Strong profit growth
• Revenues during January-September increased by 23 percent to SEK 3,192 m
(2,585)
• Operating income rose by 23 percent to SEK 1,053 m (856)
• Income after financial items rose by 22 percent to SEK 994 m (812)
• Income after tax rose by 28 percent to SEK 786 m (615)
• Earnings per share rose by 25 percent to SEK 6.46 (5.17)
• Return on shareholders' equity rose to 23 percent (17)
• Increased exchange trading - the most active summer quarter ever
• Continued strong growth in information revenues
• First technology customer in South America
“The third quarter was yet another strong quarter for OMX. Operating income
rose by 34 percent
compared with the year-earlier period. It is particularly gratifying that
profit, excluding capital gains, also increased compared with the second
quarter of 2007, since the third quarter is normally a seasonally weaker
quarter. In addition, it is highly positive that all business areas contributed
to the increase in earnings,” says Magnus Böcker, President and CEO of OMX.
OMX's interim report for the period January-September 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
Heidi Wendt, Vice President, Media Relations +46 (0)8- 405 72 93
About OMX | OMX is a leading expert in the exchange industry. The OMX Nordic
Exchange comprises over 800 companies including its alternative market First
North. OMX provides technology to over 60 exchanges, clearing organizations and
central securities depositories in over 50 countries. The Nordic Exchange is
not a legal entity but describes the common offering from OMX exchanges in
Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. OMX is a
Nordic Large Cap company in the Financials sector on the OMX Nordic Exchange.
For more information, please visit, please visit www.omxgroup.com.
This information is disclosed according to applicable law and exchange rules.
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this communication contains forward-looking
statements, which involve a number of risks and uncertainties. OMX cautions
readers that any forward-looking information is not a guarantee of future
performance and that actual results could differ materially from those
contained in the forward-looking information. Such forward-looking statements
include, but are not limited to, statements about the benefits of NASDAQ's
offer, the transactions contemplated by NASDAQ's agreements with Borse Dubai
and OMX, the proposed business combination transaction involving NASDAQ and
OMX, including estimated revenue and cost synergies, the combined company's
plans, objectives, expectations and intentions and other statements that are
not historical facts. Additional risks and factors are identified in OMX's
filings with the Swedish Financial Supervisory Authority (Sw.
Finansinspektionen) (the “SFSA”) including its annual report for 2006, which is
available on OMX's website at http://www.omxgroup.com. OMX undertakes no
obligation to publicly update any forward-looking statement, whether as a
result of new information, future events or otherwise.
Notice to OMX shareholders
This document does not constitute an offer to purchase, sell or exchange or the
solicitation of an offer to purchase, sell or exchange any securities of OMX.
Additional Information
On August 7, 2007, NASDAQ filed with the SEC a Registration Statement on Form
S-4 that includes a preliminary proxy statement of NASDAQ that also constitutes
a prospectus of NASDAQ. On October 12, 2007, NASDAQ filed with the SEC a
preliminary Proxy Statement on Schedule 14A. Investors and security holders are
urged to read the preliminary proxy statement/prospectus on Form S-4 and the
preliminary proxy statement on Schedule 14A, the definitive proxy
statement/prospectus on Form S-4 if and when it becomes available and the
definitive proxy statement on Schedule 14A if and when it becomes available, as
well as other applicable documents regarding the proposed business combination
transaction, because those documents contain, or will contain, important
information. You may obtain a free copy of those documents (if and when
available) and other related documents filed by NASDAQ with the SEC at the
SEC's website at www.sec.gov. The proxy statement/prospectus (if and when it
becomes available) and the other documents may also be obtained for free by
accessing NASDAQ's website at http://www.nasdaq.com and OMX's website at
http://www.omxgroup.com.
STRONG PROFIT GROWTH
• Revenues during January-September increased to SEK 3,192 m (2,585)
• Operating income rose to SEK 1,053 m (856)
• Income after financial items rose to SEK 994 m (812)
• Income after tax rose to SEK 786 m (615)
• Earnings per share rose to SEK 6.46 (5.17)
• Return on shareholders' equity rose to 23 percent (17)
• Increased exchange trading - the most active summer quarter ever
• Continued strong growth in information revenues
• First technology customer in South America
CEO comments: The third quarter was yet another strong quarter for OMX.
Operating income rose by 34 percent compared with the year-earlier period. It is
particularly gratifying that profit, excluding capital gains, also
increased compared with the second quarter of 2007, since the third quarter is
normally a seasonally weaker quarter. In addition, it is highly positive that
all business areas contributed to the increase in earnings.
The robust growth in the Nordic Marketplaces business area continued and new
turnover records were reached. The third quarter was characterized by turbulence
and volatility in the equities market, partly due to the unrest in the US credit
market. The number of equity transactions was up 87 percent compared with the
year-earlier period and up 7 percent on the preceding quarter - in terms of
daily turnover there has been no previous month higher than the levels reported
in August. Turnover in derivatives trading was also strong, the number of
contracts traded rose by 23 percent compared with the year-earlier period. Also,
the market for fixed income instruments is growing substantially and
requirements relating to clearing, transparency and electronic trading are
intensifying. These requirements are clearly met by OMX's fixed income-
related products and services and our potential will be utilized in an even
better manner when these are grouped in a single business unit from January 1.
Information revenues continued to increase for the Information Services & New
Markets business area. The demand for our information services is successively
increasing as more and more investors become aware of the Nordic Exchange's
continuously expanding investment opportunities.
Profitability in the Market Technology business area improved during the
quarter, with the operating margin, excluding capital gains attributable to the
sale of equities during the preceding quarter, rising from 5 to 7 percent. We
also stand firm in our belief that an operating margin of 10 percent is a
minimum for our technology operations. An example of our continuous activities
in efficiency enhancement is the agreement we recently signed with Verizon
Business for outsourcing network operations and data center management, a
partnership that lowers the costs for the business areas. A strategically
significant event during the quarter was also the signing of a contract with our
first technology customer in South America, Bolsa de Valores de Colombia. OMX
now supplies technology and services to exchanges on all the world's continents.
The business community has continued to be focused on the ownership of OMX
during the third quarter, and the conclusion of the ownership issue will
influence our future strategy. We are naturally very proud of the interest that
has been shown in OMX and the substantial value that has been attached to our
operations. Accordingly, it is particularly pleasing that we can report strong
earnings in all of our business areas. This demonstrates that the turbulence
surrounding OMX has not materially affected the company's daily operations,
which is an excellent testimony to the performance of our employees and our
brand.
Magnus Böcker
President and CEO
GROUP INCOME DEVELOPMENT DURING THE THIRD QUARTER
OMX's total revenue was SEK 1,002 m (817 in the same period last year) during
the third quarter of the year, up 23 percent compared with the year-earlier
period. In the exchange operations,trading revenue increased mainly due to
increased equities and derivatives trading. Information revenue also grew,
partly due to the new Nordic product offering and increased demand for real-time
terminals for market data. In the technology operations, the increase derives
mainly from higher license, support and project revenue. The Iceland Stock
Exchange was consolidated at December 1, 2006.
The Group's total expenses amounted to SEK 694 m (592) during the quarter, up 17
percent compared with the year-earlier period. The increase is due mainly to
higher resource requirements resulting from the expanded activities in the
technology operations, an increased focus on products and services in
information services, higher capacity requirements in the exchange operations,
and the consolidation of the Iceland Stock Exchange. Compared with the second
quarter of 2007, expenses declined by 8 percent mainly due to low levels of
seasonal activity but also due to efficiency enhancements in the technology
operations.
OMX's operating income rose to SEK 320 m (238) in the third quarter. Excluding
operations being discontinued, the operating income increased by 34 percent
compared with the same period in 2006. Participations in earnings of associated
companies amounted to SEK 12 m (13). The decrease is attributable to VPC AB no
longer being included as an associated company, effective October 1, 2006.
Earnings in the associated companies Orc Software and EDX London rose compared
with the year-earlier period. Operating income before depreciation rose to SEK
386 m (296).
Financial items were negative in an amount of SEK 25 m (negative: 11). Compared
with the preceding year, financial items were adversely affected by increased
borrowing, rising market interest rates and higher costs for financial
guarantees in conjunction with increased volumes in the clearing operations.
