Klarabergsgatan 60, Box 1399, SE-111 93 Stockholm, Sweden.
Phone: +46 8 562 250 00. www.avanza.se Produktion: Intellecta. Fotograf: Monika Franzon. Tryck: Intellecta 2008-25727
007
Av A nz A Annu A l Repo R t 2007
Avanza in brief
Avanza is the Savers’ Bank. Our mission is to make Swedes financially independent. Our goal is for Avanza’s customers to have more over for themselves than they would anywhere else. Avanza offers a complete offering of savings services with share-based, mutual fund, and pension savings. This enables customers to have a good overview and control of their entire savings with Avanza. Avanza offers the lowest charges in the market for all products.
Avanza is the leading contender in the Swedish savings market. Our long-term goal is to increase market share to a minimum of 2 per cent by 2010, corresponding to a long-term growth goal of 15-25 per cent per year. During 2007, net deposits amounted to SEK 5,000 million, and the number of customers increased by 27 per cent.
Operating income increased during 2007 by 22 per cent to SEK 557 million, and the total value of custodian accounts at the end of the year was SEK 45,900 million. Avanza reported a profit for 2007 of SEK 233 million, corresponding to SEK 8.51 per share. The company had a total of 210 employees at the end of the year.
The Avanza share is quoted on the Stockholm Stock Exchange, and the company’s biggest single owner is Investment AB Öresund.
AvAnzA AnnuAl RepoRt 2007
The year in brief
■ Operating income increased by 22 per cent (60%) to SEK 557 million (SEK 455 m).
■The operating profit increased to SEK 307 million (SEK 244 m).
■ Earnings per share improved to SEK 8.51 (SEK 6.85).
■ Net deposits during the year totalled SEK 5,000 million (SEK 6,030 m).
■ Savings capital increased by 6 per cent (45%) to SEK 45,900 million (SEK 43,200 m).
■ The number of accounts increased by 27 per cent (23%) to 165,000 (130,000).
■ The Board proposes a dividend of SEK 6.00 (SEK 4.00) per share.
■ The long-term growth goal is 15-25 per cent per year.
FON D E N UTAN AVG I FTE R
Klarabergsgatan 60, Box 1399, SE-111 93 Stockholm, Sweden.
Phone: +46 8 562 250 00. www.avanza.se Produktion: Intellecta. Fotograf: Monika Franzon. Tryck: Intellecta 2008-25727
007
Av A nz A Annu A l Repo R t 2007
Avanza in brief
Avanza is the Savers’ Bank. Our mission is to make Swedes financially independent. Our goal is for Avanza’s customers to have more over for themselves than they would anywhere else. Avanza offers a complete offering of savings services with share-based, mutual fund, and pension savings. This enables customers to have a good overview and control of their entire savings with Avanza. Avanza offers the lowest charges in the market for all products.
Avanza is the leading contender in the Swedish savings market. Our long-term goal is to increase market share to a minimum of 2 per cent by 2010, corresponding to a long-term growth goal of 15-25 per cent per year. During 2007, net deposits amounted to SEK 5,000 million, and the number of customers increased by 27 per cent.
Operating income increased during 2007 by 22 per cent to SEK 557 million, and the total value of custodian accounts at the end of the year was SEK 45,900 million. Avanza reported a profit for 2007 of SEK 233 million, corresponding to SEK 8.51 per share. The company had a total of 210 employees at the end of the year.
The Avanza share is quoted on the Stockholm Stock Exchange, and the company’s biggest single owner is Investment AB Öresund.
AvAnzA AnnuAl RepoRt 2007
The year in brief
■ Operating income increased by 22 per cent (60%) to SEK 557 million (SEK 455 m).
■The operating profit increased to SEK 307 million (SEK 244 m).
■ Earnings per share improved to SEK 8.51 (SEK 6.85).
■ Net deposits during the year totalled SEK 5,000 million (SEK 6,030 m).
■ Savings capital increased by 6 per cent (45%) to SEK 45,900 million (SEK 43,200 m).
■ The number of accounts increased by 27 per cent (23%) to 165,000 (130,000).
■ The Board proposes a dividend of SEK 6.00 (SEK 4.00) per share.
■ The long-term growth goal is 15-25 per cent per year.
FON D E N UTAN AVG I FTE R
The Savers’ Bank. Avanza’s mission is to make Swedes financially independent.
Our goal is for Avanza’s customers to have more over for themselves than they would anywhere else. Our business concept is to offer better saving through lower fees, better products, better help, and greater freedom of choice.
Double pension. Avanza wants customers to have as much over for their pensions as possible. Therefore, Avanza has removed all fixed charges on pension savings. The customer pays no account, management or insurance fees. In the long-term, charges are of great importance. A 35 year-old who saves for a pension with Avanza can receive double the pension compared with some of the major players!
AVANZA ZERO – the no-fee fund. AVANZA ZERO is the only no-fee fund in Sweden. The fund is a passively managed index fund, which aims to track the OMXS30 index. In AVANZA ZERO, Avanza offers something that is completely unique – an investment fund and pension saving system with no fees at all!
Placera Nu. Placera Nu is an independent online savings newspaper, giving readers access to analyses and buying and selling tips on shares, investment funds and pensions. Readers also have access to interesting articles, exciting interviews and hot of the press announcements – all focusing on providing smart savings advice. The journalists at Placera Nu are some of Sweden’s leading writers in the field of share-based, fund-based and pension-related saving.
placera .nu
FON D E N UTAN AVG I FTE R
HANDEL MED VÄRDEPAPPER INNEBÄR ALLTID EN RISK. En investering i värdepapper kan både öka och minska i värde och det är inte säkert att du får tillbaka hela det investerade kapitalet. Avanza Kapitalförsäkring tillhandahålls av Försäkrings- aktiebolaget Avanza Pension - ett bolag i Avanzakoncernen.
Too much tax?
AVANZA KAPITALFÖRSÄKRING.
OM DU VILL SLIPPA KAPITALVINSTSKATTEN.
• Ingen kapitalvinstskatt
• Avkastningsskatt låga 1%
• Inga försäkringsavgifter
• Ingen deklaration av aktie- och fondaffärer
• Fria uttag och insättningar
Ge t rid of the ta x!
Avan za K
apitalfö
rsäkring. Tar bort kapitalvinstskatn.te grönland
Äntligen kan du slippa allt vad kapitalvinstskatt heter. Med Avanza Kapitalförsäkring handlar du som vanligt med aktier och fonder, men i slutänden betalar du bara en avkastningsskatt på cirka 1 procent per år! Gå in på www.avanza.se och öppna en kapitalförsäkring redan idag. Det har dina pengar längtat efter länge nu. Välkommen!
