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ABG Sundal Collier

Quarterly Report Oct 13, 2023

3518_rns_2023-10-13_66a5dab1-3d5b-4df7-bd89-8aa832295917.pdf

Quarterly Report

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Solid quarter with revenues up 18% Q3 revenues of NOK 356m (NOK 303m) YTD revenues of NOK 1,161m (NOK 1,196m) Q3 diluted EPS of NOK 0.07 (NOK 0.03) YTD diluted EPS of NOK 0.26 (NOK 0.33)

2023 Q3 INTERIM REPORT

CEO comments │ A great example of the resilience of our business model

The past quarter was strong in an historical context. Q3 represented a nice uptick relative to the same period last year, as revenues were up 18%, bringing Q3 diluted EPS from NOK 0.03 to NOK 0.07.

Albeit that Q3 is the seasonal low point and with continued muted capital market sentiment, we again benefited from the resilience of our diversified business model. Our commitment to this strategy, aimed at continually fortifying the company, has been deeply integrated into our long-term approach for many years. In the absence of IPOs, we still closed numerous capital market- and M&A transactions during the quarter. The growth in several key business areas offsets the temporary declines experienced in others.

We remain committed to prudent cost management while also continuing to recruit top talent, both at junior and senior levels. While we have started adding staff to our new business areas (Private Banking and Alternatives), the overall headcount remains broadly unchanged, reflecting our balanced approach to growth and risk.

We are cautiously optimistic about the coming quarters, as we have a strong inflow of new mandates and are experiencing fairly high activity in our Investment Banking operations. We will continue to execute capital markets transactions when opportunities arise across sectors and products. Furthermore, we are always deeply committed to providing creative and solution-oriented advice within our leading M&A franchise.

Jonas Ström, CEO

Key financial figures | YTD revenues of NOK 1,161m and diluted EPS of NOK 0.26. Q3 diluted EPS of NOK 0.07 (0.03)

Macro and market backdrop | Rising long-term interest rates as core inflation is sticky has dampened equities

  • Long-term interest rates rising in both the US and Europe
  • The VIX index fluctuating at manageable levels below 20
  • S&P 500 was down 3.6% while MSCI Nordic increased by 1.6% in the quarter

Market volumes | Capital market volumes inflated by some large transactions and apparent improvement supported by easy y-o-y comparable figures

Nordic M&A transactions (#) Nordic primary ECM volumes (NOKbn 3) ) 1) Nordic primary DCM volumes (NOKbn) 2)

1) Source: Refinitv. Issuers listed on Nordic stock exchanges

2) Source: Stamdate. Corporate high yield, Nordic issuers

3) Source: Mergermarket. Nordic targets, announced transactions with financial advisors. Last quarter estimate reflecting a time-lag in Mergermaket deal registration

Corporate Financing | Increased revenues with balanced business mix across products, sectors and geographies

ECM -
SP
NOK 4.56bn Energy
ECM –
SP
NOK 1.70bn Oil Service
ECM -
PP
NOK 953m Oil Service
ECM –
RI
SEK 331m Real Estate
ECM -
RI
SEK 263m Health Care
DCM -
HY
NOK 1.25bn Real Estate
DCM -
HY
NOK 1.25bn Financials
DCM -
HY
NOK 750m TMT
DCM -
HY
NOK 500m TMT
DCM -
HY
EUR 50m Renewables
DCM -
CB
EUR 32m Seafood
DCM -
DL
SEK 835m Financials

M&A and Advisory | Maintained strong market position within M&A with participation in several closed and ongoing transactions

Selected transactions
Merger and financing of Unifon
and Nortel
NOK 520m TMT
Sale of Charge Amps to NaaS
Technology
SEK 724m Consumer
Financial advisor to Nordic
Mezzanine in connection with
the sale of Sauna360 to Masco
Corporation
EUR 125m Consumer
Confirma
Software's
acquisition of SmartTID
Undisclosed TMT

Ongoing and not completed as of 30 September 2023:

  • Financial advisor to Norwegian in connection with the acquisition of Widerøe
  • Financial advisor to Kahoot! ASA in connection with the voluntary offer for the company
  • Financial advisor to Self Storage Group ASA in connection with the voluntary offer for the company

Brokerage and Research | Steady delivery at historically high levels with YTD revenues slightly above last year

  • ABGSC appears to have taken a greater share of a declining market characterised by low institutional turnover
  • Overall client risk appetite remains subdued

Operating costs | YTD costs slightly up with NOK depreciation and headcount increase

▪ Total operating costs increased by approx. NOK 33m YTD due to the weakening NOK relative to last year.

