納斯達克交易所 (NDAQ) 2007 Q1 法說會逐字稿

Good morning and most welcome to this first quarter presentation. And I'd like to especially welcome you here in Stockholm in the auditorium but also you participating on the phone or on the Web, most welcome.

We will run this presentation as we usually do it. I will start off; talk a little bit about the events and where we are and the state of the business. Ina will then follow by taking us through the financial outcome of this first quarter. And then we will of course open up for questions and comments. And following that for you here in Stockholm, I would very much like to see you for a light lunch that will be served outside. So once again, most welcome.

But before we get started and because we have most of you as analysts and research and follow our share, I'd just like to say that we just sent out a press release and that we have sold some shares. I saw that some of you with your BlackBerries was probably picking that up. And we are making a minor divestment of Orc shares following a genuine and big interest for and supporting Orc in creating a better free float in their share. So, in the morning we have sold 650,000 shares in Orc Software in order to support them. And that takes our holding down from 29 to a little bit above 25. And it will also have an effect of approximately a profit for OMX of approximately SEK100 million for the market technology business for the second quarter.

By that, let's jump into the first quarter report. And as you have already seen in the report presented, 2007 has started off quite strong. And we have seen a high level of activity in all our operations. And there is three highlights that I'd like to bring forward. The growth in trading has continued. I think that's important. The launch of Genium, the next generation trading technology from OMX for trading, post trade and Information Services was launched in February. And thirdly, we are seeing a strong development in our Information Sales business.

But starting with the numbers, Ina will take you through the most of it. The operating income for the first quarter was SEK348 million. That was the -- in our Company's history, the highest profit in a quarter, if we exclude non-recurring items. Quarterly revenues increased by 21% excluding those non-recurring items compared to the first quarter of last year. At the same time, our costs was up 25% compared to the same quarter last year.

And the cost increases we have experienced during the quarter is largely due to the increased capacity constraints that we have in the Exchange business. And I'm coming back to say a little bit what has happened here. But also that we have intensified a lot of different projects around the Group -- in the Group. Of one of course is Genium, the next generation technology. The inclusion of Iceland is also one item that affects our cost base.

When it comes to revenues, the largest in absolute terms, of course is the increase we've seen in the Nordic marketplaces, where year-on-year revenue growth by SEK85 million. But we've also seen growth in the business areas, market technology and Information Services and New Markets. Ina will give you more details on the financials later on.

I will now take you -- talk about our business areas in more detail. And I will start with the Nordic marketplaces. Again, as already seen in the interim report, we have reached several new records in this quarter. But we also launched our alternative market First North in Iceland and in the beginning of April, we also launched First North in Finland. Also, just after the end of the reporting period, we included the Icelandic companies in the Nordic Exchange. And they are now presented together with all the other companies in -- all the other Nordic companies.

It is a record quarter. It has been a record quarter for the Nordic Exchange. And the value of trading for the first quarter was up 19% and the number of share transactions were up 50%. And I'd like to remind you that when we had this presentation a year ago for the first quarter of 2006, we also presented at the equity turnover for the first quarter last year also grow by 50%. So, we've really seen a strong, exceptionally strong growth in this business. And this exceptional strong growth had some, have had some consequences in the form of extra cost for securing capacity and securing service levels.

You see here on the slide some of the companies that we have welcomed, or that we have moved -- that have moved from First North to the main market during the quarter. And we now have over 800 companies listed on the Nordic Exchange, of these, 701 of these 800, within the Nordic marketplaces. The interest and I'd like to comment that, the interest of our listing services continues to be good. And I think we have a very good pipeline for new listings at the moment.

Another thing, which I think, is important that we are trying to be one of the leading exchanges and OMX really strive for that, with the Nordic Exchange, to be one of the leading exchanges in Europe. And one of the most important things for that is of course to have a competitive fee structure. And I think what you saw last year, what we -- changes for derivatives and what we've done with reporting trades, is just an aim for us to be one of the leading exchanges and being very competitive. And I think that is also a reason why we have seen continuous growth. We are very competitive when it comes to our fee structures.

And as you might well know, many of you here, the index record in Stockholm and Copenhagen that we've beaten during this part of the year, up until April. And those old records for indices came from the year 2000. And that is in many ways fantastic. Finland still have a bit to go. But what is even more important for us within OMX is of course that we're reaching new trading records and not only index records.

In February, which was a unique month in many ways, we saw an all-time high in both the value of share trading per day and the number of equity trades per day. We also saw an all-time high in the number of traded derivative contracts per day. And I'm not going through all these different dates in February, but when you go back to it you will find some quite unique trading records during that month.