Income after financial items rose to SEK 295 m (227) and income after tax rose
to SEK 223 m (171). Earnings per share increased by 27 percent to SEK 1.82
(1.43).
The return on shareholders' equity, based on rolling 12-month earnings, rose to
23 percent (17). The net debt/equity ratio amounted to 23 percent (19) at the
end of the reporting period.
SUMMARY EARNINGS, GROUP
Current period Current
period
July-Sept Jan-Sept Rolling
Full-
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 | year |
| | | | | | months | 2006 |
--------------------------------------------------------------------------------
| Total revenue | 1,002 | 817 | 3,192 | 2,585 | 4,217 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -694 | -592 | -2,175 | -1,771 | -2,849 | -2,445 |
--------------------------------------------------------------------------------
| Participations in | 12 | 13 | 36 | 42 | 40 | 46 |
| earnings of associated | | | | | | |
| companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 320 | 238 | 1,053 | 856 | 1,408 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -25 | -11 | -59 | -44 | -75 | -60 |
--------------------------------------------------------------------------------
| Income after financial | 295 | 227 | 994 | 812 | 1,333 | 1,151 |
| items | | | | | | |
--------------------------------------------------------------------------------
| Income after tax | 223 | 171 | 786 | 615 | 1,082 | 911 |
--------------------------------------------------------------------------------
| Earnings per share, | 1.82 | 1.43 | 6.46 | 5.17 | 8.93 | 7.64 |
| SEK | | | | | | |
--------------------------------------------------------------------------------
| Return on | 23 | 17 | 23 | 17 | 23 | 20 |
| shareholders' equity, | | | | | | |
| % | | | | | | |
--------------------------------------------------------------------------------
DEVELOPMENTS IN OMX'S BUSINESS AREAS DURING THE THIRD QUARTER
NORDIC MARKETPLACES
Within the business area, OMX operates the equity and derivatives exchanges in
Stockholm, Helsinki, Copenhagen and Iceland.
A high level of activity was reported during the summer quarter, exchange
trading increased both compared with the year-earlier period and the preceding
quarter. A number of records were reached during the period. August was the best
ever month in terms of the number of shares traded per day as well as recorded
the highest turnover of short-term fixed-income derivatives cleared through the
Nordic Exchange. The number of new listings was slightly fewer than for the
year-earlier period.
The business area's revenue amounted to SEK 518 m (379) during the quarter. The
37-percent rise in revenue compared with the year-earlier period was mainly due
to increased trading and issuer revenue combined with the acquisition of the
Iceland Stock Exchange. At the same time, the business area's expenses were SEK
249 m (201). The main reasons for the rise in expenses are increased market
activity, the increase in capacity requirements that occurred in the first
quarter and the acquisition of the Iceland Stock Exchange. The decrease compared
with the preceding quarter is primarily due to seasonally low costs during the
summer months. The business area's operating income rose by 49 percent to SEK
272 m (183).
Unlike 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
16): trading revenue, issuers' revenue and other revenue. Trading revenues
amounted to SEK 386 m (267) during the quarter, of which 72 percent was from
trading in cash products, mainly equities, and 28 percent from trading and
clearing in derivatives products. During the quarter, the number of equity
transactions increased to an average of 189,462 (101,133) per day, a rise of 87
percent compared with the year-earlier period. At the same time, the turnover in
equities trading measured in value rose by 54 percent to a daily average of SEK
47,262 m (30,682). The turnover velocity for equities trading rose to 118
percent (107).
The total number of derivatives contracts traded per day averaged 617,941
(503,794), up 23 percent compared with the third quarter of 2006. Of the total
number of contracts, Finnish options contracts on Eurex accounted for 61,442
(57,814) and Nordic derivatives contracts on EDX London for 139,722 (98,578) per
day.
Issuers' revenue increased to SEK 93 m (85) during the third quarter. The rise
was mainly attributable to the higher market capitalization of listed companies
and a larger number of listed companies. At the end of the quarter, the total
number of companies was 621 (599) on the main market and 117 (66) on First
North. During the quarter, 12 (20) new companies joined the marketplace, of
which 7 joined First North. At the same time, 7 (13) companies left the
exchange, one from First North. The total market capitalization of all listed
companies on the main market amounted to SEK 10,063 billion (7,500) at the end
of the third quarter.
Other revenue in the business area was SEK 39 m (27), including revenue of SEK
10 m from the Icelandic Securities Depository.
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.
Increased interest in information services partly driven by the creation of the
Nordic Exchange led to rising revenue in information operations during the third
quarter of 2007. This heightened interest also resulted in the business area
securing new customers both locally in the Nordic region and internationally.
The Broker Services operations were expanded from January 1 through the addition
of the unit for the development of systems for back-office services that was
organized under discontinuing operations. All comparative figures are adjusted
pro forma with respect to this organizational change.
The business area's revenue amounted to SEK 211 m (184) during the quarter.
Increased exchange activities and growing revenue from information services were
the primary drivers behind this increase. The business area's expenses were SEK
139 m (132), an increase that was mainly due to the expanded focus on new
products and services. The business area's operating income rose by 35 percent
to SEK 73 m (54).
In the Information Services & New Markets business area, there are four main
revenue sources (see page 16): information revenue, revenue from Baltic Markets,
revenue from Broker Services and other revenue. Information revenue amounted to
SEK 140 m (119) during the quarter, a rise of 18 percent compared with the
year-earlier period. This revenue is mainly based on the number of real-time
terminals used and reported by end users. These terminals receive their
information directly from OMX or via information vendors. At the end of the
quarter, OMX had 107 (91) information vendors.
Revenue from Baltic Markets increased to SEK 20 m (15) during the quarter,
primarily due to a rise in equity trading. Of the total, SEK 11 m (9) derived
from revenue from the central securities depositories in Tallinn and Riga. The
total equity turnover on the Baltic exchanges increased to SEK 83 m (31) per day
during the quarter. The number of equity transactions grew to 1,460 (852) per
day.
Revenue from Broker Services amounted to SEK 45 m (47) during the third quarter.
The decline in revenue was mainly due to a major customer terminating its
contract during the first quarter of 2007.
Other revenue amounted to SEK 6 m (3) during the quarter.
MARKET TECHNOLOGY
Within the business area, OMX develops and delivers systems solutions, IT
services and advisory services for the global exchange industry.
The demand for OMX's technology products and services continued to strengthen
during the quarter. Market development is being driven by such factors as
intensified competition between marketplaces, consolidation of global exchanges
and continued demands for increased capacity and performance. The development
activities for OMX's next generation of trading systems - Genium - increased
compared to last year.
The business area's revenue amounted to SEK 386 m (302). During the first
quarter of 2007, Genium development was moved within the Group (see page 16,
note 3), which meant that revenue related to Genium represented SEK 75 m (10) of
Market Technology's revenue for the third quarter of 2007, compared with SEK 73
m for the preceding quarter. Market Technology's external revenue amounted to
SEK 201 m (212) for the third quarter of 2007. Internal sales pertaining to the
operation and maintenance of OMX's exchange operations amounted to SEK 110 m
(81).
The business area's expenses totaled SEK 368 m (297). The rise, in both revenue
and expenses compared with the year-earlier period was primarily attributable to
the increased internal sales to and the heightened activity in Nordic
Marketplaces and Information Services & New Markets. The decrease in costs
compared with the preceding quarter is partly due to the low levels of seasonal
activity and also due to the agreements regarding the outsourcing of network
operations and data center management signed with Verizon Business.
The business area's operating income amounted to SEK 26 m (11).
OMX's order intake during the quarter was SEK 348 m (454), of which SEK 77 m
(179) pertained to internal orders. The total order value at the end of the
quarter was SEK 3,137 m (2,860), of which SEK 1,212 m (1,027) is scheduled for
delivery within one year. The total order value includes internal orders of SEK
849 m (1,080), of which SEK 366 m is scheduled for delivery within one year.
Order statistics no longer include operations being discontinued and comparative
figures have been adjusted accordingly.