▪ Y-o-y headcount increase mainly related to new business operations. Q3 total headcount broadly in line with Q2.

  • Solid Q3 with revenues up 18% relative to last year. Q3 diluted EPS increased from NOK 0.03 to 0.07
  • The past quarter is a great example of the resilience of our diversified business model with a broad contribution from all product areas and locations
  • Continued focus on cost management to protect profitability while we are progressing well on new business areas (Private Banking and Alternatives)
  • We are cautiously optimistic about the coming quarters, as we have a strong inflow of new mandates and are experiencing fairly high activity in our Investment Banking operations

Financial statements and supplementary information

Consolidated income and cash flow statements

Condensed consolidated income statement (unaudited) Other comprehensive income

NOKm Q3 2023 Q3 2022 YTD 2023 YTD 2022 2022
Corporate Financing 122.0 62.3 435.6 395.0 519.0
M&A and Advisory 124.9 121.3 303.2 386.3 618.2
Brokerage and Research 109.5 119.7 422.4 415.1 567.1
Total revenues 356.4 303.3 1,161.3 1,196.5 1,704.3
Personnel costs -212.7 -180.8 -677.0 -661.0 -943.0
Other operating costs -72.8 -66.4 -224.7 -200.9 -279.6
Depreciation -19.5 -21.8 -63.9 -62.9 -85.4
Total operating costs -304.9 -269.0 -965.6 -924.8 -1,308.0
Operating profit 51.5 34.3 195.7 271.7 396.3
Net interest -0.3 -6.2 -0.7 -19.4 -12.1
Associates -0.8 -1.4 -5.6 -5.1 -6.3
Other 0.4 0.2 -0.3 -0.1 -2.1
Net financial result -0.7 -7.5 -6.6 -24.6 -20.5
Profit before tax 50.8 26.8 189.0 247.1 375.8
Taxes -15.5 -9.0 -49.7 -62.7 -93.8
Net profit 35.3 17.9 139.3 184.4 282.0
Profit / loss to non-controlling interests 0.6 1.9 1.2 6.9 11.8
Profit / loss to owners of the parent 34.7 16.0 138.1 177.5 270.3
NOKm Q3 2023 Q3 2022 YTD 2023 YTD 2022 2022
Net profit 35.3 17.9 139.3 184.4 282.0
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations -10.1 22.3 24.7 48.5 15.9
Hedging of investment in foreign operations 10.5 -22.0 -24.9 -50.5 -17.2
Income tax relating to items that may be reclassified -2.6 5.5 6.2 12.6 4.3
Total other comprehensive income -2.2 5.8 6.0 10.7 2.9
Total comprehensive income for the period 33.1 23.6 145.4 195.1 284.9
Comprehensive income to non-controlling interests 0.4 1.9 1.6 6.9 11.8
Comprehensive income to owners of the parent 32.6 21.8 143.3 188.2 273.2
Condensed cash flow statement
NOKm Q3 2023 Q3 2022 YTD 2023 YTD 2022 2022
Cash and cash equivalents - opening balance 571.4 1,212.9 832.0 1,388.5 1,388.5
Net cash flow from operating activities -9.5 -254.1 -107.6 35.1 -53.4
Net cash flow from investing activities 3.5 -1.4 -9.8 -10.5 -18.9
Net cash flow from financing activities 54.3 -35.8 -94.8 -491.4 -484.3
Net change in cash and cash equivalents 48.4 -291.2 -212.1 -466.8 -556.5
Cash and cash equivalents - closing balance 619.8 921.7 619.8 921.7 832.0

Consolidated balance sheet

Consolidated balance sheet (unaudited)

NOKm 30/09/2023 30/09/2022 31/12/2022
Intangible assets 174.2 176.8 178.6
Financial non-current assets 63.9 73.1 70.5
Tangible assets 497.5 502.1 531.3
Total non-current assets 735.6 752.0 780.3
Receivables 3,097.7 4,931.4 2,241.7
Investments 52.6 94.9 63.1
Cash and bank deposits 619.8 921.7 832.0
Total current assets 3,770.1 5,948.0 3,136.8
Total assets 4,505.7 6,700.0 3,917.1
Paid-in capital 137.6 134.1 134.3
Retained earnings 721.6 799.4 884.8
Equity attributable to owners of the parent 859.2 933.5 1,019.1
Non controlling interests 11.6 2.7 7.6
Total equity 870.8 936.2 1,026.7
Long-term liabilities 479.4 476.4 480.4
Short-term interest bearing liabilities 332.2 49.0 70.0
Short-term liabilities 2,823.4 5,238.4 2,340.0
Total liabilities 3,634.9 5,763.8 2,890.4
Total equity and liabilities 4,505.7 6,700.0 3,917.1

