A N N U A L R E P O R T

1 9 9 7

1

CONTENTS

Foreword by the President..................................................... 2

Board Report for 1997........................................................... 3

Profit and loss account.......................................................... 8

Balance sheet........................................................................ 9

Cashflow analysis and notes................................................... 10

Notes...................................................................................11

Auditors´ report................................................................... 15

Organisation......................................................................... 16

Members of the Oslo Stock Exchange...................................... 17

Please note that the main figures for the securuties markets for 1997 and historical figures covering theprevious 10 years, are presented in the publication ”The Oslo Stock Exchange – Statistics 1997”.

These well-know word's from Shakespeare's Hamlet point toward the themethat is particularly to the fore at the moment in stock exchange circles aroundthe world. A gale of strategic structure innovations is blowing over stock ex-changes in general. A number of alliances and mergers between stock exchangesare on the drawing board or under implementation. In our "local" environmentthe greatest interest is, of course, in the agreement between Copenhagen StockExchange and Stockholm Stock Exchange regarding the establishment of a com-mon Nordic securities market. But there are also a number of other initiativesunderway, in Europe and in the United States.

For quite a few people, the question is: Where is Oslo Stock Exchange placed inthis restructuring process? Are we not an interesting enough partner, or are wedriven by forces that are trying to protect themselves and Oslo Stock Exchangefrom competition? And the answer is quite simple: No, in both cases. We have astanding invitation from our Swedish and Danish colleagues to join their stockexchange co-operation. And we are not trying to prevent competition from ot-her market places or from players trying to get a grip on our issuers, our inves-tors, or our brokers. And in the frontier-less financial industry that we are partof today, both from a legal point of view and technologically, it would be to noavail.

But first of all we must ask ourselves why should Oslo Stock Exchange co-ope-rate with other stock exchanges. Will the result be more players, particularly in-vestors and brokers, and thus a bigger and more liquid market? Maybe – butthere is also a chance that interest in Norwegian securities will be overshadowedby those of the partner bourses. Will we gain access to better and/or cheapertechnology, and thus be stronger in the technological "stock exchange merry go-round"? The right technology will undoubtedly be important in the years tocome, but so will the ability to manage one's own technology with regard touse, development, complexity, and risk levels. We have opted for a trading sys-tem that is already fully developed, primarily because we want to limit the riskinherent in the development process. I could have presented other aspects of co-operation, but these would not have changed my point one iota, that there is nouniversally valid "yes" or "no" answer to the question of whether co-operationbetween stock exchanges will, on the whole, have a positive or a negative im-pact. Every market segment must be assessed based on its own situation.

Oslo Stock Exchange takes no fanatical stance on future stock exchange co-ope-ration. This is clearly demonstrated by our 1995 agreement with OM on co-operation on derivatives, an agreement that broke fresh ground, both technicallyand market-wise. But for the other securities, shares, primary capital certificates,and bonds, our analyses tell us that co-operation between stock exchanges doesnot necessarily result in positive impacts on liquidity and/or financial savings.What then remains is some loss of freedom. We believe that it is possible to runa good local stock exchange for Norwegian issuers and investors, just as it ispossible to run a good local bank right next door to a major international bank.This does not exclude us from continually updating our pro-con analysis onstock exchange co-operation on the basis of our new technological trading plat-form.

In closing, I would like to avail myself of this opportunity of thanking all play-ers at and around Oslo Stock Exchange for their contribution to making 1997such a successful bourse year. The high level of activity and the positive deve-lopment also strengthen my belief that it is possible to maintain an effectiveNorwegian securities market based on our own resources. But my thanks gofirst and foremost to the staff at Oslo Stock Exchange. Without their efforts andcommitment, I am afraid that Oslo Stock Exchange would have proved to be abottleneck for many players in their hectic day-to-day work.

2Kjell Frønsdal

President & CEO

President’s introductionStock exchange co-operation – to be or not to be?

Kjell Frønsdal, President & CEO

Three features should be highlightedin particular from 1997. The first isthe record level of activity in virtuallyall of the Stock Exchange's areas ofoperation. A new trading volume re-cord was set in both the primary andsecondary markets for shares and pri-mary capital certificates, a new tra-ding volume record was set in the de-rivatives market, the sub-indices andthe All Share Index were constantlyreaching new highs, and there was arecord number of new companies thatwere listed.

The second feature was that an agree-ment was signed in October with theSwedish company, CAM SmallSystems, for the deliver of new tradingsystem. This system, which is built ona concept developed in Australia, willbe delivered in the autumn of 1998.The project, dubbed HS-98, will be gi-ven top priority with regard to effortsand resources through to its successfulimplementation.

The third feature was the relativelysharp fall on the Stock Exchange atthe end of October, resulting from theeconomic and financial crisis in Asia.This confirmed that the Oslo StockExchange is now part of the global se-curities market, where the major in-ternational players decide, to a greatextent, the performance of stock ex-changes around the world.

The international securities market ismoving ahead at a rapid pace, bothwith regard to technology utilisation,cross-border trading, and co-operati-on between bourses. The stock ex-changes are therefore facing entirelynew challenges as regards competiti-on. The Stock Exchange Board consi-ders positioning the Oslo StockExchange in this competition as itsmain challenge in the years to come.

Strategic assessments

Oslo Stock Exchange's main goal is tobe the central market place for the tra-ding of securities issued byNorwegian enterprises. This must be

reflected in the strategic choices theBoard makes. In this connection, theacquisition of a state-of-the-art andeffective trading system is particularlyimportant.

