CONSOLIDATED BALANCE SHEET in CHF 1 000

Note

2004

2003

4 5

159 538 170 218 329 756 33 438 290 4 898

123 889 149 438 273 327 29 577 696 4 145

368 382

307 745

15 459 8 786 23 230

24 518 17 631 31 164

Total non-current assets

47 475

73 313

TOTAL ASSETS

415 857

381 058

40 540 23 268

39 451 26 208

63 808

65 659

1 039 3 166

2 398 18 614

4 205 68 013

21 012 86 671

10 000 242 535 (255) 95 564

10 000 242 535 (459) 42 311

347 844

294 387

415 857

381 058

ASSETS Cash Marketable securities Total cash and marketable securities Accounts receivable Deferred tax assets Prepaid expenses and accrued income

6

Total current assets Fixed assets Investments in subsidiaries Intangible assets

7 8 9

LIABILITIES AND EQUITY Other liabilities Accrued expenses and deferred income

10 11

Total short-term liabilities Deferred tax liabilities Provisions

12

Total long-term liabilities Total liabilities Share capital Capital reserve Foreign currency earnings Retained earnings Total equity TOTAL LIABILITIES AND EQUITY

13

Succursale de Genève, Genève; Banque Diamantaire (Suisse), Genève; Banque Franck, Galland & Cie SA, Genève; Banque Galland & Cie SA, Lausanne; Banque IPPA

Consolidated annual financial statements for 2004

53

CONSOLIDATED INCOME STATEMENT in CHF 1 000

Note

2004

2003

Revenue

14

358 821

344 532

Personnel expense

15

(92 404)

(88 990)

INCOME STATEMENT

Depreciation and amortization of fixed and intangible assets Other operating expenses

7/ 9

(31 231)

(75 918)

16

(158 169)

(144 990 )

77 017

34 634

(6 608) (2 694)

6 923 15 236

67 715

56 793

(14 463)

(14 482)

53 253

42 311

Operating income

Net financial income Other expense/revenue

17 18

Profit before taxes

Taxes

PROFIT FOR THE YEAR

19

& Associés, Luxembourg, Succursale de Lausanne, Lausanne; Banque Jenni & Cie. SA, Basel; Banque MeesPierson BGL SA, Nyon; Banque Pasche S.A., Genève;

CONSOLIDATED CASH FLOW STATEMENT in CHF 1 000

2004

2003

53 253

42 311

CASH FLOW STATEMENT Profit for the year Depreciation and amortization of fixed and intangible assets

31 231

75 918

(15 448) 15 854 (953) 10 969

(8 275) 0 5 182 (887)

94 906

114 249

(3 861) (753) (14 765) (2 940)

(11 286) 62 565 (13 986) 10 872

72 587

162 414

(Decrease) increase in long-term liabilities

(0)

(11 540)

Net cash provided by (used in) financing activities

(0)

(11 540)

Decrease (increase) in provisions Reclassification of tax provisions Deferred income taxes Income from non-consolidated holdings Cash flow

Decrease Decrease Decrease Decrease

(increase) (increase) (increase) (increase)

in in in in

accounts receivable for goods and services prepaid expenses and accrued income other accounts payable accrued expenses and deferred income

Net cash provided by (used in) operating activities

Banque Safdié SA, Genève; Banque Syz & Co. SA, Genève; Banque Thaler SA, Genève; Banque Vontobel Genève SA, Genève; BanSabadell Finance SA, Genève;

Consolidated annual financial statements for 2004

in CHF 1 000

55

2004

2003

(8 068) (6 170) (2 124) 0

(14 695) (52 622) (3 923) 8 784

Net cash flow provided by investing activities

(16 362)

(62 456)

Unrealized exchange differences Net increase in cash and marketable securities Cash and marketable securities at 1 January

204 56 429 273 327

(1 277) 87 141 186 186

Cash and marketable securities at 31 December of which marketable securities

329 756 170 218

273 327 149 438

Increase in fixed assets Net increase in intangible assets Increase in holdings Changes in scope of consolidation

Bantleon Bank AG, Zug; Barclays Bank (Suisse) SA, Genève; Basellandschaftliche Kantonalbank, Liestal; Baumann & Cie Banquiers, Basel; BBO Bank Brienz Ober-