And as you see here on this graph, this strong growth is illustrated pretty well here. But this slide shows more than just the fact that we are at the cyclical strong period. I think this slide shows that the turnover in the equity trading is now close to twice as high as it was in the year 2000. And I think that tells us that this is not only cyclical growth, it is a lot of structural growth we see in this market. And that is why the exchange industry very much is a growth industry. And I think we have been uniquely, here in the Nordics when we look into the growth and I think despite some media comments about the failure of the Nordic Exchange, I think this clearly shows the success of the Nordic Exchange, bringing markets together.

One example what we do from the first quarter, which I'd like to highlight, is the example of IXSP, which we have been disclosing during the first quarter. And that is OMX involvement in the creation of the International Exchange in St. Petersburg. By partnership with the St. Petersburg Exchange, who are the third largest exchange in Russia, and RX a group of Russian and Swedish venture capitalists, we are creating a market -- marketplace for small and mid-size Russian companies. I think this is a very good example of how we can participate with both our technology in and our expertise in creating and developing business opportunities in Central and Eastern Europe.

Now, over to the Information Services and New Markets. The interest for our Information Services continues to grow and information sales grew by over 30% compared to the same period last year. This is very much due to the -- and follows the creation of the Nordic Exchange. And by that I think it's now clear that media and information vendors all around the world have recognized OMX and the market data and information we provide that are very interesting things for them to resell and to make business out of.

In the first quarter within this business area, we also launched our new information service for our listed companies, what we define as the CompanyNews Service. We've also continued to invest in new products and services within this area such as we work with the corporate actions, accounting data, but also a lot with providing low latency feeds in order to get information much faster, much quicker to our customers.

And I have here, presenting my interim reports, been talking about different products and services within the information sales. And I think now, with the first quarter we could see the positive effects of the new Nordic market data feed that we introduced last year. The number of information vendors increased to 103. And the number of terminals and terminals in our world is the Bloomberg screens the Reuters screens and all those screens using this -- displaying our information. The number of these terminals has increased to close to 30%, compared to last year and is now reaching 83,000. And here you could see between the Q4 and the first quarter, the effect of this new Nordic market data feed. And I think it's interesting that now, by putting all these information into one feed to our customers, it increases the value, but also increases the interest.

In this business area, we could also report that the Baltics have had an exceptionally good quarter. The number of equity transactions per day in the Baltic grow by 128% year-on-year.

As we mentioned, another part of this, within this business area, and as we mentioned at the time of our 2006 financial statement in January, the unit for development of systems for back-office services were added to the business unit broker service. This unit had revenues of SEK49 million compared to pro forma revenues of SEK53 million. So, it was down during this first quarter. The business continues to develop well, despite lower revenue -- these lower revenues which is -- and they are due to that we have lost one of our customers during the first quarter.

I also here, in this business area, would like to give you one example of all the initiatives of extending and growing our -- within the core competencies of this and that is the acquisition of Findata. In March, we announced the acquisition of Findata from the Swedish company Bisnode. Findata, I would say, had one of the most full coverage databases for financial data in the Nordics including, among other things, all these facts about corporate actions, company descriptions, financial history and a lot of customized indices. By acquiring Findata, we will be able to further develop our own Information Services business. And I think that will also support the positive development also of the Nordic Exchange.

And then over to our market technology business. I think there is three things also in this business area I would like to highlight. The first one is of course the launch of Genium that we did in February. We also have seen an increased market demand for our -- both from emerging markets, from new marketplaces, but also from existing customers. And of course, something that we have said and that we are focusing on is to enhance and focus on the profitability of this business area.

Looking into the graph here, which describes the revenues and the order intake and the total order value for the market technology business. And as you see from this graph, the total order value at the end of the first quarter reached more than SEK3 billion, which is up 30% compared to last year. And please note, and if you compare that with your old numbers, that we now have no longer include the order intake from operations being discontinued, that was part of this up until the end of last year.

The order intake for the first quarter is slightly lower than the order intake for the fourth quarter 2007, which is the normal seasonal pattern. An order intake for the first quarter reached SEK395 million compared to SEK348 million during the first quarter of last year. And order value to be delivered within the next 12 months grew by 45 -- 44% to a little bit over SEK1 billion.

And compared to the first -- compared to the fourth quarter we've also seen cost increases in market technology. And the main reason is the capacity constraints we've had in our Exchange business and that did drive the cost structure also in market technology. And we also had an increase in own work capitalized and Ina will give you a better description on that later on.

