7. Further notes. Parent company Swiss Stock Exchange (SWX Swiss Exchange Association), Selnaustrasse 30, 8021 Zurich, Switzerland

Transcription

1 Annual financial statements SWX Group Annual Report Further notes Name Location 7.1 Related parties Based on IAS 24, the following persons and entities qualify as related parties within the context of the SWX Group s normal business operations: Parent company Swiss Stock Exchange (SWX Swiss Exchange Association), Selnaustrasse 30, 8021, Switzerland The Swiss Stock Exchange is always referred to as the SWX Swiss Exchange Association in the annual financial statements. Parties with joint control Members of the Swiss Stock Exchange (the SWX Swiss Exchange Association): Name ABN Amro Bank N.V. Amsterdam, Branch Banca del Gottardo Bank CIAL (Switzerland) Bank Julius Bär & Co. Ltd Location Lugano Basel Bank Sal. Oppenheim jr. & Cie. (Switzerland) Ltd Bank Sarasin & Cie. Ltd Bank Vontobel Ltd Banque Bonhôte & Cie SA Banque Cantonale de Genève Banque Cantonale Vaudoise Banque du Bois Ltd Banque Privée Edmond de Rothschild SA Basler Kantonalbank Bellevue Group Ltd BNP Paribas (Suisse) SA BSI Ltd BZ Bank Limited Clariden Leu Ltd Cornèr Banca Limited Coutts Bank von Ernst Ltd Credit Suisse Deutsche Bank (Switzerland) Ltd Dreyfus Sons & Co. Limited, Banquiers Neuchâtel Geneva Lausanne Geneva Basel Küsnacht Basel Lugano Wilen Lugano Basel E. Gutzwiller & Cie. Banquiers Basel EFG Bank Fortis Bank Global Clearing N.V., Frankfurt Branch Goldmann Sachs Bank AG Hottinger & Cie, Banquiers HSBC Private Bank (Suisse) SA InCore Bank Ltd La Roche & Co., Banquiers LGT Bank in Liechtenstein AG Lombard Odier Darier Hentsch & Cie. Merrill Lynch Capital Markets Ltd Mirabaud & Cie, Banquiers Privés Pictet & Cie, Banquiers Privatbank IHAG Zürich AG Rahn & Bodmer, Banquiers Rüd, Blass & Cie AG SG Private Banking (Switzerland) Ltd Société Générale, Paris, branch Timber Hill (Europe) AG UBS Ltd Union Bancaire Privée Zürcher Kantonalbank Geneva Frankfurt Geneva Basel Vaduz Geneva Geneva Geneva Zug Geneva

2 58 Annual financial statements SWX Group Annual Report 2007 Key management Key management in the reporting year comprised the Board of Directors of the Swiss Stock Exchange (the SWX Swiss Exchange Association), which is identical to that of the SWX Group, as well as the members of the Management Committee of the SWX Swiss Exchange (shown with an asterisk after their name in the following list): Name STOXX Ltd. Swiss Fund Data AG Stock Exchange Intelligence Ltd Other related parties Location Basel Andreas Amschwand David J. Blumer Christoph Bigger (*) Raymund Breu Werner Bürki (*) Jean-Luc de Buman Jacques de Saussure Bernard Droux Christian Gell Peter Gomez G. Andreas Guth Andreas Häberli Heinrich Henckel (*) Reto Himmel Lee Hodgkinson (*) Daniel Keist (*) Chris Landis (*) Eduardo Leemann Peter R. Rahn Jürg Spillmann (*) Rodolfo Straub (*) Associated companies Name Location Eurex Ltd Eurex Frankfurt AG Frankfurt Eurex Clearing AG Frankfurt Eurex Bonds GmbH Frankfurt Eurex Repo GmbH Frankfurt US Exchange Holding Inc. Chicago Scoach Holding SA Scoach Europa AG Scoach Switzerland Ltd Luxembourg Frankfurt Name SWX Group Wohlfahrtsfonds Location The information on related parties required by IAS is disclosed directly in the relevant items. Where this is not possible, this information is given below. In principle, services are billed on an arm s length basis. The most important terms and conditions governing the exchange of services between the SWX Group and related parties are as follows: SWX Swiss Exchange Association The SWX Swiss Exchange is the collecting agency for fines imposed by the Sanction Commission. Proceeds from the fines were credited to the Solidarity Fund of the SWX Swiss Exchange Association up to 6 September New regulations on the application of fines came into effect on 7 September Parties with joint control Revenues and expenses relating to parties with joint control reflect transactions conducted on prevailing market terms. Amounts outstanding at year-end are not hedged and are settled in cash. There are no guarantees provided in respect of parties with joint control. No provisions were made at the end of the year for doubtful receivables from parties with joint control. Outstanding debts are monitored on a continuous basis and reviewed for long-term impairment no later than at year-end.

