Interim report. Second quarter of 2018

Transcription

1 Interim report Second quarter of 2018

2 Main features of the second quarter: Continued high level of activity in both the primary and secondary markets 12 new companies admitted to listing or trading in the quarter 29 new companies registered with VPS 158 new fixed income issues admitted to listing and 436 new fixed income issues registered with VPS Highest level of trading in shares in value terms in a single quarter since Value of shares traded up 40% and number of settlement transactions up 19% relative to the second quarter of 2017 market share of trading in OBX shares of approximately 63% (57%) in the quarter Higher costs at VPS in connection with modernising and adapting the organisation, projects and higher supervision fees Operating revenue NOK 267 million (259) EBITDA NOK 132 million (138) Earnings per share NOK 2.18 (2.65) Ordinary and extraordinary dividends of NOK 4.20 and NOK per share paid in the quarter Business activities in the quarter (same period last year in brackets) Oslo Børs VPS Holding reports a profit of NOK 94 million for the second quarter of 2018 (NOK 114 million). Operating revenues Operating expenses EBITDA Operating profit (EBIT) Earnings for the period Earnings per share (NOK) 2,18 2,65 4,33 4,66 8,30 Earnings per share (NOK) before amortisations and wr 2,20 2,66 4,36 4,70 8,36 The second quarter saw continued high levels of market activity in the primary and secondary equity and fixed income markets. Reported revenue for the second quarter of 2018 was NOK 267 million, which is NOK 8 million higher than in the second quarter of Reported revenue for the first six months of 2018 was NOK 21 million higher than in the first six months of Revenue from both Oslo Børs and VPS increased by approximately NOK 3 million each compared with the same quarter in 2017, while for the first six months of 2018 revenue from Oslo Børs and VPS increased by NOK 12 million and NOK 5 million respectively. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 136 million in the second quarter of 2018, an increase of NOK 14 million from the second quarter of Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value for the first six months of 2018 were NOK 22 million higher than in the first six months of The increase principally relates to restructuring costs at VPS in connection with modernising and adapting the organisation to the new competitive situation, project costs at VPS (including in connection with CSDR, GDPR, share shavings accounts and a new issuer portal), and higher supervision fees payable to the Financial Supervisory Authority of Norway for all the companies in the group that require official authorisation. Net financial income for the second quarter of 2018 totalled NOK 1 million, a decrease from NOK 17 million in the same period in Net financial income for 2017 included income of NOK 15 million in connection with the group s acquisition of the remaining 50% of NOTC. With effect from the start of May 2018, the group is incurring interest expense on the bond loan it issued in May. 2

3 Successful bond issue In May Oslo Børs VPS Holding ASA issued an NOK 450 million bond loan with a maturity of five years and a coupon of 3M Nibor %. The bond loan was significantly oversubscribed. An extraordinary dividend of NOK 10 per share was distributed in June in line with the purpose for which the bond was issued. Modernising and adapting VPS organisation Strategic update Since autumn 2017 VPS has been implementing changes to its management and organisation as part of its preparations for the new competitive situation. Audun Bø became the company s new CEO in October 2017, while in June 2018 Ingvild Kalleberg and Christian Aleksander Viken became the company s new CTO and head of Customer Experience and Analysis respectively. VPS has also started adapting and modernising a number of parts of its organisation, and it expects to have slightly fewer than 100 employees by the end of 2019 (down from 107 at the start of 2018). The Board of Directors of Oslo Børs VPS Holding completed a strategy process in the first six months of Oslo Børs VPS occupies a naturally strong position in the Norwegian securities market. Nearly all Norwegian equity issuers that apply for listing choose Oslo Børs, and the majority of Norwegian fixed income issuers list their debt on one of Oslo Børs marketplaces. VPS occupies an equivalent position in relation to the registration and settlement of these securities. The group has, in collaboration with Norwegian investment firms, also built up a strong position internationally within certain strong sectors (energy, seafood and shipping). With regard to trading in equity capital instruments, Oslo Børs enjoys a market share that is in line with that of other traditional stock exchanges in Europe, and it continues to be the preferred source of market data for these securities. The Norwegian market, which is the group s main market, is enjoying good growth, and Norwegian and foreign issuers are showing increasing interest in making use of Norway s securities market. In addition to the greater focus on personal saving in securities that is being driven by new savings and pension arrangements, there is a particular focus from the EU and Norwegian authorities on increasing the extent to which small and medium-sized companies use the securities market for financing. Against this background, the group expects growth in the use of its services in the coming years. The group s overall strategy is to maintain its position in the Norwegian market. We will seek to further strengthen our international position in relation to the listing, registration, trading, settlement and custody of equities and fixed income issues, both within and beyond our sectors of particular strength. Centevo and Oslo Market Solutions (OMS) have Nordic-wide offerings and will individually and in collaboration with other organisations further develop and grow their service platforms within savings, trading and information. As announced in the interim report for the fourth quarter of 2017, the Board of Directors has decided on a strategy based on organic growth for Oslo Børs. Oslo Børs is an international marketplace with a broad global offering, particularly in the energy, shipping and seafood sectors. Oslo Børs will continue to develop its marketplaces and services such that the company can further increase the level of national and international interest in listing and trading on the Oslo Børs marketplaces, including NOTC and Fish Pool. VPS is the only central securities depository in Norway and consequently occupies a unique position in the Norwegian capital market. VPS will strive to continue to be a competitive supplier of central securities depository and settlement services following the awaited implementation of CSDR in Norway in In addition to capitalising on the expected increase in usage of the Norwegian capital market, VPS will develop issuer services that are specially adapted to the SMB segment, and it will also adapt its services and seek to position itself in relation to new opportunities that result from regulatory changes. VPS will to a greater extent focus on offering standardised and entirely automated concession-regulated investor, issuer and settlement services. The delivery of such services is subject to supervision and legal requirements, including capital requirements. This may result in some services in future being offered by other companies in the group, including Centevo and OMS. This will enable Oslo Børs VPS to strengthen its competitiveness and also to support its customers need for greater efficiency through standardisation and digitalisation. Financial infrastructure is generally becoming more standardised, and this has contributed to greater collaboration between numerous different organisations. Oslo Børs will continue with its strategy of using standard technology and collaborating with the London Stock Exchange Group. However, experience from other projects/organisations indicates that purchasing CSD systems involves unpredictably large development projects that are highly complex, expensive and risky. VPS will therefore continue its work to simplify, modernise and standardise its services and technology in order to simplify the task of replacing 3