Notes to the consolidated annual financial statements

1 Summary of significant accounting policies Introduction The consolidated financial statements of the SWX Group have been prepared in accordance with the Swiss Accounting and Reporting Recommendations FER/ARR (Swiss GAAP), and using historic acquisition costs. Scope of consolidation Companies in which the SWX Group holds a majority of the share capital and voting rights, or in which it holds 50 % of the voting rights and exerts a significant influence, are fully consolidated. Companies included within the scope of consolidation are listed under note 2. Associated companies, i.e. those in which the SWX Swiss Exchange owns between 20 % and 50 % of the share capital, are accounted for using the equity method. Holdings of less than 20 % are stated at acquisition cost less valuation adjustments. Principles of consolidation The consolidated financial statements are based on the financial statements of the individual companies, which are drawn up at 31 December using uniform accounting policies. Equity is consolidated using the purchase method. Intragroup expenses and income, intragroup accounts receivable and liabilities, as well as unrealized gains on intragroup transactions have been eliminated. The figure for revenues corresponds to billings for services and products provided to third parties, net of sales taxes and reductions in remuneration. Currency translation Balance sheets of Group companies that are drawn up in a foreign currency are translated using year-end exchange rates, while income statements are translated using average exchange rates for the year. Any translation difference is accounted for under equity as a separate item. Transactions in foreign currency are translated using daily exchange rates. Translation differences are recognized as income.

The following exchange rates of the most important currencies were used for the consolidated financial statements: Currency EUR/CHF GBP/CHF USD/CHF

Year-end rate Average rate 31.12.04 31.12.03 2004 2003 1.5457 1.5595 1.5441 1.5208 2.1834 2.2092 2.2788 2.1982 1.1371 1.2351 1.2429 1.3463

Fixed assets Fixed assets are stated at acquisition or production cost less depreciation charged over the useful life of the assets, using the straight-line method. Purchases of fixed assets exceeding CHF 10 000 are capitalized. The useful life is estimated to be as follows: IT hardware 3 years Equipment, fixtures and fittings 3 years Motor vehicles 3 years Leasehold improvements Duration of rental agreement Investments in subsidiaries and loans Associated companies are consolidated in proportion to the percentage of capital owned. Other minority holdings are stated at cost, and loans at their nominal value. In the event of non-temporary impairment of an investment, a valuation adjustment is made. The net result of this position is included in the income statement under net financial income. Intangible assets Software which is purchased from or developed by a third party and costs more than CHF 10 000 is capitalized and depreciated over no more than three years. Software produced inhouse is capitalized at production cost and depreciated over an estimated useful life of 5 – 8 years. Goodwill is depreciated over five years using the straightline method, and its value is re-assessed each year. Other intangible assets such as patents, trademarks and other rights are capitalized at their historical cost and amortized over their estimated useful life (but not more than ten years) using the straight-line method. The amortization is charged to the income statement.

hasli, Brienz; BBVA Privanza Bank (Suiza) SA, Zurich; BDL Banca di Lugano, Lugano; BEKB | BCBE, Bern; Berenberg Bank (Schweiz) AG, Zurich; Bernerland Bank,

Consolidated annual financial statements for 2004

Accounts receivable The figure for accounts receivable corresponds to billings less necessary valuation adjustments. Cash and marketable securities The cash position comprises liquid assets, credit balances with banks and the post office, and fixed-term deposits up to 90 days. Cash is carried at its nominal value. Securities with a market value are carried at market value and those with no market value are shown at their net investment value or at cost, less the necessary depreciation. Revenue from this item is included in the income statement under net financial income. Valuation adjustments and provisions Appropriate valuation adjustments are made for identifiable individual risks. Provisions serve to cover risks of loss and performance commitments. They are calculated on the basis of uniform and invariable business management principles.

2 Scope of consolidation The following companies are fully consolidated: · SWX Group, Zurich (formerly SWX Holding AG; parent company; share capital CHF 10 000 000). · SWX Swiss Exchange, Zurich (wholly owned; share capital CHF 10 000 000; securities exchange and securities exchange services). · virt-x Ltd., London (formerly virt-x plc; wholly owned; share capital GBP 2 793 000; holding company of virt-x group). · virt-x Exchange Ltd., London (wholly owned; share capital GBP 100; securities exchange). · EXFEED AG, Zurich (wholly owned; share capital CHF 1 100 000; financial information distributor).

