OMX to combine with NASDAQ
• Revenues during January-June increased by 24 percent to SEK 2,190 m (1,768)
• Operating income rose by 19 percent to SEK 733 m (618)
• Income after financial items rose by 20 percent to SEK 700 m (585)
• Income after tax rose by 27 percent to SEK 564 m (444)
• Earnings per share rose by 24 percent to SEK 4.64 (3.73)
• Return on shareholders' equity rose to 22 percent (17)
• High exchange activity
• Continued sales growth for information services
• Order intake in technology operations was SEK 559 m (553) during the quarter
“The primary event during the quarter was, of course, the proposed combination
of OMX and NASDAQ - the leading innovators in the exchange industry. The new
company, which is to be named “The NASDAQ OMX Group,” will create the world's
foremost exchange and trading technology company. The combination will generate
significant advantages for customers, shareholders and other stakeholders.
Issuers, members, information clients, investors and customers in our
technology operations will all benefit from the formation of The NASDAQ OMX
Group. I am also convinced that the combination will help solidify and
strengthen the position of the financial markets in the Nordic countries. We
are delighted to report operating income of SEK 384 m (284) for the quarter,”
says Magnus Böcker, President and CEO of OMX.
OMX's interim report for the period January-June 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 10:00 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 common
offering from OMX Nordic Exchange in Helsinki, Copenhagen, Stockholm, Iceland,
Tallinn, Riga and Vilnius, 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. OMX is a Nordic Large Cap company in the Financials sector on the
OMX Nordic Exchange. For more information, 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 filing 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 proposed
business combination transaction involving NASDAQ and OMX, including estimated
revenue and cost synergies, the Combined Group's plans, objectives,
expectations and intentions and other statements that are not historical facts.
Additional risks and factors are identified in NASDAQ's filings with the U.S.
Securities Exchange Commission (the “SEC”), including its Report on Form 10-K
for the fiscal year ending December 31, 2006 which is available on NASDAQ's
website at http://www.NASDAQ.com and the SEC's website at SEC's website at
www.sec.gov. and 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
While NASDAQ's offer is being made to all holders of OMX shares, 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 or an offer to
purchase, sell or exchange or the solicitation of an offer to purchase, sell or
exchange any securities of NASDAQ in any jurisdiction in which the making of
the offer or the acceptance of any tender of shares therein would not be made
in compliance with the laws of such jurisdiction. In particular, NASDAQ's offer
is not being made, directly or indirectly, in or into Australia, Canada, Japan
or South Africa. While NASDAQ reserves the right to make the offer in or into
the United Kingdom or any other jurisdiction pursuant to applicable exceptions
or following appropriate filings and prospectus or equivalent document
publication by NASDAQ in such jurisdictions, pending such filings or
publications and in the absence of any such exception NASDAQ's offer is not
made in any such jurisdiction.
Additional Information About this Transaction
In connection with the proposed business combination transaction, OMX and
NASDAQ expect that NASDAQ will file with the SEC a Registration Statement on
Form S-4 that will include a proxy statement of NASDAQ that also constitutes a
prospectus of NASDAQ. Investors and security holders are urged to read the
proxy statement/prospectus and any amendments and other applicable documents
regarding the proposed business combination transaction if and when they become
available because they 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
OMX TO COMBINE WITH NASDAQ
• Revenues during January-June increased to SEK 2,190 m (1,768)
• Operating income rose to SEK 733 m (618)
• Income after financial items rose to SEK 700 m (585)
• Income after tax rose to SEK 564 m (444)
• Earnings per share rose to SEK 4.64 (3.73)
• Return on shareholders' equity rose to 22 percent (17)
• High exchange activity
• Continued sales growth for information services
• Order intake in technology operations was SEK 559 m (553) during the quarter
CEO comments: The primary event during the quarter was, of course, the proposed
combination of OMX and NASDAQ - the leading innovators in the exchange industry.
The new company, which is to be named “The NASDAQ OMX Group,” will create the
world's foremost exchange and trading technology company. The combination will
generate significant advantages for customers, shareholders and other
stakeholders in both companies. Together, we will create a strong platform for
future growth, by utilizing the shared expertise and competencies of the two
companies. Issuers, members, information clients, investors and customers in our
technology operations will all benefit from the formation of The NASDAQ OMX
Group. I am also convinced that the combination will help solidify and
strengthen the position of the financial markets in the Nordic countries.
We are delighted to report operating income of SEK 384 m (284) for the quarter.
The strong trend in our Nordic Marketplaces business area continued, and
additional records were broken. For instance, we recorded our highest share
turnover ever in May. The number of new listings also rose - during the quarter,
38 companies were introduced on the Nordic Exchange, including First North.
The favorable market trend is also apparent in the Information Services & New
Markets business area. Revenues have risen 22 percent since the second quarter
of the preceding year, a key explanation being our focus on new Nordic
information products and services.
For our technology operations - the Market Technology business area - sales
remained strong in the quarter and order bookings totaled SEK 559 m (553). The
business area's activity and net sales have increased markedly over the past
year, partly due to improved market conditions and the ongoing intensive
development of Genium - the next generation technology for the exchange
industry. At the beginning of the quarter, yet another building block was
introduced: Genium Market Info, a solution for information services.
We now focus on creating a long-term strategic solution for operations that are
being discontinued. As part of this effort, we incurred SEK 20 m in extra costs
in the quarter, a level that should be halfed in the next quarter.
OMX has a tradition of being driving development in the exchange industry, and
over the years we have been a leader in both technological development and
consolidation. It is with pride that I can say that the planned combination with
NASDAQ means that we are taking yet another step in that direction.
Magnus Böcker
President and CEO
GROUP INCOME DEVELOPMENT DURING THE SECOND QUARTER
OMX's total revenue rose to SEK 1,127 m (865 in the same period last year)
during the second quarter of the year, including revenue of SEK 101 m
attributable to the sale of shares in Orc Software. In the exchange operations,
the rise in revenue was attributable particularly to trading revenue, issuer
revenue and information revenue. In the technology operations, the revenue
increase derived from both license, support and project revenue and revenue from
Facility Management Services. The Iceland Stock Exchange has been consolidated
since December 1, 2006.
The Group's total expenses amounted to SEK 758 m (599) during the quarter. The
increase in expenses was due mainly to more extensive resource requirements
resulting from the expanded activities in the technology operations, an
increased focus on projects and services in information services, higher
capacity requirements in the exchange operations, and the consolidation of the
Iceland Stock Exchange. Compared with the first quarter of 2007, expenses rose
due to increased activity in the technology operations and extra costs arising
in operations being discontinued.
OMX's operating income rose to SEK 384 m (284) in the second quarter. Excluding
operations being discontinued and revenue from the sale of shares in Orc
Software, the operating profit increased with 8 percent compared to the same
period last year. Participations in earnings of associated companies amounted to
SEK 15 m (18). The earnings in Orc Software and EDX London rose while VPC AB is
no longer an associated company, effective October 1, 2006. Operating income
before depreciation rose to SEK 454 m (338).
Financial items were negative in an amount of SEK 15 m (negative: 18), including
a dividend of SEK 17 m from the Oslo Stock Exchange. 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 369 m (266) and income after tax rose to SEK 306 m (200). Earnings
per share increased by 50 percent to SEK 2.52 (1.68).
The return on shareholders' equity, based on rolling 12-month earnings, rose to
22 percent (17). The net debt/equity ratio amounted to 25 percent (22) at the
end of the reporting period.
SUMMARY EARNINGS, GROUP
Current period Current period Full-
April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Total revenue | 1,127 | 865 | 2,190 | 1,768 | 4,032 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -758 | -599 | -1,481 | -1,179 | -2,747 | -2,445 |
--------------------------------------------------------------------------------
| Participations in | 15 | 18 | 24 | 29 | 41 | 46 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 384 | 284 | 733 | 618 | 1,326 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -15 | -18 | -33 | -33 | -60 | -60 |
--------------------------------------------------------------------------------
| Income after | 369 | 266 | 700 | 585 | 1,266 | 1,151 |
| financial items | | | | | | |
--------------------------------------------------------------------------------
| Income after tax | 306 | 200 | 564 | 444 | 1,031 | 911 |
--------------------------------------------------------------------------------
| Earnings per share, | 2.52 | 1.68 | 4.64 | 3.73 | 8.56 | 7.64 |
| SEK | | | | | | |
--------------------------------------------------------------------------------
| Return on | 22 | 17 | 22 | 17 | 22 | 20 |
| shareholders' | | | | | | |
| equity, % | | | | | | |
--------------------------------------------------------------------------------
DEVELOPMENTS IN OMX'S BUSINESS AREAS DURING THE SECOND QUARTER
NORDIC MARKETPLACES
Within the business area, OMX operates the equity and derivatives exchanges in
Stockholm, Helsinki, Copenhagen and Iceland.