The Stock Exchange Board has em-phasised the need for Oslo StockExchange to update itself with regardto developments in trading technolo-gy. The agreement to buy HS-98,combined with the connection of thederivatives market to OM's tradingsystem for derivatives in February1997, will provide the StockExchange with a competitive trading

platform. When deciding which newsystem to choose, it was important forthe Stock Exchange Board to minimi-se the risk of unforeseen factors.Emphasis was therefore placed on get-ting a fully developed system withshort delivery times, and with a greatdeal of flexibility based on recognisedIT standards.

The character of securities trading isbecoming increasingly international,particularly with regard to shares.Oslo Stock Exchange has, for manyyears, had a large number of foreignplayers. Other countries have gradual-ly reached the same level, i.e. with aforeign ownership and portion of tra-ding in the 30-40 per cent range. Forthe Stock Exchange Board it is impor-tant to arrange matters so that thehigh foreign participation can bemaintained. This means that the Stock

Exchange, together with Norwegianstockbrokers and companies, mustdeliberately work to maintain the in-terest in the Norwegian marketamong foreign investors, particularlyin London and in the USA.

In 1997, the Board discussed exten-ded national co-operation at instituti-on level, particularly with theNorwegian Central SecuritiesDepository (VPS) and the NorwegianFutures and Options Clearing House.The aim is to strengthen theNorwegian market's overall competi-tiveness by way of practical measures.

Market development and measures

Activities and developments in 1997reflect to a great extent the goodNorwegian economic performance.Trading volumes in the equity marketrose by 41 per cent to NOK 341 billi-on. In the new-issue market, almostNOK 21 billion in fresh equity wasraised, more than twice the 1996 figu-re. The All Share Index rose by 31.5per cent during the year, and a new in-dex record was set on 62 stock ex-change days. However, the unrest inthe Asian foreign exchange and finan-cial markets caused prices to fall du-ring the last two months of the year.Trading in the bond market rose by12 per cent, excluding repo business,to NOK 1,215 billion.The high level of activity resulted inthe Stock Exchange Board dealing

3

Board report for 1997

19971997• 56 new companies listed

• 41% increase in turnover of shares and primary capital certificates

• New Trading System in 1998

• All Share Index rose by 32%

4

Board report for 1997

with a record number of applicationsfrom joint-stock companies for stockexchange listing. A total of 56 compa-nies were admitted to listing, 38 ofthem on the SMSB List. One third ofthe newcomers, 18 companies, areprimarily engaged in shipping and/oroffshore activities. These contributedto consolidating Oslo StockExchange's position as a leading ship-ping and offshore bourse in an inter-national perspective. At year-end, atotal of 217 joint-stock companiesand savings banks were listed. On thefixed income side, the number ofbond loans registered rose from 806to 827, while the number of certificateloans was unchanged from 1996.

Of the large numberof applications foradmission to listing,only one was turneddown, namelyVålerenga Fotball.The company appea-led the decision tothe Stock ExchangeAppeals Committee,which upheld theBoard's refusal.Furthermore, a totalof 11 companieswere delisted, mainlyas a result of mergersand acquisitions. For some time now,the Stock ExchangeBoard has wantedthe difference between the Main Listand the SMSB List to be greater. Inconnection with a revision of theStock Exchange Regulations, theBoard has proposed that a companymust have a market capitalisation ofat least NOK 500 million if it is to belisted on the Main List. The StockExchange Board has also resolvedthat, in its admission practice, it willnot normally approve listing on theMain List unless the company canshow positive results, including positi-ve operating results.

Two new members were taken up in1997, NetFonds, and ABN AmroHoare Govett. Initially, the Stock

Exchange Board resolved to refuse theapplication from NetFonds based onan assessment of the company's equi-ty position. NetFonds appealed theBoard's decision to the StockExchange Appeals Committee, whichfound in favour of NetFonds. R.S.Platou withdrew its membership inMarch 1997, in the wake of the com-pany's involvement in an issue forNorwegian Applied Technology(NAT). At year-end, the Exchangehad 32 members.

The Stock Exchange Board has vie-wed the activity in the Norwegianbond market with increasing concern.The number of active brokers in thebond market has been steadily decrea-

sing for some years, in part in linewith the transition to a more price-driven market. In the case of bindingorders, a price-driven market couldexpose involved stockbrokers to hig-her market risks. This might result inthe Stock Exchange being used less asa market place, and/or to less effectivepricing. In order to adapt Oslo StockExchange's trading procedures to thenew market structure, thus ensuring amore effective and liquid bond mar-ket, the Board resolved in Septemberto allow indicative prices to be quotedin the bond market, provided thatNorges Bank made similar amend-ments to its primary dealer agree-ments. Norges Bank did this with ef-

fect from 1 January 1998, and quo-ting indicative prices has been permit-ted since that date.

To improve Oslo Stock Exchange'scompetitive position, particularly vis-à-vis other countries, the StockExchange Board resolved at the end of1996 to extend the opening hours ofboth the bond and equity markets'trading systems by one hour. This ex-tension became effective, for a trialperiod on 1 March 1997. Followingan internal evaluation of the possibleeffects of the extension and a compre-hensive hearing among the players,the Stock Exchange Board concludedin November that the extension hadnot met expectations as far as the

equity market goes.Against this back-ground, it was deci-ded that the newopening hours forthe bond marketshould continue,and that the equitymarket should re-vert to the old ope-ning hours. TheStock ExchangeBoard will reviewthe question of ope-ning hours againwhen the new tra-ding system hasbeen implemented.

