STOCKHOLM, Sweden, Jan. 31, 2002 (PRIMEZONE) -- NeoNet's year-end report:
The Full Year 2001
-- Transaction revenues increased 18% to SEK 190.1 m, against SEK
160.9 m in the previous year; 21% (9%) of revenues were derived
from US clients.
-- NeoNet's market shares have increased on all the exchanges where
it is connected.
-- Operating earnings before depreciation and net financial items
amounted to SEK 25.2 (40.1) m.
-- Earnings before tax were SEK 3.5 m (15.9 m).
-- Earnings per share: SEK 0.15 (0.48).
-- Revenues from electronic order routing increased by 77% and
amounted to 75% (50%) of total transaction revenues.
-- 51% (42%) of transaction revenues in the period were sourced from
trading on exchanges other than Stockholm.
-- The closing balance of consolidated shareholders' equity rose to
SEK 255,6 m (235.1 m) at the end of the period. Out of the SEK
597.4 m liquid funds, SEK 412.3 m were attributable to the
settlement of equity transactions executed on behalf of clients,
which means that the company's own cash amounted to SEK 185.1 m
(SEK 204.3 m).
-- NeoNet established an electronic link-up to the LSE (London Stock
Exchange) at the end of January 2001, with 7% of trading revenues
derived from this exchange in the fourth quarter, and 5% in the
full year.
-- An agreement has been reached regarding electronic trading of
Nasdaq stocks, with launch scheduled for the second quarter of
2002.
-- Decision was made that NeoNet will in 2002 connect the Milan and
virt-x exchanges to the company's trading system. Connection to
the NYSE is scheduled for mid 2003.
The Fourth Quarter
-- Fourth-quarter revenues grew 15% year on year, to SEK 53.2 m;
against in the previous year SEK 46.3 m.
-- Earnings before tax were SEK -4.0 m, against SEK 6.7 m in 2000.
-- Electronic order routing increased by 70% over fourth quarter in
the previous year, and amounted to 90% (61%) of total transaction
revenues.
-- 54% of fourth-quarter revenues came from trading on exchanges
other than Stockholm.
-- Electronic trading began on the Euronext Paris and Amsterdam
exchanges.
CEO's Statement
"The uncertainty featuring on the world's stock markets through the year basically sustained in the fourth quarter, with market activity and stock prices remaining significantly below the fourth quarter of 2000. Many of the industry's players have experienced significant decreases, in commission or transaction revenues. Despite this, NeoNet posted quarter-on-quarter revenue gains of 15%, and year-on-year gains of 18%. Our revenues from electronic order routing grew 77% on an annual basis and reached 90% revenue share in the fourth quarter. This proves the strength in NeoNet's business concept. Revenue growth from our US clients-which now generate about a quarter of total revenues-was particularly positive. During the year, NeoNet increased market shares on all the exchanges it is connected to; underlying client base growth has been healthy, both in absolute terms and as a rising share of client trading. Our strategy of also making our electronic exchange network available for integration to clients' own legacy trading applications has expanded our market substantially, implying increased revenues as early as 2001.
The currently pronounced contraction of the global equity trading market prevented us from realizing our revenue and earnings objectives last year, but has by no means compromised our long-term prospects or opportunities. Accordingly, we have prioritized initiatives aimed at market growth, both through an expanding client base and link-ups to more exchanges, above short-term profitability. Investments in development and linking our electronic exchange network to the key London, Paris and Amsterdam Stock Exchanges, have increased our cost levels, but obviously, are expected to contribute to substantial revenue growth through forthcoming years.
NeoNet now makes a highly attractive offering to the institutional equity trading market with satisfied clients in more than ten countries. Moreover, during the second quarter 2002, we will also offer electronic trading on Nasdaq, and thereby, nearly 50% of global stock market capitalization will become available to our clients. Our corporate development is proceeding according to plan, towards our objective of offering access to 80% of global stock market capitalization through our electronic exchange network in 2003. In our view the growth potential is substantial, as we will be able to offer global electronic trading through a single trading system.''
The Group
Operations
NeoNet's business concept is to offer its clients-institutional investors and broker-dealers-efficient, secure and anonymous direct access to the world's major stock markets. Operations are based on NeoNet's proprietary trading system, with at present, electronic order routing on the London, Frankfurt, Paris, Amsterdam, Stockholm, Helsinki and Copenhagen Stock Exchanges, alongside manual trading on the above exchanges and the Oslo Stock Exchange. NeoNet has clients in 11 countries including the US.
NeoNet's electronic exchange network linked up to the LSE (London Stock Exchange) in January.
NeoNet secured membership of the Euronext exchange (the Paris, Amsterdam and Brussels stock exchanges) in January, with trading in Paris and Amsterdam starting in October and December respectively, but as a consequence of delays in a clearing-house systems platform change-over, the trading start in Brussels is now scheduled for the first half of 2002.
In April, NeoNet reached an agreement with BRUT ECN-one of the pre- eminent US ECNs (electronic communications networks)-conferring NeoNet's clients with electronic trading, primarily on NASDAQ stocks, by the second quarter of 2002.
NeoNet has reached a decision regarding the objective of linking the Milan and virt-x exchanges to NeoNet's electronic exchange network in 2002. The Zurich Stock Exchange's blue chips are traded on virt-x.
Additionally, by mid-2003, NeoNet is planning to offer electronic order routing on the NYSE through its electronic exchange network, thus offering access to 80% of the world's stock market capitalization through a single global trading system.
In September, NeoNet transferred to a collaboration with Gerling Credit Insurance Group, as its insurer for credit insurance against client bankruptcy. Most of NeoNet's clients are covered by this policy which significantly reduces the firm's exposure to credit losses.
Revenue and Earnings
Consolidated transaction revenues grew to SEK 190.1 m in the year, against SEK 160.9 m in 2000, an 18% increase. Fourth-quarter revenues were SEK 53.2 m (46.3 m), 15% growth.
Distribution of Revenues by Client Location, SEK m
Jan - Dec 2001 Jan-Dec 2000
Sweden 94.5 50% 73.7 46%
Rest of Europe 54.8 29% 73.1 45%
US 40.8 21% 14.1 9%
Total 190.1 100% 160.9 100%
NeoNet's average daily intermediated turnover was SEK 2,337 m in the fourth quarter, a year-on-year increase of 12%, against SEK 2.058 m in 2000. Rolling 12-month daily trading values were SEK 1,975 m, a year-on- year increase of 20%.
Trading values vary significantly through the year, a consequence of market activity and pricing on the exchanges where NeoNet pursues trading.
During the fourth quarter, NeoNet's average daily trading volumes were divided between exchanges as follows: Stockholm, 44%; Helsinki, 41%; Oslo, 1%; Copenhagen, 2%; Frankfurt, 6%; London, 3% and Paris, 3%.
NeoNet is a leading provider of real time equity execution services for institutional investors and broker-dealers. Through its electronic exchange network NeoNet provides its clients with efficient, secure and anonymous access to currently approximately 80 % of the equity market capitalization in Europe. NeoNet focuses on providing single access to multiple stock markets worldwide. Currently NeoNet has clients in eleven countries including the US. NeoNet has 76 employees with offices in Stockholm and New York and is listed on Stockholm Stock Exchange.
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The following files are available for download: www.waymaker.net/bitonline/2002/01/31/20020130BIT01090/bit0003.doc The Full year-end report www.waymaker.net/bitonline/2002/01/31/20020130BIT01090/bit0003.pdf The Full year-end report