3 Annual financial statements SWX Group Annual Report Associated companies The most important business relationships with associated companies are set out in the table below. All transactions were conducted at prevailing market prices. Eurex derivatives trading Eurex stock market information Scoach stock market information 66 0 Office and administration services provided by the SWX Swiss Exchange to STOXX Ltd Office and administration services provided by the SWX Swiss Exchange to Eurex Ltd Office and administration services provided by the SWX Swiss Exchange to Scoach Switzerland Ltd (2 543) 0 Office and administration services provided by the SWX Swiss Exchange to Swiss Fund Data AG Office and administration services provided by the Eurex Ltd to the SWX Swiss Exchange (58 911) (38 189) Key management Members of the SWX Swiss Exchange Board of Directors are paid fixed annual emoluments. The members of the Management Committee and the Chairman of the Board of Directors also receive a variable salary component, to which there is no legal claim. The following table gives an overview of payments to key SWX Swiss Exchange management: Short-term benefits Post-employment benefits Benefits upon termination of employment Total compensation for key management Short-term benefits include pro rata expenses incurred in the reporting period. The amount actually paid may differ from the amount shown above. Key management personnel were not granted any further advantages or benefits in the reporting periods.

4 60 Annual financial statements SWX Group Annual Report Notes to the consolidated income statement Revenue Revenue parties with joint control Revenue associated companies Revenue third parties Total revenue Personnel expense Compensation (76 175) (67 563) Social security payments (14 046) (12 355) Other personnel costs (4 909) (546) Total personnel expense (95 130) (80 464) The Compensation item increased by CHF 8.6 million in 2007 compared with This increase also includes accruals for higher bonuses. The CHF 4.4 million change in Other personnel costs includes a contribution of CHF 3.5 million from the SWX Group welfare fund to the SWX Swiss Exchange social plan that was deferred from An average of 449 people were on the permanent staff in 2007 (454 in the previous year). There were 440 full-time positions occupied at 31 December 2007, compared with 424 a year earlier.

5 Annual financial statements SWX Group Annual Report Staff pension fund Calculation parameters Discount factor 3.25 % 3.0 % Interest rate for projected pension 3.25 % 3.0 % Long-term return 4.0 % 4.0 % Salary trend 2.0 % 1.5 % Pensions trend 0.0 % 0.0 % Retirement age Men Women (LLP 2005) 2006 (LLP 2000) Probability of staff drawing pension at age: Men Women Men Women / Composition of pension plan surplus or deficit recorded in the balance sheet: Net assets at market value Present value of obligations Surplus or (deficit) Unrecognised actuarial gains or (losses) (7 885) (10 144) Non-capitalisable part of surplus (3 705) (4 827) Amount recognised in balance sheet Net assets at market value include reserves of CHF million for employer contributions. Of the CHF million recognised in the balance sheet, the full CHF million is reported as assets under Capitalised pension fund benefits.