57

Holdings in the following companies are accounted for using the equity method: · Eurex Zürich AG, Zurich (50 % stake; share capital CHF 10 000 000; European derivatives exchange). On 13 December 2004, the Articles of Association of Eurex Zürich AG were amended to incorporate new provisions governing dividend and liquidation entitlements in respect of the existing participation certificates. Consequently, the share in net income is now calculated at 15 % (2003: 20 %). Eurex Zürich AG directly or indirectly controls the following substantive companies: · Eurex Frankfurt AG, Frankfurt (share capital EUR 6 million; operation of exchanges, in particular securities exchanges, including electronic platforms for derivatives trading). · Eurex Clearing AG, Frankfurt (share capital EUR 5.1 million; clearing house and operator of the clearing system for exchange transactions). · Eurex Bonds GmbH, Frankfurt (share capital EUR 3.6 million; electronic trading platform for German government bonds, Jumbo-Pfandbriefe [mortgage bonds ] and other debt securities, as well as underlying instruments combining a future and a government bond). · U.S. Exchange Holding Inc., USA (share capital USD 1 million; parent company of the U.S. Futures Exchange L.L.C., USA). · U.S. Futures Exchange L.L.C., USA (share capital USD 44.5 million; fully automated trading in US fixed-income and share-index derivatives). · STOXX Limited, Zurich (33.3 % stake; share capital CHF 1 000 000; marketing of European index families). · Börsen-Informations AG, Basel (33.3 % stake; share capital CHF 150 000; general promotional activities for the Basel financial marketplace, operates Financial Meeting Point in Basel).

· New Soffex AG, Zurich (wholly owned; share capital CHF 100 000; dormant).

3 Changes in scope of consolidation · SWX Swiss Exchange (UK) Ltd., London (wholly owned; share capital GBP 1; dormant).

There were no changes in the scope of consolidation in 2004.

Sumiswald; Bezirkssparkasse Dielsdorf, Dielsdorf; Bezirkssparkasse Uster, Uster; BGG Banque Genevoise de Gestion, Genève; BGP Banca di Gestione Patrimo-

Notes to the consolidated annual financial statements

4 Cash and marketable securities in CHF 1 000

2004

2003

66 453 93 085

77 591 46 298

Total cash

159 538

123 889

Money market funds Hedge fund Bonds Other marketable securities

30 043 31 711 108 385 79

49 915 30 461 69 049 13

Total marketable securities

170 218

149 438

329 756

273 327

Credit balances with banks Call and time deposits

TOTAL CASH AND MARKETABLE SECURITIES

The position in the hedge fund is carried at the net investment value, as no market value is available. Because of the uncertainty concerning the valuations of such investments and the fact that not all markets are liquid, these book values may diverge substantially from the realizable values.

5 Accounts receivable in CHF 1 000

2004

2003

Accounts receivable for goods and services – to third parties – to related parties

20 357 4 858

16 152 3 834

Total accounts receivable for goods and services

25 215

19 986

Other accounts receivable – from third parties – from related parties

4 782 3 441

4 283 5 308

Total other accounts receivable

8 223

9 591

33 438

29 577

TOTAL ACCOUNTS RECEIVABLE

The item “Other accounts receivable from related parties” includes an interest-free loan of CHF 3.2 million granted to Eurex Frankfurt for an indefinite period. The loan is carried at its nominal value, as it can be recalled within one week at any time. In 2004, the Swiss Exchange granted U.S. Futures Exchange L.L.C, a company of the Eurex Group, a subordinated loan of CHF 2.7 million. This loan was fully written off on the basis of an impairment review (see note 8).

niale SA, Lugano; BHF-Bank (Schweiz) AG, Zurich; Biene - Bank im Rheintal, Altstätten; BIPIELLE Bank (Suisse), Lugano; BLP Banque de Portefeuilles, Lausanne;

Consolidated annual financial statements for 2004

59

6 Prepaid expenses and accrued income in CHF 1 000

2004

2003

Exchange fees and other revenues Accrued interest on securities Other prepaid expenses and accrued income

2 122 1 188 1 588

1 758 874 1 513

TOTAL PREPAID EXPENSES AND ACCRUED INCOME

4 898

4 145

7 Summary of fixed assets in CHF 1 000

IT hardware

Leasehold investments

Other

Total 2004

Total 2003

Acquisition costs at 1.1. Additions Changes in scope of consolidation

119 431 6 140 0

17 409 3 0

17 117 1 925 0

153 957 8 068 0

139 262 13 653 1 042

Acquisition costs at 31.12.

