Interim Report, January 1 - June 30, 2002

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Interim Report, January 1 - June 30, 2002 The Period in Summary · Transaction revenues increased by 9% to SEK 107.2 m compared with SEK 97.9 m last year. Transaction revenues for the last 12-month period increased by 12% compared with the previous 12- month period. · Increased market shares on the stock exchanges. · Revenues from electronic trading increased during the period by 44%, totaling 85% (65%) of the transaction revenues. · 57% (48%) of the period's transaction revenues derived from trading on exchanges other than the Stockholm Stock Exchange. Revenues from exchanges other than Stockholm and Helsinki doubled to reach SEK 28.2 m (14.3 m). · The share of the transaction revenues from US clients increased to 32%, which is twice as much as the same period last year. · The operating earnings before depreciation and net financial items were SEK 8.2 m (18.2 m). · The operating margin was 8% (19%). · A pre-tax loss of SEK -8.1 m (7.2 m) was reported. Realized and unrealized exchange rate losses of SEK -3.6 m (+0.3 m) on funds tied up in foreign currencies had a negative impact on the period's result. · NeoNet has initiated actions of measures to reduce costs by at least SEK 25 m annually. · The consolidated shareholders' equity amounted to SEK 251.6 m (254.6 m) at the end of the period. The Group had cash in hand, excluding items relating to the settlement of clients' securities transactions, of SEK 170.8 m (SEK 193.1 m on January 1). · Investments were made in the amount of SEK · 23.5 m (19.8), which is equivalent to 22% (20%) of the transaction revenues. · Nasdaq and the Oslo Stock Exchange were connected to NeoNet's global exchange network. · A sales office was opened in London. Events after the end of the period · The Milan Stock Exchange was connected to NeoNet's global network. CEO's Statement "Despite a very tough market climate, NeoNet is continuing to report increased daily trading values and an increase in revenues. We have achieved this by expanding our exchange network to include an increasing number of the world's major exchanges and through a steady growth of the client base. During the year the stock prices and turnover at the world's major exchanges continued to fall on a broad scale, and in particular at exchanges that have, up to now, been the most important for NeoNet's business, namely those in Stockholm and Helsinki. NeoNet's average daily trading value increased during the reporting period by 14%. In the light of up to 30% drops in revenues on the exchanges, our revenue development must be viewed as an evidence of the strength of NeoNet's offering. Transaction revenues grew by 9%. Our US clients accounted for 32% of revenues, which is twice as much as last year. Revenues from exchanges other than those in Stockholm and Helsinki doubled to reach SEK 28 m. The growth of the client base is according to plan both in Europe and in the U.S. The lower rate of revenue growth combined with costs related to the new markets resulted in unsatisfactory second quarter earnings. Actions to reduce operating costs and improve the cash flow have been intensified. The operating costs are expected to be reduced by at least SEK 25 m annually. The actions will have a limited impact this year but full effect from the beginning of next year. In addition, we will reduce product development pace, which is expected to improve the cash flow by around SEK 10 m over and above the cost reductions. Our objective, of providing our clients with trading access to 80% of global stock market capitalization through NeoNet's exchange network by 2003, still stands. NeoNet's financial position is strong with a good cash position and equity/assets ratio. We have reached a milestone in our evolution by connecting Nasdaq to NeoNet's exchange network. Clients now have electronic access to stocks on the world's second largest exchange. To reach our objective of offering access to 80% of global stock market capitalization in 2003, two more exchanges, namely Virt-x (where the highest-turnover Swiss stocks are traded) and the NYSE (the world's largest stock exchange), remain to be connected. There will continue to be major changes in the market for global equity trading and for its players. Factors such as new technology and increased competition combined with client demands for more efficient and less costly management have started to bring about extensive structural changes in the industry. NeoNet is in a strong position in the face of this development because we offer fast, secure and value-for-money electronic trading on the world's major exchanges through a single system." THE GROUP Operations During the quarter, NeoNet connected Nasdaq and the Oslo Stock Exchange to its exchange network. After the end of the period the Milan Stock Exchange was also connected. NeoNet also plans during 2003 to offer electronic trading access, through its exchange network, to the New York Stock Exchange and Virt-x (the European exchange where primarily Swiss stocks are traded). The planned timeframe for the connection of Virt-x has been delayed slightly as a result of the initiated actions. Despite this, we expect to obtain our market coverage objectives, as announced in autumn 2000, namely to offer trading access through a single system to 80% of global market capitalization in 2003. NeoNet has achieved its objectives with respect to the increase in the client base in both Europe and the U.S. A sales office has been established in London to further explore the potential of the U.K. market. Trading value, revenues and earnings The average daily intermediated trading value for the period was SEK 2,271 m, an increase of 14% compared to SEK 1,996 m for the same period last year. Rolling 12-month daily trading values were SEK 2,108 m, which was 13% higher that at the same time last year. NeoNet's average daily trading value increased during the period by 14%. At the same time, the most significant exchanges for NeoNet - in Stockholm and Helsinki - reported a fall in trading compared to the same period last year of 30% and 12% respectively. NeoNet's trading value on Stockholmsbörsen fell over the same period by 5% and grew by 8% on the Helsinki Stock Exchange. ------------------------------------------------------------ This information was brought to you by Waymaker The following files are available for download: The Full Report The Full Report