One of the contracts signed during the third quarter was for the delivery of a
trading system to Bolsa de Valores de Colombia, OMX's first customer in South
America. The contract means that OMX now has customers on all continents of the
world. OMX also received an order for trading systems from Financial & Energy
Exchange (FEX) in Australia. Furthermore, an agreement was reached with DEX, the
new Canadian derivatives market. OMX will provide and maintain DEX's derivatives
trading system. DEX is jointly owned by TSX Group and International Securities
Exchange.
There are three main sources of revenue within the Market Technology business
area (see page 16): license, support and project revenue; revenue from Facility
Management Services; and other revenue. License, support and project revenue
amounted to SEK 238 m (183) during the third quarter, mainly due to revenues
related to the development of Genium. Revenue from Facility Management Services
rose to SEK 135 m (117), mainly due to increased internal revenue from the
exchange operations and new customers.
Other revenue totaled SEK 13 m (2).
SUMMARY REVENUE AND INCOME BY BUSINESS AREA
Current period Current period
July-Sept Jan-Sept Rolling Full
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 | year |
| | | | | | month | 2006 |
| | | | | | s | |
--------------------------------------------------------------------------------
| Revenue | | | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 518 | 379 | 1,584 | 1,304 | 2,058 | 1,778 |
--------------------------------------------------------------------------------
| Information Services & New | 211 | 184 | 620 | 527 | 845 | 752 |
| Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology | 386 | 302 | 1,289 | 910 | 1,679 | 1,300 |
--------------------------------------------------------------------------------
| Operating income | | | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 272 | 183 | 820 | 698 | 1,062 | 940 |
--------------------------------------------------------------------------------
| Information Services & New | 73 | 54 | 195 | 141 | 271 | 217 |
| Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology | 26 | 11 | 160 | 43 | 210 | 93 |
--------------------------------------------------------------------------------
OTHER INFORMATION DURING THE REPORTING PERIOD JANUARY- SEPTEMBER
FINANCIAL POSITION
Total assets at the end of the reporting period amounted to SEK 13,687 m
compared with SEK 11,337 m at the same timepoint in 2006. The increase is mainly
attributable to increased market value of outstanding derivatives positions and
current trading accounts mainly arising in the operations being discontinued.
The adjusted equity/assets ratio, excluding these two items, was 60 percent (60)
(see page 12). OMX had an interest-bearing net debt of SEK 1,121 m (849) at
period-end. The net debt/equity ratio was 23 percent (19) at period-end.
At period-end, interest-bearing financial liabilities amounted to SEK 1,893 m
(1,971), of which SEK 1,050 m (1,413) was long term. The Group's total approved
credit facilities was SEK 3,690 m (3,198), of which SEK 85 m (125) was utilized.
Interest-bearing financial assets totaled SEK 772 m (1,122), of which SEK 21 m
(84) 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 54 m (120) for the reporting period. The
result after financial items was SEK 188 m (loss: 135). Cash and cash
equivalents totaled SEK 1 m (0). Investments amounted to SEK 9 m (11). Findata
AB was acquired in March 2007. Book value amounts to SEK 74 m.
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 past experience and
are reviewed at regular intervals.
RISKS AND UNCERTAINTY FACTORS
Significant risks and uncertainty factors for the Group and the Parent Company
include business risks in the form of clearing risks within the exchange
operations. Within the technology operations, risks occur in providing services
(sales, delivery and implementation, and production phases). In addition,
through its international operations, OMX will be exposed to various types of
financial risks, which are described in detail in OMX's Annual Report (page 78).
Beyond the risks described there, no other significant risks have been added.
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 for damages
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 2007. As a result of this
decision, eSpeed no longer has any claim on OMX.
In May 2007, the Helsinki Appeal Court announced its decision to reject the
claim of 20 banks and brokers claim OMX to repay charged VAT of approximately
EUR 5 m, excluding interest.
A dispute regarding a system delivery is in progress in the Market Technology
business area. In May 2006, OMX requested an arbitration process, expected to be
concluded in first half of 2008.
The Swedish Tax Board ruled in 2004 that OMX Nordic Exchange Stockholm AB
(formerly 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. OMX intends to appeal the ruling. New practice from the Swedish
Supreme Administrative Court and standpoints from the Swedish Tax Board in a
similar case have reduced the likelihood of a successful appeal. OMX is
currently analyzing the consequences of this. If the Swedish Tax Board's opinion
is upheld, OMX estimates that it will give rise to a cost of SEK 85-105 m for
the Group, although with no cash flow effect. It would also increase ongoing
operating expenses by up to SEK 3 m per month.
OMX did not make any provisions for the disputes in progress or changes in
contingent liabilities during the period.
NUMBER OF EMPLOYEES AND CONTRACTED CONSULTANTS
The number of employees and consultants in the Group was 1,658 (1,448) at the
end of the reporting period. The increase in the number of employees and
consultants was primarily due to increased activity within the business areas
Information Services & New Markets and Market Technology. The number of
employees was 1,511 (1,326) at the close of the reporting period, of which 348
(295) were employed in Nordic Marketplaces, 322 (294) in Information Services &
New Markets and 841 (737) in Market Technology. Of the total number of
employees, 64 (92) were on long-term leave, mainly parental leave.
DISCONTINUING OPERATIONS
Discontinuing operations consists of the UK sales operations in securities
administration. Revenues from discontinuing operations amounted to SEK 171 m
(88) in the period January-September, while expenses amounted to SEK 218 m
(114). The operating loss was SEK 47 m (loss: 26). In conjunction with the work
of creating conditions for sustainable profitability in the operations, extra
costs of SEK 20 m were incurred in the second quarter. In the third quarter
similar costs of SEK 10 m were incurred. OMX expects extra costs of SEK 10 m
also in the fourth quarter. 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.
ENHANCED FOCUS ON FIXED INCOME TRADING
It was announced in October 2007, after the end of the reporting period, that
OMX is to group its fixed income-related products and services in an
organizational unit to increase OMX's presence in the expanding fixed income
markets. The new fixed income organization will be established from January 1,
2008.
OMX offers clearing, trading and listing services for fixed income instruments.
The structural growth in the fixed income markets in recent years has heightened
demand for central counterparty clearing and electronic trading, while
transparency requirements are becoming stricter. OMX's products and services
satisfy all these needs and the enhanced focus will further improve the
conditions for growth.
In 2006, OMX revenues from fixed income-related products and services were
approximately SEK 250 m.
REDUCTION IN FEES
OMX's strategy is that the Nordic Exchange will be one of Europe's leading
exchanges; and part of this strategy is to have competitive fees. In April 2007,
fees were reduced by approximately 50 percent for reporting transactions in
Stockholm, Helsinki and Copenhagen.
In September 2007, it was announced that fees for trades reported to these
exchanges were to be reduced by approximately 50 percent more from November 1,
2007. Based on trading activity during the 12 months preceding this
announcement, the fee reduction would have a negative effect on OMX revenues by
approximately SEK 25 m, on a yearly basis.
The fee reductions are one step in the Nordic Exchange's offering of products
for trade reporting in accordance with the EU regulatory initiative MiFID
(Markets in Financial Instruments Directive). In addition to the fee cut, OMX
will simplify the reporting facility and extend its offer for trade reporting to
include securities from all over the European Union.
In 2006, price adjustments were made primarily in derivatives and information
services.
OUTSOURCING NETWORKS AND DATA CENTER MANAGEMENT
In August 2007, OMX announced that discussions had been initiated with an
external partner regarding the outsourcing of external network operations and
data center management. It was announced in September 2007 that an outsourcing
agreement had been concluded with Verizon Business. The seven-year contract
applies from October 1, 2007 and had to a certain degree a positive impact on
OMX operating income already in the third quarter. The agreement is part of
OMX's efforts to increase profitability in the Market Technology business area.
Information regarding the proposed combination and public tender offers to the
OMX shareholders, etc.
In a joint press release published on May 25, 2007, the Boards of Directors of
OMX and The NASDAQ Stock Market, Inc announced that they had entered into a
transaction agreement to combine the two companies through a public tender offer
from NASDAQ to the OMX shareholders. The public tender offer was presented in
the same press release. The consideration offered, comprising a combination of
cash and NASDAQ shares, is equivalent to 0.502 new NASDAQ shares plus SEK 94.3
in cash for each OMX share. Based on NASDAQ's closing price on May 23, the offer
values OMX at around SEK 208 per share.