The level of activity on the exchanges was distinctly higher during the second
quarter of the year, compared with the year-earlier period. Trading and the
number of new companies listed on the exchanges increased. The development of
the Nordic Exchange also continued. In April, the Icelandic companies were
included in the Group-wide presentation model for the main market and in OMX's
sector indexes. The alternative marketplace, First North, has expanded to
include Finland and the Baltic region. From April 2 OMX has lowered its fees for
reported trades by 50 percent.
The business area's revenue amounted to SEK 511 m (446) during the quarter. The
rise in revenue 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 269 m (214). The main reasons for the rise in
expenses compared to the same period last year are increased market activity,
the increase in capacity requirements that occured in the first quarter and the
acquisition of the Iceland Stock Exchange. The business area's operating income
rose to SEK 251 m (236). As opposed to revenue and earnings, the statistical
information below is presented pro forma and the Iceland Stock Exchange is
therefore included in comparative figures.
The Nordic Marketplaces business area has three main sources of income (see page
12): trading revenue, issuers' revenue and other revenue. Trading revenues
amounted to SEK 376 m (331) during the quarter, of which 70 percent was from
trading in cash products, mainly equities, and 30 percent from trading and
clearing in derivatives products. During the quarter, the number of equity
transactions increased to an average of 177,146 (136,721) per day, a rise of 30
percent compared with the year-earlier period. At the same time, the turnover in
equities trading measured in value rose by 19 percent to a daily average of SEK
51,669 m (43,369). The turnover velocity for equities trading decreased to 137
percent (149). The total number of derivatives contracts traded per day averaged
653,445 (612,341), up 7 percent compared with the year-earlier period. Of the
total number of contracts, Finnish options contracts on Eurex accounted for
85,997 (61,283) and Nordic derivatives contracts on EDX London for 126,103
(122,895) per day.
Issuers' revenue increased to SEK 99 m (88) during the second 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 622 (602) on the main market and 111 (56) on First
North. During the quarter, 38 (27) new companies joined the marketplace, of
which 26 joined First North. At the same time, 5 (16) companies left the
exchange, one from First North. The total market capitalization of all listed
companies on the main market rose to SEK 9,963 billion (7,012) at the end of the
first quarter.
Other revenue in the business area amounted to SEK 36 m (27), including revenue
of SEK 18 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.
The second quarter was characterized by a continued increase in demand for
information services, particularly from US customers and international
investment banks. Furthermore, the focus on the development of new products and
services continued. 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 205 m (168) 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
145 m (133), an increase that was mainly due to the expanded focus on new
products and services. The business area's operating income improved to SEK 60 m
(38).
In Information Services & New Markets, 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 137 m (102)
during the quarter, a rise of 34 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 106 (90)
information vendors.
Revenue from Baltic Markets increased to SEK 19 m (15) during the quarter,
primarily due to a rise in equity trading. Of the total, SEK 3 m (3) derived
from revenue from the central securities depositories in Tallinn and Riga. The
total equity turnover on the Baltic exchanges was SEK 92 m (52) per day during
the quarter. The number of equity transactions amounted to 1,332 (732) per day.
Revenue from Broker Services amounted to SEK 45 m (47) during the second
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 4 m (4) 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.
For Market Technology, the quarter was characterized by an increase in market
activity and intensified development of the next generation of trading systems.
Not only is interest in OMX's system coming from marketplaces offering trading
in traditional instruments such as equities and derivatives, demand is also
increasing from new marketplaces offering trading in other classes of
securities. Work on Genium, the next generation of systems for trading,
post-trade and information services, continued during the quarter. In April, a
new solution for the distribution of market data, Genium Market Info, was
launched.
The business area's revenue amounted to SEK 523 m (295) during the quarter,
including SEK 101 m from the sale of shares in Orc Software. During the first
quarter of 2007, Genium development was moved within the Group, which meant that
revenue related to Genium represented SEK 73 m (9) of Market Technology's
revenue for the second quarter of 2007, compared to SEK 37 m for the first
quarter. However, the Group's investments in Genium are in line with the
preceding quarter. Market Technology's external revenue amounted to SEK 230 m
(205) for the second quarter, which is somewhat higher than the preceding
quarter, when it totaled SEK 225 m. Internal sales of SEK 118 m (81), pertaining
to the operation and maintenance of OMX's exchange operations, were unchanged
compared to the first quarter.
The business area's expenses totaled SEK 409 m (295). The rise, in both revenue
and expenses compared with the year-earlier period was due to the increased
project activity among external customers and the increased internal sales to,
and heightened activity in, Nordic Marketplaces and Information Services & New
Markets. The business area's operating income amounted to SEK 120 m (11).
The business area's investments in R&D amounted to SEK 41 m (56) during the
quarter. Of the total investments in R&D, SEK 39 m (51) was capitalized.
The order intake during the quarter was SEK 559 m (553), of which SEK 97 m (153)
pertained to internal orders. The total order value at the end of the quarter
was SEK 3,150 m (3,049), of which SEK 1,208 m (980) is scheduled for delivery
within one year. The total order value includes internal orders of SEK 901 m
(948), of which SEK 375 m (302) is scheduled for delivery within one year. Order
statistics no longer include operations being discontinued and comparative
figures have been adjusted accordingly.
During the second quarter, an order was signed with the Plus Markets Group for
the delivery of a new platform for trading and market surveillance, and
operation and maintenance of the technical infrastructure. OMX also increased
its technology cooperation with Hong Kong Exchanges and Clearing Limited (HKEx)
through an agreement for support and maintenance of HKEx's systems for
derivatives trading and clearing and settlement. During the quarter, orders were
also signed with Australian Securities Exchange, Borsa Italiana, CNQ, ICAP,
NASD, Nord Pool, Oslo Børs, Swiss Exchange and TLX.
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 279 m (176) during the second quarter. Revenue from Facility
Management Services rose to SEK 143 m (107), mainly due to increased internal
revenue from the exchange operations and new customers.
Other revenue totaled SEK 101 m (12), which is attributable to the sale of
shares in Orc Software.
SUMMARY REVENUE AND INCOME BY BUSINESS AREA
Current period Current period Full-
April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 | 2006 |
| | | | | | months | |
--------------------------------------------------------------------------------
| Revenue | | | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 511 | 446 | 1,066 | 925 | 1,919 | 1,778 |
--------------------------------------------------------------------------------
| Information Services & New | 205 | 168 | 409 | 343 | 818 | 752 |
| Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology | 523 | 295 | 903 | 608 | 1,595 | 1,300 |
--------------------------------------------------------------------------------
| Operating income | | | | | | |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 251 | 236 | 549 | 515 | 973 | 940 |
--------------------------------------------------------------------------------
| Information Services & New | 60 | 38 | 122 | 87 | 252 | 217 |
| Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology | 120 | 11 | 133 | 32 | 194 | 93 |
--------------------------------------------------------------------------------
OTHER INFORMATION
FINANCIAL POSITION
Total assets at the end of the reporting period amounted to SEK 15,091 m
compared with SEK 11,269 m at the same time in 2006. The increase is mainly
attributable to increased market value of outstanding derivatives positions and
current trading accounts arising in the operations being discontinued. The
adjusted equity/assets ratio, excluding these two items, was 58 percent (56)
(see page 12). OMX had an interest-bearing net debt of SEK 1,153 m (931) at
period-end. The net debt/equity ratio was 25 percent (22) at period end.
At period-end, interest-bearing financial liabilities amounted to SEK 1,957 m
(2,211), of which SEK 1,050 m (1,414) was long term. The Group's total approved
credit facilities was SEK 3,692 m (2,820), of which SEK 8 m (25) was utilized.