6 62 Annual financial statements SWX Group Annual Report 2007 Breakdown of pension costs Current expenditure related to service years Interest on present value of obligations Expected net return on investment (5 927) (5 698) Change in non-capitalisable part (1 122) (549) Employee contributions (2 946) (2 871) Actuarial gain or (loss) as per 58a, IAS Pension costs included in Personnel expense Actual revenue from pension plan assets Expected net return on investments Actuarial gains or (losses) (1 371) Actual revenue Movements in amount shown in balance sheet At Pension costs for the period (4 226) (4 053) Employer contributions Transfer amount (3 744) (3 500) At

7 Annual financial statements SWX Group Annual Report The following table shows the attributable time value of pension plan assets per class: Pension fund Welfare fund Total as at Pension fund Welfare fund Total as at Own shares Third-party shares Own bonds 184 (1) Third-party bonds Properties used by the Group Properties not used by the Group Other Total pension plan assets The expected return on pension plan assets is based on anticipated rates of inflation, interest rates, risk premiums and the target asset allocation. These estimates also take historical returns on the individual asset classes into account Present value of defined benefit liability Attributable time value of pension plan assets Pension plan deficit (25 469) (29 491) Empirical adjustments: Pension plan debts Empirical adjustment (1 831) 0 Estimated pension plan assets Empirical adjustment (1 371) Employer contributions Beneficiary contributions Other operating expenses Other operating expenses relating to associated companies (59 013) (38 189) Other operating expenses relating to third parties (99 694) (88 516) Total other operating expenses ( ) ( )

8 64 Annual financial statements SWX Group Annual Report 2007 The higher volume of derivatives turnover resulted in a CHF 21 million increase in operating expenses for Eurex Ltd. The rise in Other operating expenses relating to third parties of CHF 11.2 million is due mainly to additional costs associated with the establishment as of 1 January 2008 of a new holding company for the Swiss financial market infrastructure Income from associated companies Income from equity stake in STOXX Ltd Income from equity stake in Eurex Ltd (2 339) Income from equity stake in Scoach Holding SA Total income from associated companies Net financial income Securities income (9 541) (80) Loan revaluations Income from foreign currency gains and (losses) (22) Other income and expenses Total net financial income Income from securities suffered under the trend on the financial markets in general and on the credit markets in particular. The loss in 2007 was CHF 9.5 million higher than in Income from foreign currency gains and (losses) includes a gain of CHF 11.1 million from hedging transactions related to the acquisition of the International Securities Exchange by the Eurex Group. When this hedging income is eliminated, the net foreign currency loss was CHF 1 million Net interest income Interest income Interest expense (67) (469) Total net interest income

9 Annual financial statements SWX Group Annual Report Of which financial instruments from valuation categories under IAS 39 Loans and receivables Held-to-maturity investments 0 0 Available-for-sale financial assets Held-for-trading financial assets 0 0 Financial liabilities valued at amortised cost 0 0 The performance of the interest markets and efficient cash management at Group level resulted in a CHF 6.7 million rise in interest income Income taxes Deferred income taxes (2 999) (1 191) Total deferred income taxes (2 999) (1 191) Income taxes previous years Income taxes current year (60 521) (46 631) Total income taxes (58 399) (40 505) Total tax expense (61 398) (41 696) Analysis of tax burden Profit before income taxes Weighted overall tax rate 22 % 22 % Expected income tax expense Tax reductions arising from loss carry-forwards 0 (4) Difference from local tax rates (6 730) Actual income tax expense for current year Actual income tax expense as % of profit before tax 20 % 23 % The weighted overall tax rate is calculated from the profit tax rates applicable to individual Group companies in the various tax territories, taking into account their individual tax situations.

10 66 Annual financial statements SWX Group Annual Report Notes to the consolidated balance sheet Cash and cash equivalents The assets reported here have maturities of up to three months and mainly comprise current accounts and time deposits with banks. They also include a small volume of cash on hand and cheques Bank current accounts parties with joint control Cash, post office and bank current accounts third parties Total cash, post office and bank current accounts Time deposits parties with joint control Total time deposits (less than 90 days) Total cash and cash equivalents Securities Bonds Equities Real estate Alternative investments Total securities (fair value) Money market funds: these funds invest mainly in CHF-denominated money market instruments issued by prime borrowers. The average residual term to maturity of the fund portfolio is no more than one year. Bonds: assets are invested in bonds denominated in CHF, EUR and GBP. The benchmark indices are SBI-CHF Domestic, maturity range one to seven years, and SBI-CHF Foreign, maturity range one to seven years. The weighting is 50 % for each category. Euro corporate bonds and/or absolute return bonds (ARB) may be used up to a maximum of 10 % of the portfolio value to enhance the return. Minimum ratings for borrower quality are A (Standard & Poor s) or A2 (Moody s). Equities: this item comprises equity interests in companies which are held with strategic considerations in mind. Real estate: this category comprises units in a euro-denominated real estate fund. The fund aims for broad strategic exposure to first-class, secure and profitable properties located within the euro zone. Using a systematic approach, the fund targets a performance superior to that of the benchmark. Alternative investments: this category covers investments in non-traditional instruments which have little correlation with the financial markets.