Condensed statement of changes in equity

NOKm Q3 2023 Q3 2022 YTD 2023 YTD 2022 2022
Equity attributable to owners of the parent - opening balance 850.7 912.4 1,019.1 1,213.9 1,213.9
Comprehensive income to owners of the parent 32.6 21.8 143.3 188.2 273.2
Payment to shareholders 0.0 0.0 -248.7 -470.7 -470.7
New issuing of shares 0.0 0.0 4.2 16.3 16.3
Change in own shares -24.0 -0.7 -58.7 -14.2 -13.5
Equity attributable to owners of the parent - closing balance 859.2 933.5 859.2 933.5 1,019.1
Equity attributable to non-controlling interests - opening balance 11.1 0.9 7.6 19.8 19.8
Comprehensive income to non-controlling interests 0.4 1.9 1.6 6.9 11.8
Payment to shareholders 0.0 0.0 0.0 -23.9 -23.9
Business combinations 0.0 0.0 2.4 0.0 0.0
Equity attributable to non-controlling interests - closing balance 11.6 2.7 11.6 2.7 7.6
Total equity - closing balance 870.8 936.2 870.8 936.2 1,026.7

Notes to the financial statements

1) Accounting principles

The quarterly report is prepared in accordance with IAS 34 Interim Financial Reporting and International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and all interpretations from the Financial Reporting Interpretations Committee (IFRIC), which have been endorsed by the European Commission for adoption within the EU. The quarterly report is prepared using the same principles as those used for the 2022 annual report. The quarterly report is unaudited.

2) Judgments, estimates and assumptions

The preparation of condensed consolidated interim financial statements in accordance with IFRS and the application of the chosen accounting policies require management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on a continuous basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. When preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimate uncertainty were the same as those that applied to the consolidated financial statements as of the period ending 31 December 2022.

3) Risk and uncertainty

As described in ABGSC's annual report, ABGSC's total risk exposure is analysed and evaluated at the group level. Risk evaluations are integrated in all business activities both at the group and business unit levels, increasing ABGSC's ability to take advantage of business opportunities. There has not been any significant change in the risk exposure or the risks and uncertainties described in the annual report.

4) Related parties

There have not been any changes or transactions with any related parties that significantly impact the Group's financial position or results for the period.

5) Segment information

The group segments its business primarily on a product level as this provides the best understanding of the Group's integrated operation. The Group does not allocate profits or split the balance sheet per product. Revenues are also split at an overall geographical level. Segment information is presented on other pages of this report, including on the historical quarterly summary pages.

Cost ratios

Cost per head (NOKm) Total compensation/Revenue Non-compensation/Revenue

Shareholder matters | Share count and shareholder structure

Share count
Figures
in
thousands
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Shares
outstanding
(period
end)
483
343
,
483
343
,
497
463
,
497
463
,
497
463
,
(period
end)
- Treasury
shares
6
419
,
5
669
,
13
401
,
5
586
,
9
549
,
+ Forward
outstanding
(period
end)
contracts
80
726
,
81
776
,
76
176
,
69
261
,
69
486
,
Diluted
shares
(period
end)
557
650
,
559
450
,
560
238
,
561
138
,
557
399
,
Shares
outstanding
(average)
483
343
,
483
343
,
483
657
,
497
463
,
497
463
,
- Treasury
shares
(average)
6
904
,
6
142
,
9
875
,
10
799
,
8
055
,
+ Forward
outstanding
(average)
contracts
81
142
,
80
801
,
82
605
,
74
141
,
69
337
,
Diluted
(average)
shares
557
581
,
558
002
,
556
386
,
560
805
,
558
746
,

Shareholder structure

Shares
held
by
Directors
and
staff
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Shares
held
by
Directors
and
Staff
/
Shares
outstanding
25% 25% 27% 29% 29%
Shares
Staff
/
and
fwd
held
by
Directors
and
Diluted
shares
contracts
36% 36% 38% 38% 38%
Shareholders
(shares
outstanding)
by
country
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Norway 70% 69% 69% 69% 71%
Great
Britain
4% 5% 5% 5% 5%
USA 9% 9% 9% 9% 9%
Sweden 7% 6% 7% 8% 7%
Other 10% 10% 10% 10% 9%

Share transactions

During the quarter, ABGSC purchased 4.7m shares at an average price of NOK 5.44 in two buy-back offerings. ABGSC also purchased 113k shares from former partners at an average price of NOK 4.48 per share. ABGSC sold 1.1m shares on forward contracts to partners. ABGSC also delivered 875k treasury shares to partners as settlement of forward contracts previously entered into.