Interest-bearing financial assets totaled SEK 804 m (1,280), of which SEK 28 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 33 m (76) for the reporting period. The result
after financial items was SEK 261 m (loss: 75). Cash and cash equivalents
totaled SEK 0 m (1). Investments amounted to SEK 6 m (6). 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 historic 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 appellate court in Helsinki announced its decision to reject 20
banks and brokers claim against 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 the latter half of 2007.
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, it will give rise to a cost of SEK 100-125 m for the Group, although
with no cash flow effect. It would also increase ongoing tax 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 1,637 (1,417) at the
end of the reporting period. The increase in the number of employees and
consultants was primarily due to increased activity within Information Services
& New Markets and Market Technology. The number of employees was 1,483 (1,314)
at the close of the reporting period, of which 345 (295) were employed in Nordic
Marketplaces, 318 (290) in Information Services & New Markets and 820 (729) in
Market Technology. Of the total number of employees, 72 (109) 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 111 m
(55) in the period January-June, while expenses amounted to SEK 146 m (71). The
operating loss was SEK 35 m (loss: 16). In conjunction with the work of
creating conditions for sustainable profitabilty in the operations, extra costs
of SEK 20 m was incurred in the second quarter. OMX expects these extra costs to
be halfed in the third 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.
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.
COMBINATION OF OMX AND NASDAQ
On May 25, 2007, it was announced that the boards of The NASDAQ Stock Market,
Inc. and OMX AB (publ) had signed an agreement pertaining to a combination of
the companies, which will create the foremost exchange and technology company in
the world. The combination will give rise to the world's largest network of
exchanges and exchange customers linked together by technology. The combination
will generate significant advantages for customers, shareholders and other
stakeholders in both of the companies.
In conjunction with ongoing activities relating to the combination, OMX has
incurred costs, of which approximately SEK 1 m is reported under Other external
expenses, and approximately SEK 21 m has been capitalized.
The new group, to be called The NASDAQ OMX Group, brings together two companies
with a common culture and vision of innovation, competitiveness and pioneering
technological expertise. The NASDAQ OMX Group combines two highly complementary
businesses, uniting NASDAQ's leading global brand, highly efficient electronic
trading platform and track record of customer focused innovation with OMX's
global technology services platform and customer base, efficient Nordic
Exchange, derivatives capabilities and track record of successful cross-border
exchange integrations.
The Combination will be effected through a cash and stock tender offer by NASDAQ
for all outstanding shares in OMX. The consideration offered 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 23 May, 2007, the offer values OMX at SEK 208.1 per
share, equivalent to SEK 25.1 billion (USD 3.7 billion) and represents a premium
of 19 percent to the closing price of SEK 174.5 per OMX share on 23 May, 2007,
the last full trading day prior to the announcement of the offer and a premium
of 25 percent to the volume weighted average price of SEK 165.9 per OMX share
over the 20 trading days up to and including 23 May, 2007.
The Combined Group will have 2,349 employees in 22 countries with pro forma
revenues for the financial year 2006 of more than USD 1.2 billion (SEK 8.3
billion). The relative values of the companies under the terms of the offer and
based on NASDAQ's closing share price as of 23 May, 2007 are 58 percent NASDAQ
and 42 percent OMX. The pro forma market capitalization of The NASDAQ OMX Group
will be approximately USD 7.1 billion (SEK 48.6 billion), of which NASDAQ
shareholders will own approximately 72 percent and OMX shareholders will hold
approximately 28 percent as a result of the cash component of the Offer.
The Combined Group will be governed by representatives from both NASDAQ and OMX
under the leadership of Robert Greifeld, who will serve as Chief Executive
Officer and Magnus Böcker, who will serve as President. The Board of Directors
of the Combined Group will consist of 15 members, including nine representatives
from NASDAQ, five representatives from OMX and the Chief Executive Officer of
the Combined Group. The NASDAQ OMX share will be listed on NASDAQ and on OMX
Nordic Exchange.
The Combination is unanimously recommended by the Boards of Directors of each of
OMX and NASDAQ. Investor AB, Nordea Bank AB and Magnus Böcker, together
representing approximately 16.6 percent of OMX's current issued ordinary share
capital, have entered into irrevocable undertakings to accept the Offer and, if
a mix and match facility is included in the Offer, depending on the structure
and the terms of the facility, they will elect to receive all shares, subject to
proration. Olof Stenhammar & Company, representing approximately 1.6 percent of
OMX's current issued ordinary share capital, has expressed its support for the
Combination and its intention to become a long term shareholder in the Combined
Group. In addition, Hellman & Friedman, Silver Lake Partners and Robert Greifeld
have each agreed to vote their shares in favor of certain matters related to the
Offer at the related NASDAQ shareholders' meeting, subject to the terms of
NASDAQ's certificate of incorporation.
Both parties believe the Combination will create substantial value for
shareholders, with total pre-tax annual synergies estimated at USD 150 million
(SEK 1,025 million). Of this amount, USD 100 million (SEK 683 million)
constitutes estimated cost synergies and USD 50 million (SEK 342 million)
estimated revenue synergies. Cost synergies will be realized through the
rationalization of IT systems and data centers, rationalization of non-IT
functions and reduced capital and procurement expenditure. Revenue synergies
will be achieved through the creation of deeper liquidity pools, increased
cross-border trading, increased international listings, packaged data products
and enhanced technology sales.
The Combination is expected to create substantial value for shareholders and to
be accretive to earnings per share in 2009.
REDUCTION IN FEES
OMX's strategy is to be one of Europe's leading exchanges and a part of this is
to have competitive fees. In December 2006, OMX therefore announced a reduction
in the fees by approximately 50 percent for reporting transactions in Stockholm,
Helsinki and Copenhagen as of April 2, 2007. In 2006, price adjustments were
made primarily in derivatives and information services.
LAUNCH OF GENIUM
Genium - OMX's new technology for trading, post-trade and information services -
was launched in February 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 indexes.
Findata has seven employees located in Stockholm and its revenues amounted to
SEK 17 m, with significant profitability for full-year 2006. The purchase price
amounted to SEK 43.5 m and an additional earn out payment of a maximum of SEK 35
m (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
standard in St. Petersburg. IXSP will offer Russian companies access to
international capital without having to seek listing on exchanges outside
Russia. OMX will deliver the platform for trading and market data dissemination,
and provide its expertise in 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.
A total of 26,855 shares were invested in the Share Match Program 2006. OMX AB
has signed a share-swap agreement amounting to 57,000 shares, as a result of the
program that is reported as a shareholders' equity instrument in accordance with
IAS 32. The cost of the program for the period was to SEK 3 m, including social
security expenses, and the cost of the program's entire term is estimated at SEK
17 m.
DIVIDEND
OMX's Annual General Meeting on April 12, 2007 approved the distribution of a
dividend of SEK 6.50 to shareholders, comprising of a regular dividend of SEK
4.50 per share and an extra dividend of SEK 2.00 per share.
AUTHORIZATION ON REPURCHASE OF SHARES
OMX's Annual General Meeting on April 12, 2007 approved the authorization of the
Board to repurchase shares corresponding to a maximum of 10 percent of the total
number of shares outstanding. The repurchase could take place through trading on
the stock exchange or a directed offering to shareholders. OMX does not
currently own any treasury shares. This mandate applies until the 2008 Annual
General Meeting. The purpose of the proposal is to be able to continuously adapt
the capital structure to the company's needs and thereby increase value for
shareholders, and repurchase shares that could be used for the execution of
OMX's Share Match Program.
NEW BOARD OF DIRECTORS
At OMX's Annual General Meeting on April 12, 2007, the Board members Urban
Bäckström, Bengt Halse, Birgitta Klasén, Hans Munk Nielsen and Markku Pohjola
were re-elected. Lars Wedenborn and Birgitta Kantola were elected as new members
of the Board. Urban Bäckström was elected Chairman of the Board.
AUTHORIZATION ON RAISING CERTAIN LOANS
OMX's Annual General Meeting on April 12, 2007 resolved to authorize the Board
to decide to raise loans for which the interest or the amount by which repayment
is to take place is wholly or partially dependent on the dividend to
shareholders, the performance of the OMX share, the company's earnings or the
company's financial position.
