Record high exchange activity
• Revenues during January - March increased to SEK 1,062 m (903)
• Operating income rose to SEK 348 m (334)
• Income after financial items rose to SEK 329 m (319)
• Income after tax rose to SEK 257 m (244)
• Earnings per share rose to SEK 2.12 m (2.05)
• Return on shareholders' equity rose to 20 percent (14)
• Record high equity trading
• Launch of Genium - next generation of systems for the exchange industry
• Widespread interest in information services
”Operating income of SEK 348 m is the highest quarterly earnings in the
company's history, excluding the capital gains received during prior periods.
There is a high level of activitiy in all of our operations.
The earnings increase is primarily attributable to the record high levels of
trading activities on the OMX Nordic Exchange - the number of equity
transactions rose by a total of 50 percent compared with the year-earlier
period and by 27 percent compared with the preceding quarter.” says Magnus
Böcker, President and CEO of OMX.
OMX's interim report for the period January-March 2007 is presented on the
following pages. The report is also available at www.omxgroup.com.
A press and analyst briefing will be held today at 11:00 a.m. CET at OMX's
premises at Tullvaktsvägen 15, Stockholm. For anyone unable to attend, it is
possible to participate via teleconference on the following numbers, Sweden:
+46 (0) 850 520 270, UK: +44 (0) 208 817 9301, USA: +1 718 354 1226. The report
will be presented by OMX's President and CEO Magnus Böcker and CFO Kristina
Schauman.
For further information, please contact:
Jakob Håkanson, Vice President, Investor Relations +46 (0)8- 405 60 42
Niclas Lilja, Vice President, Communications +46 (0)8- 405 63 95
About OMX | OMX is a leading expert in the exchange industry. Through the
Nordic Exchange, OMX offers access to approximately 80 percent of the Nordic
and Baltic securities market. The Nordic Exchange is a term used for marketing
purposes and is not a legal entity. It describes the common offering from the
Helsinki Stock Exchange, Copenhagen Stock Exchange, Stockholm Stock Exchange,
Iceland Stock Exchange, Tallinn Stock Exchange, Riga Stock Exchange and Vilnius
Stock Exchange. OMX integrated technology solutions cross the transaction chain
enabling efficient securities transactions for over 60 exchange organizations
in more than 50 countries. OMX is a Nordic Large Cap company in the Financial
sector on the OMX Nordic Exchange. For more information, please visit
www.omxgroup.com.
RECORD HIGH EXCHANGE ACTIVITY
• Revenues during January - March increased to SEK 1,062 m (903)
• Operating income rose to SEK 348 m (334)
• Income after financial items rose to SEK 329 m (319)
• Income after tax rose to SEK 257 m (244)
• Earnings per share rose to SEK 2.12 m (2.05)
• Return on shareholders' equity rose to 20 percent (14)
• Record high equity trading
• Launch of Genium - next generation of systems for the exchange industry
• Widespread interest in information services
CEO COMMENTS: Operating income of SEK 348 m is the highest quarterly earnings in
the company's history, excluding the capital gains received during prior
periods. There is a high level of activitiy in all of our operations. The
earnings increase is primarily attributable to the record high levels of trading
activities on the OMX Nordic Exchange - the number of equity transactions rose
by a total of 50 percent compared with the year-earlier period and by 27 percent
compared with the preceding quarter. One explanation of the large increase in
volumes is the Nordic economy which is currently advancing rapidly. However, it
is easy to forget that the strong driving forces behind this growth are
structural rather than cyclical. The market is becoming increasingly
sophisticated, and new, more active investment strategies developed in parallel
with rapid technological advances are creating the prerequisites for accelerated
trading. This is happening at the same time as a common market and the creation
of the Nordic Exchange drives growth further. The turnover velocity on the
Nordic Exchange in the past ten years has grown from 47 percent to 143 percent.
The increasing interest in the stock market and more active and event-driven
trading also contribute to the rise in demand for information services. Combined
with the creation of the Nordic Exchange, we are seeing how these trends are
driving the number of users of real-time information. At the same time, we see
how demand is expanding for entirely new services, such as the new information
service for listed companies, Company News Service, that we launched during the
first quarter.
One of the most important events during the quarter was the launch of the next
generation of systems and technology for the exchange industry - Genium. The aim
is a system that can meet future demands for flexibility and efficiency, as well
as stability and performance. Genium will not only enhance our production and
cost efficiency, but will also create entirely new prerequisites for increased
sales. Initially, Genium will be utilized by the Nordic Exchange, and will
subsequently be offered to other marketplaces, including the 60 exchanges that
we already have as customers. I would also like to reiterate our focus on
profitability in Market Technology; an operating margin of 10 percent is a
minimum requirement for this business area.
The cost increase we have experienced during the quarter is largely attributable
to the the increased capacity requirements in the exchange operations as a
result of the high volumes, as well as the intensified activity relating to
Genium and a subsequent increase in own work capitalized.
The exchange industry is undergoing rapid change. High market growth and
changing trading patterns combined with increasingly swift technological
advances and the deregulation of markets create both threats and opportunities.
Preparations for implementing MiFID, the EU directive to be introduced in
November that is so important to our industry, are well underway at OMX. Another
trend characteristic of the exchange industry is consolidation. OMX has been a
leader and merged no less than seven exchanges in three years, with the Iceland
Stock Exchange most recently integrated. Regarding our role in this respect, we
are continuing to evaluate our strategic opportunities.
Magnus Böcker
President and CEO
GROUP INCOME DEVELOPMENT DURING THE FIRST QUARTER
OMX's total revenue rose to SEK 1,062 m (903 in the same period last year)
during the first quarter of the year. In the same period last year, total
revenue included SEK 22 m attributable to the sale of shares in NOS. The rise in
revenue is partly due to increased revenue in the exchange operations, due to
the higher level of trading activity and higher information revenue from an
increased number of real-time terminals for market data. Revenue in the
technology operation rose mainly due to license, support and project revenue.
Compared with the preceding quarter, the fourth quarter of 2006, Group revenue
rose mainly due to increased exchange trading and higher own work capitalized.
The Iceland Stock Exchange is consolidated from December 1, 2006.
The Group's total expenses were SEK 723 m (580) during the quarter. The increase
in expenses is mainly attributable to more extensive resource requirements due
to the expanded activities in the technology operations, increased focus on
projects and services in the information operations and higher market activities
in the exchange operations. Compared with the preceding quarter, the fourth
quarter 2006, expenses rose due to costs for own work capitalized (see page 8),
increased costs in the exchange operations to ensure a high service level during
periods of high volumes as well as the consolidation of the Iceland Stock
Exchange.
OMX's operating income rose to SEK 348 m (334) during the first quarter.
Excluding the sale of shares in NOS during the first quarter of 2006, operating
income rose by 12 percent. Participations in earnings of associated companies
amounted to SEK 9 m (11). The earnings in Orc Software and EDX London improved
while VPC AB is no longer an associated company. Operating income before
depreciation amounted to SEK 414 m (390). Financial items were negative in an
amount of SEK 19 m (negative: 15), a decline that is mainly due to increased
borrowing costs as a result of rising market interest rates and costs for
financial guarantees in conjunction with increased volumes in the clearing
operations. Income after financial items amounted to SEK 329 m (319), income
after tax rose to SEK 257 m (244). Earnings per share increased by 3 percent to
SEK 2.12 m (2.05).
Return on shareholders' equity, calculated on the basis of rolling 12-month
earnings, rose to 20 (14) percent. OMX's net debt/equity ratio amounted to 14
(9) percent at the end of the reporting period.