11 Annual financial statements SWX Group Annual Report Investments in hedge funds are made only in funds of funds. In order to hedge (strategy) risks specific to individual managers or investments, the portfolio must be diversified according to individual funds as well as strategies. The amount invested in an individual fund may not exceed 15 % of the fund of funds, while the amount invested in an individual strategy may not exceed 40 %. The decision to invest in a hedge fund or to change the existing exposure rests with the Group Executive Committee. Investments in securities without a market value are carried in the balance sheet at net asset value. Net asset value is based on the market values of the investments of the fund in question. The unrealised gain or loss resulting from this valuation is booked to the income statement. The net asset value is reported by the fund manager. Owing to the uncertainty concerning the valuation of such investments and the fact that not all markets are liquid, the net asset value calculated at the time of valuation may diverge substantially from realisable values Short-term receivables Trade receivables from third parties from associated companies from the SWX Swiss Exchange Association from other related parties Total trade receivables Other receivables from third parties Total other receivables Total short-term receivables No interest is charged on trade receivables, which are due for payment within 30 days.

12 68 Annual financial statements SWX Group Annual Report 2007 Of total short-term receivables, CHF 50.7 million ( : CHF 44 million) is due within one year Book value Of which: neither impaired nor overdue on the accounting date Of which: not impaired on the accounting date and overdue in the following time bands < > 180 days days days days days Trade receivables Other receivables Total short-term receivables Book value Of which: neither impaired nor overdue on the accounting date Of which: not impaired on the accounting date and overdue in the following time bands < > 180 days days days days days Trade receivables Other receivables Total short-term receivables With regard to the short-term receivables that were neither impaired nor overdue, there were no indications as of the accounting date that the debtors would not fulfil their payment obligations. Individual valuation adjustments on short-term receivables to a value of CHF were made as at 31 December 2007 (2006: CHF 0).

13 Annual financial statements SWX Group Annual Report Active short-term loan The CHF loan to the SWX Swiss Exchange Association, granted as of 31 December 2006, was repaid in Prepaid expenses and accrued income Exchange fees and other revenue Accrued interest on securities Contribution by the SWX Group welfare fund to the SWX Swiss Exchange social plan (see note 7.2.2) Other prepaid expenses and accrued income Total prepaid expenses and accrued income Deferred income taxes Deferred taxes arising from differences in assets between the IFRS consolidated balance sheet and the tax accounts are as follows: Deferred tax assets Deferred tax liabilities Total deferred taxes as at Deferred tax assets Deferred tax liabilities Total deferred taxes as at Pension fund liabilities General bad debt charge 0 (87) (87) 0 (139) (139) Equity valuations 0 (6 170) (6 170) 0 (2 543) (2 543) Capitalisation of pension fund 0 (3 054) (3 054) 0 (4 203) (4 203) Total deferred income taxes 0 (9 311) (9 311) 573 (6 885) (6 312) No noteworthy additional tax liabilities are expected as a result of dividend payments by Group companies and associated companies. Changes in deferred taxes during 2007 and 2006 are as follows: At 1. 1 (6 312) (5 121) Formation (liquidation) of timing differences (2 999) (1 191) Changes in tax rates 0 0 At (9 311) (6 312)

14 70 Annual financial statements SWX Group Annual Report Tangible fixed assets Hardware Leasehold improvements Other Acquisition cost at Additions Acquisition cost at Cumulative depreciation at ( ) (18 925) (19 719) ( ) ( ) Additions (6 264) (1 233) (454) (7 951) (8 071) Cumulative depreciation at ( ) (20 158) (20 173) ( ) ( ) Net book value at Net book value at Fire insurance values Hardware Other tangible fixed assets