Trading systems

In 1997, the acquisition of a new tra-ding system has been given high prio-rity by the Stock Exchange Board.Emphasis has also been placed on ke-eping the Stock Exchange Council up-dated on the project's progress, not le-ast to ensure that the Council has agood basis for making its budget-rela-ted decisions. The total value of thecontract with CMA is approximatelyNOK 40 million. In addition, a goodNOK 30 million will have accrued inconsultancy fees and other internalcosts at the Oslo Stock Exchange.Together with guarantee charges andmiscellaneous risk premiums, it is esti-mated that the HS-98 project, as it is

900

1200

1500

Indices (1.1.1983 = 100)

Shares & Primary 1997 +/-Capital Certificates 31 Dec %

ALL SHARE INDEX 1273,61 31,52Finance 140,11 53,76Industry 2098,84 27,67Shipping 1207,69 39,78SMB** 1265,23 20,60PPC** 1292,86 40,06OBX* 676,36 27,00ITSX*** 1275,06 27,51BAEX*** 1337,59 33,76

* 1.1.87=200 ** 1.1.95=500 *** 1.1.97=1000

dimensioned at present, will cost justover NOK 90 million.The Stock Exchange Board wouldemphasise the considerable burdenHS-98 will place on the organisationin 1998. The present trading systemmust be operated and maintainedfully, simultaneously with the imple-mentation of the new one and withacquiring new competence.

HS-98 will provisionally only coverthe equity market. The Board willconsider expanding the new system toinclude also the bond market, so thatTSS can be phased out early in 1999.All three main markets will then havebeen transferred to the new tradingplatform within a period of two years.

At the end of 1997, asettlement agreementwas reached withLogica UK in respect ofthe dispute coveringthe cancellation of theformer comprehensivetrading system agree-ment.

Supervision

At the end of 1997, thesecond and final part ofthe new SecuritiesTrading Act came intoforce. It is importantthat the legal amend-ments are followed upby practical supervision. The so-calledNAT case, with considerable shortco-mings in allotments relating to theNorwegian Applied Technology(NAT) issue, was a sharp reminder ofthe need for active security regulatorysupervision.

Supervision of the Norwegian securi-ties market is split between theBanking, Insurance and SecuritiesCommission (Kredittilsynet) and OsloStock Exchange. Practical follow-upand delimitation are laid down in aco-operation agreement between thetwo institutions. A revised agreementwas approved by the Stock ExchangeBoard in November. Co-operation

with the Banking, Insurance andSecurities Commission is very good,both in practical work and on issuesof a more supervisory policy nature.

In 1997, the Stock Exchange Boardimposed infringement charges on twocompanies, for failure to comply withthe duty of disclosure. In February, aninfringement charge of 10 times theannual listing fee was imposed onSysdeco Group ASA , which is themaximum reaction under the StockExchange Act. This charge was impo-sed for having presented preliminaryaccounts for 1995 which obviouslygave incorrect and misleading infor-mation on the company's financial si-tuation.

In October, an infringement chargeequivalent to twice the annual listingfee was imposed on Alvern ASA, foradvising the market too late of a con-tract that had been entered into.

1997 was a very active year for newissues, with rather more than 230 pro-spectuses being checked. This includesboth the equity market and the bondmarket. In this respect, the StockExchange Board issued warnings inwriting, to Fearnely Fonds and ParetoFonds respectively, for having failed toprepare the necessary issue material inconnection with two private place-ments with more than 50 persons.

The Stock Exchange Regulations arethe detailed set of rules on which theStock Exchange's supervisory work isfirst and foremost based. In 1997, theStock Exchange Board discussed seve-ral matters of principle regarding acomprehensive revision of theRegulations. In December, new draftregulations were presented to theStock Exchange Council, for forwar-ding to the Ministry of Finance, InJanuary 1998, the draft was sent outon a comprehensive hearing round.

The Stock Exchange Board andthe Stock Exchange Council

The Stock Exchange Board met 14 ti-mes in 1997. There were no changes

in the compositionof the Board in1997.

The Stock ExchangeCouncil met five ti-mes in 1997, twomore than is usual.On addition to thestatutory items,two meetings werein their entiretyspent on a broadreview of the bud-getary, commercial,and technical as-pects of the newtrading system. TheStock ExchangeCouncil has been

regularly briefed on current StockExchange-related issues.

Organisation

At 31 December 1997, the StockExchange had 82 employees, inclu-ding 2 part-time staff at the branch of-fices in Bergen and Trondheim, and11 with the subsidiary A/S Oslo BørsInformasjon. This is 7 more than in1996.

A wide-ranging environmental surveywas carried out among the employeesin 1997. This survey uncovered, interalia, a need to improve the internalflow of information and to strengthen

1995 1996 1997

156,7

231,7

341,1

1991 -

1997

159,9

Shares & Primary 1997 +/-Capital Sertificates 31 Dec %

TOTAL 341,1 47,2Finance 43,3 53,7Industry 200,0 50,7Shipping 53,7 16,0SMB 34,4 112,2PPC 9,4 14,610 most traded shares 123,9 38,3

Turnover by value (NOK bn)

5

6

Board report for 1997

the Exchange's personnel functionand management competence. Thesurvey was followed up by a compre-hensive package of measures, bothshort-term and long-term in nature,including providing room under thebudget for certain measures in 1998.

With effect from 1 August 1997, theorganisation was changed. The neworganisation structure is based onfour sections, sub-divided into depart-ments which are the professional exe-cutive units. The changes have in partaimed at "sharpening" organisation,and in part at gathering those speciali-ties that normally belong together un-der one section manager. In connecti-on with the change in organisation, anew senior manage-ment group was for-med, which includesTor G. Birkeland,Director, as well as thePresident and ChiefExecutive, and theExecutive Vice Presi-dent.

In the opinion of theStock Exchange Board,if Oslo Stock Exchangeis to succeed in execu-ting its duties, it is ofdecisive importancethat the organisationmanages to keep and todevelop its competence.It is with satisfaction that the StockExchange Board has registered thatthe high level of staff turnover has fal-len somewhat in 1997. But many linesof related business still tempt withhigher salaries than Oslo StockExchange offers. It is therefore impor-tant that a high level of job satisfacti-on and challenging assignments arepart and parcel of what the StockExchange can offer to the individualemployee.