OUTLOOK FOR THE THIRD QUARTER
The third quarter is normally a period of seasonally low activity, which usually
results in relatively low revenue, but also slightly lower expenses. Revenues
from OMX's exchange operations are largely dependent upon market trends and
trading volumes in the Nordic Exchange. Revenues in the Market Technology
business area during the third quarter are expected to be in line with the first
quarter of 2007. The Group's expenses during the third quarter are expected to
be slightly lower than in the second quarter. Given the current interest rate
situation, OMX's net financial income is expected to be a negative amount of
approximately SEK 25 m for the third quarter.
The Board and the President hereby give their assurance that the interim report
provides a true and fair overview of OMX AB and of the Group's operations,
position and earnings, and describes key risks and uncertainty factors facing
OMX AB and the companies that make up the Group.
OMX AB (publ)
Stockholm, July 18, 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)
We have reviewed the interim report for the period OMX AB (publ) for
January-June, 2007. Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with IAS 34 and
the Annual Accounts Act. Our responsibility is to express a conclusion on this
interim financial information based on our review.
We conducted our review in accordance with the Standard on Review Engagements
SÖG 2410, Review of Interim Financial Information Performed by the Independent
Auditor of the Entity issued by FAR. A review consists of making inquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with Standards on Auditing in
Sweden RS and other generally accepted auditing practices. The procedures
performed in a review do not enable us to obtain a level of assurance that would
make us aware of all significant matters that might be identified in an audit.
Therefore, the conclusion expressed based on a review does not give the same
level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial information is not, in all material
respects, in accordance with IAS 34 and the Annual Accounts Act.
Stockholm, July 19, 2007.
PricewaterhouseCoopers
Bo Hjalmarsson - Authorized Public Accountant (Responsible accountant)
Christine Rankin Johansson - Authorized Public Accountant
OMX GROUP, CONSOLIDATED
INCOME STATEMENT
Current period April-June
--------- 2007 ---------
--------- 2006 ---------
--------------------------------------------------------------------------------
| SEK m | Conti | Opera | Total | | Conti | Opera | Total |
| | nuin | tion | OMX | | nuing | tions | OMX |
| | g | s | | | opera | being | |
| | opera | bein | | | tions | disco | |
| | tion | g | | | | n | |
| | s | disc | | | | tinu | |
| | | on | | | | ed 4) | |
| | | ti | | | | | |
| | | nued | | | | | |
--------------------------------------------------------------------------------
| REVENUE | | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 926 | 58 | 984 | | 805 | 35 | 840 |
--------------------------------------------------------------------------------
| Own work | 42 | - | 42 | | 25 | - | 25 |
| capitalized 1) | | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 101 | - | 101 | | - | - | - |
--------------------------------------------------------------------------------
| Total revenue | 1,069 | 58 | 1,127 | | 830 | 35 | 865 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | | |
--------------------------------------------------------------------------------
| Premises | -46 | -2 | -48 | | -50 | -2 | -52 |
--------------------------------------------------------------------------------
| Marketing | -17 | - | -17 | | -11 | - | -11 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Consultancy | -91 | -3 | -94 | | -73 | - | -73 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -54 | -2 | -56 | | -57 | -7 | -64 |
| maintenance, IT | | | | | | | |
--------------------------------------------------------------------------------
| Other external | -56 | -45 | -101 | | -41 | -9 | -50 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Personnel | -344 | -28 | -372 | | -278 | -17 | -295 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Depreciation and | -68 | -2 | -70 | | -53 | -1 | -54 |
| impairment | | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -676 | -82 | -758 | | -563 | -36 | -599 |
--------------------------------------------------------------------------------
| Participation in | 15 | - | 15 | | 18 | - | 18 |
| earnings of | | | | | | | |
| associated | | | | | | | |
| companies | | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 408 | -24 | 384 | | 285 | -1 | 284 |
--------------------------------------------------------------------------------
| Financial items | -13 | -2 | -15 | | -16 | -2 | -18 |
--------------------------------------------------------------------------------
| Income/loss after | 395 | -26 | 369 | | 269 | -3 | 266 |
| finanicial items | | | | | | | |
--------------------------------------------------------------------------------
| Tax | -63 | 0 | -63 | | -66 | 0 | -66 |
--------------------------------------------------------------------------------
| Net income/loss | 332 | -26 | 306 | | 203 | -3 | 200 |
| for the period | | | | | | | |
--------------------------------------------------------------------------------
| of which | 330 | -26 | 304 | | 202 | -3 | 199 |
| attributable to | | | | | | | |
| shareholders in | | | | | | | |
| OMX AB | | | | | | | |
--------------------------------------------------------------------------------
| of which | 2 | - | 2 | | 1 | - | 1 |
| attributable to | | | | | | | |
| minority | | | | | | | |
| interests | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 120.640 | | | | 118.474 |
| shares, millions | | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | | 118.474 |
| at 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 | 2.74 | | 2.52 | | 1.71 | | 1.68 |
| share, SEK 3) | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 2.74 | | 2.52 | | 1.71 | | 1.68 |
| share, SEK after | | | | | | | |
| full conversion | | | | | | | |
| 3) | | | | | | | |
--------------------------------------------------------------------------------
1)Own work invested in assets during the period, which are carried as fixed
assets, has been recognized in revenue under the heading ”Own work capitalized.”
This item refers only to capitalized personnel costs. Personnel costs were not
reduced for the work pertaining to capitalized assets, instead the costs are
netted by reported revenue. Accordingly, revenue recognition of own work
capitalized has no impact on results, but has a negative effect on the operating
margin.
2)For the period April-June 2007 and Jan-June 2007 Other revenue refers to
earnings of SEK 101 m attributable to the sale of shares in ORC Software. For
the period Jan-June 2006 and Jan-Dec 2006 the item refers to earnings of SEK 22
m attributable to the sale of shares in NOS ASA . The item also refers to
earnings of SEK 83 m attributable to the sale of shares in VPC AB during the
period January - December 2006.
INTERIM PERIOD JAN-JUNE
--------- 2007 ---------
--------- 2006 ---------
--------------------------------------------------------------------------------
| SEK m | Conti | Opera | Total | | Conti | Opera | Total |
| | nuin | tion | OMX | | nuing | tions | OMX |
| | g | s | | | opera | being | |
| | opera | bein | | | tions | disco | |
| | tion | g | | | | n | |
| | s | disc | | | | tinu | |
| | | on | | | | ed 4) | |
| | | ti | | | | | |
| | | nued | | | | | |
--------------------------------------------------------------------------------
| REVENUE | | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 1,899 | 111 | 2,010 | | 1,643 | 55 | 1,698 |
--------------------------------------------------------------------------------
| Own work | 79 | - | 79 | | 48 | - | 48 |
| capitalized 1) | | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 101 | - | 101 | | 22 | - | 22 |
--------------------------------------------------------------------------------
| Total revenue | 2,079 | 111 | 2,190 | | 1,713 | 55 | 1,768 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | | |
--------------------------------------------------------------------------------
| Premises | -88 | -3 | -91 | | -101 | -3 | -104 |
--------------------------------------------------------------------------------
| Marketing | -31 | - | -31 | | -23 | - | -23 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Consultancy | -183 | -4 | -187 | | -150 | - | -150 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -117 | -4 | -121 | | -102 | -10 | -112 |
| maintenance, IT | | | | | | | |
--------------------------------------------------------------------------------
| Other external | -121 | -78 | -199 | | -78 | -22 | -100 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Personnel | -663 | -53 | -716 | | -548 | -32 | -580 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Depreciation and | -132 | -4 | -136 | | -106 | -4 | -110 |
| impairment | | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -1,33 | -146 | -1,481 | | -1,108 | -71 | -1,179 |
| | 5 | | | | | | |
--------------------------------------------------------------------------------
| Participation in | 24 | - | 24 | | 29 | - | 29 |
| earnings of | | | | | | | |
| associated | | | | | | | |
| companies | | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 768 | -35 | 733 | | 634 | -16 | 618 |
--------------------------------------------------------------------------------
| Financial items | -29 | -4 | -33 | | -29 | -4 | -33 |
--------------------------------------------------------------------------------
| Income/loss after | 739 | -39 | 700 | | 605 | -20 | 585 |
| finanicial items | | | | | | | |
--------------------------------------------------------------------------------
| Tax | -136 | 0 | -136 | | -141 | 0 | -141 |
--------------------------------------------------------------------------------
| Net income/loss | 603 | -39 | 564 | | 464 | -20 | 444 |
| for the period | | | | | | | |
--------------------------------------------------------------------------------
| of which | 599 | -39 | 560 | | 462 | -20 | 442 |
| attributable to | | | | | | | |
| shareholders in | | | | | | | |
| OMX AB | | | | | | | |
--------------------------------------------------------------------------------
| of which | 4 | - | 4 | | 2 | - | 2 |
| attributable to | | | | | | | |
| minority | | | | | | | |
| interests | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 120.640 | | | | 118.474 |
| shares, millions | | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | | 118.474 |
| at 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 | 4.97 | | 4.64 | | 3.90 | | 3.73 |
| share, SEK 3) | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 4.97 | | 4.64 | | 3.90 | | 3.73 |
| share, SEK after | | | | | | | |
| full conversion | | | | | | | |
| 3) | | | | | | | |
--------------------------------------------------------------------------------
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.