Shareholder information

For more information about the ABGSC share and its largest shareholders, please visit the Investor Relations section on the ABGSC website (www.abgsc.com).

Shareholder matters | ABGSC sold a total of 1.1m shares to partners and repurchased 4.8m shares from the market and former partners in Q3

The Board currently has a mandate from the shareholders to acquire a number of ABGSC shares corresponding to approximately 10% of the share capital. The one-year mandate is valid until the end of June 2024.

Expiry year Forward contracts (1,000) Forward average price 2023 400 1.27

29,772 0.72 1,750 0.95 12,509 6.09 11,135 6.86 13,920 5.99 Total 69,486

As part of the partner share incentive programme, several partners in the firm have entered into forward contracts for the future delivery of shares. Under the programme, new and certain existing partners are given the opportunity to acquire restricted partner shares at market price, with a 15% price adjustment reflecting several restrictions with regards to the selling (or purchasing) of these shares.

The forward settlement price is adjusted for changes in interest rates and any cash distribution paid to shareholders. The interest element in the forward contract will also be adjusted in cases where the contract is settled prior to the original expiry date.

Shareholder matters | Distribution to shareholders

▪ The Board is committed to returning excess capital to shareholders through cash and buy-backs of shares over time. Excess capital will be evaluated on a continuous basis, taking into consideration a number of factors, including market conditions, regulatory requirements, counterparty and market perceptions and the nature of our business

Capital and balance sheet summary | Highly liquid asset base and solid capitalisation with satisfactory buffers to regulatory requirement

▪ ABGSC is well capitalised with a core capital ratio of 1.6x the current regulatory minimum requirement and 2.4x the expected future requirement

  • Liquid balance sheet with limited proprietary trading activity and a modest and conservative security financing operation
  • Net working capital shall be close to neutral over time, but may be subject to short-term fluctuations1)
  • Cash & Bank includes collateral cash deposits (stock borrowing, clearing, etc.)

Historical figures | Key financials in last nine quarters

Income statement
NOKm Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Revenues 561 803 487 406 303 508 426 379 356
Operating
costs
-386 -527 -355 -301 -269 -383 -338 -323 -305
Operating
profit
175 276 132 106 34 125 88 56 51
financial
Net
result
-4 0 -11 -6 -7 4 -1 -5 -1
Profit
before
tax
171 276 121 99 27 129 87 51 51
Taxes -44 -67 -30 -23 -9 -31 -22 -12 -15
Non-controlling
interests
-2 -7 0 -5 -2 -5 -1 0 -1
profit
Net
126 201 91 71 16 93 65 39 35
Balance sheet
NOKm Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Total
non-current assets
484 812 782 771 752 780 803 770 736
Receivables 5,245 1,392 2,784 4,775 4,931 2,242 4,903 5,352 3,098
Investments 74 541 66 98 95 63 75 70 53
Cash
and
bank
deposits
1,250 1,388 1,745 1,213 922 832 799 571 620
Total
current assets
6,569 3,322 4,596 6,087 5,948 3,137 5,778 5,993 3,770
Total
assets
7,053 4,134 5,378 6,858 6,700 3,917 6,580 6,763 4,506
Equity
attributable
to owners of
the
parent
1,039 1,214 1,284 912 933 1,019 1,039 851 859
Non-controlling
interests
12 20 20 1 3 8 11 11 12
Total
equity
1,051 1,234 1,304 913 936 1,027 1,051 862 871
Long-term
liabilities
234 497 485 478 476 480 497 488 479
Short-term
interest
bearing
liabilities
0 0 198 70 49 70 163 237 332
Short-term
liabilities
5,767 2,404 3,390 5,397 5,238 2,340 4,869 5,177 2,823
Total
liabilities
6,002 2,901 4,074 5,945 5,764 2,890 5,530 5,901 3,635
Total
equity
and
liabilities
7,053 4,134 5,378 6,858 6,700 3,917 6,580 6,763 4,506

Historical figures | Segment revenues in last nine quarters

Segment revenues
NOKm Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Corporate
Financing
260 427 196 137 62 124 182 132 122
M&A
and
Advisory
142 225 143 122 121 232 78 100 125
Brokerage
and
Research
159 151 148 147 120 152 166 147 110
Group 561 803 487 406 303 508 426 379 356
NOKm Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Norway 246 429 238 212 190 266 209 195 153
Sweden 208 285 199 147 74 167 144 133 108
Denmark 55 28 14 18 18 38 15 11 65
International 51 61 36 30 21 37 58 39 30
Group 561 803 487 406 303 508 426 379 356