SUMMARY EARNINGS, GROUP
--------------------------------------------------------------------------------
| | Current | period | | |
--------------------------------------------------------------------------------
| | Jan- | March | Rolling | Full-year |
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Total revenue | 1,062 | 903 | 3,769 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -723 | -580 | -2,588 | -2,445 |
--------------------------------------------------------------------------------
| Participations in earnings of | 9 | 11 | 44 | 46 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating income | 348 | 334 | 1,225 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -19 | -15 | -64 | -60 |
--------------------------------------------------------------------------------
| Income after financial items | 329 | 319 | 1,161 | 1,151 |
--------------------------------------------------------------------------------
| Income after tax | 257 | 244 | 924 | 911 |
--------------------------------------------------------------------------------
| Earnings per share, SEK | 2.12 | 2.05 | 7.75 | 7.64 |
--------------------------------------------------------------------------------
| Return on shareholders' | 20 | 14 | 20 | 20 |
| equity, % | | | | |
--------------------------------------------------------------------------------
DEVELOPMENTS IN OMX'S BUSINESS AREAS DURING THE FIRST QUARTER
NORDIC MARKETPLACES
Within the business area, OMX operates the equity and derivatives exchanges in
Stockholm, Helsinki, Copenhagen and Iceland.
The level of activity on the exchanges increased substantially during the first
quarter of the year, compared with the year-earlier period and the preceding
quarter. A number of trade records were noted, including records in the number
of transactions and turnover in equity trading. The number of new companies
listed on the exchanges remained at a high level and the widespread interest in
listing services continued. The work with the Nordic Exchange has developed well
during the quarter and First North was expanded to include Iceland. After the
end of the reporting period, the Icelandic companies were included in the
groupwide presentation model on the main market and in OMX's sector indexes.
First North was also expanded to include Finland after the period.
The business area's revenue was SEK 555 m (479) during the quarter. The rise in
revenue is mainly due to increased trading revenue and the acquisition of the
Iceland Stock Exchange. The year-earlier period included SEK 9 m attributable to
the sale of shares in NOS. At the same time, the business area's expenses
amounted to SEK 260 m (204). The main reason for the rise in expenses is the
increase in capacity requirements due to higher volumes and the acquisition of
the Iceland Stock Exchange. The business area's operating income rose to SEK 297
m (279). As opposed to revenue and earnings, the statistical information below
is presented pro forma and the Iceland Stock Exchange is therefore included in
comparative figures.
The Nordic Marketplaces business area has three main sources of income (see page
12): trading revenue, issuers' revenue and other revenue. Trading revenue
amounted to SEK 430 m (360) during the first quarter, of which 65 percent was
from trading in cash products, mainly equities, and 35 percent from trading and
clearing in derivatives products. During the quarter, the number of equity
transactions increased to an average of 176,934 (118,162) per day, a rise of 50
percent compared with the year-earlier period. Turnover in equities trading
measured in value rose by 19 percent to a daily average of SEK 49,283 m
(41,320). The turnover velocity in equities trading rose to 143 percent (134).
The total number of derivatives contracts traded per day averaged 672,812
(631,276), up 7 percent compared with the year-earlier period. Of the total
number of contracts, Finnish options contracts on Eurex accounted for 70,962
(83,645) and Nordic derivatives contracts on EDX London for 120,898 (91,730) per
day.
Issuers' revenue increased to SEK 93 m (82) during the first quarter. The rise
was mainly attributable to the higher market capitalization of the listed
companies and a larger number of listed companies. At the end of the quarter,
the total number of companies was 614 (604) on the main market and 87 (43) on
the alternative marketplace, First North. During the first quarter, nine (14)
new companies joined the marketplace, including eight on First North, and at the
same time four (six) companies left the exchange, one from First North. The
total market capitalization of all listed companies on the main market rose to
SEK 9,003 billion (7,903) at the end of the first quarter.
Other revenue amounted to SEK 32 m (37) during the first quarter. Other revenue
includes SEK 9 m from the Icelandic Securities Depository, and in the
year-earlier period included SEK 9 m from the sale of shares in NOS.
INFORMATION SERVICES & NEW MARKETS
The business area combines all of OMX's information services within the Group's
Nordic exchange offering, OMX's securities administration services and OMX's
ownership and operation of exchanges and central securities depositories in
Tallinn, Riga and Vilnius.
The first quarter was characterized by a continued increase in demands for
information services and the launch of the new information service for listed
companies, Company News Service. The focus on the development of new products
and services continued during the quarter. The Broker Services operations were
expanded from January 1 with the unit for the development of systems for
back-office services that was formally organized under discontinuing operations.
All comparative figures have been adjusted pro forma with respect to this
organizational change. The business area's revenue amounted to SEK 203 m (175)
during the first quarter. Increased exchange activities and growing revenue from
information services were the primary drivers behind this increase. The business
area's expenses were SEK 143 m (128), an increase that is mainly related to the
expanded focus on new products and services. The business area's operating
income improved to SEK 61 m (49).
In Information Services & New Markets, there are four main revenue sources (see
page 12): information revenue, revenue from Baltic Markets, revenue from Broker
Services and other revenue. Information revenue amounted to SEK 130 m (99)
during the first quarter, representing an increase of 31 percent compared with
the year-earlier period. This revenue is mainly based on the number of real-time
terminals used and reported by the end users. These terminals receive their
information directly from OMX or via information vendors. At the end of the
quarter, OMX had 103 (87) information vendors.
Revenue from Baltic Markets increased to SEK 20 m (15) during the first quarter.
10 m (9) of this is revenue from the central securities depositories in Tallinn
and Riga. Joint membership for the three Baltic exchanges was introduced during
the period. Total equity turnover on the Baltic exchanges was SEK 104 m (50) per
day during the quarter. The number of equity transactions amounted to 2,125
(933) per day.
Revenue from Broker Services amounted to SEK 49 m (53) during the first quarter.
The decline in revenue is mainly due to the fact that a major customer
terminated its contract during the quarter.
Other revenue amounted to SEK 4 m (8) during the first quarter. Other revenue
during the first quarter 2006 included SEK 4 m from the sale of shares in NOS.
MARKET TECHNOLOGY
Within the business area, OMX develops and delivers systems solutions, IT
services and advisory services for the global exchange industry.
The market activity was strengthened compared with the year-earlier period.
Increased interest in OMX's products was noted from new customers in emerging
markets and new types of marketplaces, yet also from the existing customer base.
In February, OMX launched Genium, the next generation of systems for trade,
post-trade and information services.
The business area's revenue amounted to SEK 380 m (313) during the quarter. The
year-earlier period included SEK 9 m attributable to the sale of shares in NOS.
Of total revenue, SEK 118 m (75) was internal sales and development. In the
preceding quarter, this amount totaled SEK 100. The business area's expenses
amounted to SEK 372 m (297). This rise, in both revenue and expenses compared
with the year-earlier period, was due to the increased project activity among
external customers and the increased internal sales to and heightened activities
in Nordic Marketplaces and Information Services & New Markets. The increase
compared with the preceding quarter, the fourth quarter 2006, is mainly due to
the rise in own work capitalized (see page 8) and accelerating capacity
requirements in periods of high volumes in the exchange operations. The business
area's operating income amounted to SEK 14 m (21).
Investments in R&D amounted to SEK 32 m (40) for the quarter. Of the total
investments in R&D, SEK 29 m (34) was capitalized.
OMX's order intake during the quarter amounted to SEK 395 m (348), of which SEK
113 m (139) pertained to internal orders. The total order value at the end of
the quarter was SEK 3,015 m (2,329), of which SEK 1,060 m (738) is scheduled for
delivery within a year. The total order value includes internal orders of SEK
1,081 m (897), of which SEK 443 m (305) is due for delivery within a year. Order
statistics no longer include operations being discontinued and comparative
numbers have been adjusted accordingly.
During the quarter, an order was signed with egX Group for the implementation
and operation of a marketplace for securities in real estate. OMX also signed a
new agreement with BIDS Trading (Block Interest Discovery Service) for the
operation of their trading system. An agreement was also reached with Singapore
Exchange (SGX) for the delivery of a new solution for market information. In
addition, agreements were signed with among others ASX, Borsa Italiana, Budapest
Exchange, ICAP, ISE, International Exchange St Petersburg, NASD, MICEX, Oslo
Börs and Wiener Börse during the quarter.
There are three main sources of revenue within the Market Technology business
area (see page 12): license, support and project revenue; revenue from Facility
Management Services; and other revenue. License, support and project revenue
amounted to SEK 264 m (191) during the first quarter.
Revenue from Facility Management rose to SEK 116 m (97), mainly due to increased
internal revenue from the exchange operations.