And here are some examples of contracts signed in the first quarter of 2007. The market is picking up and we are continuing to focus on the profitability of the growth we see. However, we all need to bear in mind at the moment that there is a very tough market for employees, especially here in Sweden, both when it comes to interest and we have in order to fill the gaps here, in order to support the growth, we have brought in, and as you saw in the report, a lot of consultants that we are now trying to exchange for employees over time. We also see and we are not changing our status on that one, but we see an operating margin of 10% for this business as a minimum and it's not impossible that we'll reach that during this year.

In the business area of market technology we also have divested some shares in Orc Software, which I already commented. But maybe the most important thing within market technology for the first quarter is of course the launch of the Genium, the next generation trading technology. And I think we all have seen in the first quarter report, shows it very clearly, that the exchange industry is evolving very fast and puts new demands onto technology when it comes to speed, availability, stability, flexibility and all these nice words, but even more importantly maybe, cost efficiency. That by bringing on a lot more volumes and not having the same cost constraints, or capacity constraints and this is what Genium will have an important role for us. It is a long-term project and we assume that it will be going on for a while, first to build it and then to implement it and then to operate it and then to also to bring it into other markets in the world. The Nordic Exchange will be the first one to adopt to it.

One step of this development of Genium was presented yesterday. And I think that was also a very important thing. And that was when we introduced the Genium market data, or market info, which is this low latency distribution system. And to get market data out with low latency is one of the most important things for the future, especially for supporting algorithmic trading and a lot of those type of trading players that is out there. To develop this solution, this Genium market info, we have acquired technologies from a company called Cicada, which is well known in the Information Services business, for their state of the art technology. And we have now a license to -- for everything when it comes to these kind of things for the exchange industry. And the new solution will significantly shorten the time in the future for bringing out new services to get the information out and that is one of the key components.

So, Genium, you will hear a lot more about Genium going forward, I can assure you, it's something very important to us. So, that was the three business areas and just a short comment also on operations being discontinued. There is not much to report. What I can report is that I would like finally that we in the first quarter and reported also in January, we have outsourced, we have taken (inaudible) to bring it on for the existing Swedish business and we now integrated the remaining parts into our Information Services business. So the only remaining part here is the -- our UK operations in securities administration.

The business in the UK has had a strong growth. Revenues in the first quarter was up 165% compared to last year. The rapid growth has brought with it, of course, cost increases associated with building up this business. And we are now working quite intensively with both stabilizing the operations given this high growth rate. But we also, of course, focusing on profitability as well as finding the right solutions for this business going forward with partners and others. And by that, I'd like to hand over to you Ina to take us through some of the financials.

Sometimes this works, and sometimes it doesn't.

Thank you Magnus. As you just have seen Magnus has gone through that this quarter was marked by a record high quarter when it comes to exchange activity. But we also have had a very intense quarter when it comes to our own development work and especially then our next generation exchange technology, Genium. The activity level has been very high in all our business areas and this has also resulted then in both in higher revenue as well as higher expenses for the quarter. And I will now go through that in more detail.

As you can see, here, our revenue for the quarter ended at SEK1,062 billion and this is an increase with 18% year-on-year. If we would exclude non-recurring revenue, that we had in the first quarter in 2006, that was SEK22 million, the increase year-on-year is 21%. Expenses at the same time however, they're also high and we have seen an increase year-on-year of 25%. EBIT ended at SEK348 million and a net income at SEK257 million. This implies an earnings per share of SEK2.12.

The main explanation to the high revenue as well as the expenses is as already mentioned overall, high activity. We have had high trading activity, we have had strong information sales, high external, but also then, also high internal activity within our technology operations. Please note also that Iceland's stock exchange is consolidated as of December 1, that's affecting now the full quarter and that effect on revenue is close to SEK30 million and on expenses it's close to SEK20 million. I'd also like to highlight the financial items. Here, as you can see there are minus SEK19 million [that's higher] as you have seen in the previous quarters and going forward, this is mainly due to that we have had higher market interest rates, but also higher costs related to our credit facilities that we need to have our clearing operations. There we have also seen a significant increase in the volumes.

Going forward, we expect this level to be around SEK17 million. For the second quarter, however, remember that we are expecting to get a dividend also from our financial holding in Oslo stock exchange, so that financial net for the second quarter is more expected to be around zero.