---- Rolling 12 months ---- ---- Full-year 2006
----
--------------------------------------------------------------------------------
| SEK m | Conti | Opera | Total | | Conti | Opera | Total |
| | nuin | tion | OMX | | nuing | tions | OMX |
| | g | s | | | opera | being | |
| | opera | bein | | | tions | disco | |
| | tion | g | | | | n | |
| | s | disc | | | | tinu | |
| | | on | | | | ed 4) | |
| | | ti | | | | | |
| | | nued | | | | | |
--------------------------------------------------------------------------------
| REVENUE | | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 3,569 | 180 | 3,749 | | 3,313 | 124 | 3,437 |
--------------------------------------------------------------------------------
| Own work | 99 | - | 99 | | 68 | - | 68 |
| capitalized 1) | | | | | | | |
--------------------------------------------------------------------------------
| Other revenue 2) | 184 | - | 184 | | 105 | - | 105 |
--------------------------------------------------------------------------------
| Total revenue | 3,852 | 180 | 4,032 | | 3,486 | 124 | 3,610 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | | |
--------------------------------------------------------------------------------
| External expenses | | | | | | | |
--------------------------------------------------------------------------------
| Premises | -191 | -6 | -197 | | -204 | -6 | -210 |
--------------------------------------------------------------------------------
| Marketing | -71 | - | -71 | | -63 | - | -63 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Consultancy | -343 | -4 | -347 | | -310 | - | -310 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operations and | -254 | -10 | -264 | | -239 | -16 | -255 |
| maintenance, IT | | | | | | | |
--------------------------------------------------------------------------------
| Other external | -210 | -112 | -322 | | -167 | -56 | -223 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Personnel | -1,19 | -98 | -1,296 | | -1,083 | -77 | -1,160 |
| expenses | 8 | | | | | | |
--------------------------------------------------------------------------------
| Depreciation and | -242 | -8 | -250 | | -216 | -8 | -224 |
| impairment | | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -2,50 | -238 | -2,747 | | -2,282 | -163 | -2,445 |
| | 9 | | | | | | |
--------------------------------------------------------------------------------
| Participation in | 41 | - | 41 | | 46 | - | 46 |
| earnings of | | | | | | | |
| associated | | | | | | | |
| companies | | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 1,384 | -58 | 1,326 | | 1,250 | -39 | 1,211 |
--------------------------------------------------------------------------------
| Financial items | -53 | -7 | -60 | | -53 | -7 | -60 |
--------------------------------------------------------------------------------
| Income/loss after | 1,331 | -65 | 1,266 | | 1,197 | -46 | 1,151 |
| finanicial items | | | | | | | |
--------------------------------------------------------------------------------
| Tax | -235 | 0 | -235 | | -240 | 0 | -240 |
--------------------------------------------------------------------------------
| Net income/loss | 1,096 | -65 | 1,031 | | 957 | -46 | 911 |
| for the period | | | | | | | |
--------------------------------------------------------------------------------
| of which | 1,090 | -65 | 1,025 | | 953 | -46 | 907 |
| attributable to | | | | | | | |
| shareholders in | | | | | | | |
| OMX AB | | | | | | | |
--------------------------------------------------------------------------------
| of which | 6 | - | 6 | | 4 | - | 4 |
| attributable to | | | | | | | |
| minority | | | | | | | |
| interests | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of | | | 119.754 | | | | 118.671 |
| shares, millions | | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 120.640 | | | | 120.640 |
| at period end, | | | | | | | |
| millions | | | | | | | |
--------------------------------------------------------------------------------
| Average number of | | | 119.826 | | | | 118.886 |
| shares after full | | | | | | | |
| conversion, | | | | | | | |
| millions | | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | | 12o.640 | | | | 120.640 |
| after full | | | | | | | |
| conversion at | | | | | | | |
| period end, | | | | | | | |
| millions | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 9.10 | | 8.56 | | 8.03 | | 7.64 |
| share, SEK 3) | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 9.10 | | 8.56 | | 8.03 | | 7.64 |
| share, SEK after | | | | | | | |
| full conversion | | | | | | | |
| 3) | | | | | | | |
--------------------------------------------------------------------------------
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.
NOTES TO THE INCOME STATEMENT
Total revenue amounted to SEK 2,190 m (1,768) in the period January - June.
Consolidated net sales amounted to SEK 2,010 m (1,698). Own work capitalized
amounted to SEK 79 m (48) 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 1,481 m (1,179) 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 technology solutions and increased other
external expenses in discontinuing operations.
The Group's share in the earnings of associated companies amounted to SEK 24 m
(29) 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 20 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 33 m (expense:
33), 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 136
m (141), corresponding to a tax rate of 19 (24) percent. SEK 101 m from the sale
of shares in Orc Software in the second quarter are 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 | June | June | Dec |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Goodwill | 3,266 | 3,060 | 3,140 |
--------------------------------------------------------------------------------
| Other intangible fixed assets | 1,438 | 1,041 | 1,210 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 303 | 321 | 321 |
--------------------------------------------------------------------------------
| Financial fixed assets, non-interest-bearing | 701 | 826 | 699 |
--------------------------------------------------------------------------------
| Financial fixed assets, interest-bearing | 28 | 84 | 21 |
--------------------------------------------------------------------------------
| Total fixed assets | 5,736 | 5,332 | 5,391 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 5,335 | 2,812 | 4,401 |
| positions 3) | | | |
--------------------------------------------------------------------------------
| Current receivables 1) 4) | 3,195 | 1,862 | 1,738 |
--------------------------------------------------------------------------------
| Financial assets available for sale | 481 | 723 | 518 |
--------------------------------------------------------------------------------
| Liquid assets | 275 | 472 | 410 |
--------------------------------------------------------------------------------
| Assets held for sale 2) | 69 | 68 | 70 |
--------------------------------------------------------------------------------
| Total current assets | 9,355 | 5,937 | 7,137 |
--------------------------------------------------------------------------------
| Total assets | 15,091 | 11,269 | 12,528 |
--------------------------------------------------------------------------------
| Shareholders' equity | 4,562 | 4,306 | 4,614 |
--------------------------------------------------------------------------------
| Long-term liabilities, non-interest-bearing | 320 | 323 | 282 |
--------------------------------------------------------------------------------
| Long-term liabilities, interest-bearing | 1,359 | 1,414 | 1,361 |
--------------------------------------------------------------------------------
| Total long-term liabilities | 1,679 | 1,737 | 1,643 |
--------------------------------------------------------------------------------
| Market value outstanding derivatives | 5,335 | 2,812 | 4,401 |
| positions 3) | | | |
--------------------------------------------------------------------------------
| Current liabilities, non-interest-bearing | 2,917 | 1,617 | 1,434 |
| 4) | | | |
--------------------------------------------------------------------------------
| Current liabilities, interest-bearing | 598 | 797 | 436 |
--------------------------------------------------------------------------------
| Total current liabilities | 8,850 | 5,226 | 6,271 |
--------------------------------------------------------------------------------
| Total shareholders' equity and liabilities | 15,091 | 11,269 | 12,528 |
--------------------------------------------------------------------------------
In addition to assets and liabilities reported in the balance sheet, OMX has
deposits on a client funds account that totaled SEK 3,004 m at June 30, 2007,
SEK 2,570 m at June 30, 2006 and SEK 2,604 m at December 31, 2006.