Other revenue totaled SEK 0 m (25). The first quarter of 2006 includes SEK 9 m
from the sale of shares in NOS and positive currency effects.
SUMMARY REVENUE AND INCOME BY BUSINESS AREA
--------------------------------------------------------------------------------
| | Current | period | | |
--------------------------------------------------------------------------------
| | Jan | -March | Rolling | Full year |
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Revenue | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 555 | 479 | 1,854 | 1,778 |
--------------------------------------------------------------------------------
| Information Services & New | 203 | 175 | 780 | 752 |
| Markets | | | | |
--------------------------------------------------------------------------------
| Market Technology | 380 | 313 | 1,367 | 1,300 |
--------------------------------------------------------------------------------
| Operating income | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 297 | 279 | 958 | 940 |
--------------------------------------------------------------------------------
| Information Services & New | 61 | 49 | 229 | 217 |
| Markets | | | | |
--------------------------------------------------------------------------------
| Market Technology | 14 | 21 | 86 | 93 |
--------------------------------------------------------------------------------
OTHER INFORMATION
FINANCIAL POSITION
Total assets at the end of the reporting period amounted to SEK 14,239 m
compared with SEK 11,360 m at the same time in 2006. The increase is mainly
attributable to increased market value of outstanding derivatives positions and
current trading accounts arising in the operations being discontinued. The
adjusted equity/assets ratio, excluding these two items, was 62 percent (62)
(see page 10). OMX had an interest-bearing net debt of SEK 720 m (438) at
period-end. The net debt/equity ratio was 14 percent (9) at periodend.
At period-end, interest-bearing financial liabilities amounted to SEK 1,639 m
(1,728), of which SEK 1,360 m (1,402) was long term. The Group's total approved
credit facilities was SEK 3,628 m (3,008), of which SEK 58 m (0) was utilized.
Interest-bearing financial assets totaled SEK 919 m (1,290), of which SEK 21 m
(88) were financial fixed assets.
OMX AB
The legal entity OMX AB, the Group's parent company, comprises the Group's
corporate functions and conducts holding company operations on behalf of Group
subsidiaries. Revenue totaled SEK 16 m (54) for the reporting period. The loss
before appropriations and tax was SEK 43 m (loss: 6). Cash and cash equivalents
totaled SEK 1 m (3). Investments amounted to SEK 3 m (7).
ACCOUNTING PRINCIPLES
This interim report was prepared in accordance with IAS 34 Interim Financial
Reporting, and recommendation RR 31 Interim Reporting for Groups issued by the
Swedish Financial Accounting Standards Council. The same accounting principles
and methods of calculation were applied as in the 2006 Annual Report, which was
prepared in accordance with IFRS as adopted by the EU, and RR32 for the Parent
Company.
Since a decision was made in August 2005 to discontinue operations within Banks
& Brokers, these operations are reported as discontinued although the
discontinuation has yet to be implemented. In the balance sheet, assets
attributable to Banks & Brokers are reported separately through December 31,
2005. The balance sheet for the comparison period is not affected in accordance
with IFRS 5.
In preparing this report in accordance with generally accepted accounting
principles, the Board and senior management make assessments and assumptions
affecting the company's income and position, as well as other information
disclosed. These assessments and assumptions are based on historic experience
and are reviewed at regular intervals.
LEGAL DISPUTES
On February 23, 2005, OMX announced that a court jury had rejected eSpeed's
claim that OMX had infringed its patent and rejected eSpeed's claim of
approximately USD 100 m. At the end of April 2006, eSpeed appealed the district
court's decision. The United States Court of Appeals for the Federal Circuit
upheld the district court's decision in March. As a result of this decision,
eSpeed no longer has any claim on OMX. During the second quarter of 2004, OMX
rejected a legal claim for additional repayment of VAT amounting to
approximately EUR 5 m, excluding interest. The Helsinki City Court announced an
interim ruling on the case on June 9, 2006 in favor of OMX and that OMX was
entitled to receive compensation for its legal costs. The court's ruling has
been appealed by the plaintiffs.
A dispute regarding a system delivery is in progress in the Market Technology
business area. In May 2006, OMX requested an arbitration process, which is
expected to be concluded in the latter half of 2007.
Swedish Tax Board ruled in 2004 that Stockholmsbörsen AB will be subject to a
value added tax surcharge for the support and operation services it purchases
from other companies within the Group. Stockholmsbörsen AB will appeal the
ruling. If the Swedish Tax Board's opinion would be upheld it would give rise to
a cost for the Group of approximately SEK 90-110 m based on the situation as per
December 31, 2006. It would also increase ongoing expenses by SEK 2 m per month.
OMX did not make any provisions for the disputes in progress or changes in
contingent liabilities during the period.
DISCONTINUING OPERATIONS
In August 2005, OMX announced the focusing of its technology operations through
the divestment of operations targeting banks and brokerages within the former
Banks & Brokers business area. In April 2006, a unit with 21 employees was
divested to Tieto Enator and in January 2007, OMX signed an agreement with HCL
Technologies, a global supplier of IT solutions, for an extended partnership.
The latter agreement entails that HCL Technologies has assumed the
responsibility for the development and maintenance of the systems for securities
management targeting banks and brokerages. The remaining parts of the Nordic
operations has been transferred to the Information Services & New Markets
business area. The operation has been included in the Broker Services unit since
January 1, 2007. Accordingly, only the UK sales operations in securities
administration services remain in discontinuing operations.
Revenues from discontinuing operations amounted to SEK 53 m (20) in the first
quarter, while expenses amounted to SEK 64 m (35). The operating loss was SEK 11
m (loss: 15). The increase in revenue is mainly attributable to the increased
market activity. The rise in costs is mainly due to the build-up of operations,
which has grown rapidly. OMX's aim is to identify a long-term solution with
clear advantages for the remaining parts of the discontinuing operations.
Discussions are currently in progress with potential partners.
REDUCTION IN FEES
OMX strategy is to be one of Europe's leading exchanges and a part of this is to
have competitive fees. In December 2006, OMX therefore announced a reduction in
the fees for reporting transactions in Stockholm, Helsinki and Copenhagen as of
April 2, 2007. In 2006, price adjustments were made primarily in derivatives and
information services.
LAUNCH OF GENIUM
Genium - OMX's new technology for trading, post-trade and information services -
was launched in February. The first deliveries encompass standardized solutions
for access to trading and market data, and solutions for the distribution and
processing of market data. Development activities at OMX intensified in
conjunction with the introduction of Genium. The development of Genium takes
place within the Market Technology business area. Genium is initially being
developed for OMX's Nordic Exchange, which is the reason that the asset
generated by OMX was transferred to the Nordic Marketplaces business area on
March 31, 2007. A difference in the eliminations of expenses and revenues in the
Group has arisen as there is a difference between costs in Market technology and
the amount that OMX is able to capitalize. This accounting effect will remain
for the entire duration of the development project.
ACQUISITION OF FINDATA AB
In March 2007, it was announced that OMX had acquired Findata AB, a leading
supplier of information on Nordic companies that offers customized indexes.
Findata has seven employees located in Stockholm and its revenues amounted to
SEK 17 m, with significant profitability for full-year 2006. The purchase price
amounted to SEK 43.5 m and an additional earn out payment of a maximum of SEK 35
m. The operations are consolidated into the Information Services & New Markets
business area from March 1, 2007.
PARTNERSHIP WITH THE ST. PETERSBURG EXCHANGE AND RX
It was announced in March 2007 that OMX had entered into a partnership with the
St. Petersburg Exchange and RX, a group of venture capitalists, to create the
International Exchange St. Petersburg, IXSP. IXSP will offer primarily small and
mid-sized Russian growth companies access to international capital without
having to seek listing on exchanges outside Russia. OMX will deliver the
platform for trading and market data dissemination, and provide its expertise in
creating marketplaces for small and mid-sized growth companies. The parties will
each own one third of the new company.
BID FOR LJUBLJANA STOCK EXCHANGE IN SLOVENIA
At the end of November 2006, OMX announced an initiative to investigate expanded
commercial activities in Eastern Europe. On December 12, it was announced that
OMX had submitted a bid for all issued shares in the Ljubljana Stock Exchange in
Slovenia. The bid corresponded to a total value of approximately EUR 4.2 m. The
bid expired on January 22, 2007 at which no owners had yet taken up a final
position.