C
M
Y CM
MY
CY
CMY
K
AVATax_Arsredovisning.pdf 08-02-14 10.28.28
The Savers’ Bank. Avanza’s mission is to make Swedes financially independent.
Our goal is for Avanza’s customers to have more over for themselves than they would anywhere else. Our business concept is to offer better saving through lower fees, better products, better help, and greater freedom of choice.
Double pension. Avanza wants customers to have as much over for their pensions as possible. Therefore, Avanza has removed all fixed charges on pension savings. The customer pays no account, management or insurance fees. In the long-term, charges are of great importance. A 35 year-old who saves for a pension with Avanza can receive double the pension compared with some of the major players!
AVANZA ZERO – the no-fee fund. AVANZA ZERO is the only no-fee fund in Sweden. The fund is a passively managed index fund, which aims to track the OMXS30 index. In AVANZA ZERO, Avanza offers something that is completely unique – an investment fund and pension saving system with no fees at all!
Placera Nu. Placera Nu is an independent online savings newspaper, giving readers access to analyses and buying and selling tips on shares, investment funds and pensions. Readers also have access to interesting articles, exciting interviews and hot of the press announcements – all focusing on providing smart savings advice. The journalists at Placera Nu are some of Sweden’s leading writers in the field of share-based, fund-based and pension-related saving.
placera .nu
FON D E N UTAN AVG I FTE R
HANDEL MED VÄRDEPAPPER INNEBÄR ALLTID EN RISK. En investering i värdepapper kan både öka och minska i värde och det är inte säkert att du får tillbaka hela det investerade kapitalet. Avanza Kapitalförsäkring tillhandahålls av Försäkrings- aktiebolaget Avanza Pension - ett bolag i Avanzakoncernen.
Too much tax?
AVANZA KAPITALFÖRSÄKRING.
OM DU VILL SLIPPA KAPITALVINSTSKATTEN.
• Ingen kapitalvinstskatt
• Avkastningsskatt låga 1%
• Inga försäkringsavgifter
• Ingen deklaration av aktie- och fondaffärer
• Fria uttag och insättningar
Ge t rid of the ta x!
Avan za K
apitalfö
rsäkring. Tar bort kapitalvinstskatn.te grönland
Äntligen kan du slippa allt vad kapitalvinstskatt heter. Med Avanza Kapitalförsäkring handlar du som vanligt med aktier och fonder, men i slutänden betalar du bara en avkastningsskatt på cirka 1 procent per år! Gå in på www.avanza.se och öppna en kapitalförsäkring redan idag. Det har dina pengar längtat efter länge nu. Välkommen!
C
M
Y CM
MY
CY
CMY
K
AVATax_Arsredovisning.pdf 08-02-14 10.28.28
Table of contents
2 Comments from the Managing Director 7 Market and strategy 15 Avanza’s customers 19 Avanza’s employees 23 Avanza’s history 24 The Avanza share 27 Directors’ Report 36 Five-year overview
37 Consolidated Income Statements 38 Consolidated Balance Sheets 39 Consolidated Cash Flow Statements
41 Parent Company Income Statements
42 Parent Company Balance Sheets 43 Parent Company Cash Flow Statements
44 Notes to the Accounts
74 Proposed appropriation of profits 76 Auditors’ Report
77 Definitions
79 Corporate Governance Report 84 Board of Directors’ report on internal controls regarding financial reporting 87 Articles of Association 90 Board of Directors 91 Management and Auditors 92 Annual General Meeting
2 AvAnzA 2007 Comments from the Managing Director
Our mission – to make Swedes financially independent!
Dear Shareholders,
Avanza is the Savers’ Bank. Our mission is to make Swedes financially independent. It is a credible mission because we offer the market’s best online savings products – the lowest fees, a user-friendly web service, the broadest range of savings products, and the market’s best service.
When it comes to pensions, for example, we offer Double pension. A 35 year old who invests their pension savings with Avanza can save more than 2 per cent per annum in fees, in comparison with some of the biggest pension companies. At the end of the day, this fee saving can result in the saver reaping twice the pension than would otherwise be the case.
And even those customers whose savings have a shorter term horizon will get considera- bly more back from Avanza than they would elsewhere. That’s how good we are, and it is the customer benefit that has resulted in more customers than ever before choosing to save with Avanza:
■ Record growth: The number of accounts grew in 2007 by 27 per cent to 165,000.
■ Fund-based saving increased by 37 per cent to SEK 8,960 million (SEK 6,550 m), as of 31st December 2007, corresponding to 20 per cent (15%) of the total savings capital.
■ Pension- and insurance-based saving totalled SEK 8,880 million (SEK 4,800 m), as of 31st December 2007, corresponding to 19 per cent (11%) of the total savings capital.
■ Net savings totalled 12 per cent (20%) of savings capital at the beginning of the year.
■ The total savings capital increased to 6 per cent (45%) to SEK 45,900 million (SEK 43,200 m), as of 31st December 2007.
■ Income increased by 22 per cent (60%) to SEK 557 million (SEK 455 m).
■ Earnings per share increased by 24 per cent (77%) to SEK 8.51 (SEK 6.85).
år 0
30 60 90 120 150
40 35 30 25 20 15 10 5 0
If a 35 year old makes a one-off deposit, an annual cost saving of 2 per cent means that the saver’s pen- sion savings will be twice as great by the age of 70. If a 35 year old chooses, instead, to save for their pension on an ongoing basis, Avanza yields a 79 per cent hig- her pension (nominal return, 6 per cent; inflation, 2 per cent, retirement age, 65; withdrawal period, 20 years, no assumption of an increase in real salary.) Percentage more in pension yield
Year
AvAnzA 2007 3 Comments from the Managing Director
■ The share price increased by 10 per cent in comparison with the OMX Stockholm Price Index, which decreased by 6 per cent.
Our biggest source of satisfaction last year was that Avanza successfully achieved its primary goal – of reaching out across a broader front. The most important proof of this success came in the form of the record influx of new accounts. We were less pleased, however, with the fact that net savings failed to mirror the growth in the number of accounts. This was due to a relatively high level of private consumption, higher interest rates and the turbulence in the stock market, which reduced interest in share-based saving. But the explanation also lies in harder competi- tion and in lower savings per new account. Overall, however, we are proud to state that we achieved our growth goals in 2007 with regard both to income and profits. It’s also good to look back at the goal we set at the end of 2005, namely of doubling our income in three years’
time – by the end 2008, in other words. Now that the figures are in, we can see that we have increased our income by 95 per cent after just two years!
And why have we been so successful? Well, there are obviously several reasons. One is Avanza Zero – the no-fee fund. Avanza Zero has provided a clear, simple example of the advantages that Avanza offers and has attracted more customers. And there are many other examples.