15 Annual financial statements SWX Group Annual Report Intangible assets Goodwill Standard software Externally developed software Internally developed software Acquisition cost at Additions Disposals (2 811) (2 811) 0 Elimination of goodwill (39 551) (39 551) Acquisition cost at Cumulative depreciation at (39 551) (22 262) (54 129) (25 384) ( ) ( ) Additions 0 (3 771) (9 234) (3 532) (16 537) (23 931) Disposals Elimination of goodwill Cumulative depreciation at (0) (26 033) (63 363) (28 916) ( ) ( ) Net book value at Net book value at The goodwill that had been amortised in full in previous years was eliminated from the financial statements in Software licences have been capitalised since Externally developed software consists of extended functionalities designed by third parties for the Eurex system. The figure for Internally developed software refers to development costs for the SWX platform, which have been capitalised since the 2001 financial year. The reduction in expenditure that results from capitalisation is booked to Other operating expenses Associated companies (at equity) Major shareholdings in companies included at equity in the balance sheet, and the goodwill attributable to them, are as follows: Equity interest % Book value 2007 Goodwill Equity interest % Book value 2006 Goodwill Eurex Ltd, Scoach Holding SA, Luxembourg STOXX Ltd., Swiss Fund Data AG, Total associated companies

16 72 Annual financial statements SWX Group Annual Report 2007 In 2007, Eurex Frankfurt AG acquired the International Securities Exchange Inc., USA, for USD 2.8 billion, with 85 % of the purchase price being paid by Deutsche Börse AG and 15 % by the SWX Swiss Exchange. These percentages correspond to the financial holdings of the two companies in the parent Eurex Ltd. The following table provides a summary of aggregate key figures for the associated companies of the SWX Group that are included in the consolidated financial statements in accordance with the equity method. The figures given are based on percentage shareholdings in each case. Aggregate data for associated companies included at equity in the balance sheet Total assets Short-term Long-term Total debts Short-term Long-term Sales revenues Profit

17 Annual financial statements SWX Group Annual Report Short-term payables Total Residual term to maturity of up to 1 year Total Residual term to maturity of up to 1 year Trade payables to third parties (17 731) (17 731) (14 972) (14 972) to related parties (5) (5) 0 0 to associated companies (440) (440) 0 0 Total trade payables (18 176) (18 176) (14 972) (14 972) Debts to financial institutions to third parties 0 0 (107) (107) to related parties ( ) ( ) 0 0 to associated companies Total debts to financial institutions ( ) ( ) (107) (107) Other short-term payables to third parties (1 322) (1 322) (1 973) (1 973) to related parties to associated companies Total other short-term payables (1 322) (1 322) (1 973) (1 973) Total short-term payables ( ) ( ) (17 052) (17 052) There are no payables with a residual term to maturity of more than one year. The outstanding bank loan of CHF 220 million, which was taken up in five tranches, should be repaid by 31 December Accrued expenses and deferred income Employee benefits Swiss Federal Banking Commission (SFBC) Accruals and deferrals relating to Quotematch Other accruals and deferrals Total accrued expenses and deferred income Pursuant to the Federal Council Ordinance of 2 December 1996 (as amended on 21 October 2003) concerning fees charged by the Swiss Federal Banking Commission (SFBC), part of the SFBC s costs are covered by a turnover fee levied by the SWX Swiss Exchange on securities trading. The estimated amount payable to the Commission for the 2007 financial year is CHF 9 million.

