mainly be divided into three segments:
domestic institutions, domestic and foreign hedge funds and interbank clients.
Market and business environment
The model and strategy established in 2002, which is still the right route towards becoming a local market leader, are under constant refinement. Differentiating HQ by maintaining clear focus, outperforming our competitors, daring to do things differently and in- novating new opportunities is a viable route to success in fierce competition.
The price pressure that has for several years ap- plied to more straightforward services in the Equities service area persists. In order to counter this, HQ has chosen to focus on an increased level of added value in its services. Revenue from institutional share trading continued to rise during 2007.
The brand has been further strengthened and clients are increasingly responding to HQ’s focus on generating value-adding transaction proposals.
Research-driven brokerage fees continued rising in 2007, as did sales of derivative products, which generate higher average fees. The year was HQ’s best ever from the brokerage fees perspective. One of the cornerstones of the services provided by Equities is absolute advice based on case-driven research. The steady focus on case research that generates added value has produced results in the form of increas- ingly broad acceptance in the market, which is in turn demonstrated by the rising ranking of the Research department. Among other distinctions, Prospera’s latest survey ranked HQ the best performer in case- driven research.
Corporate Finance
Corporate Finance provides professional financial advice related to public and non-public acquisitions, mergers and divestments, stock market-related trans- actions and in conjunction with matters of ownership and capital structures, as well as strategic advice. HQ Corporate Finance focuses mainly on the Swedish market, complemented by the other Nordic countries and the Russian market. Our clients are found mainly among small and medium-sized Swedish listed and unlisted companies. Corporate Finance has a staff of 14 and has been involved in executing more than 300 transactions since the department was opened in 1992.
INVESTMENT BANKINg
+ HQ 2007
INVESTMENT BANKINg 21
INVESTMENT BANKINg
Market and business environment
Demand for Corporate Finance services was strong in 2007 and advisory services in connection with sales of privately held companies have increased in volume.
The trend is driven mainly by business transfers, as many entrepreneurs are reaching the age of retire- ment. Greater access to venture capital, primarily from private equity funds, is increasing opportunities for successful sales of this type of company. Assignments involving sales of small and medium-sized enterprises are expected to increase in the next few years. The cur- rent uneasiness in the credit market has not affected conditions for transactions involving enterprises in this segment as much as it has for larger enterprises.
HQ Corporate Finance acted as an advisor in 2007 for transactions including the sale of Pahléns, a pool accessory manufacturer, and Läckeby Water Group, a water treatment business.
Activity in stock market transactions was high dur- ing the first part of 2007. During that period, transac- tions executed by HQ Corporate Finance included a private placement and IPO of EOS Russia worth a total of SEK 1,936 million, the IPO of DIBS, and a new share issue worth SEK 87 million. Several structured place- ments worth about SEK 850 million were also executed during the year. Demand and opportunities for suc- cessful capital acquisitions, including IPOs, declined in The main thrust of HQ Corporate Finance is to create
added value and build long-term relationships in which clients can benefit from HQ’s solid transactional experience and industrial knowledge. Our keystones are thorough analysis, high quality and confidentiality linked with a long-term approach. When combined with financial creativity, longstanding and broad experi- ence of the stock market and business, accompanied by comprehensive experience with transactions, this has proven to result in strong client relationships. Our employees have extensive business backgrounds and a high level of expertise in specific sectors and complex transactions. In connection with stock market transac- tions, we bring together the knowledge and dedica- tion of HQ as a whole to execute public and private transactions on the primary and secondary markets.
HQ Corporate Finance has wide-ranging experience of initial public offerings and other listings, structured placements, private placements, preferred issues, share buybacks, redemption programmes, the arrange- ment of underwriting consortiums and other stock- related transactions. In the area of M&A and business transfers, Corporate Finance provides financial advice and transaction support to both listed and unlisted companies. The department has solid experience with acquisitions, mergers, sales, buyouts, and fairness and valuation assignments.