But the most important explanation to the success lies with our customers. Our customer satisfaction level is 98 per cent – the highest figure in the industry and one which fills us with enormous pride. Because the most common reason for a saver to choose Avanza is by recom- mendation from a satisfied customer. And customer service is all about team work. Which is why I’d like to say a big thank you to my colleagues, every single one of whom has contributed to this success!
Two mega-trends
The total value of the Swedish savings market is SEK 3,800 billion, and the market normally grows by between 6 to 8 per cent per annum. The segment in which Avanza operates, online saving, is growing considerably faster than this, however, and between 2001 and 2007, Avanza’s savings capital has grown by 33 per cent per annum. Our goal in the future is to achieve a growth in savings capital of at least 20 to 25 per cent per annum.
One important partial reason for the strong growth in online saving is, of course, the increase in internet usage, not least amongst the more mature user groups. 58 per cent of all adults now use the internet on a daily basis, and in the 55 to 64 age group, the figure has increased to 89 per cent – the highest figure in Europe for this age group .1
But the most important reason for the growth in online saving is a completely different one. There is a strong trend, not only in Sweden, but in the West as a whole, for the state and
1 Source: World Internet Institute, “Swedes and the Internet”, 2007
4 AvAnzA 2007 Comments from the Managing Director
companies to transfer responsibility for savings to the individual. When it comes both to PPM and to the new collective agreement pension plans, Swedes are now obliged to decide for them- selves in which funds they wish to save. The roots for all this lie in the fact that we are retiring earlier and living longer, and that the percentage of the population made up by the elderly is increasing rapidly. The public and collective pension systems are totally unable to carry the load this entails. All of which has meant a very sharp increase in the need for personal savings.
And there’s a real urgency, too. Saving is about small decisions today that can have a huge impact on your future economic security. 2 per cent lower fees, for example, can mean twice the pension. The cost-effectiveness and simplicity that online saving offers is making mana- ging one’s savings online an increasingly attractive proposition.
These strong trends are both the basis for and the focus of Avanza’s growth.
Strategy – to lower thresholds!
Our overall ambition – that a customer of ours shall recoup more for themselves than they would have done as a customer of any other firm – is a credible one. But despite the clear customer benefit that Avanza offers, we only have 165,000 accounts and 1.3 per cent of the market.
So in simple terms: the potential is massive.
Avanza’s existing customer group comprises the enthusiastic savers, the Swedes who have the know-how, the time and the interest to track the stock market and who like trying to sniff out the best value for money shares and funds to buy.
The target group that Avanza has now identified and will attempt to bring on board is made up of the more pragmatic savers. This is a target group made up of approximately 3 million individuals who realise that their current savings programme is perhaps less than optimal. They are not prepared to invest too much time in learning more about saving and in tracking the stock market.
But they are prepared to move their savings to get more out, e.g. in the form of a double pension.
If we want to reach out to this large group of savers, we must make it easier both to become and to be an Avanza customer. It should take no more than a couple of minutes for a saver from this group to understand the alternatives and get started, saving with Avanza.
Lowering the thresholds for this target group means that we need to work across the board – from our brand name to the way in which customers manage their savings with us.
Below is a sample of the ways in which Avanza will be lowering the thresholds in 2008:
■ The launch of asset management for all types of savings, ensuring that a customer who lacks either the time or the know-how can still take advantages of the benefits offered by Avanza.
■ Better products for interest-based saving. The less active a saver is, the more they tend to invest in interest-based saving.
■ Personal savings coaches will help the customer all the way from online registration to the point where the customer is up and running with their savings programme.
AvAnzA 2007 5 Comments from the Managing Director
■ Simpler pricing structures making life easier for the customer.
■ Continued focus on the broader fronts of fund-based and pension-based savings.
■ Name change to Avanza Bank to make it clear that we are a secure bank.
Our goals
Avanza’s goal is to achieve a long-term growth in profit of between 15 and 25 per cent per annum.
This goal is based on a long-term growth in income of between 10 and 25 per cent. In the short-term perspective, income is dependent on the stock market’s performance. If the turbulence that has characterised the start of 2008 continues, it will naturally impact the rate at which Avanza grows this year. Avanza will, therefore, be focusing on the factors that affect income in the long-term – growth in the number of accounts and in net savings.
Avanza’s goal in 2008 will be to make good progress en route to the magic threshold of one quarter of a million accounts and management services! Our ambition is for net savings to total a minimum of between 13 and 17 per cent, corresponding to between SEK 6,000 million and SEK 8,000 million.
The costs side of things is equally important. Our goal is to ensure that costs increase by no more than between 10 and 20 per cent. Given the shaky market we are currently experiencing, we must pay considerable attention to this aspect in all our expansion plans. The internet enables us to work efficiently and ensures that we have by far the lowest costs in the sector. At the same time, we are building for the future and investing more in both innovation and sales.
In conclusion, we’re having fun, here at Avanza. Creating value for our customers and share holders goes hand in hand. Which gives us a very simple starting point for everything we do. It also makes it easier to see when we are doing our job well. I’d like to thank every single Avanza employee for another strong year and for their 100 per cent commitment to developing Sweden’s best savings products and services.
I hope that you, as a shareholder, also share in this ambition as an Avanza customer.
Welcome to the Savers’ Bank!
Stockholm, February 2008
Nicklas Storåkers, Managing Director
E-mail: nicklas.storakers@avanza.se, tel: +46 8 562 250 01
PS. Interested in becoming a customer? Mail or call me and I’ll send you a special welcome present. DS
6 AvAnzA 2007 Our mission – to make Swedes financially independent!
Mission
Avanza’s mission is to make Swedes financially independent.
As the Savers’ Bank, our goal is for an Avanza customer to have
more money over for themselves than they would anywhere else.
AvAnzA 2007 7 Market and strategy
Market and strategy
Business concept
Avanza’s business concept is to offer Swedes better savings through:
■ Lower fees. Avanza is the price leader when it comes both to fees for share trading (brokerage), fund-based saving (e.g. Avanza Zero – the no-fee fund), and pension-based saving.
■ Better help. Customers are offered the market’s widest range of products and services through our primary channel, the Internet, with everything from share prices, portfolio reports, and automatic help with tax returns, to buying and selling tips through the independent online newspaper, Placera Nu. Avanza’s customer support department provides customers with fast, high quality service.
■ Greater freedom of choice. Avanza’s ambition is for its customers to be able to find the best investment alternatives with Avanza at all times. Avanza offers, amongst other things, 930 funds from 75 fund management companies. The product range has, furthermore, been increased in 2007 to include currency trading and trading in Canadian shares.
■ Simpler products. Avanza has a range of different product offerings, adapted to the needs of different customer groups. From the beginning of 2008, Avanza also offers asset management for all types of saving.
vision and goals
Avanza’s long-term goal is, by the end of 2010, to have 2 per cent of the Swedish savings market.