RESOLUTIONS BY AGM OF OMX
Share Match Program
OMX's Annual General Meeting on April 12, 2007 resolved to approve the proposed
Share Match Program 2007 regarding approximately 95 senior executives and key
individuals in OMX. The program runs over a period of three years and is based
on the employee's long-term confidence in OMX and provides an incentive to
continue to work for a successful OMX. Participants in the program invest in OMX
shares and, provided that OMX achieves performance targets related to earnings
per share and how OMX's shares perform in comparison to its competitors, after
three years, participants may obtain a maximum of five matching shares per
invested OMX share. However, President and CEO Magnus Böcker may obtain a
maximum of eight matching shares. The number of shares that the participant may
buy in the program is limited.
A total of 26,855 shares were invested in the Share Match Program 2006. OMX AB
has signed a share-swap agreement amounting to 57,000 shares, as a result of the
program that is reported as a shareholders' equity instrument in accordance with
IAS 32. The cost of the program for the period was to SEK 1 m, including social
security expenses, and the cost of the program's entire term is estimated at SEK
12 m.
DIVIDEND
OMX's Annual General Meeting on April 12, 2007 approved the distribution of a
dividend of SEK 6.50 to shareholders, comprising of a regular dividend of SEK
4.50 per share and an extra dividend of SEK 2.00 per share.
AUTHORIZATION ON REPURCHASE OF SHARES
OMX's Annual General Meeting on April 12, 2007 approved the authorization of the
Board to repurchase shares corresponding to a maximum of 10 percent of the total
number of shares outstanding. The repurchase could take place through trading on
the stock exchange or a directed offering to shareholders. OMX does not
currently own any treasury shares. This mandate applies until the 2008 Annual
General Meeting. The purpose of the proposal is to be able to continuously adapt
the capital structure to the company's needs, and thereby increase value for
shareholders and repurchase shares that could be used for the execution of OMX's
Share Match Program.
NEW BOARD OF DIRECTORS
At OMX's Annual General Meeting on April 12, 2007, the Board members Urban
Bäckström, Bengt Halse, Birgitta Klasén, Hans Munk Nielsen and Markku Pohjola
were re-elected. Lars Wedenborn and Birgitta Kantola were elected as new members
of the Board. Urban Bäckström was elected Chairman of the Board.
AUTHORISATION ON RAISING CERTAIN LOANS
OMX's Annual General Meeting on April 12, 2007 resolved to authorize the Board
to decide to raise loans for which the interest or the amount by which repayment
is to take place is wholly or partially dependent on the dividend to
shareholders, the performance of the OMX share, the company's earnings or the
company's financial position.
OUTLOOK FOR THE SECOND QUARTER
Revenues in OMX's exchange operations are largely dependent on trading
performance and trading volumes on the exchanges in Stockholm, Helsinki and
Copenhagen. In the business area Market Technology, revenues in the second
quarter are estimated to be in line with those of the first quarter of 2007.
Group expenses during the second quarter are also expected to be in line with
those of the first quarter.
OMX AB (publ)
Stockholm, April 24, 2007
Board of Directors
This report has not been subject to a comprehensive auditor's examination.
INCOME STATEMENT Current period Jan-March
------- 2007 -------- -------- 2006 -------
--------------------------------------------------------------------------------
| | Conti | Opera | Total | Conti | Opera | Total |
| | nuing | tions | OMX | nuing | tions | OMX |
| | opera | being | | opera | being | |
| | tions | dis- | | tions | dis-c | |
| | | conti | | | onti | |
| | | nued | | | n | |
| | | | | | ued 4) | |
--------------------------------------------------------------------------------
| SEK m | | | | | | |
--------------------------------------------------------------------------------
| REVENUE | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 972 | 53 | 1,025 | 838 | 20 | 858 |
--------------------------------------------------------------------------------
| Own work capitalized | 37 | - | 37 | 23 | - | 23 |
| 1) | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | - | - | - | 22 | - | 22 |
--------------------------------------------------------------------------------
| Total revenue | 1,009 | 53 | 1,062 | 883 | 20 | 903 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | |
--------------------------------------------------------------------------------
| Premises | -42 | -1 | -43 | -51 | -1 | -52 |
--------------------------------------------------------------------------------
| Marketing expenses | -14 | - | -14 | -12 | - | -12 |
--------------------------------------------------------------------------------
| Consultancy expenses | -93 | -1 | -94 | -76 | -1 | -77 |
--------------------------------------------------------------------------------
| Operations and | -63 | -2 | -65 | -46 | -2 | -48 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external | -64 | -33 | -97 | -37 | -13 | -50 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Personnel expenses | -319 | -25 | -344 | -270 | -15 | -285 |
--------------------------------------------------------------------------------
| Depreciation and | -64 | -2 | -66 | -53 | -3 | -56 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -659 | -64 | -723 | -545 | -35 | -580 |
--------------------------------------------------------------------------------
| Participation in | 9 | - | 9 | 11 | - | 11 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 359 | -11 | 348 | 349 | -15 | 334 |
--------------------------------------------------------------------------------
| Financial items | -17 | -2 | -19 | -13 | -2 | -15 |
--------------------------------------------------------------------------------
| Income/loss after | 342 | -13 | 329 | 336 | -17 | 319 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | -72 | 0 | -72 | -75 | 0 | -75 |
--------------------------------------------------------------------------------
| Net income/loss for | 270 | -13 | 257 | 261 | -17 | 244 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| of which | 269 | -13 | 256 | 260 | -17 | 243 |
| attributable to | | | | | | |
| shareholders in OMX | | | | | | |
| AB | | | | | | |
--------------------------------------------------------------------------------
| of which | 1 | - | 1 | 1 | - | 1 |
| attributable to | | | | | | |
| minority interests | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 120.640 | | | 118.474 |
| shares, millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares at | | | 120.640 | | | 118.474 |
| period end, millions | | | | | | |
--------------------------------------------------------------------------------
| Average number of | | | 120.640 | | | 118.760 |
| shares after full | | | | | | |
| conversion, millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | 118.760 |
| after full | | | | | | |
| conversion at period | | | | | | |
| end, millions | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 2.23 | | 2.12 | 2.19 | | 2.05 |
| SEK 3) | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 2.23 | | 2.12 | 2.19 | | 2.05 |
| SEK after full | | | | | | |
| conversion 3) | | | | | | |
--------------------------------------------------------------------------------
--- ROLLING 12 MONTHS --- --- FULL-YEAR 2006 ---
--------------------------------------------------------------------------------
| | Conti | Opera | Total | Conti | Opera | Total |
| | nuin | tion | OMX | nuing | t | OMX |
| | g | s | | opera | ions | |
| | opera | being | | tions | being | |
| | tion | dis- | | | dis-co | |
| | s | conti | | | nti | |
| | | nued | | | nue | |
| | | | | | d 4) | |
--------------------------------------------------------------------------------
| SEK m | | | | | | |
--------------------------------------------------------------------------------
| REVENUE | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 3,447 | 157 | 3,604 | 3,313 | 124 | 3,437 |
--------------------------------------------------------------------------------
| Own work capitalized | 82 | - | 82 | 68 | - | 68 |
| 1) | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 83 | - | 83 | 105 | - | 105 |
--------------------------------------------------------------------------------
| Total revenue | 3,612 | 157 | 3,769 | 3,486 | 124 | 3,610 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | |
--------------------------------------------------------------------------------
| Premises | -195 | -6 | -201 | -204 | -6 | -210 |
--------------------------------------------------------------------------------
| Marketing expenses | -65 | - | -65 | -63 | - | -63 |
--------------------------------------------------------------------------------
| Consultancy expenses | -327 | - | -327 | -310 | - | -310 |
--------------------------------------------------------------------------------
| Operations and | -256 | -16 | -272 | -239 | -16 | -255 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external | -194 | -76 | -270 | -167 | -56 | -223 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Personnel expenses | -1,13 | -87 | -1,219 | -1,083 | -77 | -1,160 |
| | 2 | | | | | |
--------------------------------------------------------------------------------
| Depreciation and | -227 | -7 | -234 | -216 | -8 | -224 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -2,39 | -192 | -2,588 | -2,282 | -163 | -2,445 |
| | 6 | | | | | |
--------------------------------------------------------------------------------
| Participation in | 44 | - | 44 | 46 | - | 46 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 1,260 | -35 | 1,225 | 1,250 | -39 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -57 | -7 | -64 | -53 | -7 | -60 |
--------------------------------------------------------------------------------
| Income/loss after | 1,203 | -42 | 1,161 | 1,197 | -46 | 1,151 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | -237 | 0 | -237 | -240 | 0 | -240 |
--------------------------------------------------------------------------------
| Net income/loss for | 966 | -42 | 924 | 957 | -46 | 911 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| of which | 962 | -42 | 920 | 953 | -46 | 907 |
| attributable to | | | | | | |
| shareholders in OMX | | | | | | |
| AB | | | | | | |
--------------------------------------------------------------------------------
| of which | 4 | - | 4 | 4 | - | 4 |
| attributable to | | | | | | |
| minority interests | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 118.737 | | | 118.671 |
| shares, millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares at | | | 120.640 | | | 120.640 |
| period end, millions | | | | | | |
--------------------------------------------------------------------------------
| Average number of | | | 118.928 | | | 118.886 |
| shares after full | | | | | | |
| conversion, millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | 120.640 |
| after full | | | | | | |
| conversion at period | | | | | | |
| end, millions | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 8.10 | | 7.75 | 8.03 | | 7.64 |
| SEK 3) | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 8.10 | | 7.75 | 8.03 | | 7.64 |
| SEK after full | | | | | | |
| conversion 3) | | | | | | |
--------------------------------------------------------------------------------
1)Own work invested in assets during the period, which are carried as fixed
assets, has been recognized in revenue under the heading ”Own work capitalized.”