In conjunction with ongoing activities relating to the combination, OMX has
incurred costs, of which approximately SEK 1 million is reported under other
external expenses and approximately SEK 64 million has been capitalized.
On August 9, 2007, Borse Dubai Limited announced that it had purchased 4.9
percent of the shares in OMX for SEK 230 per share and that Borse Dubai had
entered into an option agreement to acquire a further 22.5 percent shareholding
for SEK 230 per share.
On August 17, 2007, Borse Dubai announced a competing tender offer to OMX
shareholders. The offer corresponded to a cash payment of SEK 230 for each OMX
share.
In a press release published on the same day, August 17, 2007, the Board of
Directors of OMX announced that it had noted the offer from Borse Dubai and that
the Board would consider the offer as compared to the NASDAQ offer and would
update shareholders in due course.
On September 18, 2007, Borse Dubai applied for an ownership assessment regarding
OMX.
On September 20, 2007, NASDAQ and Borse Dubai announced that they had reached an
agreement entailing that Borse Dubai's offer of SEK 230 in cash for each OMX
share was to remain, and that a series of transactions were to be subsequently
carried out that would involve NASDAQ purchasing all of Borse Dubai's shares in
OMX and that Borse Dubai would be the owner of 19.9 percent of the shares of the
combined NASDAQ OMX.
In a press release published on the same day, September 20, 2007, the Board of
Directors of OMX stated that it had noted the joint announcement by NASDAQ and
Borse Dubai and that the Board would assess the implications of the structure
for shareholders and would update OMX shareholders in due course. In a press
release published on the same day, September 20, 2007, Qatar Investment
Authority announced that it was encouraging OMX shareholders not to act on the
joint offer from NASDAQ/Borse Dubai. Furthermore, it was announced that Qatar
Investment Authority was in the process of evaluating the situation regarding
OMX and that further information would be provided in due course.
In a disclosure statement published by the Swedish Financial Supervisory
Authority (Sw. Finansinspektionen) on September 21, 2007, Qatar Holding LLC, a
wholly owned subsidiary of Qatar Invest ment Authority, announced that it had
acquired 9.98 percent of the shares in OMX.
On September 26, 2007, NASDAQ and Borse Dubai announced that Borse Dubai had
raised its tender offer to SEK 265 in cash for each OMX share and changed the
shareholder acceptance level condition from more than 90 percent to more than 50
percent. It was also announced that irrevocable undertakings had been secured
from shareholders representing 18.5 percent of the shares in OMX and that,
accordingly, 47.6 percent of the shares in OMX were now under Borse Dubai's
control through direct ownership, option agreements and irrevocable
undertakings.
In a press release published on the same day, September 26, 2007, the Board of
OMX stated that the joint announcement by NASDAQ and Borse Dubai, entailing that
Borse Dubai is to increase its cash offer to SEK 265 per share, was to be taken
into consideration in the Board's assessment of the implications of the
structure proposed by NASDAQ and Borse Dubai in their offer on September 20,
2007.
On September 27, 2007, the Swedish FSA announced that after completing an
ownership assessment, NASDAQ had been approved as a shareholder of OMX.
ACQUISITION OF THE ARMENIAN STOCK EXCHANGE
At the end of November 2006, OMX announced that it had begun to investigate the
possibility of more extensive business opportunities in Eastern Europe. On April
27, 2007, it was announced that OMX had signed a Declaration of Intent with the
Armenian central bank and the Armenian government concerning the acquisition of
the Armenian Stock Exchange and the Armenian central securities depository. The
final agreement is subject to certain conditions being met and is conditional on
the definitive approval of the relevant Armenian government agencies and the
Armenian central bank.
LAUNCH OF GENIUM
Genium - OMX's new technology for trading, post-trade and information services -
was launched in February 2007. 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 indices.
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 (see acquisition calculation on page 18). 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, a stock exchange of international
standards in St. Petersburg. IXSP will offer Russian companies access to
international capital without having to seek listings on exchanges outside
Russia. OMX will deliver the platform for trading and market data dissemination,
and provide its expertise in marketplace services. The parties will each own one
third of the new company.
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 share match program 2007 has not been, and will not be,
initiated, due to the fact that OMX has been subject to public tender offers
since May 2007.
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, which is reported as a shareholders' equity instrument in accordance
with IAS 32. The cost of the program for the period was SEK 7 m, including
social security expenses, and the cost of the program's entire term is estimated
at SEK 20 m. If a public tender is executed, the share match program 2006 will
mature and be redeemed on the basis of the terms and conditions of the program.
DIVIDEND
OMX's Annual General Meeting on April 12, 2007 approved the distribution of a
dividend of SEK 6.50 to shareholders, comprising of 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.
AUTHORIZATION ON RAISING CERTAIN LOANS
OMX's Annual General Meeting on April 12, 2007 resolved to authorize the Board
to take the decision to raise loans for which the interest or the amount by
which repayment occurs 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 FOURTH QUARTER
Revenues from OMX's exchange operations are largely dependent upon market trends
and trading volumes on the Nordic Exchange. Revenues in the Market Technology
business area during the fourth quarter are expected to be somewhat higher than
in the second quarter, which is a better quarter for comparison than the third
quarter that includes the vacation months of July and August. The Group's
expenses during the fourth quarter are expected to be in line with the costs for
the second quarter. Given current interest rate levels, OMX's net financial
income is expected to be a negative amount of approximately SEK 25 m for the
fourth quarter.
OMX AB (publ)
Stockholm, October 24, 2007
Urban Bäckström (Chairman)
Bengt Halse (Board member)
Birgitta Klasén (Board member)
Hans Munk Nielsen (Board member)
Birgitta Kantola (Board member)
Markku Pohjola (Board member)
Lars Wedenborn (Board member)
Magnus Böcker (President and CEO)
This report has not been subject to a comprehensive auditor's examination.
OMX GROUP, CONSOLIDATED
INCOME STATEMENT
Current period July - Sept
--------- 2007 --------- --------- 2006 ---------
--------------------------------------------------------------------------------
| SEK m | Conti | Opera | Total | Conti | Opera | Total |
| REVENUE | nuin | tion | OMX | n | tions | OMX |
| | g | s | | uing | being | |
| | opera | bein | | opera | disco | |
| | tion | g | | t | n | |
| | s | disc | | ions | tinu | |
| | | on | | | ed 4) | |
| | | ti | | | | |
| | | nued | | | | |
--------------------------------------------------------------------------------
| Net sales | 921 | 60 | 981 | 766 | 33 | 799 |
--------------------------------------------------------------------------------
| Own work | 21 | - | 21 | 18 | - | 18 |
| capitalized 1) | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Total revenue | 942 | 60 | 1,002 | 784 | 33 | 817 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | |
--------------------------------------------------------------------------------
| Premises | -50 | -2 | -52 | -49 | -1 | -50 |
--------------------------------------------------------------------------------
| Marketing expenses | -10 | - | -10 | -9 | - | -9 |
--------------------------------------------------------------------------------
| Consultancy | -85 | -2 | -87 | -76 | - | -76 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -45 | -4 | -49 | -77 | -4 | -81 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external | -53 | -30 | -83 | -32 | -14 | -46 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Personnel expenses | -315 | -32 | -347 | -250 | -22 | -272 |
--------------------------------------------------------------------------------
| Depreciation and | -64 | -2 | -66 | -56 | -2 | -58 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -622 | -72 | -694 | -549 | -43 | -592 |
--------------------------------------------------------------------------------
| Participation in | 12 | - | 12 | 13 | - | 13 |
| earnings of | | | | | | |
| associated | | | | | | |
| companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 332 | -12 | 320 | 248 | -10 | 238 |
--------------------------------------------------------------------------------
| Financial items | -21 | -4 | -25 | -8 | -3 | -11 |
--------------------------------------------------------------------------------
| Income/loss after | 311 | -16 | 295 | 240 | -13 | 227 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | -72 | 0 | -72 | -56 | 0 | -56 |
--------------------------------------------------------------------------------
| Net income/loss for | 239 | -16 | 223 | 184 | -13 | 171 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| of which | 236 | -16 | 220 | 183 | -13 | 170 |
| attributable to | | | | | | |
| shareholders in OMX | | | | | | |
| AB | | | | | | |
--------------------------------------------------------------------------------
| of which | 3 | - | 3 | 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, | 1.96 | | 1.82 | 1.54 | | 1.43 |
| SEK 3) | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 1.96 | | 1.82 | 1.54 | | 1.43 |
| 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 met
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) For the period January-September 2007 Other revenue refers to earnings
of SEK 101 m attributable to the sale of shares in ORC Software. For the period
January-September 2006 and January-December 2006 the item refers to earnings of
SEK 22 m attributable to the sale of shares in NOS ASA. and for January-December
also to earnings of SEK 83 m attributable to the sale of shares in VPC AB.