This corresponds to a long-term growth in profit of between 15 and 25 per cent per annum.
The goal for 2008 is for net savings to total between 13 and 17 per cent of savings capital at the beginning of the year and for Avanza, by the end of the year to be approaching 250,000 accounts and management services.
Business model
General
Avanza’s business model is based on the law of large numbers, i.e. taking small payments from every customer and having lots of customers. This, when combined with a high percentage of fixed costs and the market’s lowest costs per customer and transaction, will generate excellent potential for a long-term growth in profits.
Non-brokerage income is more stable than brokerage income, generating the potential for high level profitability, even in a weaker stock market climate. Non-brokerage income
8 AvAnzA 2007 Market and strategy
2 Source: Sparbarometern, Q4 2007
primarily comprises net interest items, fund commissions and other income. The goal for 2008 is for non-brokerage income to exceed 130 per cent of operating expenses.
Income
Long-term growth in income is created by an underlying growth in savings capital. Income in both the short and the medium term is heavily dependent on stock market performance and hence difficult to predict, and Avanza’s goals are, therefore, primarily based on those factors we can influence and which generate long-term growth in savings capital. The most important factor is net savings resulting both from a higher percentage of existing customers’
savings and from an increased number of accounts and customers.
Costs
Avanza’s cost base is based on a high percentage of fixed costs. To ensure that we are, in the long term, a highly profitable price leader, Avanza’s goal is also to ensure we offer the industry’s lowest cost per transaction and customer. Avanza is currently the market’s cost leader.
Market and competitors
The market
The total value of the Swedish savings market is SEK 3,800 billion, 56 per cent of which comprises direct savings and 44 per cent pension-based savings.2 The market is normally expected to grow by between 6 and 8 per cent per annum. Sweden has the world’s highest percentage of share- and fund-based savings. Seven million Swedes – 80 per cent of the population – own shares or investment fund units, either directly or indirectly. Two million Swedes carry out at least one transaction a year.
There are underlying factors that explain the growth in the savings market. As the importance of the public and collective pension and welfare systems declines, the need for savings by individuals is increasing. And when individuals’ choices increase, the need for guidance, support for decision-making and advice also increases.
This shift to individual saving also means a greater focus on an individual’s returns from their savings. And this, in turn, boosts the demand for a wider range of products
and services, freedom of choice, and lower fees. The internet offers particularly good opportunities to meet these requirements and this, coupled with the increase in people’s
Bonds and other 4%
Shares 16%
Investment funds 13%
Deposits 23%
Pensions 44%
The Swedish savings market.
Source: Sparbarometern, Q4 2007.
AvAnzA 2007 9 Market and strategy
internet usage, has resulted in online saving growing considerably faster than the savings market as a whole.
90 per cent of all Swedes over the age of 18 have access to the internet.3 The percentage of the more mature groups who use the internet has increased markedly in recent years, and a massive 89 per cent of the 55 to 64 age group use the internet – the highest percentage in Europe .3
When it comes to online saving, customers most commonly manage only part of their savings online. The trend is, however, for those customers already able to use the internet to transfer a greater percentage of their savings to an online savings management system. The trend that is seeing increasing numbers of the more mature target groups using the internet is a positive one because this target group is a relatively capital-strong one.
There are no publicly available statistics on online saving. Avanza’s savings capital has, however, increased by 33 per cent per annum during the period from 2001 to 2007, which is a considerably faster growth rate than that of the savings market as a whole. Avanza’s goal for the future is a per annum increase in savings capital of 20 to 25 per cent. Avanza believes that in the long-term, over 50 per cent of all savings will be managed online.
The trend in share-based saving suggests that the internet’s importance will continue and that the medium will be predominant. The major banks have invested more heavily in the internet, increasing the competition. Brokerage fees have fallen in recent years, and competition is expected, in future, to revolve more around functionality, support for decision- making, simplicity, and product range.
The trend in fund-based saving indicates that the customer is becoming increasingly active. This activity level has been encouraged by the active investment fund choices offered within PPM and by different types of pension-based saving. The percentage of fund market- places, i.e. open solutions where the customer can make their own choices from a wide range of funds, is increasing. The fund marketplaces have enabled distribution by smaller fund management companies, resulting in smaller fund management companies taking market shares from the more established ones.
As market interest rates successively rose in 2007, competition has increased substantially with regard to saving in the form of deposits in accounts. The stock market turbulence in the latter half of 2007 has also reinforced this trend.
Pension- and insurance-based saving is the biggest single savings segment, but also the type of saving that interests Swedes least. Savers perceive the pension products as complica- ted and many find it difficult to gain an overview of their aggregate pension savings, resulting in reduced levels of involvement. The gradual deterioration in the public savings system has led to more and more people realising that their finances in retirement depend on their active
3 World Internet Institute, “Swedes and the Internet”, 2007
10 AvAnzA 2007 Market and strategy
savings choices today. This realisation is, in turn, increasing activity levels and awareness on the part of savers, who are demanding cheaper and more flexible pension products. Two major collective agreement pension solution procurements took place in 2007 (ITP and SAF/LO) with the aim of improving pension solutions and putting pressure on prices.
Pension- and insurance-based saving is dependent on political decisions. The abolition of wealth tax in 2007 has resulted in a sharp increase in interest in endowment insurance. New saving in endowment pensions was stopped in February and a temporary transfer block on pension insurance was imposed, which had a negative effect on Avanza. The removal of this block on transfers as of May 1st 2008 has now been announced.
Competitors
As the savings market grows and consumers’ awareness grows, competition grows apace.
Savings-related fees are expected to fall by between 3 and 7 per cent per annum over the next five year period.
The Swedish savings market is still dominated by the four big banks and the big pension companies. There are also a number of niche players, such as smaller banks and pension companies, fund management companies, asset managers, stock brokers and insurance brokers. Avanza is the biggest dedicated player in online saving.
The other players with a dedicated online savings profile are Skandiabanken, Nordnet and E*Trade.
Avanza’s market position
Avanza’s customers are currently, by and large, the most active and most aware savers – the enthusiasts. This target group comprises on the order of 800,000 savers. The target group into which Avanza aims to expand is the approximately 3 million Swedes who have some savings know-
how, but who have not had the time or the interest in managing their own savings on an ongoing basis. These individuals – the pragmatists – are, however, prepared to review their savings and to switch to better solutions.
The basic message is that savers have more money for them- selves as Avanza customers. Using Avanza should be perceived as a secure and simple solution. Avanza shall continue to use transparent and simple message bearers, such as the Savers’
Bank, Double Pension, Avanza Zero and Placera Nu.
Avanza’s customers can bring their entire savings portfolio under a single roof with Avanza and gain a good overview – everything from shares, investment funds and private and
0.0 0.3 0.6 0.9 1.2 1.5
2007 2006 2005 2004 2003 2002 2001
%
Market shares of the total savings market, 2001-2007.