Financial matters

The accounts for 1997 show an ope-rating profit of NOK 10.4 million anda profit for the year of NOK 16.7 mil-lion. It is proposed that the profit for

the year be transferred to accumula-ted retained profits.

In 1997, total operating incomeamounted to rather more than NOK103 million, or NOK 18 million morethan in 1996. This increase in opera-ting income reflects the generally hig-her level of activity in the equity mar-ket, and the influx of new companies,and was spread fairly evenly overmost types of duty/fee. The incomealso includes the final settlement ofthe settlement agreement with LogicaUK.

In 1997, operating expenses amoun-ted to NOK 93 million, which wasNOK 18 million more than in 1996.

In general, this increase must be seenin conjunction with the increased levelof activity in almost every one of theStock Exchange's areas of activity.Compared to 1996, much of the in-crease in expenses is related to higherpersonnel expenses, inter alia in con-nection with the extended openinghours, and a sharp increase in thenumber of employees on the IT side.In addition, the increase is due tomore extensive marketing of derivati-ves and to negotiations on HS-98.

Oslo Stock Exchange's subsidiary, A/SOslo Børs Informasjon, recorded aprofit of NOK 1.6 million in 1997,compared to NOK 2.6 million in1996. At 31 December 1997, the

company's equity capital amounted toNOK 11.5 million.

At the end of the year, the equity capi-tal of the Oslo Stock Exchange Grouptotalled NOK 156 million. The StockExchange Board no longer finds it ne-cessary to ear-mark equity in separatereserves, an investment reserve and anincome regulation reserve. The Boardhas therefore proposed that these re-serves be liquidated with effect fromthe turn of the year 1997/98.

In connection with the proposal to theStock Exchange Council for the bud-get for 1998, the Stock ExchangeBoard has started to update the distri-bution formula that has been applied

since 1994 in re-spect of the StockExchange Act'sstatutory de-mands as to thedistribution offees among thevarious usergroups. The newcost analysisconcluded that alarger part of thecosts should beassigned to thestockbrokers andless to the issuerside. This waspart of the basison which the

Stock Exchange Board based its pro-posal to the Stock Exchange Councilfor the draft budget 1998. On thewqhole, this implies an adjustment ofthe rates, with a view to reducing feesby 15 per cent for issuers of shares,and a 25 per cent increase for stock-brokers.

Prospects

The Stock Exchange Board is of theopinion that Oslo Stock Exchangewill continue to be an attractive andexciting market place in the years tocome, for Norwegian and internatio-nal players alike. The Stock ExchangeBoard, by selecting a new trading sys-tem, has both directly and indirectly

1995 1996 1997

165 172

217

1991 -

1997

154

Shares & Primary 1997 +/-Capital Certificates 31 Dec

Domestic 196 38Foreign 21 7Total 217 45Banking 7 0Insurance 1 -1Industry 76 11Shipping 39 2SMB 80 32PPC 14 1

No. of listed companies

7

Ole LundChairman

Frode Hassel

John HøstelandDeputy Chairman

Kristin Normann Aarum

Odd Sigmund RøsteStaff Representative

Johan Solbu Braaten

Nigel K. WilsonSigmund Ellingbø

First line from left: Frode Hassel, Odd Sigmund Røste, Sigmund Ellingsbø og Nigel K. Wilson.Second line from left: Johan Solbu Braaten, Kristin Normann Aarum, John Høsteland og Ole Lund.

set the course for Oslo StockExchange's activity in the years tocome. An effective national stock ex-change is a precondition ifNorwegian business and Norwegianinvestors are to be able to fully ex-ploit the unique economic situationour country enjoys.

The Stock Exchange Board envisagesthree main challenges to be faced inthe next few years. The first is tomove Oslo Stock Exchange over to amodern technological platformwhich can open up for effective co-operation and communication withother players. The second is tostrengthen co-operation within theentire securities chain in Norway. Inpractice, this means closer co-operati-on in a number of areas between theNorwegian Central SecuritiesDepository (VPS), the NorwegianFutures and Options Clearing House,and Oslo Stock Exchange. And final-ly, the third challenge, which theStock Exchange Board looks forwardto with great expectations, is theconclusion of the ongoing committeereview of Oslo Stock Exchange's fu-ture organisation. It is important thatOslo Stock Exchange at all times hasthe necessary flexibility to orientateitself in day-to-day situations that areexposed to competition.

Profit and loss account

8

Cashflow analysis and notes are an integral part of the account

OSLO STOCK EXCHANGE CONSOLIDATED

1997 1996 NOTES FIGURES IN NOK 1000 1997 1996

OPERATING REVENUES43 594 39 224 1 Quotation fees 43 594 39 2249 387 6 980 Listing issue fees 9 387 6 980

22 887 20 355 Member fees 22 887 20 35510 341 9 036 Dealing fees options 10 341 9 0365 996 4 594 Sales revenues 18 720 16 308

11 202 4 854 2/14 Other income 10 928 4 714

103 407 85 043 TOTAL OPERATING REVENUES 115 857 96 617

OPERATING COSTS38 581 32 793 3/5 Salaries and social costs 43 176 36 8713 149 3 280 3 Fees 3 336 3 370

45 283 35 808 4/12 Departmental expenses 49 604 40 2435 940 3 261 7 Depreciation 7 229 4 505

