Excellent 2007 Results For SWX Group, SIS Group And Telekurs Group

The Swiss financial centre’s three infrastructure companies, which merged as of 1 January 2008 to create Swiss Financial Market Services Ltd, recorded excellent financial results for 2007, the last year in which the three companies prepared individual accounts as separate entities. The SWX Group, SIS Group and Telekurs Group each generated record earnings in 2007. Higher volumes in all business fields contributed significantly to these gratifying results.

For the SWX Group, 2007 was the most successful year in its history. Securities turnover on the SWX Swiss Exchange, SWX Europe (formerly, virt-x) and Scoach Switzerland Ltd. increased by 27.8% to CHF 2.528 trillion. The number of contracts traded on Eurex, the derivatives exchange jointly operated with Deutsche Börse AG, also rose by roughly 25% to 1.9 billion. That higher volume led to a 47.4% increase in earnings before interest and taxes to a level of CHF 290.4 million.

The SIS GROUP also achieved outstanding results: the 2007 financial year represents the company’s fourth consecutive year of record earnings. Operating income rose by 78.1% to CHF 108.8 million, while net profit grew from CHF 34.6 million in 2006 to CHF 70.3 million in the past year.

At the Telekurs Group, operating income increased by CHF 136.3 million, or 19.5%, to CHF 834.1 million; earnings before interest and tax rose by 23.5% to CHF 79.3 million. These key readings are all the more impressive when one considers that Telekurs acquired the French financial information company Fininfo in 2007.

Given those results, Swiss Financial Market Services Ltd is starting out on an extremely solid base. No consolidated financial statements are available as yet for 2007 because the three former companies did not apply the same accounting standards, hence their figures are not directly comparable. The accounting standards of Swiss Financial Market Services AG will be unified during the course of 2008.

Overview of key figures for 2007:(1)

Another record year for the SWX Group in 2007

In 2007, the SWX Swiss Exchange, SWX Europe (formerly, virt-x) and Scoach Switzerland Ltd. benefited from a new record high in turnover and trading volume. Annual revenues increased over the previous year by 27.8% to CHF 2.528 trillion. Turnover in structured products and warrants rose a marked 57.7% and in exchange traded funds (ETFs) by 51.8%.

The Group’s net profit for 2007 surged an annualised 49% to CHF 244.3 million, representing the sixth consecutive year of record earnings. Increased demand for trading capacity contributed significantly to that result. Operating income in 2007 grew by 26% to CHF 533.8 million. On the other hand, operating expenses rose 22.5% to CHF 253.8 million, mainly due to investments in innovation projects, particularly those focused on the total modernisation of the trading infrastructure. EBIT for 2007 increased by 47.4% to CHF 290.4 million, while cash, cash equivalents and securities holdings declined 2.5% to CHF 571 million. Revenues from cash market trading recorded a sharp 39.6% gain versus the previous year to a total of CHF 240.9 million, and income from data sales increased by 11.5% to CHF 42.3 million. Admission revenues fell 21.4% to CHF 19.4 million, while those from futures and options trading on Eurex rose 22.7% to CHF 223.8 million.

10 initial public offerings were launched on the SWX Swiss Exchange in 2007. The newly listed companies have a collective market capitalisation of approximately CHF 5.0 billion, CHF 1.5 billion of which was placed in the public capital market. With the IPOs of Cosmo Pharmaceuticals and Addex Pharmaceuticals, the SWX Swiss Exchange was able to expand further its position as Europe’s leading life-sciences exchange. Dramatic growth was also recorded in the number of new issues of structured products and warrants. At the end of 2007, the number of outstanding products totalled 19,062, with 25,742 having been admitted to trading during the year. 64 new ETFs were listed on the SWX Swiss Exchange in 2007, bringing the year-end total to 125 products.

The SWX Swiss Exchange and SWX Europe (formerly, virt-x) last year pressed ahead with their “Trading for the Future“ initiative, which is aimed at expanding the exchanges’ trading infrastructure. Another milestone was the approval of a new tariff structure for securities trading.

In the past year, Eurex recorded an approximate 25% increase in the number of contracts traded (1.9 billion). Eurex’s acquisition of America’s International Securities Exchange (ISE) in 2007 is contributing not only to a broader presence in the USA through the addition of new participants, but also an expanded palette of USD-based products.