3) Earnings per share are calculated on the basis of the weighted average
number of shares during the period and 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.
Interim period Jan - Sept
--------- 2007 --------- --------- 2006 ---------
--------------------------------------------------------------------------------
| REVENUE | Conti | Opera | Total | Conti | Opera | Total |
| | nuin | tion | OMX | n | tions | OMX |
| | g | s | | uing | being | |
| | opera | bein | | opera | disco | |
| | tion | g | | t | n | |
| | s | disc | | ions | tinu | |
| | | on | | | ed 4) | |
| | | ti | | | | |
| | | nued | | | | |
--------------------------------------------------------------------------------
| Net sales | 2,820 | 171 | 2,991 | 2,409 | 88 | 2,497 |
--------------------------------------------------------------------------------
| Own work | 100 | - | 100 | 66 | - | 66 |
| capitalized 1) | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 101 | - | 101 | 22 | - | 22 |
--------------------------------------------------------------------------------
| Total revenue | 3,021 | 171 | 3,192 | 2,497 | 88 | 2,585 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | |
--------------------------------------------------------------------------------
| Premises | -138 | -5 | -143 | -150 | -4 | -154 |
--------------------------------------------------------------------------------
| Marketing expenses | -41 | - | -41 | -32 | - | -32 |
--------------------------------------------------------------------------------
| Consultancy | -268 | -6 | -274 | -226 | - | -226 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -162 | -8 | -170 | -179 | -14 | -193 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external | -174 | -108 | -282 | -110 | -36 | -146 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Personnel expenses | -978 | -85 | -1,063 | -798 | -54 | -852 |
--------------------------------------------------------------------------------
| Depreciation and | -196 | -6 | -202 | -162 | -6 | -168 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -1,95 | -218 | -2,175 | -1,657 | -114 | -1,771 |
| | 7 | | | | | |
--------------------------------------------------------------------------------
| Participation in | 36 | - | 36 | 42 | - | 42 |
| earnings of | | | | | | |
| associated | | | | | | |
| companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 1,100 | -47 | 1,053 | 882 | -26 | 856 |
--------------------------------------------------------------------------------
| Financial items | -51 | -8 | -59 | -37 | -7 | -44 |
--------------------------------------------------------------------------------
| Income/loss after | 1,049 | -55 | 994 | 845 | -33 | 812 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | -208 | 0 | -208 | -197 | 0 | -197 |
--------------------------------------------------------------------------------
| Net income/loss for | 841 | -55 | 786 | 648 | -33 | 615 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| of which | 834 | -55 | 779 | 645 | -33 | 612 |
| attributable to | | | | | | |
| shareholders in OMX | | | | | | |
| AB | | | | | | |
--------------------------------------------------------------------------------
| of which | 7 | - | 7 | 3 | - | 3 |
| 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, | 6.91 | | 6.46 | 5.44 | | 5.17 |
| SEK 3) | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 6.91 | | 6.46 | 5.44 | | 5.17 |
| SEK after full | | | | | | |
| conversion 3) | | | | | | |
--------------------------------------------------------------------------------
---Rolling 12 months--- ---Full-year 2006---
--------------------------------------------------------------------------------
| REVENUE | Conti | Opera | Total | Conti | Opera | Total |
| | nuing | tion | OMX | n | tions | OMX |
| | opera | s | | uing | being | |
| | tions | bein | | opera | disco | |
| | | g | | t | n | |
| | | disc | | ions | tinu | |
| | | on | | | ed 4) | |
| | | ti | | | | |
| | | nued | | | | |
--------------------------------------------------------------------------------
| Net sales | 3,724 | 207 | 3,931 | 3,313 | 124 | 3,437 |
--------------------------------------------------------------------------------
| Own work | 102 | - | 102 | 68 | - | 68 |
| capitalized 1) | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 184 | - | 184 | 105 | - | 105 |
--------------------------------------------------------------------------------
| Total revenue | 4,010 | 207 | 4,217 | 3,486 | 124 | 3,610 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | |
--------------------------------------------------------------------------------
| Premises | -192 | -7 | -199 | -204 | -6 | -210 |
--------------------------------------------------------------------------------
| Marketing expenses | -72 | - | -72 | -63 | - | -63 |
--------------------------------------------------------------------------------
| Consultancy | -352 | -6 | -358 | -310 | - | -310 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -222 | -10 | -232 | -239 | -16 | -255 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external | -231 | -128 | -359 | -167 | -56 | -223 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Personnel expenses | -1,263 | -108 | -1,371 | -1,083 | -77 | -1,160 |
--------------------------------------------------------------------------------
| Depreciation and | -250 | -8 | -258 | -216 | -8 | -224 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -2,582 | -267 | -2,849 | -2,282 | -163 | -2,445 |
--------------------------------------------------------------------------------
| Participation in | 40, | - | 40 | 46 | - | 46 |
| earnings of | | | | | | |
| associated | | | | | | |
| companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 1,468 | -60 | 1,408 | 1,250 | -39 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -67 | -8 | -75 | -53 | -7 | -60 |
--------------------------------------------------------------------------------
| Income/loss after | 1,401 | -68 | 1,333 | 1,197 | -46 | 1,151 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | -251 | 0 | -251 | -240 | 0 | -240 |
--------------------------------------------------------------------------------
| Net income/loss for | 1,150 | -68 | 1,082 | 957 | -46 | 911 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| of which | 1,142 | -68 | 1,074 | 953 | -46 | 907 |
| attributable to | | | | | | |
| shareholders in OMX | | | | | | |
| AB | | | | | | |
--------------------------------------------------------------------------------
| of which | 8 | - | 8 | 4 | - | 4 |
| attributable to | | | | | | |
| minority interests | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 120.296 | | | 118.671 |
| shares, millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares at | | | 120.640 | | | 120.640 |
| period end, | | | | | | |
| millions | | | | | | |
--------------------------------------------------------------------------------
| Average number of | | | 120.296 | | | 118.886 |
| shares after full | | | | | | |
| conversion, | | | | | | |
| millions | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | 120.640 |
| after full | | | | | | |
| conversion at | | | | | | |
| period end, | | | | | | |
| millions | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 9.49 | | 8.93 | 8.03 | | 7.64 |
| SEK 3) | | | | | | |
--------------------------------------------------------------------------------
| Earnings per share, | 9.49 | | 8.93 | 8.03 | | 7.64 |
| SEK after full | | | | | | |
| conversion 3) | | | | | | |
--------------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
Total revenue amounted to SEK 3,192 m (2,585) in the period January - September.
Consolidated net sales amounted to SEK 2,991 m (2,497). Own work capitalized
amounted to SEK 100 m (66) 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 2,175 m (1,771) during the reporting
period. The increase in costs was primarily due to increased consultancy and
personnel expenses as a consequence of increased market activity, increased
development of the next generation of trading systems and increased other
external expenses in discontinuing operations.
The Group's share in the earnings of associated companies amounted to SEK 36 m
(42) and is attributable to EDX London, Orc Software, NLK and the Lithuanian
securities depository, CSDL. In the year-earlier period, the earnings from
associated companies also included a result of SEK 28 m from the then associated
company VPC AB. The underlying increase is mainly attributable to improved
earnings for Orc Software and EDX London, and, during the second quarter, SEK 7
m from a dissolved provision at EDX London.