Bad debts 50

92 953 75 142 TOTAL OPERATING COSTS 103 395 84 989

10 454 9 901 OPERATING PROFIT 12 462 11 628

6 322 7 496 Financial revenues 6 667 7 77962 31 Financial expenses 81 53

6 260 7 465 NET FINANCIAL RESULT 6 586 7 726

16 714 17 366 PROFIT BEFORE TAX 19 048 19 354

13 Taxes 713 621

16 714 17 366 PROFIT FOR THE YEAR 18 335 18 733

ALLOCATIONS16 714 17 366 Transferred to retained profits 18 335 18 733

16 714 17 366 TOTAL ALLOCATIONS 18 335 18 733

9

Balance sheetpr. 31.12

Cashflow analysis and notes are an integral part of the account

Oslo, 31, December 199731, Mars 1998

Kjell FrønsdalPresident

Morten L. MüllerHead of Administration

OSLO STOCK EXCHANGE CONSOLIDATED

1997 1996 NOTES FIGURES IN NOK 1000 1997 1996

ASSETSCurrent assets

76 276 72 334 9 Cash and bank 85 682 78 626 8 378 1 233 Debtors 9 868 1 475

- Other short-term receivables 736 102 6 652 8 960 Earned unpaid income 3 313 6 396

- Prepaid expenses 376 377 Stocks 377

91 306 82 904 Total current assets 99 599 87 352

Fixed assets

10 410 - 7/8/14 Trading system 10 410 - 41 237 41 658 10 Bonds 41 237 41 658

2 295 1 286 5 Pension funds 2 295 1 286 11 Shares 11 10

6 867 7 112 7/8 Property 6 867 7 112 2 823 3 390 7/8 Vehicles and fittings 3 138 3 473

11 317 12 723 7/8 EDP equipment 12 705 14 729 617 655 Loans to employees 617 655

1 350 1 350 Other long-term receivables 1 350 1 350

76 916 68 174 Total fixed assets 78 630 70 273

168 222 151 078 TOTAL ASSETS 178 229 157 625

LIABILITIES AND EQUITYShort-term liabilities

1 777 4 037 Creditors 2 274 4 192 4 113 3 422 Accrued pay roll tax and social security 4 732 3 811 2 408 1 996 Accrued holiday pay, bonuses 2 733 2 255

1 156 Accrued expenses 423 1 926 1 789 Prepaid revenues 3 356 -

Payable taxes 714 621 10 087 10 611 Total short-term liabilities 14 232 12 805

Long-term debt

954 5/6 Pension liabilities 1 174 332

954 - Total long-term debt 1 174 332

157 181 140 467 15 Equity 162 823 144 488

168 222 151 078 TOTAL LIABILITIES AND EQUITY 178 229 157 625

Cashflow analysis

10

OSLO STOCK EXCHANGE CONSOLIDATED

FIGURES IN NOK 1000 1997 1996 1997 1996

Net cashflow from operations 1) 18 065 15 616 21 975 19 179

Cashflow from investments

Receipts on sale of fixed assets 170 130 330 130 Payments on purchase of fixed assets (14 293) (15 141) (15 249) (15 831)Net cashflow from investments (14 123) (15 011) (14 919) (15 701)

Cashflow from financing

Receipts on raising new long-term debt 0 0 0 0Payments on repayment of long-term debt 0 0 0 0Net cashflow from financing

Net change in cash and cash equivalents 3 942 605 7 056 3 478 Cash and cash equivalents at start of period 72 334 71 729 78 626 75 148 Cash and cash equivalents at end of period 76 276 72 334 85 682 78 626

1) Reconciliation

Profit before tax 16 714 17 366 19 048 19 354 Tax paid for period 0 - (622) (296)Gain on sale of fixed assets (8) (108) (115) (108)Ordinary depreciation 5 940 3 261 7 229 4 505 Change in stocks 377 (108) 377 (108)Change in receivables from customers (7 145) 1 750 (8 393) (530)Change in payables to suppliers (2 260) 2 222 (1 918) 2 245Change in pension funds (55) (359) (167) (406)Items classified as investment activity (reclassification of bonds) 421 421 421 422Change in other assets 4 081 (8 829) 6 115 (5 899)Net cashflow from operational activities 18 065 15 616 21 975 19 179

11

Notes

PRINCIPLES

A) Consolidation principlesThe consolidated accounts consist of: The Oslo Stock Exchange (parent company)

A/S Oslo Børs Informasjon (subsidiary - 100%)

The purchase value method is used on consolidation. This means that the purchase price of the shares in the subsidiary iseliminated against equity in the subsidiary at the time of purchase / formation. Internal transactions, receivables andliabilities are eliminated.

B) Classification of items in the accountsReceivables payable within one year are classified as current assets. Other assets are fixed assets. The corresponding principle is used for liability items.

C) Current assets / fixed assets Current assets are valued at the lower of acquisition cost and actual value.

Fixed, non-depreciable assets are entered in the accounts at cost price. Fixed depreciable assets are entered in theaccounts at cost price after deduction of ordinary depreciation. The straight line method is used for depreciationpurposes. Minor and temporary investments are entered as expenses.

D) Cash reserveThe cash-reserve in the cash-flow analysis consists of cash and bank-deposits.

(FIGURES IN NOK 1,000) 1997 1996

Shares 30 536 26 907Primary capital certificates 1 656 1 609Bonds 11 402 10 703Certificates 0 5SUM 43 594 39 224

NOTE 2. OTHER INCOMEOther income of NOK 11,202,914 includes final settlement from Logica

NOTE 3. REMUNERATIONRemuneration paid to the President of the Exchange totalled NOK 1,146,254,-.Under his employment terms the Stock Exchange President has the right to two year's salary if his periodof appointment is not renewed or his employment contract is terminated by the Oslo Stock Exchange.

Fees paid to the auditing firm Kjelstrup og Wiggen ANS in 1997 totalled NOK 140,000, of which NOK 20,000 was for advisory services.

The items fees includes remuneration paid to the Stock Exchange Board of NOK 455,000 tothe Stock Exchange Council of NOK 149,500 and to the Stock Exchange Appeals Committee of NOK 318,700.