This item refers only to capitalized personnel costs. Personnel costs were not
reduced for the work pertaining to capitalized assets, instead the costs are
netted by reported revenue. Accordingly, revenue recognition of own work
capitalized has no impact on results, but has a negative effect on the operating
margin.
2)Other revenue refers to earnings of SEK 22 m attributable to the sale of
shares in NOS ASA during the periods January - March 2006 and January - December
2006. The item also refers to earnings of SEK 83 m attributable to the sale of
shares in VPC AB during the period January - December 2006.
3)Earnings per share are calculated on the basis of the weighted average number
of shares during the period. This is based on OMX AB shareholders' share of
earnings for the period.
4)The income statement for discontinuing operations has been adjusted compared
with interim reports in 2006 as a result of organizational changes where certain
parts of the business area have been retained.
NOTES TO THE INCOME STATEMENT
Total revenue amounted to SEK 1,062 m (903) in the period January-March.
Consolidated net sales amounted to SEK 1 025 m (858). Own work capitalized
amounted to SEK 37 m (23) during the period, primarily with respect to systems
development. Refer to pages 4-5 for revenue per business area.
The Group's total expenses amounted to SEK 723 m (580) for the reporting period.
The increase in costs is primarily due to increased operation and maintenance
costs as well as consultancy and personel expenses as a consequence of increased
market activity and increased development of the next generation of Technology
solutions.
The Group's share in the earnings of associated companies amounted to SEK 9 m
(11) and is attributable to EDX London, Orc Software and the Lithuanian
securities depository CSDL. In 2006 the associated earnings also included a
result of SEK 8m from the, at that time, associated company VPC AB. The
underlying increase is mainly attributable to improved earnings for Orc Software
and EDX London.
Net financial items for the Group amounted to an expense of SEK 19 (expense:
15), a decline that is mainly due to increased borrowing costs as a result of
rising market interest rates and costs for financial guarantees in conjunction
with increased volumes in the clearing operations. Tax expenses for the
reporting period amounted to SEK 72 m (75), corresponding to a tax rate of 22
(24) percent.
Currency effects have had a minimal impact on the Group's operating revenue and
operating income during the reporting period.
BALANCE SHEET
--------------------------------------------------------------------------------
| SEK m | March | March | Dec |
| | 20 | 20 | 2006 |
| | 07 | 06 | |
--------------------------------------------------------------------------------
| Goodwill | 3,285 | 3,094 | 3,140 |
--------------------------------------------------------------------------------
| Other intangible fixed assets | 1,395 | 1,021 | 1,210 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 314 | 336 | 321 |
--------------------------------------------------------------------------------
| Financial fixed assets, | 737 | 917 | 699 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Financial fixed assets, interest-bearing | 21 | 88 | 21 |
--------------------------------------------------------------------------------
| Total fixed assets | 5,752 | 5,456 | 5,391 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 4,754 | 3,110 | 4,401 |
| positions | | | |
--------------------------------------------------------------------------------
| Current receivables 1) 3) | 2,782 | 1,532 | 1,738 |
--------------------------------------------------------------------------------
| Financial assets available for sale | 522 | 723 | 518 |
--------------------------------------------------------------------------------
| Liquid assets | 360 | 478 | 410 |
--------------------------------------------------------------------------------
| Assets held for sale 2) | 69 | 61 | 70 |
--------------------------------------------------------------------------------
| Total current assets | 8,487 | 5,904 | 7,137 |
--------------------------------------------------------------------------------
| Total assets | 14,239 | 11,360 | 12,528 |
--------------------------------------------------------------------------------
| Shareholders' equity | 5,050 | 4,959 | 4,614 |
--------------------------------------------------------------------------------
| Long-term liabilities, non-interest-bearing | 291 | 298 | 282 |
--------------------------------------------------------------------------------
| Long-term liabilities, interest-bearing | 1,360 | 1,407 | 1,361 |
--------------------------------------------------------------------------------
| Total long-term liabilities | 1,651 | 1,705 | 1,643 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 4,754 | 3,110 | 4,401 |
| positions | | | |
--------------------------------------------------------------------------------
| Current liabilities, non-interest-bearing | 2,505 | 1,265 | 1,434 |
| 3) | | | |
--------------------------------------------------------------------------------
| Current liabilities, interest-bearing | 279 | 321 | 436 |
--------------------------------------------------------------------------------
| Total current liabilities | 7,538 | 4,696 | 6,271 |
--------------------------------------------------------------------------------
| Total liabilities and shareholders' equity | 14,239 | 11,360 | 12,528 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
In addition to assets and liabilities reported in the balance sheet, OMX has
deposits on a client funds account that totaled SEK 2,887 m at March 31, 2007,
SEK 2,289 m at March 31, 2006 and SEK 2,604 m at December 31, 2006.
1)Of which interest-bearing receivables amount to SEK 16 m at March 31, 2007,
SEK 1 m at March 31, 2006 and SEK 1 m at December 31, 2006.
2)Assets held for sale have been adjusted for periods in 2006 compared with
interim reports in 2006 as a result of organizational changes where certain
parts of the business area have been retained.
3)Includes current trading accounts in the amount of SEK 1,396 m at March 31,
2007, SEK 206 m at March 31, 2006 and SEK 615 m at December 31, 2006, arising in
the UK operations for the sale of securities administration services, organized
under operations being discontinued.
NOTES TO THE BALANCE SHEET
Consolidated goodwill amounted to SEK 3,316 m (3,125) at period-end, including
assets held for sale of SEK 31 m (31). Consolidated goodwill pertains primarily
to the Nordic Marketplace business area, and refers to strategic acquisitions of
operations with a long history and stable and strong cash flow. During the
period, investments in goodwill amounted to SEK 47 m, of which SEK 43 m was
attributable to the acquisition of Findata AB.
Other intangible assets of SEK 1,426 m (1,044), including assets held for sale,
consist mainly of capitalized development costs for system products that are
amortized over a period of 3-10 years and valued on a current basis against
prevailing market conditions, as well as intangible assets attributable to
acquisitions, for example of the Copenhagen Stock Exchange, Findata and EV.
Assessments to ascertain any potential impairment of intangible fixed assets are
conducted continuously.
At period-end, the Group's deferred tax assets amounted to SEK 83 m (210).
Provisions were utilized in an amount of SEK 5 m (21) during the period.