4 its core system in the future. VPS expects to incur costs of between around NOK 20 million to NOK 30 million a year in connection with this work over the coming years. VPS and the post-trade sector are facing a period of major change with greater international standardisation and efficiency improvements and, in the Board s view, this will increase the number of opportunities for collaborating with other organisations going forward. The Board is open to VPS working together with other organisations in order to achieve its strategic goals and thereby increase its competitiveness. Outlook Conditions in the group s markets and its revenues will vary over time, but the group has a target of generating the basis for underlying growth in its activities regardless of fluctuations in market conditions. The group has a target of over time achieving average annual growth in underlying EBITDA of 5% from The group s operating expenses before depreciation and amortisation are expected to be around NOK 540 million in 2018 and to be at the same level in the period. 4

5 Oslo Børs Oslo Børs Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Reported revenue for Oslo Børs for the second quarter of 2018 was NOK 136 million (NOK 133 million), an increase of NOK 3 million from the same period in The OSEBX Index (the Benchmark Index) was at the end of the second quarter of 2018, an increase of 9.2% in the quarter. Four companies were admitted to listing in the second quarter on the Oslo Børs and Oslo Axess marketplaces, three companies were admitted to trading on Merkur Market, and four companies were removed from listing/trading. At the end of the second quarter of 2018, a total of 215 companies were listed on Oslo Børs and Oslo Axess, while 20 companies had been admitted to trading on Merkur Market. There were 45 companies registered on the NOTC list at the end of the second quarter of 2018, with five companies admitted to registration and three companies deregistered in the quarter. A total of 2,106 fixed income issues were listed on Oslo Børs and Nordic ABM (Alternative Bond Market) at the end of the second quarter of 2018, representing an increase of 86 relative to the end of the second quarter of Listing fees paid by issuers in the second quarter of 2018 totalled NOK 37 million, an increase of NOK 5 million from the same period in Document inspection and admission to listing fees in the second quarter of 2018 totalled NOK 17 million, a decrease of NOK 9 million from the same period in Listing fees paid by issuers in the first six months of 2018 were NOK 11 million higher at NOK 72 million, while document inspection and admission to listing fees in the first six months totalled NOK 26 million, a decrease of NOK 8 million from the same period in The value of shares, ETFs and equity certificates traded in the second quarter of 2018 totalled NOK 361 billion (NOK 257 billion), an increase of 40% from the second quarter of We estimate that in the second quarter of 2018 Oslo Børs had a market share of trading in OBX shares of approximately 63%, up from approximately 57% in the second quarter of Oslo Børs had 48 member firms at the end of the second quarter of 2018, of which 18 are local firms and 30 are remote members. The overall level of activity in the derivatives market in the second quarter of 2018, as measured by the number of contracts traded, was approximately 22% higher than in the same period in The level of activity when measured in value terms was approximately 19% higher. Fish Pool reported total contract turnover of 14,203 tonnes for the second quarter of 2018, representing a decrease of approximately 29% from the same period in Total revenue related to trading in the second quarter of 2018 was NOK 38 million, an increase of NOK 4 million from the same period in Revenue related to trading in shares was NOK 7 million higher than in the second quarter of 2017, while revenue related to trading in fixed income instruments was NOK 2 million lower. Revenue related to trading in derivatives was NOK 1 million lower. Revenue from Fish Pool, which is included in revenue related to trading in derivatives, was NOK 1 million lower than in the second quarter of Total revenue related to trading in the first six months of 2018 was NOK 4 million higher at NOK 73 million. The estimated number of end users of market data from Oslo Børs at the end of the second quarter of 2018 was in line with the number at the end of the second quarter of The number of professional users was somewhat lower, while the number of private users was higher by the same amount. Non-display use of data also increased. Revenue related to market data for the second quarter of 2018 was NOK 37 million, an increase of NOK 2 million from the same period in Revenue related to market data for the first six months of 2018 was NOK 5 million higher at NOK 76 million. Salary and other operating expenses for the second quarter of 2018 totalled NOK 54 million, an increase of NOK 3 million relative to the same period in Salary and other operating expenses for the first six months of 2018 were NOK 2 million higher than in the same period in The increase is primarily due to higher supervision fees payable to the Financial Supervisory Authority of Norway. Equities - value of turnover (NOK billion) Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Financial market data - number of end-users (profesionnal and private) Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 5