SOle AdviSOr JUlY 2007 STrUCTUred PlACeMeNT
AdviSOr TO ACQUirer SePTeMBer 2007 XPONCArd ACQUireS ACSC
SOle AdviSOr deCeMBer 2007
redeMPTiON:
diSTriBUTiON Of CASH
AdviSOr TO Seller JUNe 2007 liTOriNA ACQUireS PHAlÉNS fABriKer
SOle AdviSOr JUNe 2007 iPO ANd liSTiNG AT
firST NOrTH
SOle AdviSOr JUNe 2007 redeMPTiON:
diSTriBUTiON Of CASH
leAd AdviSOr JUNe 2007 iPO ANd liSTiNG AT
firST NOrTH
SOle AdviSOr MAY 2007 STrUCTUred PlACeMeNT
SOle AdviSOr MAY 2007 PrivATe PlACeMeNT
leAd AdviSOr MAY 2007 STrUCTUred PlACeMeNT
SOle AdviSOr MAY 2007 STrUCTUred PlACeMeNT
SOle AdviSOr MArCH 2007 STrUCTUred PlACeMeNT
SOle AdviSOr feBrUArY 2007 deBT ArrANGeMeNT
SOle AdviSOr MArCH 2007 STrUCTUred PlACeMeNT
AdviSOr TO Seller JANUArY 2007 SKiSTAr ACQUireS veMdAleNS SPOrTAffär OCH SKidUTHYrNiNG
VÄMDALSFJÄLL CAH AB
SOle AdviSOr deCeMBer 2007
riGHTS iSSUe
deCeMBer 2007 riGHTS iSSUe
AdviSOr TO Seller deCeMBer 2007 HereNCO AB ACQUireS
väTTerN iNdUSTrieS
AdviSOr TO Seller deCeMBer 2007 Kf iNveST ACQUireS läCKeBY WATer GrOUP
+ HQ 2007
INVESTMENT BANKINg
conjunction with the turbulence and market downturn in the second half. HQ expects this situation to con- tinue, at least through the first half of 2008.
HQ Corporate Finance also executed the redemp- tion of shares in Kungsleden and SWECO with a combined worth of SEK 1,714 million. HQ Corporate Finance also acted as financial advisor to XponCard in connection with the public offer to shareholders in ACSC, and was instrumental in new issues of Varyag Resources and KontaktEast.
HQ Corporate Finance strengthened its market po- sition during the year as a financial advisor in transac- tions with a Swedish element, creating the conditions for continued development, based on understanding of the capital market and client businesses, close client relationships and expertise in advice and execution.
TRADINg
The Trading unit is engaged in trading in shares and derivatives on HQ’s own account. The unit, which had six employees at year-end 2007, focuses on market making and risk arbitrage transactions on many of the world’s stock markets. Trading is mainly in equity- related instruments, accompanied by some trading in currency and fixed-income positions. The percentage of long-term positions has fallen in recent years, which has lowered the level of risk.
The Trading business, started in 1994, has histori- cally been very successful, but conditions for engaging in trading on own account deteriorated successively during the year. Consequently, the Trading unit is reporting its first loss-making year ever.
A decision was taken in October to dismantle Trad- ing in its current form. The decision is entirely consist- ent with HQ’s ambition to focus on repeat revenue and expand operations in the growth area of alternative investments.
Market and business environment
Although competition remains fierce, HQ Trading is the market-leading market maker for stock options and index options in the Swedish market.
There was a dramatic shift in market climate during the year, which started out favourably but gradually deteriorated. The crisis in the US credit market trig- gered global financial uncertainty that accelerated with every month that passed in the latter part of the year.
A considerably higher cost of risk and lower liquidity caused unfavourable conditions for the industry as a whole, which of course affected HQ as well.
ALTERNATIVE INVESTMENTS
Focus in the Alternative Investments area was previ- ously directed at hedge fund products. A decision was taken in the autumn to increase concentration in this growth segment and considerably expand operations in the future.
HQ’s future ambition is to become the leading independent player in Sweden in this niche by creat- ing an efficient and flexible platform for alternative investments. The business will consist of products and services developed by HQ and solutions crafted in alliances. Products are distributed via the HQ group organisation and external distributors.
HQ entered into an alliance in 2007 with a manager of private equity funds, thus providing HQ clients a unique opportunity to invest in global, buy-out ori- ented private equity funds.
Väring Capital, an HQ subsidiary, launched the first Swedish hedge fund targeted at emerging markets.
Going forward, the value proposition within Alterna- tive Investments will be expanded to include high-yield products such as senior loans and corporate bonds, real assets including real estate, forest and infrastruc- ture, and structured products and hedge funds with a distinct niche orientation.
ALTERNATIVE INVESTMENTS
Structured Products Hedge Funds
HQ Global Hedge Equity-linked Real Estate
Bonds HQ Private Equity I
HQ Nordic Hedge HQ Protego Forest
HQ Solid Agriculture
Väring Capital Infrastructure
Private Equity Real Assets High Yield
22 INVESTMENT BANKINg
Senior Loans
Corporate Bonds
xxxxxx 23
+ HQ 2007
INVESTMENT BANKINg
HQ Bank was and remains a pioneer in Emerging Markets. As a result, we have
acquired long experience and established channels in several emerging markets
around the world. HQ initiated coverage of the African market in 2006 and we
are currently trading in about ten African countries. Nevertheless, Sweden is our
closest growth market and through steadfast exploration, innovation and perfor-
mance, HQ is creating new and innovative solutions in Alternative Investments
and other segments.