Net financial items for the Group amounted to an expense of SEK 59 m (expense:
44), including a dividend of SEK 17 m from Oslo Stock Exchange, a decline that
is mainly due to increased borrowing, rising market interest rates and increased
costs for financial guarantees in conjunction with increased volumes in the
clearing operations. Tax expenses for the reporting period amounted to SEK 208 m
(197), corresponding to a tax rate of 21 (24) percent. SEK 101 m from the sale
of shares in Orc Software in the second quarter is not liable to tax. Currency
effects have had a minimal impact on the Group's operating revenue and operating
income during the reporting period.
BALANCE SHEET
--------------------------------------------------------------------------------
| SEK m | September | September | Dec |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Goodwill | 3,247 | 3,071 | 3,140 |
--------------------------------------------------------------------------------
| Other intangible fixed assets | 1,474 | 1,056 | 1,210 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 295 | 306 | 321 |
--------------------------------------------------------------------------------
| Financial fixed assets, | 788 | 822 | 699 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Financial fixed assets, interest-bearing | 21 | 84 | 21 |
--------------------------------------------------------------------------------
| Total fixed assets | 5,825 | 5,339 | 5,391 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 4,803 | 3,250 | 4,401 |
| positions 3) | | | |
--------------------------------------------------------------------------------
| Current receivables 1) 4) | 2,262 | 1,663 | 1,738 |
--------------------------------------------------------------------------------
| Financial assets available for sale | 487 | 789 | 518 |
--------------------------------------------------------------------------------
| Liquid assets | 243 | 230 | 410 |
--------------------------------------------------------------------------------
| Assets held for sale 2) | 67 | 66 | 70 |
--------------------------------------------------------------------------------
| Total current assets | 7,862 | 5,998 | 7,137 |
--------------------------------------------------------------------------------
| Total assets | 13,687 | 11,337 | 12,528 |
--------------------------------------------------------------------------------
| Shareholders' equity | 4,826 | 4,501 | 4,614 |
--------------------------------------------------------------------------------
| Long-term liabilities, | 305 | 298 | 282 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Long-term liabilities, interest-bearing | 1,358 | 1,413 | 1,361 |
--------------------------------------------------------------------------------
| Total long-term liabilities | 1,663 | 1,711 | 1,643 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 4,803 | 3,250 | 4,401 |
| positions 3) | | | |
--------------------------------------------------------------------------------
| Current liabilities, non-interest-bearing | 1,860 | 1,317 | 1,434 |
| 4) | | | |
--------------------------------------------------------------------------------
| Current liabilities, interest-bearing | 535 | 558 | 436 |
--------------------------------------------------------------------------------
| Total current liabilities | 7,198 | 5,125 | 6,271 |
--------------------------------------------------------------------------------
| Total shareholders' equity and | 13,687 | 11,337 | 12,528 |
| liabilities | | | |
--------------------------------------------------------------------------------
In addition to assets and liabilities reported in the balance sheet, OMX has
deposits on a client funds account that totaled SEK 2,848 m at September 30,
2007, SEK 2,809 m at September 30, 2006 and SEK 2,604 m at December 31, 2006.
1) Of which interest-bearing receivables amount to SEK 21 m at September 30,
2007, SEK 19 m at September 30, 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) Through its clearing operations in the derivatives markets, Nordic
Marketplaces is the formal counterparty in all derivatives positions traded via
the exchanges. However, the exchanges do not utilize the derivatives for purpose
of conducting their own trading, instead these derivatives are to be seen as a
method of documenting the counterparty guarantees established in the clearing
operations.
4) Includes current trading accounts in the amount of SEK 838 m at September 30,
2007, SEK 582 m at September 30, 2006 and SEK 650 m at December 31, 2006, mainly
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 3,277 m (3,102) at period-end, including
assets held for sale of SEK 30 m (31). Consolidated goodwill pertains primarily
to the Nordic Marketplaces 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 1,503 m (1,083), 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. The increase in intangible assets is partly attributable to the
acquisitions of Findata and EV (The Iceland Stock Exchange and CSD). 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 47 m (153).
Provisions were utilized in an amount of SEK 19 m (39) during the period.
The Group's investments in other intangible assets during the period were SEK
360 m (176). A major part of the investments are within the technology
operations, partly pertaining to a license from Cicada for technology pertaining
to 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 49
m (34).
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 (see note 3 in
the table above).
The market value of OMX's remaining holding in the associated company Orc
Software (3.8 million shares) at period-end was SEK 645 m (308), while the
carrying amount was SEK 77 m (70).
CHANGE IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| SEK m | Jan-Sept | Jan-Sept | Full-year |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Shareholders' equity - opening | 4,614 | 4,749 | 4,749 |
| balance | | | |
--------------------------------------------------------------------------------
| Minority interests | 1 | -1 | -1 |
--------------------------------------------------------------------------------
| New issue | - | - | 269 |
--------------------------------------------------------------------------------
| Dividend to shareholders 1) | -781 | -765 | -1,120 |
--------------------------------------------------------------------------------
| Share swap for share-investment | - | -8 | -8 |
| program | | | |
--------------------------------------------------------------------------------
| Share-investment program | 2 | 1 | 2 |
--------------------------------------------------------------------------------
| Cash-flow hedging | 13 | -14 | -18 |
--------------------------------------------------------------------------------
| Translation differences | 71 | -68 | -173 |
--------------------------------------------------------------------------------
| Reassessments reported against | 120 | -12 | -12 |
| shareholders' equity | | | |
--------------------------------------------------------------------------------
| Changes in shareholders' equity of | - | 4 | 15 |
| associated company | | | |
--------------------------------------------------------------------------------
| Net income in reporting period 2) | 786 | 615 | 911 |
--------------------------------------------------------------------------------
| Shareholders' equity - closing | 4,826 | 4,501 | 4,614 |
| balance | | | |
--------------------------------------------------------------------------------
1) For the period January-June 2007 total dividends to shareholders of SEK 784 m
has been paid, of which OMX received SEK 3 m (see text: Comments to cash flow
statement).
2) Of which, the minority share was SEK 7 m for January-September 2007, SEK 3 m
for January-September 2006 and SEK 4 m for January-December 2006.
CASH FLOW STATEMENT Current period Current period
July-Sept Jan-Sept Rolling Full-
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 | year |
| | | | | | months | 2006 |
--------------------------------------------------------------------------------
| Cash flow from current | | | | | | |
| operations | | | | | | |
--------------------------------------------------------------------------------
| before changes in working | 313 | 240 | 959 | 760 | 1,204 | 1,002 |
| capital | | | | | | |
--------------------------------------------------------------------------------
| Change in working capital | -132 | -103 | -108 | -38 | -50 | 30 |
--------------------------------------------------------------------------------
| Cash flow from current | 181 | 137 | 851 | 722 | 1,154 | 1,032 |
| operations | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | -162 | -159 | -350 | -711 | 84 | -284 |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Dividend to shareholders | - | - | -781 | -765 | -1,136 | -1,120 |
--------------------------------------------------------------------------------
| Cash flow from financing | -50 | -220 | 114 | 69 | -88 | -133 |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Change in liquid assets | -31 | -242 | -166 | -685 | 14 | -505 |
--------------------------------------------------------------------------------
| Liquid assets - opening | 275 | 472 | 410 | 915 | 230 | 915 |
| balance1 ) | | | | | | |
--------------------------------------------------------------------------------
| Liquid assets - closing | 244 | 230 | 244 | 230 | 244 | 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 4,826 m (4,501), of which the minority
share was 23 (16) 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 SEK 781 m in 2007.
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.
During the report period January - September, investments in intangible assets
affecting the cash flow amounted to SEK 346 m (322) and investments in tangible
assets affecting the cash flow amounted to SEK 49 (34).
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. Cash flow from investing activities also includes the cash flow
effect from the divestment of shares in Orc Software and changes in financial
investments with a term of more than three months in the amount of SEK 31 m
(negative: 461) which have been transferred from cash and cash equivalents.
During the period dividends totaling SEK 784 m were paid to the shareholders. Of
this amount, OMX received SEK 3 m through the third party share swap-agreement
that is used to hedge the 2006 Share Match Program.
