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Interim report January 1 – September 30, 2011

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Good profitability in technology operations

Orc Group’s operating income in technology operations for Q3 2011 was SEK 50.2m, of which Orc generated SEK 43.2m, equal to an operating margin of 28%, and CameronTec generated SEK 7.0m, equal to an operating margin of 39%.

  • The annualized contract value (ACV) at the end of Q3 2011 was SEK 681.5m (692.1), a decrease of SEK 10.6m, or 1.5%, compared to Q3 2010.
  • The transaction net was SEK 16.4m (23.4) and the transaction margin was 32% (36) for Q3 2011.
  • Non-recurring costs of SEK 13.1m were recognized in Neonet in the third quarter.

July – September 2011

  • Operating revenue of SEK 227.2m (255.6)
  • Revenue growth of -11%
  • Operating income of SEK 16.6m (16.2*)
  • Operating margin of 7% (6*)
  • Income after tax of SEK 12.9m (-0.2*)
  • Basic earnings per share of SEK 0.55 (-0.01*)

January – September 2011

  • Operating revenue of SEK 705.0m (708.6)
  • Revenue growth of -1%
  • Operating income of SEK 79.0m (52.3*)
  • Operating margin of 11% (7*)
  • Income after tax of SEK 58.4m (23.8*)
  • Basic earnings per share of SEK 2.48 (1.15*)

The Neonet Group is consolidated as of April 1, 2010. The actual transaction date was April 7, 2010.

* The comparative figures have been restated.

CEO Thomas Bill comments:
The third quarter was marked by widespread uncertainty in the financial markets, although the market situation for the Group as a whole was largely unchanged compared to the previous quarter. In Europe we have seen ongoing cost pressure and restructurings, not least in the Nordic region. At the same time there are signs of improvement in the Americas region, such as lower churn, successes for Orc Market Maker and Orc Hosted as well as several new customers in Brazil. However, there is still far-reaching uncertainty in both Europe and the Americas regarding regulation of the financial markets, which is having an inhibiting effect on demand. The APAC region saw the addition of several new customers and continued growth among major banks and brokerage firms. During the quarter the ACV increased by SEK 14m.

CameronTec has continued to perform well. In Europe we were awarded a number of key contracts during the quarter, including one with a global bank. The trend in which many major players are building their infrastructure based on the FIX standard is positive and important for CameronTec.

Neonet had yet another challenging quarter despite an upturn in trading volumes in many market places. However, this volume growth is coming from customer segments other than those that trade through Neonet. As previously announced, we are making several changes within the operation and further measures are underway to attain profitability in execution services. One crucial step for profitability in Neonet is the launch of the new Execution Service Provider (ESP) solution that provides a unique combination of execution services and technology for institutional brokers. ESP gives sell-side firms a very strong offering for their customers while at the same time providing significant cost savings. We have already met powerful interest in the service and see considerable potential here.

Given the current exchange rates and low transaction volumes in Neonet, it remains uncertain whether the target to achieve a minimum operating margin of 20% in a weak market can be reached by 2012.

About Orc Group
Orc Group is a leading provider of technology and services for the global financial industry. Orc delivers trading and market access solutions that are used by proprietary trading and market making firms, investment banks, hedge funds and brokerage houses.

The Orc Group serves customers through three business units, each with distinctive offerings:

  • Orc develops and provides the tools needed to run profitable trading and brokerage businesses.
  • Neonet is an execution service provider that offers professional market participants independent, high-speed execution services based on advanced trading software solutions.
  • CameronTec is the financial industry leader in FIX infrastructure and connectivity solutions.

With market presence in all major global financial centers, Orc provides sales and support services from its offices across the EMEA, Americas and Asia-Pacific regions.

Orc Group is publicly traded on NASDAQ OMX Stockholm (SSE: ORC).

For additional information, visit www.orc-group.com

Contact Information
CEO Thomas Bill, phone: +46 8 506 477 35
CFO Anders Berg, phone: +46 8 506 477 24

The information in this interim report is subject to the disclosure requirements of Orc Group AB under the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. The information was released for publication on October 13, 2011, 8:00 a.m. CEST.

N.B. The English text is a translation of the Swedish text. In case of discrepancy between the Swedish and the English text the Swedish version shall prevail.

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