Here you can see the earnings development per quarter and the light blue part just highlights the non-recurring items. As you can see, revenue as well as operating income has, they have trended upwards in the past year. The increase in revenue excluding the non-recurring items is 21% year-on-year and 13% quarter-on-quarter. The improvement in operating income is 12% year-on-year and 28% quarter-on-quarter. And now over to the revenue growth. And here you had a growth in revenue per business area adjusted for non-recurring items. As you can see, the growth comes from all business areas, but the larger part is within the Nordic Marketplaces and market technology. Nordic Marketplace increases mainly related to the higher trading and at SEK70 million out of the SEK85 million but also higher issues as revenue of around SEK11 million. Part of this contribution, as I already mentioned is also the consolidation of our Iceland stock exchange, that's close to SEK30 billion.

For Information Services New Markets, the increase is mainly related to the high information sales. Here we have seen a strong increase of 31% year-on-year and it is mainly due to a positive response to the new Nordic market data offering that we launched in the fourth quarter and this has resulted in a higher number of used terminals, that number has increased with 28%, but also that we now have a higher number of information vendors. They've also seen a strong market activity in the Baltic Markets that has contributed to revenue growth for Information Services and that has contributed with the SEK5 million. However, at the same time, we have seen a lower revenue from the brokerage services with about the same amount offsetting this.

For market technology, the increase mainly stems from higher license support and project revenue. Out of the SEK76 million, it's more than SEK70 million. And this is the result of the overall high external and internal activity that has resulted in higher own work capitalized, related mainly to the development of Genium.

Our facility management revenues have also increased year-on-year and that increase is SEK19 million. Another explanation to the strong revenue growth is the increased revenue for discontinuing operations that now includes the securities management operations in the UK. That operation is under build up and has shown a very strong growth, year-on-year, that increase is SEK33 million. Finally, eliminations have also increased and this reflects the higher activity in all business areas, and increased internal sales, that's an effect of that.

Let's now move on to the cost development. And here you have the cost development for the past year, and as you can see we've had fairly stable costs up until the fourth quarter in 2006, where we've started to see a pick up in costs. Year-on-year, costs have increased with 25%, excluding the discontinued operations, the increase is 20%. Compared to the last quarter in 2006, the increase is 5%, excluding discontinued operations.

So, where does this cost increase come from? As you can see here, the major part of the cost increase year-on-year, relates to market technology and Nordic Marketplaces. For Nordic Marketplaces, the increase cost is SEK56 million, and out of this close to SEK20 million is related to Iceland stock exchange, and the major part of the remainder relates to increased costs for IT support and maintenance. And this is due to the increased capacity requirements we have for our trading. For Information Services and New Markets, the cost increase is SEK15 million, or 11% year-on-year. This is mainly related to investments that we have made in new products and services during the year. On a quarter-on-quarter basis, the costs for this business area is somewhat down.

Market technology has also experienced a high increase in costs of SEK75 million, or 25% year-on-year, and if this -- is already mentioned mainly related to the higher market activity, and in particular, the increased internal activity that we've had, to support a higher trading in our exchanges, but also the development of Genium. Also here you can see on the cost side, the growth from discontinuing operations, where we have had a growth year-on-year, of SEK29 million in costs, as -- and that this, as I mentioned previously, the result of this operations being -- building up.

The eliminations, as I mentioned, they are related to higher internal activities. Here I would like you to please note that eliminations for costs are lower than the eliminations for revenue. This is mainly due to that a large development of Genium for our own exchanges. The reason is that we are doing the actual development work in the market technology while the costs are activated in the exchanges. This results in a differential in the eliminations, and this is due to the fact that it's not possible from an accounting point of view, to activate all costs related to internal development. It's only possible to activate direct costs. This differential we are expecting to remain during the development project.

For the second quarter 2007, we expect that the total costs will remain in line with the first quarter. I will now move over to the balance sheet, if I manage -- here we go. Here I would mainly like to highlight two things. First of all, the increase in short-term receivables, as well as short-term liabilities. This is due to large transaction volumes that we have seen related to the securities administration business in the UK, where we act as intermediary. This is a momentarily grossing up of the balance sheet and it's a similar effect that we have from the market value of the outstanding derivatives.

There also -- seen an increase in the equity and this increase is more than SEK400 million and this is due to strong profit generation. Since the end of the reporting period, however, we have paid our dividend and this has then resulted in a decrease of equity positions, of close to SEK800 million.