PARENT COMPANY
Income statement
Current period Current period
July-Sept Jan-Sept Rolling Jan
--------------------------------------------------------------------------------
| Mkr | 2007 | 2006 | 2007 | 2006 | 12 | -Dec |
| | | | | | months | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| REVENUE | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 21 | 26 | 54 | 98 | 83 | 127 |
--------------------------------------------------------------------------------
| Other revenue 1) | - | - | - | 22 | - | 22 |
--------------------------------------------------------------------------------
| Total revenue | 21 | 26 | 54 | 120 | 83 | 149 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| Premises | -22 | -21 | -65 | -72 | -87 | -94 |
--------------------------------------------------------------------------------
| Marketing expenses | -2 | -2 | -13 | -13 | -29 | -29 |
--------------------------------------------------------------------------------
| Consultancy expenses | -8 | -6 | -24 | -25 | -32 | -33 |
--------------------------------------------------------------------------------
| Operations and | -5 | -1 | -13 | -2 | -25 | -14 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external expenses | -3 | -4 | -13 | -5 | -37 | -29 |
--------------------------------------------------------------------------------
| Personnel expenses | -5 | -10 | -37 | -26 | -61 | -50 |
--------------------------------------------------------------------------------
| Depreciation and | -8 | -7 | -22 | -21 | -29 | -28 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -53 | -51 | -187 | -164 | -300 | -277 |
--------------------------------------------------------------------------------
| Operating income | -32 | -30 | -133 | -66 | -195 | -128 |
--------------------------------------------------------------------------------
| Financial items | -41 | -30 | 321 | -69 | 377 | -13 |
--------------------------------------------------------------------------------
| Income/loss after | -73 | -60 | 188 | -135 | 182 | -141 |
| financial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | 20 | 6 | 77 | 47 | 95 | 65 |
--------------------------------------------------------------------------------
| Net income/loss for the | 53 | 54 | 265 | -88 | 277 | -76 |
| period | | | | | | |
--------------------------------------------------------------------------------
1)Other revenue refers to earnings of SEK 22 m attributable to the sale of
shares in NOS ASA during the periods January - September 2006 and January -
December 2006.
NOTES TO THE INCOME STATEMENT
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 54 m (120) for the reporting period. The
result after financial items was SEK 188 m (loss: 135). The increase from the
same period in 2006 is mainly attributable to dividends from subsidiaries
accounted for in the financial items.
BALANCE SHEET
--------------------------------------------------------------------------------
| SEK m | September | September | December |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Intangible fixed assets | 15 | 13 | 16 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 79 | 95 | 90 |
--------------------------------------------------------------------------------
| Financial fixed assets, | 8,392 | 7,914 | 8,165 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Financial fixed assets, | 10 | 4 | 3 |
| interest-bearing | | | |
--------------------------------------------------------------------------------
| Total fixed assets | 8,496 | 8,026 | 8,274 |
--------------------------------------------------------------------------------
| Receivables from Group companies | 3 | 24 | 404 |
--------------------------------------------------------------------------------
| Other short term receivables | 128 | 65 | 43 |
--------------------------------------------------------------------------------
| Liquid assets | 1 | 0 | 1 |
--------------------------------------------------------------------------------
| Total current assets | 132 | 89 | 448 |
--------------------------------------------------------------------------------
| Total assets | 8,628 | 8,115 | 8,722 |
--------------------------------------------------------------------------------
| Shareholders' equity | 4,132 | 4,360 | 4,603 |
--------------------------------------------------------------------------------
| Long-term liabilities, | 1,358 | 1,412 | 1,360 |
| interest-bearing | | | |
--------------------------------------------------------------------------------
| Long-term liabilities, | 25 | 22 | 15 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Total long-term liabilities | 1,383 | 1,434 | 1,375 |
--------------------------------------------------------------------------------
| Liabilities to Group companies | 2,468 | 1,698 | 2,280 |
--------------------------------------------------------------------------------
| Current liabilities, | 110 | 76 | 66 |
| non-interest-bearing | | | |
--------------------------------------------------------------------------------
| Current liabilities, interest-bearing | 535 | 547 | 398 |
--------------------------------------------------------------------------------
| Total current liabilities | 3,113 | 2,321 | 2,744 |
--------------------------------------------------------------------------------
| Total shareholders' equity and | 8,628 | 8,115 | 8,722 |
| liabilities | | | |
--------------------------------------------------------------------------------
NOTES TO THE BALANCE SHEET
Cash and cash equivalents totaled SEK 1 m (0). Investments amounted to SEK 9 m
(11). Findata AB was acquired in March 2007. Book value amounts to SEK 74 m.
REVENUES, EXPENSES AND OPERATING INCOME BY BUSINESS AREA
Current period Current period Rolling Jan
July-Sept Jan-Sept 12 -Dec
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | | | | | | |
--------------------------------------------------------------------------------
| Trading revenue | 386 | 267 | 1,191 | 958 | 1,519 | 1,286 |
--------------------------------------------------------------------------------
| Issuers' revenue | 93 | 85 | 286 | 255 | 375 | 344 |
--------------------------------------------------------------------------------
| Other revenue | 39 | 27 | 107 | 91 | 164 | 148 |
--------------------------------------------------------------------------------
| Total revenues | 518 | 379 | 1,584 | 1,304 | 2,058 | 1,778 |
--------------------------------------------------------------------------------
| Total expenses | -249 | -201 | -778 | -619 | -1,010 | -851 |
--------------------------------------------------------------------------------
| Participation in | 3 | 5 | 14 | 13 | 14 | 13 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 272 | 183 | 820 | 698 | 1,062 | 940 |
--------------------------------------------------------------------------------
| Operating margin, % | 53 | 48 | 52 | 54 | 52 | 53 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Information Services & | | | | | | |
| New Markets | | | | | | |
--------------------------------------------------------------------------------
| Information sales | 140 | 119 | 408 | 320 | 529 | 441 |
--------------------------------------------------------------------------------
| Revenues from Baltic | 20 | 15 | 59 | 45 | 82 | 68 |
| Markets | | | | | | |
| 1) | | | | | | |
--------------------------------------------------------------------------------
| Revenue from Broker | 45 | 47 | 138 | 147 | 196 | 205 |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Other revenue | 6 | 3 | 15 | 15 | 38 | 38 |
--------------------------------------------------------------------------------
| Total revenue | 211 | 184 | 620 | 527 | 845 | 752 |
--------------------------------------------------------------------------------
| Total expenses | -139 | -132 | -427 | -393 | -576 | -542 |
--------------------------------------------------------------------------------
| Participation in | 1 | 2 | 2 | 7 | 2 | 7 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 73 | 54 | 195 | 141 | 271 | 217 |
--------------------------------------------------------------------------------
| Operating margin, % | 35 | 29 | 31 | 27 | 32 | 29 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market Technology | | | | | | |
--------------------------------------------------------------------------------
| License-, support- | 238 | 183 | 781 | 551 | 1,015 | 785 |
| and project revenue | | | | | | |
--------------------------------------------------------------------------------
| Facility Management | 135 | 117 | 393 | 321 | 504 | 432 |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Other revenue | 13 | 2 | 115 | 39 | 159 | 83 |
--------------------------------------------------------------------------------
| Total revenue | 386 | 302 | 1,289 | 910 | 1,679 | 1,300 |
--------------------------------------------------------------------------------
| Total expenses | -368 | -297 | -1,149 | -889 | -1,493 | -1,233 |
--------------------------------------------------------------------------------
| Participation in | 8 | 6 | 20 | 22 | 24 | 26 |
| earnings | | | | | | |
| of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 26 | 11 | 160 | 43 | 210 | 93 |
--------------------------------------------------------------------------------
| Operating margin, % | 7 | 4 | 12 | 5 | 13 | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operations being | | | | | | |
| discontinued 2) | | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 60 | 33 | 171 | 88 | 207 | 124 |
--------------------------------------------------------------------------------
| Total expenses | -72 | -43 | -218 | -114 | -267 | -163 |
--------------------------------------------------------------------------------
| Operating income | -12 | -10 | -47 | -26 | -60 | -39 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group eliminations | 173 | 81 | 472 | 244 | 572 | 344 |
| - | | | | | | |
| revenues 3) | | | | | | |
--------------------------------------------------------------------------------
| Group eliminations | 134 | 81 | 397 | 244 | 497 | 344 |
| - | | | | | | |
| costs 3) | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Group | | | | | | |
--------------------------------------------------------------------------------
| Revenue | 1,002 | 817 | 3,192 | 2,585 | 4,217 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -694 | -592 | -2,175 | -1,771 | -2,849 | -2,445 |
--------------------------------------------------------------------------------
| Participation in | 12 | 13 | 36 | 42 | 40 | 46 |
| earnings of associated | | | | | | |
| companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 320 | 238 | 1,053 | 856 | 1,408 | 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'S BUSINESS AREAS
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 third quarter, 72 percent was from spot trading
(mainly equities) and 28 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 10.3 m, calculated on the basis of trading during the third
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 0.8 m,
calculated on the basis of trading during the third 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 7.6 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, revenues
from the CSD on Iceland and web related revenues from Company Services. Other
revenues can also include 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
Revenues 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 could also
include capital gains from the sale of operations.