1) Of which interest-bearing receivables amount to SEK 20 m at June 30, 2007,
SEK 1 m at June 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 1,877 m at June 30,
2007 and SEK 615 m at December 31, 2006, arising in the UK operations for the
sale of securities administration services, organized under operations being
discontinued.
NOTES TO THE BALANCE SHEET
Consolidated goodwill amounted to SEK 3,297 m (3,090) at period-end, including
assets held for sale of SEK 31 m (30). 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 1,468 m (1,072), 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 66 m (177).
Provisions were utilized in an amount of SEK 11 m (33) during the period.
The Group's investments in other intangible assets during the period were SEK
269 m (130). A major part of the investments are within the technology
operations, partly pertaining to a license from Cicada concerning the
development of a new system for information dissemination. In addition, assets
of SEK 30 m on the acquisition of Findata AB have been identified as other
intangible assets. Investments in tangible fixed assets amounted to SEK 35 m
(26).
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 holding in the associated company Orc Software (3.8
million shares) at period-end was SEK 708 m (234), while the carrying amount was
SEK 70 m (69).
CHANGE IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
| SEK m | Jan-June | Jan-June | Full-year |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Shareholders' equity - opening balance | 4,614 | 4,749 | 4,749 |
--------------------------------------------------------------------------------
| Minority interests | 1 | 1 | -1 |
--------------------------------------------------------------------------------
| New issue | - | - | 269 |
--------------------------------------------------------------------------------
| Dividend to shareholders 1) | -781 | -765 | -1,120 |
--------------------------------------------------------------------------------
| Share swap for share-investment program | - | -8 | -8 |
--------------------------------------------------------------------------------
| Share-investment program | 1 | - | 2 |
--------------------------------------------------------------------------------
| Cash-flow hedging | 13 | -20 | -18 |
--------------------------------------------------------------------------------
| Translation differences | 100 | -54 | -173 |
--------------------------------------------------------------------------------
| Reassessments reported against | 50 | -12 | -12 |
| shareholders' equity | | | |
--------------------------------------------------------------------------------
| Changes in shareholders' equity of | - | -29 | 15 |
| associated company | | | |
--------------------------------------------------------------------------------
| Net income in reporting period 2) | 564 | 444 | 911 |
--------------------------------------------------------------------------------
| Shareholders' equity - closing balance | 4,562 | 4,306 | 4,614 |
--------------------------------------------------------------------------------
1) For the period Jan-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 4 m for January-June 2007, SEK 2 m for
January-June 2006 and SEK 4 m for January-December 2006.
CASH FLOW STATEMENT
Current period Current period Full-
April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Cash flow from current | | | | | | |
| operations | | | | | | |
--------------------------------------------------------------------------------
| before changes in | 293 | 289 | 621 | 519 | 1,104 | 1,002 |
| working capital | | | | | | |
--------------------------------------------------------------------------------
| Change in working | -17 | 45 | 24 | 66 | -12 | 30 |
| capital | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from current | 276 | 334 | 645 | 585 | 1,092 | 1,032 |
| operations | | | | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | 60 | -3 | -163 | -553 | 106 | -284 |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Dividend to shareholders | -781 | -765 | -781 | -765 | -1,136 | -1,120 |
--------------------------------------------------------------------------------
| Cash flow from financing | 360 | 428 | 164 | 290 | -259 | -133 |
| activities | | | | | | |
--------------------------------------------------------------------------------
| Change in liquid assets | -85 | -6 | -135 | -443 | -197 | -505 |
--------------------------------------------------------------------------------
| Liquid assets - opening | 360 | 478 | 410 | 915 | 472 | 915 |
| balance | | | | | | |
| 1 ) | | | | | | |
--------------------------------------------------------------------------------
| Liquid assets - closing | 275 | 472 | 275 | 472 | 275 | 410 |
| balance | | | | | | |
| 1 ) | | | | | | |
--------------------------------------------------------------------------------
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 4,562 m (4,306), of which the minority
share was 22 (15) at period-end. This change in shareholders' equity compared
with the year-earlier period is mainly due to the positive earnings for the
period and dividends to shareholders of 781 Mkr 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. The change in working capital
during the period is mainly due to an increase in accounts payable. During the
report period January - June, investments in intangible assets affecting the
cash flow amounted to SEK 248 m (245) and investments in tangible assets
affecting the cash flow amounted to SEK 35 (26).
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 37 m
(negative: 395) which have been transferred from cash and cash equivalents.
During the period dividends totalling SEK 784 m have been paid to the
shareholders. Of these, 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 Rolling
April-June Jan-June 12 Jan-Dec
--------------------------------------------------------------------------------
| Mkr | 2007 | 2006 | 2007 | 2006 | months | 2006 |
--------------------------------------------------------------------------------
| REVENUE | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 21 | 25 | 33 | 54 | 106 | 127 |
--------------------------------------------------------------------------------
| Other revenue 1) | - | - | - | 22 | - | 22 |
--------------------------------------------------------------------------------
| Total revenue | 21 | 25 | 33 | 76 | 106 | 149 |
--------------------------------------------------------------------------------
| EXPENSES | | | | | | |
--------------------------------------------------------------------------------
| Premises | -21 | -23 | -43 | -51 | -86 | -94 |
--------------------------------------------------------------------------------
| Marketing expenses | -4 | -3 | -11 | -11 | -29 | -29 |
--------------------------------------------------------------------------------
| Consultancy expenses | -7 | -9 | -16 | -18 | -31 | -33 |
--------------------------------------------------------------------------------
| Operations and | -4 | 0 | -8 | -1 | -21 | -14 |
| maintenance, IT | | | | | | |
--------------------------------------------------------------------------------
| Other external expenses | -6 | 0 | -10 | -1 | -38 | -29 |
--------------------------------------------------------------------------------
| Personnel expenses | -18 | -30 | -32 | -16 | -66 | -50 |
--------------------------------------------------------------------------------
| Depreciation and | -7 | -7 | -14 | -14 | -28 | -28 |
| impairment | | | | | | |
--------------------------------------------------------------------------------
| Total expenses | -67 | -72 | -134 | -112 | -299 | -277 |
--------------------------------------------------------------------------------
| Operating income | -46 | -47 | -101 | -36 | -193 | -128 |
--------------------------------------------------------------------------------
| Financial items | 264 | -22 | 362 | -39 | 388 | -13 |
--------------------------------------------------------------------------------
| Income/loss after | 218 | -69 | 261 | -75 | 195 | -141 |
| finanicial items | | | | | | |
--------------------------------------------------------------------------------
| Tax | 17 | 18 | 57 | 41 | 81 | 65 |
--------------------------------------------------------------------------------
| Net income/loss for the | 235 | -51 | 318 | -34 | 276 | -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 - June 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 33 m (76) for the reporting period. The result
after financial items was SEK 261 m (loss: 75). 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 | June | June | Dec |
--------------------------------------------------------------------------------
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Intangible fixed assets | 15 | 13 | 16 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 83 | 99 | 90 |
--------------------------------------------------------------------------------
| Financial fixed assets, non-interest-bearing | 8,295 | 7,905 | 8,165 |
--------------------------------------------------------------------------------
| Financial fixed assets, interest-bearing | 11 | 5 | 3 |
--------------------------------------------------------------------------------
| Total fixed assets | 8,404 | 8,022 | 8,274 |
--------------------------------------------------------------------------------
| Receivables from Group companies | 75 | 24 | 404 |
--------------------------------------------------------------------------------
| Other short term receivables | 73 | 59 | 43 |
--------------------------------------------------------------------------------
| Liquid assets | 0 | 1 | 1 |
--------------------------------------------------------------------------------
| Total current assets | 148 | 84 | 448 |
--------------------------------------------------------------------------------
| Total assets | 8,552 | 8,106 | 8,722 |
--------------------------------------------------------------------------------