Let's now move onto the cash flow. And here you have the cash flow for the quarter. Cash flow from current operations before the change in working capital was positive, at SEK328 million, compared to SEK230 million for the same period last year. Working capital decreased somewhat during the quarter, resulting in a cash flow from current operations, of SEK369 million. At the same time, we've had a negative cash flow from investment operations for the quarter, of SEK223 million. The main investment activities are acquisition related. Magnus has already mentioned a few. The Findata acquisition, but also the license from Cicada. But we have also had investment, quite a lot of investments in our own systems and in the Genium development.

As a result, our net debt has all-in-all, decreased, compared to the year end and it ended at SEK720 million. At the year-end, we have net debt of SEK847 million.

Finally, here I would like to update you on our key financial ratios. Here, as you can see, the earnings per share has remained at the high level of SEK2.12 per share, or SEK7.75 for the rolling 12 months, compared to SEK7.64 for the full year in 2006. Our profitability, return on equity and return on capital employed, has remained stable at 20%, and finally we have seen a decrease of our leverage of our net debt to equity, from 18% at year-end, to 14%. Our leverage target is to have a net debt equity of 30% over time. Since the end of the reporting period, we have paid dividends of close to SEK800 million and if we take that into account, the pro forma net debt equity post-dividend is 35%.

In order to enable us to continue to work with [adapting] the capital structure on an ongoing basis, our annual general meeting approved on April 12, a mandate for our board to re-purchase shares, and this mandate is to re-purchase shares up to 10% of total outstanding shares. With that, I'd like to conclude and then hand over to Magnus for some final remarks.

Thank you Ina. See if I can manage to change this. Here we are. Well, the strategic -- finally, before we go over to the Q and A's, I'd like to highlight a little bit of the strategic focus for the management and for OMX in general. And of course, I think, most of what is stated here is quite, maybe quite obvious, but I think it's important to state it anyway. I think we are in a good speed to conclude and to build the Nordic Exchange, but I still think there is some way to go. And I think not at least, working with the different players in the Nordic market, when it comes to investors, when it comes to the members trading, when it comes to media, and when it comes to the other. Everybody has supported this Nordic and we still have a lot of things we can do in order to smoothen that. And trying to influence them to be thinking more Nordic. I think we have taken some steps but there is more steps that needs to be taken. And as always, we'd like to see that if we can -- we have a very good co-operation with Oslo and we like to see that continue to be very good and developing relationship. And of course, creating a more profitable growth in our technology business is a priority.

The Genium, which we have mentioned so many times in this presentation, is an important part of that. With it's modularized building blocks it will be an important factor for us to secure continuous growth, but also at an efficient cost structure.

The third one is to take and utilizes the momentum that we see in the interest for information from the Nordic market and to grow the OMX Information Services business is an important thing.

The fourth one is, of course, with OMX being a quite unique company in the exchange industry with all the different assets we have within our company making us unique, I think participate in the creation of both regional markets and new market places is something that I think we could reap a lot of benefits from. IXSP in St. Petersburg, Findata, Genium Market Info is three examples from the first quarter. I hope to present more of these kind of different examples in the quarters to come.

And the last one I'd like to highlight, and there is a discussion about that, also something that I look forward to present more of, the service offering, and that is all the regulations and the changes in Europe, turning Europe more into one financial market. MISIT is the latest but there will be more issues, more regulations coming out. To turn them into business opportunities more than to business threat is something we work a lot with. And I think with the experience we have being one of the exchanges and exchange industry companies working with a more competitive environment than some of our friends out there, we're really trying to turn that into a benefit for us and not a threat. As we have done very much in the past.

And finally, Ina had mentioned most of it, but I'd just like to conclude that the outlook a little bit for the second quarter. And as we always state, the revenues in the OMX Exchange operations are largely dependent on trading performance and trading volumes on our exchanges and therefore it's impossible to make an outlook for that. However, in the business here of market technology we expect that the revenues for the second quarters are to be inline with those for the first quarter. And the Group expenses during the second quarter are also expected to be inline with those for the first quarter given the market activities and everything going on in our industry. By that, from Ina and myself, thank you for listening in. Thank you for watching on the Web.

I'd like now to move over to the Q&A session and please, when you're asking questions, please if you could state your name and where you're from. Who'd like to kick off? I need to say that do we also have the support from -- if you on the phone like to ask questions, I think you'll get some instructions.

(OPERATOR INSTRUCTIONS)

We're starting in the room instead.

Okay, thank you.

(inaudible) at SEB Enskilda. What's surprising a little bit on the trading revenue was the strength, and in particular on derivatives. Can you go in a little bit more detail why derivatives trading revenues were so strong?