18 74 Annual financial statements SWX Group Annual Report Tax liabilities Tax liabilities previous years Tax liabilities current year Total tax liabilities Long-term provisions Repair work on buildings Other Book value at Additions Release 0 (116) (116) (4 841) Foreign currency earnings Book value at Repair work on buildings: under the existing rental contracts for the premises at Selnaustrasse 30 in and Canary Wharf in London, alterations made to these buildings by the tenant must be removed and the buildings restored to their original state at the tenant s expense upon termination of the rental agreement. Appropriate provisions are therefore made for this purpose over the remaining term of the leases (see note 7.4.3), based on estimates prepared by external architects Dividends paid and proposed Dividends paid and proposed during the financial year 0 0 Dividends recommended to the general assembly (not reported as a liability as at 31.12)

19 Annual financial statements SWX Group Annual Report Other information Segment data Cash Trading Eurex Derivatives Trading Data Sales Admission Corporate Services Total Group 2007 Total Group 2006 Revenue Operating expenses ( ) (71 696) (20 169) (6 908) (15 200) ( ) ( ) Income from associated companies Financial income 920 (18) Earnings before interest, taxes, depreciation and amortisation (EBITDA) (6 562) Depreciation and amortisation on tangible and intangible assets (9 308) (9 862) (1 962) (56) (3 300) (24 488) (32 002) Earnings before interest and taxes (EBIT) (9 862) Interest income Income taxes (3 247) 0 (1 399) 0 (56 752) (61 398) (41 696) Profit (loss) for the year (53 287) Intangible assets Tangible fixed assets Holdings in associated companies Other assets Total assets Liabilities (35 144) (2 343) (1 117) (145) ( ) ( ) ( ) Investments in tangible and intangible assets Total expenses with no impact on cash flow (40 478) (13 226) (7 454) (1 344) (18 658) (35 354)

20 76 Annual financial statements SWX Group Annual Report Partial disposal of operations The SWX Group and Deutsche Börse AG merged their structured products trading activities to form the Luxembourg-based Scoach Holding SA as of 1 January The SWX Group holds % of the voting rights in this joint venture. The new company holds all the shares in Scoach Switzerland Ltd, a new exchange governed by Swiss law, into which the SWX Swiss Exchange has spun off its warrants and structured products business. The jointly held company also holds all of the shares in Frankfurt-based Scoach Europa AG, which is co-operator of warrant and certificate trading on the Frankfurt Stock Exchange Major contracts The following long-term contracts were in effect as at 31 December 2007: Voting pool agreement between Deutsche Börse AG and the SWX Swiss Exchange concerning their joint shareholdings in Eurex Ltd,, and its subsidiaries (expiry 2014) Cooperation agreement between the SWX Group and Deutsche Börse AG concerning the parties stake in the holding company being set up in Luxembourg (expiry 2018) see also note Partial disposal of operations Rental contracts entered into by the SWX Group: Canton, Selnau stock exchange building (expiry 2012) Canary Wharf Management Ltd, Canary Wharf, London (expiry 2011) Société Privée de Gérance, Geneva (expiry 2012) Telekurs Services AG, (expiry 2007) Wincasa, (expiry 2009) Payments due under the aforementioned leases are as follows: Within one year In two to five years In more than five years 0 0 Total future rental payments

21 Annual financial statements SWX Group Annual Report Disclosure of fair value Changes in the market value of financial assets, liabilities or financial instruments may impact on the SWX Group s assets and the results of its operations. Securities are held by the SWX Group as part of its cash management policy. Risks of a possible loss in value are minimised by means of internal analyses, as well as the ongoing monitoring of performance and the risks associated with the individual investments concerned. Book value Fair value Cash and cash equivalents Securities at fair value Total cash and cash equivalents and securities Trade receivables Other receivables Short-term loans Prepaid expenses and accrued income Total current assets Short-term trade payables (18 176) (14 972) (18 176) (14 972) Debts to financial institutions ( ) (107) ( ) (107) Tax liabilities (52 556) (44 321) (52 556) (44 321) Other short-term payables (1 322) (1 973) (1 322) (1 973) Accrued expenses and deferred income (39 111) (38 331) (39 111) (38 331) Total short-term payables ( ) (99 704) ( ) (99 704) Income not realised in equity from securities from derivatives

22 78 Annual financial statements SWX Group Annual Report Additional information on financial instruments Book values, carrying values and attributable time values by valuation categories Carrying value under IAS 39 Valuation category under IAS 39 Book value Amortised cost Fair value booked as income Fair value Assets Cash and cash equivalents Loans and receivables Securities held to maturity Held-to-maturity investments available for sale Financial asset at fair value through profit or loss held for trading Derivative financial assets hedged unhedged Trade receivables Loans and receivables Other receivables Loans and receivables Prepaid expenses and accrued income Loans and receivables Liabilities Short-term trade payables Loans and receivables Debts to financial institutions Loans and receivables Other short-term payables Loans and receivables Accrued expenses and deferred income Loans and receivables As at the balance sheet date, there were no financial instruments that are valued in accordance with IAS 17.