24 xxxxxx
+ HQ 2007
HUMAN CAPITAL
HQ Bank’s business is conducted from eight offices in several locations in Swe-
den and via external partners in Sweden and abroad. Our continued success is
dependent on maintaining a stimulating and innovative working climate that
attracts the brightest talents in every niche and a wide network of successful
partners.
+ HQ 2007
HUMAN CAPITAL 25 HQ regards the employees of the group as its most
important asset. The financial industry is knowledge- intensive and highly competitive. Accordingly, efficient provision of skilled employees and strong development opportunities are highly significant. The skills, experi- ence and dedication of employees are critical to the success of the company.
HQ is a modern service enterprise whose mandate is to continually deliver added value to its clients. That applies to every employee, regardless of his or her department or position within the group.
The atmosphere is fast-paced and decision paths are short, which makes HQ an exhilarating place to work. The ability to acquire and apply relevant knowl- edge and take fast, sound decisions is crucial. Key characteristics for employees of HQ are an inquiring mindset, openness to change and a strong drive to achieve, which correlate well with HQ’s guiding princi- ples of explore, innovate and perform.
The HQ organisation is driven by enterprise, energy and cohesiveness accomplished through:
Excellent career opportunities.
General employee wellness initiatives, such as subsidised fitness programmes and the company health service.
Initiatives to build the HQ brand to attract new employees and clients.
As a niche player in the banking market, HQ works with a small organisation, which requires breadth and depth of expertise in every employee in order to live up to client demands. In concrete terms, this means that new employees recruited to HQ often have already distinguished themselves professionally, although they may still be moving up the career ladder. An intern- ship programme was carried out in 2007, in which young, recent graduates were recruited for a six-month internal training programme divided equally among all HQ business units.
During the autumn, HQ initiated a deliberate initiative to enhance interdepartmental integration.
The objective is to promote communication and cost-effectively achieve a sharper, more flexible value proposition to our clients and exploit economies of scale. Heightened focus on entrepreneurship is aimed at encouraging individual, insightful initiatives that HQ clients will perceive as the leading edge of HQ’s value proposition. Many HQ clients are also entrepreneurs who must be taken care of by employees who can rapidly acquaint themselves with each client’s unique situation and requirements.
In order to provide employees with a greater opportu- nity to participate in HQ’s business and development, an employee convertible programme was offered to employees in 2007. Investment AB Öresund, HQ’s principal shareholder, has also given all employees the opportunity to acquire call options.
Personal, long-term financial commitment en- hances employee motivation and strengthens loyalty to the group.
HQ had 250 (244) employees at December 31, 2007, of whom 71 (66) are women. The average number of employees was 244 (223). The average age of employees is 37 and they have been with HQ for an average of five years.
HUMAN CAPITAL
40
30
20
10
0
120 105 90 75 60 45 30 15 0
% Employees
2003 2004 2005 2006 2007 20–29 30–39 40–49 50–59 60–69
4
3
2
1
0
%
Women Men Total
2006 2007
Private Banking 120 Investment Banking 46 Management and Administration 84
Employee turnover Age distribution
Absenteeism due to illness Number of employees
by business unit
+ HQ 2007
26 THE HQ SHARE
THE HQ SHARE
Year Change Increase/decrease in
issued shares Total issued shares Change in share
capital, SEK Total share capital, SEK
1999 Company formed 1,000 1,000 100,000 100,000
1999 Split and new issue 11,500 12,500 400,000 500,000
2000 New issue 3,551,852 3,564,352 142,074,080 142,574,080
2000 New issue, preferred shares 1,453,022 5,017,374 58,120,880 200,694,960
2001 New issue, warrants 168,850 5,186,224 6,754,000 207,448,960
2002 New issue, warrants 4,000 5,190,224 160,000 207,608,960
2003 New issue, warrants 12,350 5,202,574 494,000 208,102,960
2004 Reduction of nominal value 0 5,202,574 –156,077,220 52,025,740
2004 Redemption 2004 –501,524 4,701,050 –5,015,240 47,010,500
2005 Redemption 2005 –462,954 4,238,096 –4,629,540 42,380,960
2005 New issue, merger HQ Fonder 2,540,524 6,778,620 25,405,240 67,786,200
2006 Split 6,778,620 13,557,240 0 67,786,200
2007 Split 13,557,240 27,114,480 0 67,786,200
CONVERTIBLE DEBENTURES AND wARRANTS
During 2006 and 2007 HQ directed three different convertible programmes to employees that could result in conversion of a maxi- mum of 2,400,700 shares. See also Notes 14 and 24. No warrants are outstanding.
HQ SHARE PERFORMANCE IN 2007
Shares traded
SEKDec 06 Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07
Number
The HQ share (total return) AFGX indexed (total return)
Source: Thomson0 300,000 600,000 900,000 1,200,000 1,500,000
100 150 200 250 300