Shares: per NOK 1,000,000 in market capitalisation

1997 1996

135 150Minimum 70 000 70 000Maximum 525 000 575 000

50% rates are paid for companies listed on the SMB-list

Bonds: per NOK 100,000 in remaining outstanding debt.

1997 1996

7,50 7,75Minimum 5 500 5 500Maximum 40 000 40 000

NOTE 1. QUOTATION FEES

Fee rates have been calculated as follows (NOK)

Estimated pension obligation (overfunding) at 31.12.97

OSLO STOCK EXCHANGE CONSOLIDATED

Estimated pension obligation 13 964 063 15 265 491Pension funds (market value) 16 446 433 17 624 672Net pension obligation before tax -2 482 370 -2 359 181Periodised employment tax 17 370Changes in accounting estimatesnot recorded in P/L 187 378 266 550Net pension obligation after tax (overfunding) -2 294 992 -2 075 261 1)

Notes

12

Net pension expenses at 31.12.97 are made up asfollows:

OSLO STOCK EXCHANGE CONSOLIDATED

Pensions earned for the year 1 385 684 1 550 593Interest cost on pension obligations 836 657 911 009Expected return on pension funds -1 156 992 -1 234 637Net pension expenses before employment tax 1 065 349 1 226 965Periodised employment tax 292 594 315 382Changes in accounting estimatesNet pension expenses including employment tax 1 357 943 1 542 347

1) Net pension funds totalling NOK 2,294,992 are recorded in the balance sheet for Oslo Stock Exchange.For the Group, net pension funds of NOK 2075,261 divided into pension fonds NOK 2,294,992 and net pension obligations of NOK 219,731 are recorded.

Overfunding is capitalised as the expected pensions earned and interest cost will exceed the expected yield, so that it will be possible in future to utilisethis overfunding.

NOTE 4. OPERATING EXPENSES

(FIGURES IN NOK 1,000)Operating expenses have the following distribution:

OSLO STOCK EXCHANGE CONSOLIDATED

1997 1996 1997 1996Travel 1 453 1 756 1 633 1 844Projects 16 321 11 700 16 321 11 700Property 5 421 4 928 5 421 4 928Other operating expenses 22 088 17 424 26 229 21 771

TOTALT 45 283 35 808 49 604 40 243

NOTE 5. PENSION OBLIGATIONS - GROUP PENSION SCHEME

The group has a collective pension scheme for its employees with Storebrand. The obligation covers 44 employees in Oslo Stock Exchange and 52 employees in the group at 31.12.97.

The group's pension schemes are to be treated for accounting purposes as a benefit planunder the preliminary Norwegian accounting standard for pension expenses.

Actuarial calculations have been made on the basis of information from us.The following assuptions have been made in the year's calculations:

Return on pension funds 8,00 %Discount rate 7,00 %Annual salary growth/G increase 3,30 %Annual pension adjustment 2,50 %Annual increase G 3,30 %

13

Notes

NOTE 6: PENSION OBLIGATIONS – EARLY RETIREMENTIn 1997, Oslo Stock Exchange established a voluntary early retirement scheme for all employees, effective from the ageof 64 years. For certain managers, based on special criteria, the scheme is effective on reaching the age of 60 years. Theobligations are calculated in accordance with Norwegian Accounting Board standards, expensed over the profit andloss account, and recorded in the balance sheet in the amount of NOK 954,288.-.

NOTE 7: FIXED ASSETS (FIGURES IN NOK 1,000)

OSLO STOCK EXCHANGEProperty Fittings Vehicles Computers Trading Non-depreciable Total

system operating assetsCost price and ordinary depreciation

Cost price at 1.1 12 312 3 746 2 313 19 784 305 38 460Additions 31 421 3 431 10 410 14 293Disposals 325 325Cost price at 31.12 12 312 3 777 2 409 23 215 10 410 305 52 428

Acc. ordinary depreciation at 1.1 5 198 2 282 694 7 061 15 235Ordinary depreciation 246 331 526 4 837 5 940Acc. ord. depr. disposals 163 163Acc. ordinary depreciation at 31.12 5 444 2 613 1 057 11 898 0 0 21 012

Book value 31.12 6 868 1 164 1 352 11 317 10 410 305 31 416

% ordinary depreciation 2 10/20 20/25 20/33 0 0

Book gain / loss operating assets sold 0 0 8 0 0 0 8

KONSERN

Property Fittings Vehicles Computers Trading Non-depreciable Totalsystem operating assets

Cost price and ordinary depreciation

Cost price at 1.1 12 312 3 746 2 614 32 664 305 51 641Additions 31 771 4 037 10 410 15 249Disposals 626 626Cost price at 31.12 12 312 3 777 2 759 36 701 10 410 305 66 264

Acc. ordinary depreciation at 1.1 5 198 2 282 912 17 935 26 327Ordinary depreciation 246 331 591 6 061 7 229Acc. ord. depr. disposals 411 411Acc. ordinary depreciation at 31.12 5 444 2 613 1 092 23 996 0 0 33 145

Book value 31.12 6 868 1 164 1 667 12 705 10 410 305 33 119

% ordinary depreciation 2 10/20 20/25 20/33 0 0Book gain / loss operating assets sold 0 0 115 0 0 0 115

HS-98 is a new trading system, planned to be commissioned in 1998. Project expenses are capitalised.Depreciation of the system will start when the project is commissioned.

In 1997, the depreciation rate for the LEC project (Computers) was changed from 33% to 20%. The results improved, therefore, by NOK 252,847.-.

Notes

14

NOTE 8: ACQUISITIONS AND DISPOSALS (SALES PRICE) OF FIXED ASSETS

(FIGURES IN NOK 1,000)OSLO STOCK EXCHANGEAcquisitions and disposals (sales price) of fixed assets

1997 1996 1995 1994 1993Acq. Disp. Acq. Disp. Acq. Disp. Acq. Disp. Acq. Disp.