Historical figures | Key figures in last nine quarters

Key figures
NOK Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Headcount
(average)
315 323 324 327 336 341 340 340 346
Revenues
head
(average)
per
1
78
2
48
1
50
1
24
0
90
1
49
1
25
1
11
1
03
Operating
(average)
head
costs
per
-1
23
-1
63
-1
10
-0
92
-0
80
-1
12
-0
99
-0
95
-0
88
Operating
/
Revenues
cost
69% 66% 73% 74% 89% 75% 79% 85% 86%
Total
compensation
/
Revenues
55% 54% 55% 53% 60% 56% 57% 59% 60%
Operating
margin
%
31% 34% 27% 26% 11% 25% 21% 15% 14%
(annualised)
Return
Equity
on
51% 74% 29% 26% 7% 25% 25% 16% 25%
Shares
outstanding
(period
end)
470
747
,
470
747
,
470
747
,
483
343
,
483
343
,
483
343
,
497
463
,
497
463
,
497
463
,
(period
end)
Treasury
shares
-18
063
,
-19
371
,
-11
738
,
-7
069
,
-6
419
,
-5
669
,
-13
401
,
-5
586
,
-9
549
,
Forward
outstanding
(period
end)
contracts
102
436
,
101
511
,
101
004
,
81
306
,
80
726
,
81
776
,
76
176
,
69
261
,
69
486
,
Diluted
shares
(period
end)
555
119
,
552
887
,
560
013
,
557
580
,
557
650
,
559
450
,
560
238
,
561
138
,
557
399
,
Earnings
share
(basic)
per
0
28
0
45
0
20
0
15
0
03
0
19
0
14
0
08
0
07
(diluted)
Earnings
share
per
0
23
0
37
0
17
0
13
0
03
0
17
0
12
0
07
0
07
Book
value
share
(basic)
per
2
30
2
69
2
80
1
92
1
96
2
13
2
15
1
73
1
76
Book
value
share
(diluted)
per
2
35
2
68
2
88
2
01
2
05
2
21
2
33
1
90
1
94
Total
capital
adequacy
4
043
,
4
843
,
4
994
,
4
860
,
4
683
,
006
5
,
4
966
,
169
5
,
4
937
,
Core
capital
506 648 625 628 627 671 614 643 620
Total
capital
adequacy
ratio
13% 13% 13% 13% 13% 13% 12% 12% 13%
Minimum
requirement
ratio
coverage
1
6x
1
7x
1
6x
1
6x
1
7x
1
7x
1
5x
1
6x
1
6x

Financial calendar

9 February 2024 | Q4 2023 earnings release

Company overview

Mission | Enable businesses and capital to grow and perform

1) Source: Mergermarket (M&A). Pending and completed transactions with targets from Norway, Sweden or Denmark. Last quarter estimate reflecting a time-lag in Mergermaket deal registration

2) Source: Refinitiv (ECM): Companies listed in Norway, Sweden or Denmark

25

3) Source: Stamdata (DCM). Non-Shipping related high yield issuers located in Norway, Sweden or Denmark and with documentation in Norway, Sweden or Denmark

Vision | Being the most agile and respected Nordic investment bank

Norway

ABG Sundal Collier ASA Pb. 1444 Vika Ruseløkkveien 26 8th floor NO-0251 Oslo

Tel +47 22 01 60 00

Sweden

ABG Sundal Collier AB Regeringsgatan 25 8th floor SE-11153 Stockholm Tel +46 8 566 286 00

United Kingdom

ABG Sundal Collier Ltd. St Martin's Court 25 Newgate St 5th floor UK-EC4M 7EJ London Tel +44 207 905 5600

Denmark

ABG Sundal Collier ASA Copenhagen Branch Forbindelsesvej 12 DK-2100 Copenhagen Ø

Tel +45 3546 3000

Germany

ABG Sundal Collier ASA Frankfurt Branch Schillerstrasse 2 5. Obergeschoss DE-60313 Frankfurt /Main

Tel +49 69 96 86 96 0

USA

ABG Sundal Collier Inc. 140 Broadway Suite 4604 US-10005 New York Tel +1 212 605 3800

Singapore

ABG Sundal Collier Pte Ltd 10 Collyer Quay Ocean Financial Center #40-07, Singapore 049315

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This material has been prepared by ABG Sundal Collier ASA, or an affiliate thereof ("ABGSC").

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© 2023 ABG Sundal Collier ASA. All rights reserved. ABG Sundal Collier ASA specifically prohibits the redistribution of this material and accepts no liability whatsoever for the actions of third parties in this respect.

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