I think there is a few things, but I think there is one topic that stands out. And I think we normally have that question every quarter, first quarter, due to the way that fee structure in the derivatives business is. It's built up on a calendar year, which means that the rebate system on that is effecting on the calendar year basis. So, when you've traded over the full year the average prices at the end of the year is lower as an average than the beginning when the rebate system kicks in.

Is that enough of an explanation? Because it was up strongly year-on-year and we've seen price cuts on derivatives since Q1 last year.

But it's still the main -- we've been able to reduce fees and push volumes, but still the main part of this difference as you see is the rebate system and the fact that --

(inaudible) derivative or anything (inaudible) I understand that now.

No, I would say it's quite a generic [comment]. More questions?

(inaudible - microphone inaccessible).

Absolutely, please.

You still say that you can expect up to 10% operating margin technology even during this year. If we listen to your guidance for Q2 with both revenues -- [technology] revenues and costs for the Group unchanged, sounds like it won't happen in Q2. Q3 typically is seasonally weak, so if that's to be happening in Q4, how would that look? Would we lower costs or higher revenues? What does it take?

As I stated before, I think we don't change our guidance on that one compared to what we did, so we don't see it as impossible to reach this year. I think when we look into this year, this first quarter, I think we like to restate that I think none of us could expect the volume growth and the capacity we've seen that we have had in the exchange business. And we have devoted more resources to internal, so many of this internal work has been done within technology in order to facilitate that. So that is, of course, hampering profitability in a way because it's internal trades. But I think we are not changing our statement. We see that we will -- it's not impossible that we reach it this year and it's a very clear focus on that in the technology business.

Is that costs that will fall off towards the end of the year then?

I think it's a combination. I think we will -- we need to work with both the cost structure and the way -- how we -- internal processes look like, but also trying to monitorize the interest we see in the market. That will be always the priority between internal demand and external demand. Please?

Rasmus Engberg, Handelsbanken Capital Markets. Can I have a follow up question first on technology? When you have a target of 10% EBIT margin, is that for your business, or does it include the participation from Orc Software?

We see it as, not, however, not the divestment of the shares, because that otherwise we wouldn't need to state this 10%, because I think we have practically already solved it. So -- but it include the operational as we see it with Orc, yes.

Second question on Genium. Now we do get a new sort of business area called eliminations, which has a loss. And you say that for the duration of that project we should expect a gap between the eliminations. Are we talking one year, two years?

I think what we're trying to do and I think that a little bit on the first quarter we are trying to speed up, because the growth in these exchange businesses is so strong, so we see what we can do in order to speed up this original plan of Genium to see if we can do it faster. I think it's a little bit early yet to say exactly when we can have it, sort of when it peaks and when it tails out. But we hope to do that during the year to be more specific about the process of that.

What is the plan for it to be implemented on your exchange, roughly?

It's modulized, so I think we already this year you will see that the interconnectivity, the fast fix interfaces and things that will support for our members to have better connectivity to the Nordic Exchange will be implemented. And that is the module in Genium. So what you will see module-by-module implemented and that is also a way for us long-term to change building blocks in order not to -- the way today with our existing technologies and like any other existing technologies, is very much a one big system and any change is quite cumbersome.

Further questions? Yes, please?

Fredrik Gutenbrant at Cheuvreux. I was wondering, you said some time during the presentation that you have reached a new cost level in the markets operation and you had great revenue growth of 21%, but your operating margin is flat compared to last year. So I was just wondering if you can elaborate on what will happen to the cost base in during the remaining quarters of 2007 and just what that increased cost base is coming from?

I think what we're trying to be very clear on is that phenomenal growth you have seen in our business, I mean we've been 50% up in the number of transactions this year and last year was also up 50%. With this very strong growth, you put certain constraints on how to operate and how to do things. And as long as this growth rate continues and as long as this high volume, this is what we refer to, we need to realize that will lead to a higher cost base than if we'd -- than where we were when it was far lower volumes.

So I think there is, to some degree, a -- it's not sort of a 100% fixed cost base and a variable revenue side. It's really some connectivity and now we've reached certain points where we're really getting into a new territory when it comes to capacity. So I think you should refer to it, to some extent, to the level of operations and the size of it. It might be some tails of it, we're building up now, if something happens it takes a while scaling it down if we see that the long-term trend is lower. So there is a flexibility in it, so it's not like we just add on in a fixed cost base on a high level, it's actually some variability in it.