23 Annual financial statements SWX Group Annual Report Carrying value under IAS 39 Valuation category under IAS 39 Book value Amortised cost Fair value booked as income Fair value Assets Cash and cash equivalents Loans and receivables Securities held to maturity Held-to-maturity investments available for sale Available for sale held for trading Financial asset at fair value through profit or loss Derivative financial assets hedged unhedged Trade receivables Loans and receivables Other receivables Loans and receivables Short-term loans Loans and receivables Prepaid expenses and accrued income Loans and receivables Liabilities Trade payables Loans and receivables Debts to financial institutions Loans and receivables Other short-term payables Loans and receivables Accrued expenses and deferred income Loans and receivables The majority of cash and cash equivalents, trade receivables and payables and other receivables and payables have short remaining terms to maturity, which is why their book value as of the accounting date corresponds more or less to their attributable time value. As at the balance sheet date, there were no financial instruments that are valued in accordance with IAS 17.

24 80 Annual financial statements SWX Group Annual Report 2007 Net income by valuation category From interest From subsequent valuation From disposal Net income At fair value Currency translation Valuation adjustment Loans and receivables (LaR) Held-to-maturity investments (HtM) Available-for-sale financial assets (AfS) (7 572) (2 425) (3 093) (80) Financial assets held for trading (FAHfT and FLHfT) Financial liabilities measured at amortised cost (FLAC) Total (7 572) Interest earned on financial instruments is reported under net interest income Default risk Credit risks arise from the possibility that the counterparty to a transaction is unable or unwilling to meet its commitments and that the SWX Group will incur a financial loss as a result. Under the Group s cash management policy, only borrowers with a very good credit rating are considered for lending operations, thereby minimising counterparty risk. In addition, payments received and amounts outstanding in connection with trade receivables are monitored on an ongoing basis. Description Book value Default risk Cash and cash equivalents Securities at fair value Total cash and cash equivalents and securities Trade receivables Other receivables Total receivables Prepaid expenses and accrued income Cash and cash equivalents comprises current account balances and money market balances held with top-rated financial institutions. Securities at fair value comprises investments in domestic and foreign bonds from issuers with very good ratings. Investments in alternative asset classes are made only in the context of portfolio management mandates in the care of portfolio managers who have many years of experience.

25 Annual financial statements SWX Group Annual Report Trade receivables mainly comprises accounts receivable from domestic and foreign banks and other financial institutions. Prepaid expenses and accrued income includes accrued and deferred interest on cash and cash equivalents and securities, as well as receivables that have not yet been billed Liquidity risk The SWX Group monitors any liquidity risk by means of the rolling planning of cash inflows and outflows. SWX Group receivables and payables have maturities of less than 12 months. The tables given below show the SWX Group s contractually agreed (undiscounted) interest and capital repayments relating to original financial liabilities, as well as derivatives with positive and negative attributable time values: Cash flows 2008 Variable interest Repayment Book value Fixed interest Interest-bearing liabilities ( ) Non-interest-bearing liabilities (1710) Derivative financial assets and liabilities Total liquidity risk ( ) The figures given above include all instruments that were held in the portfolio and for which payments had already been contractually agreed on 31 December Budgeted figures for new future liabilities are not included. Amounts in foreign currency have been translated at the exchange rate prevailing at the balance sheet date. Variable interest payments on financial instruments have been calculated on the basis of the most recent interest rates fixed prior to 31 December Financial liabilities that may be repaid at any time are always allocated to the earliest possible time frame Interest risk The Group s interest risk originates primarily from variable-interest financial liabilities that are not hedged. The Group s sensitivity analysis is based on the interest risk as at 31 December. For the purposes of internal reporting to the Group Executive Committee, to allow it to evaluate the interest risk, possible changes of one percentage point are deemed to be a reasonable fluctuation. On 31 December, a change in the interest rate of + / one percentage point would have changed annual financial income by approximately CHF 8.3 million (2006: CHF 9.3 million), ignoring any tax effects and providing all other assumptions remain unchanged. The calculation factors in hedged positions.