The Group's investments in other intangible assets during the period were SEK
179 m (68). A major part of the investments are within the technology
operations, partly pertaining to a license from Cicada concerning the
development of a new system for information dissemination. In addition, assets
of SEK 30 m on the acquisition of Findata AB have been identified as other
intangible assets. Investments in tangible fixed assets amounted to SEK 30 m
(16).
In the UK securities management operation, which is organized within
discontinuing operations, OMX has the role of intermediary in securities
transactions. During the period between transaction and settlement (usually one
to five days), OMX has a receivable pertaining to the purchasing party and a
liability pertaining to the selling party. These cannot be offset.
The market value of OMX's holding in the associated company Orc Software (4.5
million shares) at period-end was SEK 673 m (308), while the carrying amount was
SEK 82 m (62).
CHANGE IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| SEK m | Jan-March | Jan-March | Full-year |
| | 2007 | 2006 | 2 |
| | | | 006 |
--------------------------------------------------------------------------------
| Shareholders' equity - opening | 4,614 | 4,749 | 4,749 |
| balance | | | |
--------------------------------------------------------------------------------
| Minority interests | 1 | - | -1 |
--------------------------------------------------------------------------------
| New issue | - | - | 269 |
--------------------------------------------------------------------------------
| Dividend to shareholders | - | - | -1,120 |
--------------------------------------------------------------------------------
| Share swap for share-investment | - | - | -8 |
| program | | | |
--------------------------------------------------------------------------------
| Share-investment program | 1 | - | 2 |
--------------------------------------------------------------------------------
| Cash-flow hedging | 11 | - | -18 |
--------------------------------------------------------------------------------
| Translation differences | 116 | -4 | -173 |
--------------------------------------------------------------------------------
| Reassessments reported against | 50 | -24 | -12 |
| shareholders' equity | | | |
--------------------------------------------------------------------------------
| Changes in shareholders' equity of | - | -6 | 15 |
| associated company | | | |
--------------------------------------------------------------------------------
| Net income in reporting period 1) | 257 | 244 | 911 |
--------------------------------------------------------------------------------
| Shareholders' equity - closing | 5,050 | 4,959 | 4,614 |
| balance | | | |
--------------------------------------------------------------------------------
1)Of which, the minority share was SEK 1 m for January-March 2007, SEK 1 m for
January-March 2006 and SEK 4 m for January-December 2006.
CASH-FLOW STATEMENT
--------------------------------------------------------------------------------
| | Current | period | | |
--------------------------------------------------------------------------------
| | Jan - | March | Rolling | Full-year |
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Cash flow from current | | | | |
| operations | | | | |
--------------------------------------------------------------------------------
| before changes in working | 328 | 230 | 1,100 | 1,002 |
| capital | | | | |
--------------------------------------------------------------------------------
| Change in working capital | 41 | 20 | 51 | 30 |
--------------------------------------------------------------------------------
| Cash flow from current | 369 | 250 | 1,151 | 1,032 |
| operations | | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | -223 | -550 | 43 | -284 |
| activities | | | | |
--------------------------------------------------------------------------------
| Dividend to shareholders | - | - | -1,120 | -1,120 |
--------------------------------------------------------------------------------
| Cash flow from financing | -196 | -137 | -192 | -133 |
| activities | | | | |
--------------------------------------------------------------------------------
| Change in liquid assets | -50 | -437 | -118 | -505 |
--------------------------------------------------------------------------------
| Liquid assets - opening | 410 | 915 | 478 | 915 |
| balance1 ) | | | | |
--------------------------------------------------------------------------------
| Liquid assets - closing | 360 | 478 | 360 | 410 |
| balance1 ) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1)Cash and cash equivalents comprise cash and bank balances, as well as
financial investments with a term of less than three months. Change of
short-term investments with a term of more than three months are reported as
cash flow from investing activities.
NOTES TO CHANGE IN SHAREHOLDERS' EQUITY
Shareholders' equity amounted to SEK 5,050 m (4,959), of which the minority
share was 18 (15) at period-end. This change in shareholders' equity compared
with the year-earlier period is mainly due to the positive earnings for the
period and dividends to shareholders of 1,120 Mkr in 2006.
NOTES TO THE CASH FLOW STATEMENT
Cash flow from operating activities before changes in working capital comprises
operating income with depreciation and capital gains (other revenue) reversed,
plus adjustments for financial items and paid tax. The change in working capital
during the period is mainly due to an increase in accounts payable. During the
report period January - March, investments in intangible assets affecting the
cash flow amounted to SEK 123 m (168).
The investment activities during the quarter have mainly consisted of the
acquisition of Findata, the acquisition of a license from Cicada and investments
in own systems.
Investments in tangible assets amounted to SEK 17 m (2) for the reporting
period. Cash flow from investing activities also includes changes in financial
investments with a term of more than three months in the amount of SEK 4 m which
have been transferred from cash and cash equivalents.
REVENUES, EXPENSES AND OPERATING INCOME BY BUSINESS AREA
--------------------------------------------------------------------------------
| | Current | period | | |
--------------------------------------------------------------------------------
| | Jan - | March | Rolling | Jan-Dec |
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | | | | |
--------------------------------------------------------------------------------
| Trading revenue | 430 | 360 | 1,356 | 1,286 |
--------------------------------------------------------------------------------
| Issuers' revenue | 93 | 82 | 355 | 344 |
--------------------------------------------------------------------------------
| Other revenue | 32 | 37 | 143 | 148 |
--------------------------------------------------------------------------------
| Total revenues | 555 | 479 | 1,854 | 1,778 |
--------------------------------------------------------------------------------
| Total expenses | -260 | -204 | -907 | -851 |
--------------------------------------------------------------------------------
| Participation in earnings of | 2 | 4 | 11 | 13 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating income | 297 | 279 | 958 | 940 |
--------------------------------------------------------------------------------
| Operating margin, % | 54 | 58 | 52 | 53 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Information Services & New | | | | |
| Markets | | | | |
--------------------------------------------------------------------------------
| Information sales | 130 | 99 | 472 | 441 |
--------------------------------------------------------------------------------
| Revenues from Baltic Markets 1) | 20 | 15 | 73 | 68 |
--------------------------------------------------------------------------------
| Revenue from Broker Services | 49 | 53 | 201 | 205 |
--------------------------------------------------------------------------------
| Other revenue | 4 | 8 | 34 | 38 |
--------------------------------------------------------------------------------
| Total revenue | 203 | 175 | 780 | 752 |
--------------------------------------------------------------------------------
| Total expenses | -143 | -128 | -557 | -542 |
--------------------------------------------------------------------------------
| Participation in earnings of | 1 | 2 | 6 | 7 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating income | 61 | 49 | 229 | 217 |
--------------------------------------------------------------------------------
| Operating margin, % | 30 | 27 | 29 | 27 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market Technology | | | | |
--------------------------------------------------------------------------------
| License-, support- and project | 264 | 191 | 858 | 785 |
| revenue | | | | |
--------------------------------------------------------------------------------
| Facility Management Services | 116 | 97 | 451 | 432 |
--------------------------------------------------------------------------------
| Other revenue | 0 | 25 | 58 | 83 |
--------------------------------------------------------------------------------
| Total revenue | 380 | 313 | 1,367 | 1,300 |
--------------------------------------------------------------------------------
| Total expenses | -372 | -297 | -1,308 | -1,233 |
--------------------------------------------------------------------------------
| Participation in earnings of | 6 | 5 | 27 | 26 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating income | 14 | 21 | 86 | 93 |
--------------------------------------------------------------------------------
| Operating margin, % | 4 | 7 | 6 | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operations being discontinued | | | | |
--------------------------------------------------------------------------------
| Total revenue | 53 | 20 | 157 | 124 |
--------------------------------------------------------------------------------
| Total expenses | -64 | -35 | -192 | -163 |
--------------------------------------------------------------------------------
| Operating income | -11 | -15 | -35 | -39 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group eliminations - revenues | 129 | 84 | 389 | 344 |
| 3) | | | | |
--------------------------------------------------------------------------------
| Group eliminations - costs 3) | 116 | 84 | 376 | 344 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Group | | | | |
--------------------------------------------------------------------------------
| Revenue | 1,062 | 903 | 3,769 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -723 | -580 | -2,588 | -2,445 |
--------------------------------------------------------------------------------
| Participation in earnings of | 9 | 11 | 44 | 46 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Operating income | 348 | 334 | 1,225 | 1,211 |
--------------------------------------------------------------------------------
1)Comprises trading revenues, issuers' revenue and revenues from the central
securities depositories in Tallinn and Riga.