AvAnzA 2007 11 Market and strategy
occupational pensions to PPM. The common denominator for all savings formats is that Avanza offers the market’s lowest fees.
At the end of 2007, Avanza’s customers had SEK 45,900 million (SEK 43,200 m) invested in different savings formats with Avanza, corresponding to 1.3 per cent (1.2%) of the total savings market. The number of accounts held by Avanza at the turn of the year totalled 165,000 (130,000).
Avanza is currently the biggest player on the Stockholm Stock Exchange, measured in terms of the number of trans actions, and 8.5 per cent (10.0%) of the number of transactions on the Stockholm Stock Exchange (including First North) were made via Avanza in 2007.
Avanza’s customers have invested SEK 8,960 million in investment funds at the turn of the year. The savings capital in Avanza’s pension and insurance products totalled SEK 8,880 million, as of 31st December 2007, corresponding to a 0.5 per cent share of the pension and insurance market.
Avanza’s strategy
In order to achieve its goals, Avanza will be concentrating its efforts on the following lodestars in 2008:
■ Focus. Avanza’s operations will continue to focus on the areas in which Avanza is or can be the best, i.e. the areas that genera- te the most value for its customers. This means, amongst other
0 2 4 6 8 10
Avanza SEB Nordnet Handels-
banken Swedbank Etrade Carnegie Nordea Skandia-
banken
%
Market shares, OMX Stockholm including First North, 2007, in comparison with banks et al.
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Total Pensions and insurance Deposits Investment
funds Shares and other
%
Market shares, shares, invest- ment funds, deposits and pensions and insurance, and total, 2007.
things, focusing on the Swedish savings market and only complementing the product range with other bank services that simplify saving.
■ Simplicity. One factor for success if we are to reach out on an even broader front is that we make it easier to become and be an Avanza customer. Avanza’s programme for 2008 will, therefore, include launching asset management for all savings formats, simplifying the pricing structure, offering savings coaches for new customers, and improving the offering for interest-based saving.
■ Price leadership. Avanza’s strategy is to continue leading the trend towards lower fees for saving in 2008. Q1 2008 will see us launch both savings accounts with a better interest rate for deposits, and a new fee structure that offers the customer better terms, the more savings they bring under the Avanza banner.
■ Best online customer satisfaction. Avanza is convinced that customer benefit is the only route to long-term shareholder benefit. The first question in everything that Avanza does is, therefore, why is this good for the customer. The way in which it generates value for our share-
12 AvAnzA 2007 Market and strategy
holders is a secondary issue. Exploiting the advantages offered by the internet often enables customer and shareholder benefit to be combined. And as a result, Avanza has a 98 customer satisfaction index. This is the most important basis for growth because a recommendation from a satisfied customer is the most common primary reason for a new customer starting to save with Avanza.
■ Sales offensive. Avanza’s product is very competitive and our ambition now is, therefore, to reach out through more active selling. Avanza will, amongst other things, be augmenting both its direct selling activities and its phone-based selling. Our goals include reaching 25,000 customers at 350 customer evenings in 2008 and improving the conversion rate from potential customer to active customer.
■ Unite customers’ savings. Added selling of savings accounts with high interest rates for deposits, investment fund and pension-based savings, and endowment insurance, are particularly interesting. One of our important goals is to reinforce the distribution of occupational pensions.
■ Development offensive. Avanza is the Savers’ Bank. If Avanza is to retain and extend our lead over the competition, we must constantly break new ground with new services and products in the savings sector. Our development focus is spread equally over expanding and cutting edge products for our core customers.
■ Exploit opportunities when they arise. Avanza operates in a rapidly changing world and must adapt along with the customer, commercial opportunities and the outside world.
Financial goals
Avanza’s goal is a long-term growth in profits of between 15 and 25 per cent. The healthy pre- conditions for growth are due to the rapid growth in online saving. This is, in turn, due to the advantages that the internet offers in terms of simplicity and low fees, to an increased need for individual savings, and to the increased internet usage amongst the more mature target groups.
Avanza believes that in the long-term, over 50 per cent of all savings will be managed online.
Avanza’s market share is 1.3 per cent and our goal is to achieve a market share of
2 per cent by the end of 2010 at the latest. This is later than we had previously hoped, and this postponement is due to a poorer stock market performance and lower levels of net saving than anticipated in 2007. The long-term preconditions for growth are, however, just as good as before. Our intention is, therefore, to intensify our sales work over the next two years.
Avanza’s aim is for the number of accounts and management services to total in the region of a quarter of a million by the end of 2008. Our goal is for net savings during the year to total bet- ween SEK 6,000 million and SEK 8,000 million. Avanza will be launching a couple of new servi- ces and offerings during the first quarter and expects them to strengthen the preconditions for higher levels of net saving.
There is a clear link in the long term between a growth in savings capital and a growth in
AvAnzA 2007 13 Market and strategy
operating income, and an underlying growth in savings capital will, therefore, generate the preconditions for a growth in income.
The long-term growth goals for operating income can be summarised as follows:
Annual growth (ca) 2001–2007 Goals net savings, % of savings
capital at the beginning of
the year 23%* 13–17%
normal growth in value 14%* 6–8%
Savings capital, growth 33% 20–25%
Estimated pricing pressure (2%) (3–7%)
Growth in income 34% 10–25%
Increase in costs (20%) (10–20%)
Growth in profits 78% 15–25%
*2002-2007
The biggest threat that could prevent Avanza from achieving its
goals is a long-term negative stock market trend, resulting in both lower levels of savings capital and a reduced interest in saving. The increasing levels of fund-based and pension-based savings are, however, reducing this direct reliance on the stock market. The competition from traditional players has also increased. Avanza views the increased competition in the online savings sector as a positive trend, but also as one that imposes tougher demands on Avanza.
Avanza’s business model means that the majority of its costs are fixed. Marketing and sel- ling costs are, however, primarily variable costs that depend on Avanza’s view of the market situation. Avanza can, therefore, choose to reduce the rate at which its costs increase in a weaker market climate, but Avanza operates in a rapidly changing market and we can, there- fore, also choose to invest more heavily in growth. This may entail higher than forecast costs. The cost increase is primarily due to higher staffing levels. All investments are, however, based on current systems and organisation, and levels of cost awareness are high within Avanza. It is calculated that in order to implement the planned activities and generate the preconditions for achieving our growth goals, operating expenses will have to increase by between 10 and 20 per cent in 2008. Given the turbulent market climate that has characterised the start of 2008, however, Avanza is adopting a cautious approach to cost increases. Seasonally speaking, operating expenses are normally higher during the first and fourth quarters than during the other two.