MARKET TECHNOLOGY
LICENSE, SUPPORT AND PROJECT REVENUE
License, support and project revenues 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
Through Facility Management Services, OMX assumes 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 exchange
rate differences. Other revenues could also include capital gains from the sale
of operations.
INVESTMENTS Current period Current period Rolling Full-
July-Sept Jan-Sept 12 year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | months | 2006 |
--------------------------------------------------------------------------------
| Goodwill | - | - | 47 | 190 | 183 | 326 |
--------------------------------------------------------------------------------
| Other intangible | 91 | 46 | 360 | 176 | 413 | 229 |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Tangible assets | 14 | 8 | 49 | 34 | 92 | 77 |
--------------------------------------------------------------------------------
| Assets acquired | - | - | 30 | 75 | 165 | 210 |
| through | | | | | | |
| acquisitions | | | | | | |
| 1) | | | | | | |
--------------------------------------------------------------------------------
| Total | 105 | 54 | 486 | 475 | 853 | 842 |
--------------------------------------------------------------------------------
1) Concerns other intangible assets.
INVESTMENTS IN R&D Current period Current period Rolling Full-
SEK m (of which expensed) July-Sept Jan-Sept 12 year
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2007 | 2006 | months | 2006 |
--------------------------------------------------------------------------------
| Nordic | 40(1) | 2(2) | 144(5) | 10(4) | 151(9) | 17(8) |
| Marketplaces 1) | | | | | | |
--------------------------------------------------------------------------------
| Information | 33(3) | 6(0) | 71(6) | 13(1) | 75 (7) | 17(2) |
| Services & New | | | | | | |
| Markets 2) | | | | | | |
--------------------------------------------------------------------------------
| Market Technology | 13(3) | 34(0) | 86(8) | 129(12) | 131(9) | 174(13) |
| 1) | | | | | | |
--------------------------------------------------------------------------------
| Total | 86 (7) | 42(2) | 301(19) | 152(17) | 357(25) | 208(23) |
--------------------------------------------------------------------------------
1) The development of Genium takes place within the Market Technology business
area but it is initially being developed for OMX's Nordic Exchange. Hence, the
asset generated was transferred to the Nordic Marketplaces business area on
March 31, 2007. This has led to investments in R&D increasing in Nordic
Marketplaces and decreasing in Market Technology.
2) For the periods July-September and January-September 2007, investments in R&D
within the Information Services & New Markets business area increased compared
to the same period last year, mainly due to increased development within the
business units Information Services and Broker Services.
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 - EV
--------------------------------------------------------------------------------
| | 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 94 m and in net income in the amount of SEK 37 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 - FINDATA
--------------------------------------------------------------------------------
| | Fair value | Carrying value |
--------------------------------------------------------------------------------
| Fixed assets 1) | 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 9 m and
in net income in the amount of SEK 3 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 3m, 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. An additional cash payment of SEK 5 m
has been paid in the third quarter 2007 and an another SEK 5 m will be paid in
2008.
The remaining earn out payment, which is dependent on results, and is expected
to amount to SEK 17.5 m, 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 were paid during the second quarter.
DEPRECIATION AND IMPAIRMENT BY BUSINESS AREA
Current period Current period Rolling Full
July-Sept Jan-Sept 12 year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 19 | 17 | 57 | 53 | 74 | 70 |
--------------------------------------------------------------------------------
| Information Services | 12 | 5 | 40 | 16 | 46 | 22 |
| & New Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology 1) | 35 | 36 | 105 | 99 | 138 | 132 |
--------------------------------------------------------------------------------
| Total | 70 | 53 | 136 | 110 | 250 | 224 |
--------------------------------------------------------------------------------
1) The period January - September 2007 includes impairment losses in
discontinuing operations in the amount of SEK 6 m. The period January -
September 2006 includes impairment losses in discontinuing operations in the
amount of SEK 6 m. The period January - December 2006 includes impairment losses
in discontinuing operations in the amount of SEK 8 m.
Key ratios 1)
--------------------------------------------------------------------------------
| | Jan-Sept | Jan-Sept | Jan-Dec |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Earnings per share, SEK 2) | 6.46 | 5.17 | 7.64 |
--------------------------------------------------------------------------------
| Share price at period-end, SEK | 279.5 | 142 | 126 |
--------------------------------------------------------------------------------
| Average number of OMX shares traded | 1,838 | 708 | 772 |
| daily, | | | |
| thousands | | | |
--------------------------------------------------------------------------------
| P/E ratio 3) | 31 | 21 | 16 |
--------------------------------------------------------------------------------
| Shareholders' equity per share, SEK | 40 | 38 | 38 |
--------------------------------------------------------------------------------
| Share price/Shareholders' equity per | 7,0 | 3,7 | 3,3 |
| share, | | | |
| SEK | | | |
--------------------------------------------------------------------------------
| Return on equity, % 3) | 23 | 17 | 20 |
--------------------------------------------------------------------------------
| Return on capital employed, % 4) | 23 | 18 | 20 |
--------------------------------------------------------------------------------
| Net debt/equity,% | 23 | 19 | 18 |
--------------------------------------------------------------------------------
| Equity/assets ratio, % 5) | 54 | 56 | 57 |
--------------------------------------------------------------------------------
| Adjusted equity/assets ratio, % 6) | 60 | 60 | 61 |
--------------------------------------------------------------------------------
| Number of employees at period-end | 1,658 | 1,326 | 1,402 |
--------------------------------------------------------------------------------
| Average number of employees during the | 1,473 | 1,309 | 1,324 |
| period | | | |
--------------------------------------------------------------------------------
| Personnel expenses, SEK m | 1,063 | 852 | 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
mainly arising in the UK operations for the sale of securities administration
services, which are reported as discontinuing operations (see page 12).
MAJOR SHAREHOLDERS AS OF SEPTEMBER 30, 2007
--------------------------------------------------------------------------------
| | Number of shares | Share capital |
| | | and |
| | | votes. % |
--------------------------------------------------------------------------------
| Investor AB | 12,950,507 | 10.7 |
--------------------------------------------------------------------------------
| Qatar Investment Authority | 12,043,406 | 10.0 |
--------------------------------------------------------------------------------
| The Swedish state | 7,993,466 | 6.6 |
--------------------------------------------------------------------------------
| Nordea Bank | 6,421,797 | 5.3 |
--------------------------------------------------------------------------------
| Borse Dubai | 5,911,382 | 4.9 |
--------------------------------------------------------------------------------
| SEB | 2,365,286 | 2.0 |
--------------------------------------------------------------------------------
| Swedbank Robur Funds | 2,154,006 | 1.8 |
--------------------------------------------------------------------------------
| SEB funds | 1,742,054 | 1.4 |
--------------------------------------------------------------------------------
| The Finnish state | 1,508,500 | 1.3 |
--------------------------------------------------------------------------------
| The second AP fund | 1,428,617 | 1.2 |
--------------------------------------------------------------------------------
| Other Swedish owners | 11,719,035 | 9.7 |
--------------------------------------------------------------------------------
| Other foreign owners | 54,402,411 | 45.1 |
--------------------------------------------------------------------------------
| 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.