2)The income statement for discontinuing operations has been adjusted for
periods in 2006 compared with interim reports in 2006 as a result of
organizational changes where certain parts of the business area have been
retained.
3)Development activities at OMX intensified in conjunction with the introduction
of Genium. The development of Genium takes place within the Market Technology
business area. Genium is initially being developed for OMX's Nordic Exchange,
which is the reason that the asset generated by OMX was transferred to the
Nordic Marketplaces business area on March 31, 2007. A difference in the
eliminations of expenses and revenues in the Group has arisen as there is a
difference between costs in Market technology and the amount that OMX is able to
capitalize. This accounting effect will remain for the entire duration of the
development project.
SOURCES OF REVENUE IN OMX
NORDIC MARKETPLACES
TRADING REVENUE
Trading revenues comprise trading and clearing revenues from the spot and
derivatives products traded on the exchanges included in Nordic Marketplaces. Of
the trading revenues during the first quarter, 65 percent was from spot trading
(mainly equities) and 35 percent was from trading and clearing related to
derivatives products.
With respect to trading revenues from share trading, the two most important
parameters are the value of the share turnover and the number of share
transactions. A change in value of the average trading volume of 1 percent on an
annual basis (assuming an unchanged number of transactions) will affect trading
revenues by +/- SEK 11.2 m, calculated on the basis of trading during the first
quarter of 2007.
With respect to revenue from trading and clearing related to derivatives
products, the two most important parameters are the number of derivatives
contracts and the size of the options premiums. A change of the average daily
derivatives turnover of 1,000 contracts on an annual basis (assuming unchanged
options premiums and product mix) will affect trading revenue by +/- SEK 1.1 m,
calculated on the basis of trading during the first quarter of 2007.
ISSUERS' REVENUE
Issuers' revenues derive from the fees that listed companies pay and are
directly related to the listed companies' market capitalization. A 10 percent
change in the total market capitalization of Nordic Marketplaces will affect
issuers' revenue by +/- SEK 6.8 m, calculated on an annual basis from 2006
levels and based on the business conducted during the year.
OTHER REVENUE
Other revenues consist primarily of line connection fees for members and
operation reimbursement fees regarding the derivatives clearing link with the
Oslo Stock Exchange. Other revenues also include possible capital gains from the
sale of operations.
INFORMATION SERVICES & NEW MARKETS
INFORMATION REVENUe
Information revenues are generated through the sale and distribution of trading
information based on the data generated through trading on OMX's exchanges.
Customers comprise information vendors, exchange members and private
individuals.
Trading information, which is the largest source of revenue, is sold to around
one hundred companies that distribute the information to a large number of end
users. These information vendors are invoiced in arrears. The size of the fee
depends on the number of end users.
REVENUE FROM BALTIC MARKETS
Revenues from the Baltic Markets comprise trading revenues and issuers' revenue
from the exchanges owned by OMX in Tallinn, Riga and Vilnius. The revenue model
is similar to that within Nordic Marketplaces. Also included are revenues from
the central securities depositories in Tallinn and Riga - the number of register
accounts as well as cleared and settled accounts are the most important
parameters.
REVENUE FROM BROKER SERVICES
Revenue from Broker Services derive from securities administration, mainly
back-office services related to share trading in the Nordic region, and the
licensing and operation of back-office systems also in the Nordic region.
Revenue from securities administration is based on fixed revenue per customer
and variable revenue governed by the number of transactions carried out. Systems
revenue comprises license, operation and consulting revenue.
OTHER REVENUE
Other revenues consist primarily of training revenues, sales of information
materials and line connection fees for members. Other revenues also include
possible capital gains from the sale of operations.
MARKET TECHNOLOGY
LICENSE, SUPPORT AND PROJECT REVENUE
License, support and project revenue derive from the system solutions developed
and sold by OMX. After OMX has developed and sold a system solution, the
customer licenses the right to use the software. Each project involves
individual adaptations to the specific requirements of the customer, for
instance, relating to functionality and capacity. This development, testing and
installation work generates project revenue that is invoiced continually
according to degree of completion. When OMX provides a system solution, it
undertakes to continually upgrade, develop and maintain the system and receives
regular support revenues for this work.
With regard to major system solutions for customers such as exchanges and
clearing organizations, license and project revenue is mostly fixed and
recognized in relation to the degree of completion. Support revenue is mainly
fixed and contracts usually extend for five years. A certain portion of license
revenue can also be recurring, and contracts can extend for a longer period.
FACILITY MANAGEMENT SERVICES REVENUE
Facility Management Services involve OMX assuming responsibility for the
continuous operation of a system platform for a customer, for which OMX receives
recurring facility management revenue. Revenue from Facility Management Services
can be both fixed and volume-based. Contract periods vary between one and seven
years.
OTHER REVENUE
Other revenues comprise mainly revenue from consulting services and exchangerate
differences. Other revenues also include possible capital gains from the sale of
operations.
INVESTMENTS
--------------------------------------------------------------------------------
| SEK m | Current | period | | |
--------------------------------------------------------------------------------
| | Jan - | March | Rolling | Full year |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Goodwill | 47 | 173 | 200 | 326 |
--------------------------------------------------------------------------------
| Other intangible assets | 179 | 68 | 340 | 229 |
--------------------------------------------------------------------------------
| Tangible assets | 30 | 16 | 91 | 77 |
--------------------------------------------------------------------------------
| Assets acquired through | 30 | 75 | 165 | 210 |
| acquisitions 1) | | | | |
--------------------------------------------------------------------------------
| Total | 286 | 332 | 796 | 842 |
--------------------------------------------------------------------------------
INVESTMENTS IN R&D
--------------------------------------------------------------------------------
| SEK m (of which expensed) | Current | period | | |
--------------------------------------------------------------------------------
| | Jan - | March | Rolling | Full year |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 54 (2) | 2 (1) | 69 (9) | 17(8) |
--------------------------------------------------------------------------------
| Information Services & | 6 (1) | 5(0) | 18 (3) | 17(2) |
| New Markets | | | | |
--------------------------------------------------------------------------------
| Market Technology1) | 32 (3) | 40(6) | 166 (10) | 174(13) |
--------------------------------------------------------------------------------
| Total | 92 (6) | 47(7) | 253 (22) | 208(23) |
--------------------------------------------------------------------------------
PRELIMINARY ACQUISITION CALCULATION - EV
--------------------------------------------------------------------------------
| SEK m | |
--------------------------------------------------------------------------------
| Cash | 41 |
--------------------------------------------------------------------------------
| Acquisition costs | 17 |
--------------------------------------------------------------------------------
| New share issue | 256 |
--------------------------------------------------------------------------------
| Acquisition price | 314 |
--------------------------------------------------------------------------------
| Fair value of acquired net assets | 179 |
--------------------------------------------------------------------------------
| Goodwill | 135 |
--------------------------------------------------------------------------------
ACQUIRED ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
| | Fair value | Carrying value |
--------------------------------------------------------------------------------
| Fixed assets1) | 149 | 9 |
--------------------------------------------------------------------------------
| Current assets | 19 | 19 |
--------------------------------------------------------------------------------
| Cash and bank balance | 33 | 33 |
--------------------------------------------------------------------------------
| Current liabilities | -22 | -22 |
--------------------------------------------------------------------------------
| Acquired net assets | 179 | 39 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1)The difference between fair value and carrying value is primarily attributable
to the valuation of acquired contracts.