125 571

17 412

19 042

162 025

153 957

Accumulated depreciation at 1.1. Additions Changes in scope of consolidation

(99 709) (13 641) 0

(13 673) (859) 0

(16 057) (2 627) 0

(129 439) (17 127) 0

(106 239) (22 875) (325)

Accumulated depreciation at 31.12

(113 350)

(14 532)

(18 684)

(146 566)

(129 439)

19 722 12 221

3 736 2 880

1 060 358

24 518 15 459

33 023 24 518

31. 12. 2004

31. 12. 2003

92 000 7 300

92 000 6 550

NET BOOK VALUE AT 1.1. NET BOOK VALUE AT 31.12. Fire insurance values in CHF 1 000 IT hardware Other fixed assets

BNP Paribas (Suisse) S.A., Genève; Bondpartners S.A., Lausanne; Bordier & Cie, Banquiers privés, Genève; Bovay & Partenaires SA, Lausanne; BPT Trading SA,

Notes to the consolidated annual financial statements

8 Investments in subsidiaries in CHF 1 000

2004

2003

Eurex Zürich AG, Zurich STOXX Limited, Zurich

3 501 5 285

12 237 5 394

TOTAL INVESTMENTS IN SUBSIDIARIES

8 786

17 631

On 13 December 2004, the Articles of Association of Eurex Zürich AG were amended to incorporate new provisions governing dividend and liquidation entitlements in respect of the existing participation certificates. Consequently, the share in net income is now calculated at 15 % (2003: 20 %) and the value of the equity investment has fallen by CHF 3.5 million. In December 2004, Eurex Zürich AG received a capital contribution of CHF 2.1 million. The investment in Eurex Zürich AG, valued using the equity method, amounted to CHF 10.6 million at 31 December 2004. This represents a decline of CHF 0.2 million. Against a background of difficult market conditions, the prospects for Eurex’s US companies are viewed with restraint. Overall, these companies are operating at a considerable loss. An impairment review was conducted on 31 December 2004, following which an adjustment of CHF 7.1 million was made to the book value of the holding in Eurex Zürich AG. The investment in STOXX Limited, valued using the equity method, amounted to CHF 5.3 million at 31 December 2004. This represents a decline of CHF 0.1 million.

Lausanne; BPVi (Suisse) Bank SA, Lugano; Bridport & Cie SA, Genève; BS Bank Schaffhausen, Hallau; BW Vermögens-Management (Schweiz) AG, Zurich; C.I.M.

Consolidated annual financial statements for 2004

61

9 Summary of intangible assets in CHF 1 000

Goodwill

Software licences

Externally developed software

Internally developed software

Total 2004

Total 2003

Acquisition costs at 1.1. Additions Disposals

39 327 0 (0)

11 975 2 512 (0)

40 455 3 041 (0)

22 913 1 064 (447)

114 670 6 617 (447)

62 047 52 623 (0)

Acquisition costs at 31.12.

39 327

14 487

43 496

23 530

120 840

114 670

(38 367) (320) 0

(11 473) (866) 0

(28 532) (7 176) 0

(5 134) (4 678) (1 064)

(83 506) (13 040) (1 064)

(30 788) (52 718) 0

Accumulated amortization at 31.12. (38 687)

(12 339)

(35 708)

(10 876)

(97 610)

(83 506)

502 2 148

11 923 7 788

17 779 12 654

31 164 23 230

31 259 31 164

Accumulated amortization at 1.1. Additions Special amortization

NET BOOK VALUE AT 1.1. NET BOOK VALUE AT 31.12.

960 640

The Group began capitalizing software licences in 1996. 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 extending the SWX platform, which have been capitalized since the 2001 financial year. In accordance with inhouse regulations on the capitalization of internally developed software, expenditure incurred in each financial year is capitalized at year-end and written off over an estimated useful life of 5– 8 years. In 2004, development costs of CHF 1.1 million were capitalized in connection with the EM7 release. Work was then halted on the basis of current project assessment procedures. The newly launched Quotematch project replaced the EM7 release. The capitalized costs were therefore fully written down.

Banque, Genève; Caisse d’Epargne d’Aubonne, Aubonne; Caisse d’Epargne de la Ville de Fribourg, Fribourg; Caisse d’Epargne de Nyon, PSA/sgu, Nyon; Caisse

Notes to the consolidated annual financial statements

10 Other liabilities in CHF 1 000

2004

2003

Due for goods and services – to third parties – to related parties

12 999 747

13 698 –

Total due for goods and services

13 746

13 698

Miscellaneous liabilities – to third parties – to related parties

26 794 0

15 486 10 267

Total miscellaneous liabilities

26 794

25 753

TOTAL OTHER LIABILITIES

40 540

39 451

In 2004, the current account debt of CHF 10.3 million to the SWX Swiss Exchange Association resulting from the transfer of the solidarity fund at 31 December 2003 was settled by means of a cash remittance.