STOXX can also look back on a successful year. With an annualised growth rate of roughly 45% in index-based options and futures, STOXX is the European market leader and the world’s No. 2 in financial market indices.

Outstanding 2007 financial year for SIS Swiss Financial Services Group AG

For the SIS Group, 2007 represented the fourth record year in succession. With a 78.1% leap in gross profit to a level of CHF 108.8 million and a doubling of net profit from CHF 34.6 million to CHF 70.3 million, the Group once again achieved excellent results. Strict cost management, improved procurement conditions and successes from acquisitions in various business areas all had an influence on that impressive performance.

For SIS SegaInterSettle AG, 2007 was by far the highest-volume year in the company’s history. The number of transactions rose by 44.5% to 47.4 million and assets held in custody increased by 2.6% to CHF 3.086 trillion. Operating expenses declined to CHF 109.3 million, 23.6% lower than in the previous year. This significant reduction in outlays is attributable to continuous cost management efforts. SIS SegaInterSettle expanded its range of services particularly in the investment fund area, thereby achieving high growth rates. Moreover, customer-oriented as it is, the company was able in 2007 to return CHF 10 million to its customers in the form of price reductions.

SIS x-clear AG continued to assert itself in the marketplace during 2007. Apart from SWX Europe (formerly, virt-x), SIS x-clear now also offers clearing services as a central counterparty for the SWX Swiss Exchange. The initiation of clearing services for the London Stock Exchange is imminent. The gratifying financial year was also reflected in the transaction figures: the number of transactions handled by SIS x-clear in 2007 rose by an impressive 80.6% to 14.3 million. As a result, clearing volume also increased by 63.6% to CHF 872.2 billion.

SAG SIS Aktienregister AG further expanded the company’s leading position in its core services of share register and special register administration as well as the organisation of annual general meetings. The number of shareholder meetings rose from 99 to 120 and the number of share registers under administration increased by 17 to a total of 149. At year’s end, 70 special registers were under administration, up from 65 in the previous year. In addition to these quantitative increases, efficient cost management also contributed significantly to the fine annual results. Net profit for the year quadrupled to CHF 0.9 million.

Marked growth at Telekurs Group in 2007

In the year under review, the Telekurs Group recorded a marked CHF 136.3 million increase in operating income to CHF 834.1 million, a 19.5% gain that was accomplished both through acquisitions and organic growth. If acquisitions are factored out, operating income increased 12.4% to CHF 86.8 million. Earnings before interest and tax rose by 23.5% to CHF 79.3 million. Despite the burden of extraordinary charges for the integration of Fininfo, which was acquired in the fall of 2007, as well as for the merger to create Swiss Financial Market Services, annual net profit grew by 18.2% to CHF 91.8 million.

The card-based payment transactions business area, which encompasses the acquiring business as well as the compiling and processing of credit, debit and prepaid card transactions, registered a CHF 67.8 million increase in revenues to CHF 454.3 million, 17.5% higher than in the previous year. The number of debit card transactions rose by 6% and those made via credit cards by 20%. In addition, two smaller acquisitions aimed at propelling the internationalisation of the card business, as well as the early 2007 launch of the Mobile Voucher, both contributed to this growth in revenues. The acquiring-processing business also benefited from the uninterrupted trend towards cashless payments: transaction volume rose by 18.7% to a total of 317.7 million.

The electronic payment systems business area comprises interbank payments processing, the direct debit business as well as PayNet, the network for processing electronic invoices. In 2007, operating income rose by 5.4% to CHF 33.4 million. Transaction volume in the SIS interbank payments system increased by 12.6% to 357 million, and in euroSIC by 12.9% to 3.5 million. Owing to the higher volume of transactions and continual gains in efficiency, the transaction prices at SIC were reduced sharply once again. Telekurs PayNet witnessed a significant increase in transactions, particularly in the business-to-consumer area.

The international financial information business area specialises worldwide in procuring, refining, processing and disseminating international financial market information and encompasses the Group companies in Switzerland, Europe, Asia, Africa and the USA. Operating income in this business area rose by CHF 67.2 million to CHF 310.3 million. In early October, the financial information business of France’s Fininfo SA was acquired, thereby making Telekurs Financial the third largest financial information provider in Europe.

The IT and Facilities Services unit placed its focus on integrating the SIS Group’s data processing centre into the systems of the Telekurs Group, a project that was completed ahead of schedule in late November.