The above should not, however, be regarded as an income or profit forecast for 2008, due to the operations’ reliance on stock market trends. The aim is, however, for non-brokerage income, i.e. the operating income that does not rely directly on the stock market, to comprise a minimum of 130 per cent of operating expenses, resulting in good results stability, even in a weaker stock market climate.
0.0 0.5 1.0 1.5 2.0
Profit before tax Expenses Income
2007 2006 2005 2004 2003 2002 2001
%
Income, expenses and profit before tax in relation to savings capital, 2001–2007.
14 AvAnzA 2007 Market and strategy
AvAnzA 2007 15 Avanza’s customers
Avanza’s customers
Avanza currently offers savings formats for all types of savers, ranging from direct savings products such as shares and investment funds, to pension-based saving and PPM management.
The aim is to give Swedish savers control over their entire savings portfolio and to help them become financially independent.
Avanza currently has 165,000 accounts – a number that has increased by 27 per cent since 2006. The majority of Avanza’s customers are private savers who save in shares and investment funds and the majority of all trading occurs via Avanza’s website at www.avanza.se.
Avanza also offers phone-based trading, but this represents a very small percentage of total trading. Pension- and insurance-based saving continues to grow and accounted at the turn of the year for 18 per cent (12%) of the total number of accounts. The biggest percentage growth in 2007 occurred in the endowment insurance savings sector, which has grown by 415 per cent, largely due to more favourable tax legislation and changes to the product terms and conditions.
The majority of Avanza’s customers come, at present, from a group of very active and aware savers, known as enthusiasts. This group is characterised by a high level of involvement, and by extensive know-how and interest in finance and savings in general. In 2007, Avanza customers completed an average of 2.09 (2.01) transactions per month and account and the number of transactions increased from an average of 36,000 per day to 41,300.
Private savers
Avanza’s biggest customer group comprises ordinary private savers. At the end of last year, Avanza held a total of 159,100 (126,400) private accounts with an average savings capital per account of SEK 179,000 (SEK 229,000). The most common shareholdings amongst Avanza customers are Ericsson, Avanza Zero and H&M, and customers’ net share purchases in 2007 have primarily been in H&M, Handelsbanken and Sandvik.
Fund-based saving has increased substantially in 2007. The number of customers with investment fund holdings had increased from 43,200 to 64,500 by the end of the year and the most common fund unit purchases during the year were made in Chinese, Hedge and Indian funds. Avanza currently offers a complete range of pension-based saving products that enable the customers to choose between private pension insurance, IPS and occupational pensions. Choosing Avanza is also an option in three of the four collective agreement pensions, SAF-LO, KAP-KL and PA 03. Choosing Avanza is not an option in ITP.
16 AvAnzA 2007 Avanza’s customers
Avanza Private Banking
Avanza Private Banking is aimed at wealthy private individuals and companies with in excess of SEK 3 million in savings capital. The terms are particularly advantageous, offering customers an even lower brokerage rate (0.055 per cent), competitive interest terms, tax advice, and personal service via their own VIP phone number. The target group comprises wealthy private individuals and company owners who prefer to make their own investment decisions and who want full insight into and control over their affairs. There were a total of 5,100 Avanza Private Banking customers at the turn of the year, with an average of SEK 3.2 million saved with Avanza.
Avanza Pro
Avanza has 800 day traders at the turn of the year. Day traders are private individuals who primarily concern themselves with share trading. Avanza Pro offers a very low brokerage rate (0.01– 0.035 per cent) and a number of specialist services in the fields of financial information, personal service with their own VIP phone number, training and rapid ordering.
Avanza Pro customer make an average of over 50 share transactions every month, but also trade in other instruments, such as bonds, warrants and futures. They are also more likely to pledge their securities than Avanza’s other customers. This customer group also requires advanced trading applications, and Avanza now offers the market’s leading trading software, such Avanza Trader, Avanza Online Trader and Avanza Eco Trader.
Corporate customers
The majority of Avanza’s customers are private individuals, but companies, such as entrepreneurs, asset managers and listed companies, can also become Avanza customers. At the end of 2007, Avanza had 5,300 corporate customers.
Entrepreneurs use Avanza both to manage their surplus liquidity and for long-term investments. Since March 2006, we have also offered Avanza Occupational Pension that enables both small and large companies to invest on a completely no-fee basis in over 900 funds and thousands of shares. At the end of 2007, 300 companies with a total of 1,600 employees had chosen to affiliate themselves to Avanza Occupational Pension, corresponding to an increase in the number of employees involved of 344 per cent since the previous year.
Institutions and asset managers can also do business through Avanza. The transactions are carried out via Avanza’s website, via a broker over the phone, or using a trading application programme. This service is known as Avanza Inst and currently has 60 customers.
Avanza Corporate Finance also offers companies services in conjunction with stock market
AvAnzA 2007 17 Avanza’s customers
flotations, ownership widening, and new rights issues. Avanza Corporate Finance has completed 20 such assignments in 2007, 12 of which involved stock market flotations and/or ownership widening. Avanza Corporate Finance has a substantial competitive advantage in that it allows users to access Avanza’s 165,000 account holders in a cost-effective manner.
PPM customers
Avanza has also offered PPM saving since February 2007. This service is offered both to existing customers of Avanza and to new customers. The saver chooses from three actively managed portfolios, Avanza 100, Avanza 70 and Avanza 50, and the launch of additional actively managed PPM portfolios is planned for 2008. A total of 4,000 savers have signed up for the Avanza PPM service in 2007.
No. accounts
2007 2006
Savings capital
2007 2006
Avanza 150,100 120,200 27,600 28,200
Aktiespar.se 9,000 6,200 800 800
Avanza Private Banking 5,100 3,100 16,400 13,300
Avanza Pro 800 500 1,100 900
Total 165,000 130,000 45,900 43,200
18 AvAnzA 2007 Avanza’s customers
AvAnzA 2007 19 Avanza’s employees
Avanza’s employees
Avanza’s biggest factor for success is its employees’ ability to generate the best solutions and provide the best service, based on the customers’ needs. Avanza aims, therefore, to attract and develop the best talent within the sector. Avanza endeavours to be a company that offers its employees a stimulating environment in which the employee can develop, both professionally and as an individual.
Avanza has expanded in 2007, creating just over 50 new positions. Avanza’s recruitment requirement will continue, however, in a number of different areas, and in those of develop- ment and sales in particular. Avanza is a relatively small organisation, but thanks to the website and efficient partnerships, Avanza is able to handle the hundreds of thousands of transactions completed by our customers every month. Our employees work in three main areas: services directly aimed at the various customer groups, product and service develop- ment, and support functions such as administration, risk management, finance and HR.