11 Accrued expenses and deferred income in CHF 1 000

2004

2003

Employee benefits Swiss Federal Banking Commission Other accruals and deferrals

8 811 9 900 4 557

7 651 9 000 9 557

23 268

26 208

TOTAL ACCRUED EXPENSES AND DEFERRED INCOME

Pursuant to the ordinance of 2 December 1996 (as amended on 21 October 2003) concerning fees of the Swiss Federal Banking Commission, part of the Commission’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 2004 financial year is CHF 9.9 million.

d’Epargne de Prez, Corserey et Noréaz, Prez-vers-Noréaz; Caisse d’Epargne de Siviriez, Siviriez; Caisse d’Epargne du District de Cossonay, Cossonay;

Consolidated annual financial statements for 2004

63

12 Provisions in CHF 1 000

Book value at 1.1. Additions Use Reclassification Reversal Foreign currency earnings

BOOK VALUE AT 31.12.

Taxes

Repair work on rented buildings

Other

Total 2004

Total 2003

13 617 15 415 (13 185) (15 854) (19) 26

2 747 309 0 0 0 (1)

2 250 0 0 (892) (1 248) 1

18 614 15 724 (13 185) (16 746) (1 267) 26

26 889 13 010 (7 774) 0 (13 511) 0

0

3 055

111

3 166

18 614

The reduction of CHF 0.9 million in other provisions in 2004 is due to the reclassification of accruals for exchange fees. These are now accounted for under Accrued expenses and deferred income. Provisions for taxes are now carried under Miscellaneous liabilities. These provisions are for short-term tax liabilities.

13 Changes in equity in CHF 1 000

Company capital

Capital reserve (premium)

Retained earnings

Cumulative translation difference

Total

Equity at 1.1. 2003 Payment of premium Profit for the year Translation differences

10 000

0 242 535

242 535 (242 535) 42 311

0

(459)

252 535 0 42 311 (459)

Equity at 31.12. 2003

10 000

(459)

294 387

204

204 53 253

(255)

347 844

242 535

Translation differences Profit for the year Equity at 31.12. 2004

42 311

53 253 10 000

242 535

95 564

The share capital amounts to CHF 10 million, divided into 10 000 registered shares of CHF 1 000 each. On 13 August 2003, the share capital of the SWX Group was raised by CHF 9.9 million to CHF 10 million by means of a non-cash contribution from the SWX Swiss Exchange. The difference between this amount and the acquisition price was recorded as a premium (general legal reserve). The foreign currency difference results from the translation of individual accounts of foreign subsidiaries.

Caisse d’Epargne du District de Courtelary, Courtelary; Caisse d’Epargne du District de Vevey, Vevey; Caisse d’Epargne et de Prévoyance d’Yverdon-les-

Notes to the consolidated annual financial statements

14 Segment data in CHF 1 000 Spot securities trading Derivatives trading (Eurex Group) Information services Admission fees Revenue from service level agreements Miscellaneous revenue

TOTAL REVENUE

2004

2003

110 999 152 985 27 441 17 763 21 872 27 761

106 335 146 333 29 958 13 583 25 149 23 174

358 821

344 532

Revenue from spot securities trading is shown after deduction of a rebate of CHF 20 million (2003: CHF 15 million). Miscellaneous revenue relates primarily to IT services provided for participants, investment protection fees and stamp taxes on the issuance of securities.

15 Personnel expense in CHF 1 000 Compensation Social security payments Other personnel costs

TOTAL PERSONNEL EXPENSE

2004

2003

(60 893) (20 881) (10 630)

(59 448) (19 537) (10 005)

(92 404)

(88 990)

In 2004, an average of 478 people were on the permanent staff (454 in the previous year). There were 467 full-time positions occupied at 31 December 2004, compared with 447 in 2003.

Bains S.A., Yverdon-les-Bains; Caixa Bank Banque Privée (Suisse) SA, Genève; CAT Finance AG, Zurich; CBG Banca Privata Lugano SA, Lugano; CBG Compagnie

Consolidated annual financial statements for 2004

65

16 Other operating expenses in CHF 1 000

2004

2003

Repairs and maintenance Public relations and marketing Telecommunications Rental expense Turnover fee payments to the Swiss Federal Banking Commission Agency agreement with Eurex Consultancy and services Miscellaneous operating expenses

(17 215) (5 871) (15 972) (9 431) (9 407) (55 290) (24 911) (20 072)

(17 915) (5 652) (19 648) (8 637) (8 386) (42 735) (23 955) (18 062)

TOTAL OTHER OPERATING EXPENSES

(158 169)

(144 990)

The increase in expenses for the agency agreement with Eurex is mostly due to costs incurred in connection with the latter’s US business, and higher taxes which cannot be reclaimed.