| Shareholders' equity | 4,136 | 4,419 | 4,603 |
--------------------------------------------------------------------------------
| Long-term liabilities, interest-bearing | 1,359 | 1,413 | 1,360 |
--------------------------------------------------------------------------------
| Long-term liabilities, non-interest-bearing | 21 | 21 | 15 |
--------------------------------------------------------------------------------
| Total long-term liabilities | 1,380 | 1,434 | 1,375 |
--------------------------------------------------------------------------------
| Liabilities to Group companies | 2,325 | 1,422 | 2,280 |
--------------------------------------------------------------------------------
| Current liabilities, non-interest-bearing | 115 | 61 | 66 |
--------------------------------------------------------------------------------
| Current liabilities, interest-bearing | 596 | 770 | 398 |
--------------------------------------------------------------------------------
| Total current liabilities | 3,036 | 2,253 | 2,744 |
--------------------------------------------------------------------------------
| Total shareholders' equity and liabilities | 8,552 | 8,106 | 8,722 |
--------------------------------------------------------------------------------
NOTES TO THE BALANCE SHEET
Cash and cash equivalents totaled SEK 0 m (1). Investments amounted to SEK 6 m
(6). 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
April-June Jan-June Rolling Jan-Dec
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | | | | | | |
--------------------------------------------------------------------------------
| Trading revenue | 376 | 331 | 805 | 691 | 1,400 | 1,286 |
--------------------------------------------------------------------------------
| Issuers' revenue | 99 | 88 | 193 | 170 | 367 | 344 |
--------------------------------------------------------------------------------
| Other revenue | 36 | 27 | 68 | 64 | 152 | 148 |
--------------------------------------------------------------------------------
| Total revenues | 511 | 446 | 1,066 | 925 | 1,919 | 1,778 |
--------------------------------------------------------------------------------
| Total expenses | -269 | -214 | -528 | -418 | -962 | -851 |
--------------------------------------------------------------------------------
| Participation in | 9 | 4 | 11 | 8 | 16 | 13 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 251 | 236 | 549 | 515 | 973 | 940 |
--------------------------------------------------------------------------------
| Operating margin, % | 49 | 53 | 52 | 56 | 51 | 53 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Information Services | | | | | | |
| & New Markets | | | | | | |
--------------------------------------------------------------------------------
| Information sales | 137 | 102 | 268 | 201 | 508 | 441 |
--------------------------------------------------------------------------------
| Revenues from Baltic | 19 | 15 | 39 | 30 | 77 | 68 |
| Markets 1) | | | | | | |
--------------------------------------------------------------------------------
| Revenue from Broker | 45 | 47 | 93 | 100 | 198 | 205 |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Other revenue | 4 | 4 | 9 | 12 | 34 | 38 |
--------------------------------------------------------------------------------
| Total revenue | 205 | 168 | 409 | 343 | 818 | 752 |
--------------------------------------------------------------------------------
| Total expenses | -145 | -133 | -288 | -261 | -569 | -542 |
--------------------------------------------------------------------------------
| Participation in | 0 | 3 | 1 | 5 | 3 | 7 |
| earnings of | | | | | | |
| associated companies | | | | | | |
| | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 60 | 38 | 122 | 87 | 252 | 217 |
--------------------------------------------------------------------------------
| Operating margin, % | 29 | 23 | 30 | 25 | 31 | 29 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Market Technology | | | | | | |
--------------------------------------------------------------------------------
| License-, support- | 279 | 176 | 543 | 367 | 961 | 785 |
| and project revenue | | | | | | |
--------------------------------------------------------------------------------
| Facility Management | 143 | 107 | 258 | 204 | 486 | 432 |
| Services | | | | | | |
--------------------------------------------------------------------------------
| Other revenue | 101 | 12 | 102 | 37 | 148 | 83 |
--------------------------------------------------------------------------------
| Total revenue | 523 | 295 | 903 | 608 | 1,595 | 1,300 |
--------------------------------------------------------------------------------
| Total expenses | -409 | -295 | -782 | -592 | -1,423 | -1,233 |
--------------------------------------------------------------------------------
| Participation in | 6 | 11 | 12 | 16 | 22 | 26 |
| earnings of | | | | | | |
| associated companies | | | | | | |
| | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 120 | 11 | 133 | 32 | 194 | 93 |
--------------------------------------------------------------------------------
| Operating margin, % | 23 | 4 | 15 | 5 | 12 | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operations being | | | | | | |
| discontinued 2) | | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 58 | 35 | 111 | 55 | 180 | 124 |
--------------------------------------------------------------------------------
| Total expenses | -82 | -36 | -146 | -71 | -238 | -163 |
--------------------------------------------------------------------------------
| Operating income | -24 | -1 | -35 | -16 | -58 | -39 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group eliminations | 170 | 79 | 299 | 163 | 480 | 344 |
| - revenues 3) | | | | | | |
--------------------------------------------------------------------------------
| Group eliminations | 147 | 79 | 263 | 163 | 444 | 344 |
| - costs 3) | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Group | | | | | | |
--------------------------------------------------------------------------------
| Revenue | 1,127 | 865 | 2,190 | 1,768 | 4,032 | 3,610 |
--------------------------------------------------------------------------------
| Expenses | -758 | -599 | -1,481 | -1,179 | -2,747 | -2,445 |
--------------------------------------------------------------------------------
| Participation in | 15 | 18 | 24 | 29 | 41 | 46 |
| earnings of | | | | | | |
| associated companies | | | | | | |
--------------------------------------------------------------------------------
| Operating income | 384 | 284 | 733 | 618 | 1,326 | 1,211 |
--------------------------------------------------------------------------------
1)Comprises trading revenues, issuers' revenue and revenues from the central
securities depositories in Tallinn and Riga.
2) The income statement for discontinuing operations has been adjusted for
periods in 2006 compared with interim reports in 2006 as a result of
organizational changes where certain parts of the business area have been
retained.
3) Development activities at OMX intensified in conjunction with the
introduction of Genium. The development of Genium takes place within the Market
Technology business area. Genium is initially being developed for OMX's Nordic
Exchange, which is the reason that the asset generated by OMX was transferred to
the Nordic Marketplaces business area on March 31, 2007. A difference in the
eliminations of expenses and revenues in the Group has arisen as there is a
difference between costs in Market technology and the amount that OMX is able to
capitalize. This accounting effect will remain for the entire duration of the
development project.
SOURCES OF REVENUE IN OMX
NORDIC MARKETPLACES
TRADING REVENUE
Trading revenues comprise trading and clearing revenues from the spot and
derivatives products traded on the exchanges included in Nordic Marketplaces. Of
the trading revenues during the second quarter, 70 percent was from spot trading
(mainly equities) and 30 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 9.2 m, calculated on the basis of trading during the second
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 0.9 m,
calculated on the basis of trading during the second 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 7.2 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 also include possible capital gains from the sale of operations.
INFORMATION SERVICES & NEW MARKETS
INFORMATION REVENUe
Information revenues are generated through the sale and distribution of trading
information based on the data generated through trading on OMX's exchanges.
Customers comprise information vendors, exchange members and private
individuals.
Trading information, which is the largest source of revenue, is sold to around
one hundred companies that distribute the information to a large number of end
users. These information vendors are invoiced in arrears. The size of the fee
depends on the number of end users.
REVENUE FROM BALTIC MARKETS
Revenues from the Baltic Markets comprise trading revenues and issuers' revenue
from the exchanges owned by OMX in Tallinn, Riga and Vilnius. The revenue model
is similar to that within Nordic Marketplaces. Also included are revenues from
the central securities depositories in Tallinn and Riga - the number of register
accounts as well as cleared and settled accounts are the most important
parameters.
REVENUE FROM BROKER SERVICES
Revenue from Broker Services derive from securities administration, mainly
back-office services related to share trading in the Nordic region, and the
licensing and operation of back-office systems also in the Nordic region.
Revenue from securities administration is based on fixed revenue per customer
and variable revenue governed by the number of transactions carried out. Systems
revenue comprises license, operation and consulting revenue.
OTHER REVENUE
Other revenues consist primarily of training revenues, sales of information
materials and line connection fees for members. Other revenues also include
possible capital gains from the sale of operations.