Avanza had an average of 178 employees in 2007. At the turn of the year, there were a total of 210 (157) full-time employees (excluding those on leaves of absence and parental leave). 36 per cent (39%) of them are women and 64 per cent (61%), men. The average age of employees is 32 (32). The sick leave rate in 2007 was 1.6 per cent (2.0%).
An attractive workplace
Avanza’s continued positive development relies on our being an attractive employer with motivated and committed employees. Our ability to recruit and retain talented employees is absolutely critical. Annual employee satisfaction surveys carried out in-house are one way of measuring how attractive Avanza is as a workplace, which is why we have been carrying out surveys like this since 2003. Job satisfaction levels amongst Avanza employees were higher in 2007 than ever before. According to the 2007 employee survey, nine out of every ten employees thought that as an employer, Avanza exceeded or met their expectations.
Of the 13 overall areas measured, 11 had developed positively in comparison to last year.
The employee satisfaction survey measures just over 100 issues divided into 13 areas. The focus of the survey is on obtaining infor- mation on the difference between how important an issue/area is in relation to how well Avanza meets its employees’ requirements. The graph shows how the difference overall is shrinking every year, which means that Avanza employees’ job satisfaction levels are increasing year after year.
–0,82
How important the issues are regarded as being by employees Very
important
Completely unimportant
How well the company meets the employees’
requirements
–0,71 –0,55 –0,48
1 3 4 5
2007 2006 2005 2003
20 AvAnzA 2007 Avanza’s employees
The biggest positive development came in the area of skill development, which was one of the prioritised areas for 2007. Management is another area that continues to develop in a positive way and which is the result of many years’ of long-term investment in strengthening Avanza abilities in this area. Avanza will continue to focus on further improving areas such as management by objectives in 2008, but will also be focusing on areas specific to the respective departments.
Corporate culture
Avanza’s corporate culture is unique and is the main reason for Avanza’s success. The corporate culture at Avanza is based on four cornerstones: customer focus, accountability, innovation and having fun at work. These cornerstones are a natural part of management and in terms of the day to day relationships between employees and between employees and customers. Here at Avanza, employees are encouraged to take their own decisions and to take responsibility. A number of employees who have demonstrated the ability to work in accordance with Avanza’s cornerstones are rewarded every quarter.
Avanza’s formula for success:
A = All of us at Avanza
We help a colleague help a Customer · We believe in Accountability · We challenge and think along New lines · We have fun
These cornerstones are the basis for everything Avanza does and are particularly important during a period of vigorous expansion when numerous new colleagues unfamiliar with Avanza’s corporate culture are joining the company. This is why it is so important that we introduce new recruits to Avanza’s corporate culture and methodology in an efficient way. And this is why all new recruits undergo an introductory programme during their first six months at Avanza. Avanza is an expansive company that is also characterised by the climate typical of a smaller company. Avanza’s ambition is to retain this successful culture.
AvAnzA 2007 21 Avanza’s employees
Management
Management is a key issue at Avanza. The management group has been expanded during 2007 to meet the greater demands being made on Avanza and hence on Avanza’s managers.
The majority of the new managers have been recruited internally, showing the excellent developmental opportunities at Avanza.
All new managers receive basic managerial training and the management group also receives ongoing developmental training. Recruitment, training and development for managers are the issues which were highlighted in 2007 and which will continue to be prioritised in the future. An Avanza manager must understand the company’s business concept, act on their own initiative and, together with his or her colleagues, drive Avanza forward.
Continuous development
Innovation is an important cornerstone of Avanza’s operations and characterises Avanza’s view of development. Avanza has invested considerable time in both collective and individual skill development over the past year. The work has included training managers and experts, but has also involved expanding the range of employees’ skills. Continuous skill development is critical for a fast-growing company and vital if Avanza is to ensure its ability to meet customers’ requirements and stay ahead of the competition.
Every Avanza employee undergoes regular performance reviews during which their work situation, individual goals, personal development, relationships and cooperation are discussed. The investment in internal recruitment, during which all vacant positions are advertised internally and employees are encouraged to apply, is an important part of Avanza’s continuous development. Internal recruitment is important both in terms of offering developmental opportunities for employees and in terms of increasing cooperation and contacts between different departments.
22 AvAnzA 2007 Avanza’s employees
AvAnzA 2007 23 Avanza’s history
Avanza’s history
A growing market
Online saving began when a few dedicated stockbrokers launched their services online in 1996. The initial offering was restricted to share trading on the Stockholm Stock Exchange at low brokerage rates. The services offered a limited amount of information and the quality varied. Initially, the services only attracted cost-aware and active share investors. The small product range notwithstanding, growth was strong because the fees were low and the stock market performed strongly in the late 1990s.
When the long stock market decline began in 2000, growth amongst the online brokers tapered off and as a result, the market consolidated during 2000 to 2001.
When the market started to perform positively again in early 2003, interest in on-line saving grew once more. The quality of the online services had also improved by that point and the product range had been substantially increased. The result was vigorous growth in online saving. This trend was boosted by the more mature age groups becoming more used to using the Net.
The ongoing trend is seeing the companies who started as online stockbrokers take larger and larger market shares in recent years, with their trade expanding into adjacent areas, such as investment funds and pension saving.
Avanza – the leading challenger
Today’s Avanza comprises the merged companies, HQ.SE Fondkommission, Aktiespar Fondkommission and Avanza. These companies were founded between 1996 and 1999 and merged between 2000 and 2001.
Avanza’s original offering comprise share trading on the Stockholm Stock Exchange.
Today, Avanza offers training in Swedish and foreign shares, investment funds, share index bonds and derivatives. The savings product portfolio is a comprehensive one, because the company also offers pension saving and gives customers the option of managing their own PPM saving through Avanza.
Avanza acquired Börsveckan AB (now known as Placera Media Stockholm AB) in the spring of 2006. September 2006 saw the launch of Placera Nu, an online savings newspaper providing continuously updated stock market information, analyses and buying and selling tips from some of Sweden’s most experienced stock market journalists. A small investment fund business was acquired in 2007 from Ikanobanken.
Avanza now has the market’s broadest product range and lowest fees and many comment ators consequently regard Avanza as the leading challenger in the Swedish savings market.
24 AvAnzA 2007 The Avanza share
The Avanza share
Price performance
The price performance of the Avanza share on the Stockholm Stock Market between 2003 and 2007.
Warrant programme
The warrant programme comprises 1,216,450 shares, corresponding to a dilution of 4.3 per cent. The warrant programme is divided into three subsidiary programmes and the total warrant programme runs during the period from July 2005 to September 2010. Outstanding warrants 2005/2008 (subsidiary programme 1) grant entitlement to subscribe for a total of 424,200 new shares at an exercise price of SEK 70.20 per share. The term of the programme expires on 30th September 2008.