Eignarhaldsfelagid Verdbrefathing (EV) is included in Nordic Marketplaces. EV
was consolidated in the Group's income statement and balance sheet on December
1, 2006. For the period, EV is included in the Group's revenues in the amount of
SEK 29 m and in net income in the amount of SEK 8 m. Goodwill is attributable to
the company's positive profitability and anticipated revenue synergies in
conjunction with the continued integration of the Nordic-Baltic securities
market. The cash-flow effect of the acquisition amounts to SEK 25 m, comprising
a cash payment of SEK 41 m, acquisition costs of SEK 17 m, minus received cash
balances of SEK 33 m. Of the total amount of acquisition costs of SEK 17 m, SEK
11 m had an effect on cash flow in 2006. The remaining SEK 6 m will impact cash
flow in 2007. The new shares issued are valued at market value on the
acquisition date.
PRELIMINARY ACQUISITION CALCULATION- FINDATA
--------------------------------------------------------------------------------
| SEK m | |
--------------------------------------------------------------------------------
| Cash | 71 |
--------------------------------------------------------------------------------
| Acquisition costs | 3 |
--------------------------------------------------------------------------------
| Acquisition price | 74 |
--------------------------------------------------------------------------------
| Fair value of acquired net assets | 31 |
--------------------------------------------------------------------------------
| Goodwill | 43 |
--------------------------------------------------------------------------------
ACQUIRED ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
| | Fair value | Carrying value |
--------------------------------------------------------------------------------
| Fixed assets1) | 30 | 0 |
--------------------------------------------------------------------------------
| Current assets | 3 | 3 |
--------------------------------------------------------------------------------
| Cash and bank balance | 1 | 1 |
--------------------------------------------------------------------------------
| Current liabilities | -3 | -3 |
--------------------------------------------------------------------------------
| Acquired net assets | 31 | 1 |
--------------------------------------------------------------------------------
1)The difference between fair value and carrying value is primarily attributable
to the valuation of acquired contracts.
Findata AB was consolidated in the Group's income statement and balance sheet on
March 1, 2007 and is included in the Information Services & New Markets business
area. Findata is included in the Group's revenues in the amount of SEK 2 m and
in net income in the amount of SEK 0 m. Goodwill is attributable to the
anticipated synergies in conjunction with the further development of OMX's
information services.
The cash flow effect of the acquisition totals a negative amount of SEK 73 m,
comprising a cash payment of SEK 71 m, acquisition costs of SEK 3 m, minus
received cash balances of SEK 1 m. A total of SEK 43.5 m of the cash amount was
paid during the first quarter of 2007. In the second quarter SEK 10 m in earn
out payment will be paid. The remaining earn out payment, which is dependent on
results, and is expected to amount to SEK 17.5m, will be paid in the first
quarters of 2008 and 2009. Of the acquisition costs, SEK 1 m had an effect on
cash flow in the first quarter. The remaining acquisition costs will be paid
during the second quarter.
DEPRECIATION AND IMPAIRMENT BY BUSINESS AREA
--------------------------------------------------------------------------------
| | Current | period | | |
--------------------------------------------------------------------------------
| | Jan - | March | Rolling | Full year |
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 18 | 18 | 70 | 70 |
--------------------------------------------------------------------------------
| Information Services & New | 12 | 5 | 29 | 22 |
| Markets | | | | |
--------------------------------------------------------------------------------
| Market Technology 1) | 36 | 33 | 135 | 132 |
--------------------------------------------------------------------------------
| Total | 66 | 56 | 234 | 224 |
--------------------------------------------------------------------------------
1)The period January - March 2007 includes impairment losses in discontinuing
operations in the amount of SEK 2 m. The period January - March 2006 includes
impairment losses in discontinuing operations in the amount of SEK 3 m.
KEY RATIOS1)
--------------------------------------------------------------------------------
| | Jan-March | Jan-March | Jan-Dec |
| | 2007 | 2006 | 2 |
| | | | 006 |
--------------------------------------------------------------------------------
| Earnings per share, SEK 2) | 2.12 | 2.05 | 7.64 |
--------------------------------------------------------------------------------
| Share price at period-end, SEK | 145 | 149 | 126 |
--------------------------------------------------------------------------------
| Average number of OMX shares traded | 704 | 728 | 772 |
| daily, thousands | | | |
--------------------------------------------------------------------------------
| P/E ratio 3) | 19 | 27 | 16 |
--------------------------------------------------------------------------------
| Shareholders' equity per share, SEK | 42 | 42 | 38 |
--------------------------------------------------------------------------------
| Share price/Shareholders' equity per | 3.5 | 3.6 | 3.3 |
| share, SEK | | | |
--------------------------------------------------------------------------------
| Return on equity, % 3) | 20 | 14 | 20 |
--------------------------------------------------------------------------------
| Return on capital employed, % 4) | 20 | 17 | 20 |
--------------------------------------------------------------------------------
| Net debt/equity,% | 14 | 9 | 18 |
--------------------------------------------------------------------------------
| Equity/assets ratio, % 5) | 53 | 60 | 57 |
--------------------------------------------------------------------------------
| Adjusted equity/assets ratio, % 6) | 62 | 62 | 61 |
--------------------------------------------------------------------------------
| Number of employees at period-end | 1,451 | 1,302 | 1,402 |
--------------------------------------------------------------------------------
| Average number of employees during the | 1,440 | 1,295 | 1,324 |
| period | | | |
--------------------------------------------------------------------------------
| Personnel expenses, SEK m | 344 | 285 | 1,160 |
--------------------------------------------------------------------------------
1) Definitions of key ratios are given in the OMX Annual Report 2006, page 103.
2) Based on OMX AB shareholders' share of earnings for the period.
3) Based on 12-month rolling income.
4) 12-month rolling income before interest expenses and tax as a percentage of
average shareholders' equity plus interest-bearing liabilities.
5) Calculated excluding market value of outstanding derivatives positions (see
OMX Annual Report 2006, page 94).
6) Calculated excluding market value of outstanding derivatives positions (see
OMX Annual Report 2006, page 94) and adjusted for current trading accounts
arising in the UK operations for the sale of securities administration services,
which are reported as discontinuing operations (see page 10).
NUMBER OF EMPLOYEES AND CONTRACTED CONSULTANTS
The number of employees and consultants in the Group was 1,629 (1,386) at the
end of the reporting period. The increase in the number of employees and
consultants was primarily due to increased activity within Information Services
& New Markets and Market Technology. The number of employees was 1,451 (1,302)
at the close of the reporting period, of which 324 (291) were employed in Nordic
Marketplaces, 310 (265) in Information Services & New Markets and 817 (746) in
Market Technology. Of the total number of employees, 72 (90) were on long-term
leave, mainly parental leave.
MAJOR SHAREHOLDERS AS OF 2007-03-31
--------------------------------------------------------------------------------
| | Number of shares | Share capital |
| | | and |
| | | votes, % |
--------------------------------------------------------------------------------
| Investor AB | 12,950,507 | 10.7 |
--------------------------------------------------------------------------------
| The Swedish state | 7,993,466 | 6.6 |
--------------------------------------------------------------------------------
| Nordea Bank | 6,483,474 | 5.4 |
--------------------------------------------------------------------------------
| Fidelity Funds | 4,543,500 | 3.8 |
--------------------------------------------------------------------------------
| Franklin-Templeton Funds | 4,254,964 | 3.5 |
--------------------------------------------------------------------------------
| Didner & Gerge aktiefond | 3,650,000 | 3.0 |
--------------------------------------------------------------------------------
| Svenska Handelsbanken | 3,246,071 | 2.7 |
--------------------------------------------------------------------------------
| Swedbank Robur Funds | 3,087,914 | 2.6 |
--------------------------------------------------------------------------------
| SEB funds | 2,106,504 | 1.7 |
--------------------------------------------------------------------------------
| Olof Stenhammar and affiliates | 1,987,590 | 1.6 |
--------------------------------------------------------------------------------
| Other Swedish owners | 20,532,309 | 17.0 |
--------------------------------------------------------------------------------
| Other foreign owners | 49,804,168 | 41.3 |
--------------------------------------------------------------------------------
| Total number of shares | 120,640,467 | 100 |
--------------------------------------------------------------------------------
Source: SIS Ägarservice
OMX AB (publ) SE-105 78 Stockholm. Tel. +46 8 405 60 00. Fax +46 8 405 60 01.
www.omxgroup.com
Corp. Reg. No. 556243-8001. Street address: Tullvaktsvägen 15.