Bancaire Genève, Genève; Citation SA, Zurich; Citibank (Switzerland), Zurich; Clariden Bank, Zurich; Commerzbank (Schweiz) AG, Zurich; Compagnie Bancaire

Notes to the consolidated annual financial statements

17 Net financial income in CHF 1 000

2004

2003

Interest income Dividend income Other income

3 734 4 000 182

2 717 3 200 819

Financial income

7 916

6 736

Interest expense Bad debt expense Other financial expense

(185) (33) (777)

(279) (72) (372)

Financial expense

(995)

(723)

(3 544) (186) (109) (7 130)

– 509 378 –

(10 969)

887

(1 284) (1 276)

(325) 348

(13 529)

910

(6 608)

6 923

Impact of new arrangement for participation certificates of Eurex Zürich AG Income from equity stake in Eurex Zürich AG Income from equity stake in STOXX Limited Impairment, Eurex Zürich AG Income from non-consolidated holdings Securities earnings Foreign currency earnings Valuation and exchange differences TOTAL NET FINANCIAL INCOME

Dividend income for 2004 includes a dividend payment of CHF 4.0 million by STOXX Limited for the 2003 financial year. More details of income from non-consolidated holdings are provided in note 8.

Espirito Santo SA, Lausanne; cosba private banking ag, Zurich; Credit du Lac S.A., Lugano; Crédit Mutuel de la Vallée SA, Le Sentier; Credit Suisse Fides,

Consolidated annual financial statements for 2004

67

18 Other expense/revenue in CHF 1 000

2004

2003

Miscellaneous expenses

(3 061)

(2 764)

Other expense

(3 061)

(2 764)

Reversals of provisions Other prior period adjustments

0 367

16 776 1 224

Other revenue

367

18 000

(2 694)

15 236

2004

2003

(15 416) 953

(9 300) (5 182)

(14 463)

(14 482)

TOTAL OTHER EXPENSE/REVENUE

19 Taxes in CHF 1 000 Capital and income taxes Deferred income taxes

TOTAL TAX EXPENSE

Deferred income taxes are calculated on the differences between the book values of individual company accounts and the values used for consolidation purposes. A tax rate of 25 % was applied for the calculation of deferred income taxes.

Zurich; Credit Suisse First Boston, Zurich; Credito Privato Commerciale SA, Lugano 4 Caselle; Daiwa Securities SMBC Europe Limited, London, Geneva Branch,

Notes to the consolidated annual financial statements

20 Off-balance sheet transactions Contingent liabilities The SWX Swiss Exchange has committed itself in a comfort letter to providing Eurex Clearing AG, Frankfurt, with 20 % of the financial resources it needs to fulfil its obligations as a clearing house. The terms of this undertaking were revised with effect from 1 January 2005. The commitment is now 15 % and limited to a maximum amount of EUR 105 million. This new arrangement replaces the comfort letter of 8 November 2000. The commitment is 20 % for events prior to 1 January 2005. The SWX Swiss Exchange has issued a legally non-binding declaration to the Financial Services Authority (FSA) in favour of the U.S. Futures Exchange L.L.C., a company of the Eurex Group, under which it recognizes its moral obligation to provide financial support as an indirect shareholder and within the context of the joint venture with Deutsche Börse AG. In compliance with regulatory requirements of the FSA, the SWX Swiss Exchange has committted itself to providing virt-x Ltd. with sufficient financial resources at any time. virt-x Exchange Ltd. has undertaken to make compensation payments to London Clearing House Limited (LCH) if the services provided in connection with the central counterparty for securities trading at virt-x are terminated before 4 May 2005. Such compensation would be equivalent to the daily turnover which LCH would have to forfeit if the services were discontinued, less all expenses which LCH would no longer incur as a result of their termination. It is not possible to quantify this commitment. Any compensation payment that might be made is limited to a maximum of GBP 2 million. virt-x Exchange Ltd. has undertaken to make compensation payments to SIS x-clear AG (x-clear) if the agreement in connection with the central counterparty is terminated before 4 May 2005. Such compensation would be equivalent to the daily turnover which x-clear would have to forfeit, less all expenses which x-clear would no longer incur as a result of the termination of its service. It is not possible to quantify this commitment. Any compensation payment that might be made is limited to a maximum of GBP 1 million. In a letter to London Clearing House Limited (LCH) dated 14 November 2002, the SWX Swiss Exchange confirmed that in the event of a resumption of trading in SMI stocks by SWX, LCH would be able to continue providing settlement services for these stocks on the same terms as agreed with virt-x and that the SWX Swiss Exchange would compensate LCH for any additional expenses incurred. Long-term contracts · Rental contract with the Canton of Zurich for the stock exchange building at Selnaustrasse (expiry 2012 ) · Rental contract with Canary Wharf Management Ltd., Canary Wharf, London (expiry 2005 ) · Cooperation agreement with Deutsche Börse concerning Eurex Zürich AG (expiry 2014 )