Okay, and just another question. Regarding the new products popping up, I mean the Boat project, the Turquoise project; do you still feel confident with your fee structure for the remaining part of 2007?

Yes, we do.

Okay and just a follow up question on that one then. If these projects materialize, there's a lot of focus what that could do to volumes, the potential [steering] volumes, but have you done any analysis what it might do to the information side?

I think that lessons learned from other parts of the world, when you see new entities coming into the market like MTFs, as we call them in Europe, UCNs, whatever you call them in the US, the overall thing they bring to the market is an increased growth. I think we need to realize that adding new trading facility doesn't steal volume from someone else. It adds volume.

The question is, are you different growth rates of those? When you added in Archipelago, or Brut, or INET into the US market a few years back, if you look into the traditional exchanges at that time, you've seen that they've had a phenomenal growth on top of that. So I think what's important, when you look into these MTFs in Europe, whatever they are, Turquoise -- Boat is something different, because they are in a different way. But in the trading environment, you have a few others whether it is Vertex, or Turquoise, or PMG, the plus market groups, and others, and initiatives from some exchanges. I am convinced that we will see the same pattern in Europe, i.e., overall growth, even stronger growth in turnover.

That said, it will be more competitive, absolutely. But if you're prepared to be competitive and you know how to use it, you will be able to see the overall market growing faster.

So, I think from an OMX perspective, we are not necessarily negative, or have the fear of those entities. Quite the opposite, that will bring more people to look into the blue chips, more people to look into trading, creating new opportunities. We will hopefully see some of the very, very big trading companies from the US entering Europe, if some of these comes in, and if they start investing in Europe they will also have a positive effect on exchanges like OMX.

I think you might be right.

But does this also apply -- we talk about volumes, but does this also apply to the Information Services side?

I think it will, but I don't see that it's necessarily on a negative note. It could be -- we can see more trading firms coming in, more member interest in our markets. I think there will be also a genuine bigger interest for information and feeds -- the market data feeds from our market.

More and more competitive?

Absolutely, there is no doubt about it. But I don't think it will diminish it.

May I continue there. You talk about volumes here, a lot, but in the US I guess the same -- similar new competitors and increased volumes. You also see dramatically falling trading prices. Do you think it's long-term sustainable that Europe should have higher trading prices than the US?

Yes. And there is one -- a few things that is different from where you have here. So I think you will always -- there is always, when you look into the US market, I think sometimes when you look into -- you should look into the overall revenues of the exchanges, because what they have is compared to the European ones, they have a lot of fixed cost. If you like to be a member of the New York Stock Exchange, you pay a lot. If we [suggest] look into the trading, say, but in order to be -- you need to pay membership, they take different charges for connectivity in a total different way. They have a different fee structure than we have.

So, if you look into the revenues, it's not as big a differences. We have different structures, of how European exchanges are charging for the trading compared to the US ones, so that is one important thing. So, just to compare trading fees doesn't give you the right solution, for making the right conclusions, I would say. So, that is one thing.

I also think we need to realize that it's still a fragmented market in Europe, and that will remain for a very long time. I think, however, that for blue chips, for maybe the top 50 stocks in Europe, you might see it one development and maybe another development for the remaining part. But I think we are quite distant from reaching the US. Clearing the settlement is another one.

I think we have questions on the phone.

(OPERATOR INSTRUCTIONS). Excuse me Michael Long from KBW is online with a question.

Okay, sorry. Hi, I have a quick question. Maybe, I wonder if you can give us any sort of qualitative update on how the trading volumes have been in April so far. And the other question was, whether you can give any sort of updates on discussions that you've had with the smaller Eastern European, Central European exchanges. Which ones in particular have you been having particular discussions with? Thanks.

Thank you very much. Should I take April -- yes. April volumes, if you look into April up front until now, we are slightly up in April compared with the average for the first quarter, when we look into the turnover and the equity market. So that we have seen a continuous slight uptick in volumes.

When it comes to the Central and Eastern European markets, I think we are continuously and we have seen some positive feedback from some of the markets in this -- all-in-all it's about 25 countries, 25 markets that we are working with. I think we have been quite open that Bulgaria, Slovenia, Poland, Armenia, Kazakhstan, and of course St. Petersburg area, has been the target for the short-term. I hope that we will in not too distant time, we'll also add other partners in that region to us.

Thank you.

Further questions?

Excuse me. Johannes Thormann from WestLB is online with a question.

Good morning. Johannes Thormann of WestLB. Three questions, if I may.

First of all, could you elaborate a little bit more on the group eliminations? Will it have the same run rate this year and also probably for the next years, or will it fade away again?