The warrants can be redeemed during the period from 1st June 2008 up to and including 30th September 2008. Outstanding warrants 2006/2009 (subsidiary programme 2) grant entitlement to subscribe for a total of 411,620 new shares at an exercise price of SEK 168.78 per share. The term of the programme expires on 30th September 2009. The warrants can be redeemed during the period from 1st June 2009 up to and including 30th September 2009. Outstanding warrants 2007/2010 (subsidiary programme 3) grant entitlement to subscribe for a total of 380,630 new shares at an exercise price of SEK 170.81 per share. The term of the programme expires on 30th September 2010. The warrants can be redeemed during the period from 1st June 2010 up to and including 30th September 2010. The warrants are valued at market rates using the Black & Scholes valuation model.
Share facts
number of shares 27,160,000
number of outstanding
warrants 1,216,450
Market capitalisation,
31st Dec. 2007, SEK m 3,680
Share price, 31st Dec. 2007,
SEK m 135.50
Highest closing price, 31st May 2007 140.00 Lowest closing price, 3rd August 2007 111.00
Change in share capital
Year Changes
Changes in number of shares
Total number of shares
Changes in share capital, SEK
Total share capital, SEK
2001 new issue 4,425,907 25,415,478 11,064,767 63,538,695
2001 new issue 1,207,396 26,622,874 3,018,490 66,557,185
2005 new issue 842,800 27,465,674 2,107,000 68,664,185
2007 Buy-back of own shares –305,674 27,160,000 – 68,664,185
SEK SAX ALL SHARE AVANZA SHARE
0 50 100 150 200
2007 2006
2005 2004
2003 0 20 40 60 80 100 120 140 160 180
2007 2006
2005 2004
2003
20 40 60 80 100 120 140 160 170 SEK
03 04 05 06 07
SAX ALL SHARE AVANZA SHARE
SEK SAX ALL SHARE AVANZA SHARE
AvAnzA 2007 25 The Avanza share
The largest shareholders
According to the register of shareholders maintained by VPC, the following institutions and individuals were the largest registered shareholders as of 31st December 2007.
Avanza has bought back 305,674 shares in 2007. The remaining 27,160,000 shares are dist- ributed between Avanza’s shareholders as shown below. The percentage of foreign owners is estimated at 7.0 per cent. There were a total of 10,803 shareholders.
The ten largest shareholders,
31st Dec. 2007 Number of shares Percentage of share capital and votes, %
Investment AB Öresund 6,031,097 22.2
Sven Hagströmer
(incl. family and companies) 2,039,416 7.5
Mats Qviberg (incl. family) 1,422,989 5.2
Sten Dybeck (incl. companies) 915,400 3.4
HQ Fonder AB 854,000 3.1
RAM One Fund 734,089 2.7
AMF Pensionsförsäkring AB 600,000 2.2
SEB Fonder AB 591,650 2.2
Fjärde AP-Fonden 459,294 1.7
Swedbank Robur Fonder AB 444,528 1.6
Other owners 13,067,537 48.2
Total 27,160,000 100.0
Concentration, capital Percentage of share capital and votes, %
The 10 largest owners 51.8
The 25 largest owners 62.4
The 100 largest owners 77.2
Dividend policy
Avanza AB shall pay a dividend to its shareholders comprising that part of the company’s profits which is not deemed necessary to meet the requirements that the nature of the operations, their scope and risks place on the size of shareholders’ equity, and the company’s consolidation requirements, liquidity and position in general, or to develop the operations. Dividends can be combined with other measures, such as redemption or buy-back of the company’s own shares.
The justification of the proposed dividend
Avanza’s Board of Directors proposes that the Annual General Meeting approve a cash dividend of SEK 6.00 (SEK 4.00) per share for 2007. This corresponds to a dividend payment totalling SEK 163 million (SEK 110 m) and a dividend ratio of 70 per cent (58%). The Board is of the opinion that in the long-term, the dividend can comprise a minimum of 70 per cent of the profit for the year. The Board is of the opinion that the proposed dividend is justified with regard to the above considerations.
26 AvAnzA 2007 The Avanza share
18th April 2008 is proposed as the record day for entitlement to receive a dividend. The final day for trading in the Avanza share entailing an entitlement to receive a dividend is, therefore, 15th April 2008. It is calculated that if the Annual General Meeting approves the Board’s proposal, the cash dividend can be disbursed through the agency of VPC on 23rd April 2008.
Buy-back of the company’s own shares
On 30th August 2007, the Avanza’s Board of Directors decided to commence the buy-back of the company’s own shares in accordance with the authorisation obtained at the Annual General Meeting held on 22nd March 2007. Avanza has acquired a total of 305,674 of its own shares in 2007 for a total of SEK 40.6 million. This corresponds to an average price of SEK 132.86 per share. The buy-backs correspond to 1.1 per cent of the total number of shares before the buy-backs. The average number of the company’s own shares bought back in 2007 totalled 61,135.
AvAnzA 2007 27 Directors’ Report
The Board of Directors and Managing Director of Avanza AB (publ.), company registration no. 556274-8458, hereby submit the Annual Report for the 2007 financial year.
Group structure
Avanza AB is the parent company of the Avanza Group. The operational activities are conducted by the wholly-owned subsidiaries, Avanza Bank AB, Försäkringsaktiebolaget Avanza Pension and Avanza Fonder AB, which are under the supervision of the Swedish Financial Supervisory Authority, and Placera Media Stockholm AB, a media company that consists of the online newspapers, Placera Nu, Börsveckan, and Börsguiden.
Description of operations
Avanza’s mission is to make Swedes financially independent. As the Savers’ Bank, Avanza’s goal is for an Avanza customer to have more money over for themselves than they would anywhere else. Avanza offers efficient online savings solutions in the Swedish market.
Customers are offered simple and cost-effective ways of saving in shares, funds, share index bonds, derivatives and pension products, such as endowment insurance and pension insurance.
Avanza wants to offer the market’s best decision-making support for saving and savers.
This involves providing the customers with both qualitative and quantitative information that supports the customer in his or her savings decisions. Avanza accordingly offers everything from share prices and news in real time to more sophisticated decision-making support such as share analyses, portfolio reports and tax return support. Avanza primarily targets Swedish private investors, but also offers services for private day traders and corporate customers such as entrepreneurs, institutions and asset managers.
Operational performance
Avanza reported strong growth in all customers groups in 2007. The total number of accounts increased by 27 per cent (23%) to 165,000 (130,000) as of 31st December 2007.
The year has been characterised by net deposits failing to fully track the growth in the number of accounts. This was due to a relatively high level of private consumption, higher interest rates, and to stock market turbulence reducing savers’ interest in equity-based saving. But the explanation also lies in harder competition and lower levels of saving per new account. Net savings in 2007 totalled SEK 5,000 million (SEK 6,030 m), corresponding to 12 per cent (20%) of savings capital at the beginning of the year.