21 Pending transactions The risks inherent in pending transactions are covered by “Other provisions”.

Genève; DC Bank Deposito-Cassa der Stadt Bern, Bern; Decova S.A., Genève; Deka (Swiss) Privatbank AG, Zurich; Delen (Suisse) SA, Genève; Dexia Privatbank

Consolidated annual financial statements for 2004

69

22 Post-balance-sheet events 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 2004.

23 Related parties In the course of normal business operations, the SWX Group provides services for the following related parties: SWX Swiss Exchange Association Eurex Zürich AG, Zurich, and the subsidiaries held by it either directly or indirectly, essentially: Eurex Frankfurt AG, Frankfurt, Eurex Clearing AG, Frankfurt, Eurex Bonds AG, Frankfurt, U.S. Exchange Holding Inc., U.S. Futures Exchange L.L.C. STOXX Limited, Zurich in CHF 1 000 Derivatives trading, Eurex Group Service level agreements, Eurex Zürich AG Service level agreements, STOXX Limited Agency agreement, Eurex Zürich AG

TOTAL RELATED PARTIES

2004

2003

152 985 15 317 3 596 (55 290)

146 333 13 097 3 945 (42 735)

116 608

120 640

Services are billed on an arm’s-length basis.

24 Staff pension fund There is an affiliation with a collective insurance foundation that insures the employees of the SWX Swiss Exchange, STOXX Limited and Eurex Zürich AG. In order to show pension fund liabilities as required by Swiss GAAP (FER/ARR 16), this affiliation is treated as a defined contributions plan, i.e. its assets and liabilities are not carried in the balance sheet, and the portion of personnel expense accounted for by the employer’s contributions – CHF 6.7 million, against CHF 7.4 million in 2003 – equals the booked expense. Reserves for the employer’s contributions amounted to CHF 3.4 million at 31 December 2004 (CHF 3.4 million in 2003). The SWX Group has set up a welfare foundation for discretionary payments and the financing of retirement benefits, in order that employees of companies with which it has close business or financial ties are insured against the economic consequences of old age, disability and death. Since the foundation was established, the SWX Swiss Exchange has paid in an amount of CHF 18 million (CHF 5 million in 2004 and CHF 5 million in 2003).

(Schweiz) AG, Zurich; Dominick Company AG, Privatbank, Zurich; Dresdner Bank (Schweiz) AG, Zurich; DRYDEN BANK SA, Genève; EB Entlebucher Bank, Schüpfheim;

REPORT OF THE GROUP AUDITORS Zurich, 11 February 2005 As auditors of the group, we have audited the consolidated financial statements (balance sheet, income statement, statement of cash flows and notes, pages 52 to 69) of SWX Group, Zurich, for the year ended 31 December 2004. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP ARR and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved.

Ernst & Young Ltd.

sig. Thomas Schneider Swiss Certified Accountant (in charge of the audit)

sig. Iqbal Khan Swiss Certified Accountant

EFG Private Bank SA, Zurich; EGOBANK SA, Lugano; Ersparnisanstalt der Stadt St. Gallen, St. Gallen; Ersparnisanstalt Oberuzwil, Oberuzwil; Ersparnisge-

Consolidated annual financial statements for 2004

71

sellschaft Küttigen, Küttigen; Ersparniskasse Affoltern i.E., Affoltern i.E.; Ersparniskasse des Amtsbezirks Interlaken, Interlaken; Ersparniskasse Erlins-

BALANCE SHEET in CHF 1 000

2004

2003

44

6 826

Time deposits

32 828

0

Total cash

32 872

6 826

Money market funds Hedge fund Bonds

0 31 711 108 385

20 002 30 461 69 049

Total marketable securities

140 096

119 512

Total cash and marketable securities

172 968

126 338

Accounts receivable – from third parties

530

304

Total accounts receivable

530

304

1 188

874

Total current assets

174 686

127 516

Investments in subsidiaries

263 331

263 331

Total non-current assets

263 331

263 331

438 017

390 847

ASSETS Credit balances with banks

Prepaid expenses and accrued income

TOTAL ASSETS

bach, Erlinsbach; Ersparniskasse Rüeggisberg, Rüeggisberg; Ersparniskasse Schaffhausen, Schaffhausen; F. van Lanschot Bankiers (Schweiz) AG, Zurich; Fer-

Annual financial statements for 2004 of the SWX Group

in CHF 1 000

73

2004

2003

Accounts payable – to related parties

0

80

Total accounts payable

0

80

Total short-term liabilities

0

80

Provisions

561

265

Total long-term liabilities

561

265

Total liabilities

561

345

Share capital Legal reserve Profit brought forward Profit for the year 31.12.