Vehicles 421 170 1 046 130 325 613 1 261 804 575 370Fittings 31 1 123 136 160Non-depr. operating assets 305Computers 3 431 12 971 2 479Trading system 10 410PropertyTotal 14 293 170 15 140 130 2 940 613 1 726 804 575 370

CONSOLIDATEDAcquisitions and disposals (sales price) of fixed assets

1997 1996 1995 1994 1993Acq. Disp. Acq. Disp. Acq. Disp. Acq. Disp. Acq. Disp.

Vehicles 771 330 1 046 130 325 613 1 261 804 876 370Fittings 31 1 123 136 160Non-depr. operating assets 305Computers 4 037 13 662 2 995 2 166 506 2 193Trading system 10 410PropertyTotal 15 249 330 15 831 130 3 456 613 3 892 1 310 3 069 370

NOTE 9. RESTRICTED FUNDSNOK 2,549,394 of total bank depo-sits relates to restricted bank deposits.

The corresponding figure for thegroup is NOK 2,904,947

NOTE 10. BONDSWith effect from 31.12.1994 thebond portfolio has been classified un-der fixed assets and is assumed to beheld until maturity. An interest rateequivalent to the yield to maturity isbooked as income.Changes in themarket yield on these bonds do notaffect the profit and loss account orbalance sheet.The premium at thedate of classification will be periodi-sed until maturity.

NOTE 11. SHARESThe Oslo Stock Exchange owns100% of the share capital, i.e. 5,000shares with a nominal value of NOK1,000, in A/S Oslo B¿rs Informasjon(OBI). The book value of the shares isNOK 0.-

The share portfolio of A/S Oslo BørsInformasjon consists of shares inlisted coMpanies.This share portfoliowill always form part of the compa-ny´s business and must therefore beregarded as long-term.

NOTE 12. LEASESThe company has signed the follo-wing material lease contracts:Fred.Olsensgt. 1Lease period 2.1.91-31.12.98Annual rent NOK 780,576

NOTE 13. ACCOUNTING TREATMENT OF TAXAt 31.12.97 the Exchange's subsidia-ry has negative temporary differencesdivided between NOK 1,647,562 onfixed assets, NOK 75,000 on ac-counts receivable and NOK 219,731on pension liabilities.The tax benefitrelated to the negative temporary dif-ferences is not included in the ac-counts. The tax charge in the ac-counts, NOK 713,258, consists enti-

rely of tax payable.NOTE 14. TRADING SYSTEM – DISPUTESOn 19 November 1997, Oslo StockExchange entered into a settlementagreement with Logica UK Limited.The court hearing scheduled forJanuary 1998 has been withdrawn.The settlement, which is confidential,is a full and final settlement of the le-gal dispute.

Oslo Stock Exchange is not party toany other legal disputes, nor have anyclaims been made that are consideredto be of material importance to OsloStock Exchange's financial position.

NOTE 15. EQUITYIt has been resolved that equity shallbe dealt with as one item –Accumulated Retained Earnings. TheIncome Regulation Fund and theInvestment Fund, NOK 27 millionand NOK 30 million respectively,have been transferred toAccumulated Retained Earnings also

15

Auditors reportfor 1997

THE STOCK EXCHANGE COUNCIL AT 1 JANUARY 1998

ChairmanBorger A. Lenth

Deputy ChairmanSolveig Sollie

Members Deputy members Organisation

Gunnar Jørgensen Monica Smith-Sørensen Norwegian Shareholders OrganisationJan A. Halvorsen Cathrine Hellandsvik Arbeids- og administrasjonsdepartementetTorkild Varran Inger Nergård Norwegian Bankers' AssociationEli Telhaug Vibeke Parr Ministry of FinanceLars Trondsgaard Olaug Svarva State Social Security FundTone Ofstad Ingeborg B Holtskog Olebakken Ministry of JusticeGyda Berg Terje Ruud Association of Local AuthoritiesKjersti Tøgård Trøbråten Eirik Bunæs Banking, Insurance and Securities CommissionGro Granden Kari Lorentz-Larssen Trade UnionsGunnvald Grønvik Karin Lohrmann The Norwegian Central BankKristian Lund Per Broch Mathisen Norwegian Association of StockbrokersHanne Bøvøld Frede Aas Rognlien Norwegian Association of StockbrokersLena Sparr Johnsen Erik Garaas Association of Norwegian Insurance CompaniesThor Jørgen Guttormsen Edith Midelfar Norwegian Shipowners AssociationSiv Elisabeth Østlien Jacobsen Geir Bruflot Norwegian Futures & Options Clearing HouseAtle Johnsen Aase Aamdal Lundgaard Norwegian Accounting Standards BoardKarin Joys Vabø Henning Strøm Norwegian Association of Financial AnalystsTor Hernæs Elin Heio Kobro Nærings- og HandelsdepartementetGeorg Størmer Tor Lund Confederation of Norwegian Business and IndustryLisbeth Lindberg Hanne Rieker Confederation of Norwegian Business and IndustryHilde E. Johansen Egil Blakstad Norwegian Savings Banks AssociationLasse Ruud Astrid Søgaard Mutual Funds AssociationJan Hellstrøm Tom Kolvig Norwegian Registry of SecuritiesBernt Bangstad Kari S. Hansen Staff RepresentativeHege Sjo Dag Willoch Staff Representative

THE STOCK EXCHANGE APPEALS COMMITTEE AT 1 JANUARY 1998

Tore Schei, Chairman High Court JudgeAttorney Bjørg Ven, Deputy Chairman Advokatene Haavind & HagaJohn Giverholt, Group Director Den norske Bank ASAAnne Cathrine Høeg Rasmussen, Attorney Advokatfirmaet Schiødt ASEllen Mo, Attorney Advokatfirma Hauge & Co.