26 82 Annual financial statements SWX Group Annual Report Currency risk The SWX Group operates internationally and is therefore exposed to fluctuations in exchange rates. These may impact on the assets and income of the Group as expressed in Swiss francs. Foreign currency risks are monitored continuously and, depending on market developments, are hedged. On the other hand, transaction risks arising from changes in exchange rates in connection with the SWX s operating business are not hedged at present. A large proportion of revenue and expenses is generated in Swiss francs. Exchange differences arising from the translation of subsidiaries accounts drawn up in foreign currencies are carried under Group equity. The following table shows the sensitivity of pre-tax profit and equity to probable changes in exchange rates: Increase/ decrease Effect on pre-tax profit Effect on equity Increase/ decrease Effect on pre-tax profit Effect on equity EUR + / 5 % 1 190/(1 190) 0 + / 5 % 1 205/(1 205) 0 GBP + / 5 % 115/(115) 0 + / 5 % 283/(283) 0 USD + / 5 % 1 703/(1 703) /(22 078) + / 5 % 10/(10) Capital management Interest-bearing loans ( ) (107) Trade payables (18 176) (14 972) Tax liabilities (52 556) (44 321) Other short-term payables (1 322) (1 973) plus cash and cash equivalents and money market investments Surplus of cash and cash equivalents and money market investments (net debt) Equity ( ) ( ) Unrealised income (equity) Total equity ( ) ( ) Capital and surplus of cash and cash equivalents and money market investments (net debt) Gearing ratio

27 Annual financial statements SWX Group Annual Report Assets subject to restrictions on disposal Book value Related liability Book value Related liability Bonds Total pledged assets Contingent liabilities The SWX Swiss Exchange has committed itself in a letter of comfort to providing Eurex Clearing AG, Frankfurt, with 15 % of the financial resources it needs to fulfil its obligations as a clearing house. The commitment for events prior to 1 January 2005 is 20 %. The commitment is limited to a maximum amount of EUR 105 million. In compliance with the regulatory requirements of the Financial Services Authority (FSA), the SWX Swiss Exchange has committed itself to providing virt-x Ltd. with sufficient financial resources at all times. The SWX Swiss Exchange took out a bank loan of CHF 220 million to finance the acquisition of the International Securities Exchange Holdings Inc. by its indirect subsidiary Eurex Frankfurt AG. The SWX Group bears joint and several liability with the SWX Swiss Exchange for the attendant financial obligations to the bank Post balance sheet events The general assembly of the SWX Group of 20 November 2007 passed an ordinary share capital increase of CHF 9.5 million as of 1 January 2008, to be effected by the issue of registered shares with a par value of CHF 1 each. Share capital now amounts to CHF 19.5 million (previously CHF 10 million). As of 1 January 2008, the SWX Swiss Exchange Association was dissolved and absorbed, with all its assets and liabilities, into the SWX Group. The name of the SWX Group was changed to Swiss Financial Market Services Ltd at the same time. As of 1 January 2008, the SWX Group, SIS Group and the Telekurs Group merged to form Swiss Financial Market Services Ltd. The shareholders of this new company are made up of the existing owners. A shareholder pooling agreement which prohibits the transfer of shares within the first five years will bring stability to this ownership structure, which also corresponds to the present user structure. Following the merger of the SWX Group, SIS Group and Telekurs Group to form Swiss Financial Market Services Ltd. virt-x Ltd., the London-based exchange and subsidiary of the SWX Group, is to be renamed SWX Europe Limited as of 1 March No events occurred after the balance sheet date which would have a material impact on the consolidated financial statements for the year ended 31 December On 28 March 2008, the Board of Directors recommended that the consolidated annual financial statements of the SWX Group be approved.