Secondly, concerning your tax rate, which was below your guidance of 25% for the full year, and Q2, should be also below this run rate, because I guess your Orc Software share sale. Is there a reason why you still stick to the 25% for the full year 2007?

And last, but not least, talking about exchange consolidation, looking at priorities, which is the higher priority for you? By completing the Nordic exchange landscape, or finding an Anglo-Saxon partner? Thank you.

When it comes to the group eliminations, if I got your question right, it was mainly over what period of time does it expect to have these eliminations?

Yes.

And, as Magnus has already mentioned, it will -- we expect them to remain during the period we are developing Genium for our exchanges, and at this point in time we haven't -- we are not --

(Inaudible) this year, next year probably will be?

Well, most probably you're going to see it this year or next year. But we have not come out with any forecast on that.

Okay. So, first of all, this year next year's the best assumption?

That's the best assumption.

Okay.

When it comes to the tax rate, in the past few quarters we've had a lower tax rate than what we have guided on the 25%. Over time, we remain with our guidance. We will have a tax rate of close to 25%. However, it could vary between the quarters, and it's very much dependent on our Group's structure and where we are generating revenue. So, you can also expect, going forward, that it could actually be on a slightly lower level than 25%.

Okay, fine.

On the exchange consolidation, I'm afraid, Johannes, that I will not give you any guidance, or enlightenment on that one, more than we've already given you. I think I OMX is a very, very good example of consolidation, and the positive effects, what we've done with consolidation.

I think we are and shown by this interim report, I think we've proven that we are very strong on our own, on a standalone basis we are able to generate the profit, to be competitive on the fees, at the same time having one of the world's -- I would say the world's leading technology, which is a prerequisite for success in the exchange industry. So I think we are standing strong.

And, following a lot of media speculation, what I've commented before and I continue to comment, is that of course we have a lot of discussions with other in this exchange industry, part of what you all are quite aware of. London Stock Exchange, with EDX, Central and Eastern European exchanges, and we have a lot of discussion with all the other large ones in order to see if there is an opportunity. Everybody talks to everybody in our industry, because it's growing very rapidly, creates a lot of opportunities and to see if there is any way you could grasp those and take care of those. That is my comment to it.

Okay. Thank you.

Thank you. Okay, I think we are running out of questions, and -- I have a final question here. Yes, please?

Yes. Just on that topic, there's been talks of consolidation for a couple of years now, perhaps, in the industry at least, and we see fairly little coming out of it, at least when it comes to major players coming together. And can you just say something what a main obstacle to continued consolidation is? I mean, everyone talks to everyone, but -- what's the main obstacle?

I think -- first of all, I'd like to challenge you on your comment. I would say that there has been a lot of consolidation. We have consolidated seven exchanges, and I think that is a good example of consolidation itself. And I think we have proven to bring value out of that.

Secondly, I think the merger between New York Stock Exchange and Euronext is a very, very significant event in the exchange industry that brings us into total different world of consolidation. I think that will have some effects. I also think that we shouldn't remember the [CME CUT] merger in the US. I think we'll need to look into the merger between Archipelago and the New York Stock Exchange, NASDAQ's acquisition of Brut and INET. So I think you will have seen also Euronext acquisition, previously, I think you have seen quite an active -- and I think it's actually been a little bit more strongly in the last year than we have seen before. You can also see ICE, the Intercontinental Exchange, acquisition of [Nybord], is one of those, and you've seen some of the new plays coming into NYMEX, New York Mercantile Exchange, from general private equity firms stepping in, [C Vue E] becoming a listed company.

So, I can give you a long list of things I think is really active in our industry. So I think that will continue. I don't see that that will stop. The obstacles is, as always, does it fundamentally bring new and better services to customers? Does it fundamentally bring value to the stakeholders and not only the shareholders? I think that is the obstacle.

I think the London issue, if you make it that way that London has been under siege for such a long time. I think part of that problem is that trying to make an acquisition in London has had previously quite a strong focus on shareholder value, not necessarily only on -- when you look into -- because they've been under siege in a way for two and a half years. Part of those has been very focused on shareholder value, and not necessarily on the investors in the market, the numbers trading in the market, and the issues. And I think that needs to be taken into account in order to be successful.

Okay? Once again, many thanks from Ina and myself for listening in. For you on the Web, on the phone, many thanks for watching and listening. For you here in Stockholm, I like to invite you to a light lunch that is served just outside. So please, be welcome. Thank you very much.