THE STOCK EXCHANGE BOARD AT 1 JANUARY 1998

Ole Lund, Barrister Adv.firma Lund, Gundersen & Co.John Høsteland, Managing Director Elcon Securities A/SFrode Hassel, Managing Director Bolig- og Næringsbanken ASAKristin Normann Aarum, Senior Lecturer Dr. Jur. Universitetet i OsloJohn Solbu Braaten, Finance Director Carnegie FondsforvaltningNigel K. Wilson, Managing Director Odin Fondsforvaltning ASSigmund Ellingbø, Managing Director Den norske Bank ASAOdd Sigmund Røste, Manager Bond Market Staff Representative

Organisation

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17

COMMITTEE ON STOCK EXCHANGE AND SECURITIES LAW AT 1 JANUARY 1998

Håkon Løchen, Attorney / Kim Dubrowen, Attorney Thommessen, Krefting, Greve & LundCarl J. Hambro, Attorney Gram, Hambro & GarmannArne Didrik Kjørnes, Attorney / Marius Ryel, Attorney Wikborg, Rein & Co.Gudmund Knudsen, Attorney /Knut Bruntland, Attorney Bugge, Arentz-Hansen & RasmussenErling Christiansen jr., Attorney / Anne Cathrine Høeg Rasmussen, Attorney Advokatfirmaet Schiødt ASHenning Øglænd, Attorney Advokatfirmaet Stabell ASOle Nyfløt, Attorney Advokatfirmaet Nyfløt, Kahr og HenriksenAnders Chr. Stray Ryssdal , Attorney / Harald Schjoldager, Attorney Wiersholm, Mellby & Bech

MEMBERS OF THE OSLO STOCK EXCHANGE

Company Address Telephone

ABG Securities AS P.O.Box 1351 Vika 0113 OSLO 22 83 88 70ABN Ambro Bank N.V., P.O.538 Sentrum 0105 OSLO 22 47 66 00Aros Securities AS P.O.Box 1332 Vika 0112 OSLO 22 82 38 00Alfred Berg Norge A/S P.O.Box 483 Sentrum 0105 OSLO 22 00 50 00Bergen Fondsmeglerforretning A.S P.O.Box 933 5001 BERGEN 55 55 15 00Bryggen Finans Fonds AS P.O.Box 1856 Nordnes 5024 BERGEN 55 54 64 50Carnegie AS P.O.Box 684 Sentrum 0106 OSLO 22 00 93 00Christiania Bank og Kreditkasse ASA P.O.Box 1166 Sentrum 0107 OSLO 22 48 50 00Den Norske Bank ASA, DnB Markets P.O.Box 1171 Sentrum 0107 OSLO 22 48 10 50Elcon Securities AS P.O.Box 153 Sentrum 0102 OSLO 22 33 02 40Fearnley Fonds A/S P.O.Box 1158 Sentrum 0107 OSLO 22 93 60 00Fokus Bank ASA, 7005 TRONDHEIM 72 88 20 11Fondsfinans a.s P.O.Box 1782 Vika 0122 OSLO 23 11 30 00Fondspartner AS P.O.Box 750 Sentrum 0106 OSLO 22 42 95 00Handelsbanken Markets P.O.Box 1342 Vika 0113 OSLO 22 94 09 00Karl Johan Fonds AS P.O.Box 1243 Vika 0110 OSLO 23 10 56 00Sparebanken Midt-Norge 7005 TRONDHEIM 73 58 65 50NetFonds AS Fred. Olsensgt. 1 0152 OSLO 22 33 30 20Norden Fondsmeglerforretning AS P.O.Box 1580 Vika 0120 OSLO 23 11 68 00Norse Securities AS P.O.Box 1474 Vika 0116 OSLO 22 01 63 00Orkla Finans (Fondsmegling) A.S P.O.Box 1724 Vika 0121 OSLO 22 40 08 00Pareto Fonds AS P.O.Box 1411 Vika 0114 OSLO 22 87 87 00Prebon Yamane (Sweden) AB Riddargatan 30 S-11457 STOCKHOLM 0046 8 667 52 00Saga Securities AS P.O.Box 1770 Vika 0122 OSLO 22 01 00 00Enskilda Securities P.O.Box 1843 Vika 0123 OSLO 22 82 73 00Sparebanken Nord-Norge 9005 TROMSØ 77 62 20 00Sparebanken NOR, vps P.O.Box 1172 Sentrum 0107 OSLO 22 31 80 10SR-Fonds A/S P.O.Box 163 4001 STAVANGER 51 83 63 00Sundal Collier & Co a.s P.O.Box 1444 Vika 0115 OSLO 22 01 60 00A. Sundvall ASA P.O.Box 657 Sentrum 0106 OSLO 23 10 40 50Terra Fonds ASA P.O.Box 2349 Solli 0201 OSLO 22 87 81 00Unibank Markets A/S Torvgade 2 DANMARK 0045 33 33 17 48

THE ACCOUNTING COMMITTEE AT 1 APRIL 1998

Atle Johnsen, Professor Norges Handelshøyskole, BergenFinn Berg Jacobsen, State Auth. Public Accountant Arthur Andersen & CoHarald Jægtnes, Audit Director Den norske Bank ASAPål Reiulf Olsen, Director Elcon Securities A/SJan Syversen, Attorney Advokatfirmaet Harboe, Syversen & Co ASTrond Tømta, State Auth. Public Accountant Coopers & Lybrand A/SBjørn Østbø, Director Vital Forsikring A.SKirsten Jacobsen, State Auth. Public Accountant Banking, Insurance and Securities Commission

Organisation

Postbox 460 Sentrum, 0105 Oslo.Telefon +47 22 34 17 00. Telefax +47 22 34 19 25.

www.ose.no

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