MARKET TECHNOLOGY
LICENSE, SUPPORT AND PROJECT REVENUE
License, support and project revenue derive from the system solutions developed
and sold by OMX. After OMX has developed and sold a system solution, the
customer licenses the right to use the software. Each project involves
individual adaptations to the specific requirements of the customer, for
instance, relating to functionality and capacity. This development, testing and
installation work generates project revenue that is invoiced continually
according to degree of completion. When OMX provides a system solution, it
undertakes to continually upgrade, develop and maintain the system and receives
regular support revenues for this work.
With regard to major system solutions for customers such as exchanges and
clearing organizations, license and project revenue is mostly fixed and
recognized in relation to the degree of completion. Support revenue is mainly
fixed and contracts usually extend for five years. A certain portion of license
revenue can also be recurring, and contracts can extend for a longer period.
FACILITY MANAGEMENT SERVICES REVENUE
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 also include possible capital gains from the
sale of operations.
INVESTMENTS Current period Current period Full-
April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Goodwill | - | - | 47 | 190 | 183 | 326 |
--------------------------------------------------------------------------------
| Other intangible | 100 | 62 | 269 | 130 | 368 | 229 |
| assets 1) | | | | | | |
--------------------------------------------------------------------------------
| Tangible assets | 18 | 10 | 35 | 26 | 86 | 77 |
--------------------------------------------------------------------------------
| Assets acquired | - | - | 30 | 75 | 165 | 210 |
| through | | | | | | |
| acquisitions 2) | | | | | | |
--------------------------------------------------------------------------------
| Total | 118 | 72 | 381 | 421 | 802 | 842 |
--------------------------------------------------------------------------------
1) The period April-June 2007 includes a reclassification of SEK 20 m of other
intangible assets for the period January - March 2007 .
2) Concerns other intangible assets.
INVESTMENTS IN R&D Current period Current period Full-
SEK m April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| (of which | 2007 | 2006 | 2007 | 2006 | 12 | 2006 |
| expensed) | | | | | months | |
--------------------------------------------------------------------------------
| Nordic | 63(2) | 6(2) | 104(4) | 8(3) | 113(9) | 17(8) |
| Marketplaces | | | | | | |
--------------------------------------------------------------------------------
| Information | 18(1) | 2(0) | 38(3) | 7(1) | 48(4) | 17(2) |
| Services & New | | | | | | |
| Markets | | | | | | |
--------------------------------------------------------------------------------
| Market | 41(2) | 56(5) | 73(5) | 96(11) | 151(7) | 174(13) |
| Technology | | | | | | |
--------------------------------------------------------------------------------
| Total | 122(5) | 64(7) | 215(12) | 111(15) | 312(20) | 208(23) |
--------------------------------------------------------------------------------
PRELIMINARY ACQUISITION CALCULATION - EV
--------------------------------------------------------------------------------
| SEK m | |
--------------------------------------------------------------------------------
| Cash | 41 |
--------------------------------------------------------------------------------
| Acquisition costs | 17 |
--------------------------------------------------------------------------------
| New share issue | 256 |
--------------------------------------------------------------------------------
| Acquisition price | 314 |
--------------------------------------------------------------------------------
| Fair value of acquired net assets | 179 |
--------------------------------------------------------------------------------
| Goodwill | 135 |
--------------------------------------------------------------------------------
ACQUIRED ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
| | Fair value | Carrying value |
--------------------------------------------------------------------------------
| Fixed assets1) | 149 | 9 |
--------------------------------------------------------------------------------
| Current assets | 19 | 19 |
--------------------------------------------------------------------------------
| Cash and bank balance | 33 | 33 |
--------------------------------------------------------------------------------
| Current liabilities | -22 | -22 |
--------------------------------------------------------------------------------
| Acquired net assets | 179 | 39 |
--------------------------------------------------------------------------------
1) The difference between fair value and carrying value is primarily
attributable to the valuation of acquired contracts.
Eignarhaldsfelagid Verdbrefathing (EV) is included in Nordic Marketplaces. EV
was consolidated in the Group's income statement and balance sheet on December
1, 2006. For the period, EV is included in the Group's revenues in the amount of
SEK 40 m and in net income in the amount of SEK 13 m. Goodwill is attributable
to the company's positive profitability and anticipated revenue synergies in
conjunction with the continued integration of the Nordic Baltic securities
market. The cash-flow effect of the acquisition amounts to SEK 25 m, comprising
a cash payment of SEK 41 m, acquisition costs of SEK 17 m, minus received cash
balances of SEK 33 m. Of the total amount of acquisition costs of SEK 17 m, SEK
11 m had an effect on cash flow in 2006. The remaining SEK 6 m will impact cash
flow in 2007. The new shares issued are valued at market value on the
acquisition date.
PRELIMINARY ACQUISITION CALCULATION - FINDATA
SEK m
--------------------------------------------------------------------------------
| Cash | 71 |
--------------------------------------------------------------------------------
| Acquisition costs | 3 |
--------------------------------------------------------------------------------
| Acquisition price | 74 |
--------------------------------------------------------------------------------
| Fair value of acquired net assets | 31 |
--------------------------------------------------------------------------------
| Goodwill | 43 |
--------------------------------------------------------------------------------
ACQUIRED ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
| | Fair value | Carrying value |
--------------------------------------------------------------------------------
| Fixed assets1) | 30 | 0 |
--------------------------------------------------------------------------------
| Current assets | 3 | 3 |
--------------------------------------------------------------------------------
| Cash and bank balance | 1 | 1 |
--------------------------------------------------------------------------------
| Current liabilities | -3 | -3 |
--------------------------------------------------------------------------------
| Acquired net assets | 31 | 1 |
--------------------------------------------------------------------------------
1) The difference between fair value and carrying value is primarily
attributable to the valuation of acquired contracts.
Findata AB was consolidated in the Group's income statement and balance sheet on
March 1, 2007 and is included in the Information Services & New Markets business
area. Findata is included in the Group's revenues in the amount of SEK 5 m and
in net income in the amount of SEK 2 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 will be 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 Full-
April-June Jan-June Rolling year
--------------------------------------------------------------------------------
| SEK m | 2007 | 2006 | 2007 | 2006 | 12 months | 2006 |
--------------------------------------------------------------------------------
| Nordic Marketplaces | 20 | 18 | 38 | 36 | 72 | 70 |
--------------------------------------------------------------------------------
| Information Services & | 16 | 5 | 28 | 11 | 39 | 22 |
| New Markets | | | | | | |
--------------------------------------------------------------------------------
| Market Technology 1) | 34 | 31 | 70 | 63 | 139 | 132 |
--------------------------------------------------------------------------------
| Total | 70 | 53 | 136 | 110 | 250 | 224 |
--------------------------------------------------------------------------------
1) The period January - June 2007 includes impairment losses in discontinuing
operations in the amount of SEK 4 m. The period January - June 2006 includes
impairment losses in discontinuing operations in the amount of SEK 4 m. The
period January - December 2006 includes impairment losses in discontinuing
operations in the amount of SEK 8 m.
MAJOR SHAREHOLDERS AS OF JUNE 30, 2007
--------------------------------------------------------------------------------
| | Number | Share capital |
| | of | and |
| | shares | votes. % |
--------------------------------------------------------------------------------
| Investor AB | 12,950,507 | 10.7 |
--------------------------------------------------------------------------------
| The Swedish state | 7,993,466 | 6.6 |
--------------------------------------------------------------------------------
| Nordea Bank | 6,623,115 | 5.5 |
--------------------------------------------------------------------------------
| Franklin-Templeton Funds | 4,289,604 | 3.6 |
--------------------------------------------------------------------------------
| Fidelity Funds | 3,454,500 | 2.9 |
--------------------------------------------------------------------------------
| Didner & Gerge aktiefond | 2,557,000 | 2.1 |
--------------------------------------------------------------------------------
| Olof Stenhammar and companies | 1,887,590 | 1.6 |
--------------------------------------------------------------------------------
| Swedbank Robur Funds | 1,867,100 | 1.5 |
--------------------------------------------------------------------------------
| SEB funds | 1,785,144 | 1.5 |
--------------------------------------------------------------------------------
| The Finnish state | 1,508,500 | 1.3 |
--------------------------------------------------------------------------------
| Other Swedish owners | 13,915,183 | 11.5 |
--------------------------------------------------------------------------------
| Other foreign owners | 61,808,758 | 51.2 |
--------------------------------------------------------------------------------
| 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.