10 000 249 077 131 425 46 954

10 000 249 077 0 131 425

Total equity

437 456

390 502

438 017

390 847

LIABILITIES AND EQUITY

TOTAL LIABILITIES AND EQUITY

rier Lullin & Cie SA, Genève; Fibi Bank (Schweiz) AG, Zurich; FIDEURAM Bank (Suisse) SA, Lugano; Fidurhône SA, Genève; Finacor SA, Basel; Financière Mermod

INCOME STATEMENT

in CHF 1 000

from 1. 1. 2004 from 19. 12. 2002 to 31. 12. 2004 to 31. 12. 2003

INCOME STATEMENT Personnel expense Other operating expenses

(0) (170)

(50) (65)

Operating income

(170)

(115)

Interest income Securities earnings Dividends Write-downs on investments in subsidiaries Foreign currency earnings Other financial expense

2 523 1 446 44 000 (0) (0) (289)

707 527 133 200 (2 303) (197) (129)

Net financial income

47 680

131 805

Profit before taxes

47 510

131 690

(556)

(265)

46 954

131 425

Taxes

PROFIT FOR THE YEAR

S.A., Lausanne; Financière SBA (Suisse) SA, Genève; Finter Bank Zurich, Zurich; FTI Banque Fiduciary Trust, Genève; Glarner Kantonalbank, Glarus; Gonet &

Annual financial statements for 2004 of the SWX Group

75

NOTES TO THE ANNUAL FINANCIAL STATEMENTS Guarantees and guarantee obligations in favour of third parties There are no guarantees, guarantee obligations or assets pledged in favour of third parties.

Investments in subsidiaries in CHF 1 000 SWX Swiss Exchange, Zurich STOXX Limited, Zurich EXFEED AG, Zurich

TOTAL INVESTMENTS IN SUBSIDIARIES

31.12. 2004

31.12. 2003

258 978 3 353 1 000

258 978 3 353 1 000

263 331

263 331

A list of the subsidiaries of the SWX Group, showing their business activity, their share capital and the stake held, can be found on page 57.

Equity in CHF 1 000

31.12. 2004

31.12. 2003

10 000 249 077 131 425

10 000 249 077 0

Profit for the year

46 954

131 425

TOTAL EQUITY

437 456

390 502

Share capital Legal reserve Profit brought forward

The SWX Group’s share capital amounts to CHF 10 000 000, is fully paid up and is divided into 10 000 registered shares with a nominal value of CHF 1 000 each. All the shares of the SWX Group are owned by the SWX Swiss Exchange Association.

Cie, Banquiers, Genève; Graubündner Kantonalbank, Chur; GRB Glarner Regionalbank, Glarus; Habib Bank AG Zurich, Zurich; Hardcastle Trading AG, Rapperswil

PROPOSAL OF THE BOARD OF DIRECTORS Proposal of the Board of Directors concerning the appropriation of profit The Board of Directors proposes that the profit for the year of CHF 46 954 000 should be carried forward.

SG, Hentsch Henchoz & Cie, Lausanne; Héritage Finance & Trust S.A., Genève; HSBC Guyerzeller Bank AG, Zurich; HYPOSWISS Privatbank AG, Zurich; IBI Bank AG,

Annual financial statements for 2004 of the SWX Group

77

Zurich; IMC International Marketmakers Combination B.V. Amsterdam, Niederlassung Unterägeri (ZG), Unterägeri; IntesaBci Bank (Suisse), Zurich; Investec Bank

REPORT OF THE STATUTORY AUDITORS Zurich, 11 February 2005 As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes, pages 72 to 77) of SWX Group, Zurich, for the year ended 31 December 2004. These financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records and financial statements (and the proposed appropriation of available earnings) comply with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. Ernst & Young Ltd.

sig. Thomas Schneider Swiss Certified Accountant (in charge of the audit)

sig. Iqbal Khan Swiss Certified Accountant

(Switzerland) AG, Zurich; IRB Interregio Bank, Reinach; Israel Discount Bank (Switzerland) SA, Genève; ITAG Vermögensverwaltung, Basel; J. P. Morgan (Suisse)