6 VPS VPS Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Second-quarter operating revenue for VPS totalled NOK 130 million (NOK 126 million), an increase of NOK 3 million from the second quarter of In the issuer area, registered securities saw a decrease in the number of limited companies registered with VPS but an increase in the number of fixed income issues registered relative to the second quarter of At the end of the second quarter of 2018, 995 (1,003) limited companies and 3,223 (3,032) fixed income issues were registered with VPS. Revenue from the issuer area for the second quarter of 2018 totalled NOK 45 million, in line with the same period in Revenue from the issuer area for the first six months of 2018 was also in line with the same period in 2017 at NOK 81 million. In the investor area, the market value of holdings at the end of the second quarter of 2018 was 14% higher than at the end of the second quarter of million VPS accounts were registered at the end of the second quarter of 2018, up from 1.22 million at the end of the second quarter of Revenue from the investor area for the second quarter of 2018 was NOK 42 million, an increase of NOK 5 million relative to the same period in Revenue from the investor area for the first six months of 2018 was NOK 10 million higher at NOK 88 million. The number of transactions in the settlement area in the second quarter of 2018 was 19% higher than in the same period in Revenue from the settlement area for the second quarter of 2018 totalled NOK 30 million, an increase of NOK 5 million from the same period in Revenue from the settlement area for the first six months of 2018 was NOK 4 million higher at NOK 59 million. Revenue from Centevo in the second quarter of 2018 totalled NOK 11 million, a decrease of NOK 5 million from the same period in This represents a decrease of NOK 5 million as a result of a loss of customers. Salary and other operating expenses for the second quarter of 2018 were NOK 8 million higher at NOK 77 million. Salary and other operating expenses for the first six months of 2018 were NOK 17 million higher. The increase to a large extent relates to restructuring costs in connection with modernising and adapting the organisation to the new competitive situation, project costs (including in connection with CSDR, GDPR, share savings accounts and a new issuer portal), higher supervision fees, and a planned increase in resource usage at Centevo. Number of trade transactions (1000) Investor accounts and value of holdings Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 # income-earning accounts (1000) Holdings (NOK bill) 6

7 Oslo Market Solutions Oslo Market Solutions Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Operating revenue for the second quarter of 2018 was NOK 0.4 million lower than in the same period in 2017, while operating expenses were NOK 0.2 million higher. Oslo Market Solutions operating revenue fluctuates with the timing of the implementation of customer projects and the delivery of routine services. Please see for further operational key figures. All figures are in thousands of Norwegian kroner and apply to the Oslo Børs VPS group unless otherwise stated. The group comprises the parent company Oslo Børs VPS Holding ASA and the subsidiaries Oslo Børs ASA, Verdipapirsentralen ASA (VPS) and Oslo Market Solutions AS. The accounting information in this report has not been audited. 7

8 Profit and loss account This interim report has been prepared in accordance with IAS 34. The same accounting principles and methods of calculation are used in the interim report as in the annual accounts. Earnings per share is calculated on the basis of earnings for the period in question. Operating revenues Operating expenses Salary and other personnel expenses Other operating expenses Depreciations and write-downs Amortisations Operating expenses before capitalisation of internal resources, depreciations and amortisations Total operating expenses EBITDA Operating profit (EBIT) Net financial items Ordinary pre-tax profit Tax Earnings for the period Actuarial gains/losses defined benefit pension plans Tax-effect Total comprehensive income Profit/loss attributable to non-controlling interests Profit/loss attributable to owners of the parent Earnings per share (NOK) 2,18 2,65 4,33 4,66 8,30 Diluted earnings per share (NOK) 2,18 2,65 4,33 4,66 8,30 EBITDA = Operating revenues - Salary and other personnel expenses - Other operating expenses 8

9 Segment information The Oslo Børs VPS Holding group has three segments: Oslo Børs, VPS, and Oslo Market Solutions. The segments are equivalent to the subsidiaries of the same name. Fish Pool and NOTC are included in the Oslo Børs segment. Centevo is included in the VPS segment. Oslo Børs Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) VPS Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Oslo Market Solutions Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Other/eliminations Operating revenues Salary and other operating expenses EBITDA Capitalisation of internal resources Depreciations and write-downs Amortisations Operating profit (EBIT) Total operating revenues Total salary and other operating expenses Total EBITDA Total capitalisation of internal resources Total depreciations and write-downs Total amortisations Total operating profit (EBIT)

10 Balance sheet Current receivables totalled approximately NOK 117 million at the end of the second quarter. Of this, trade receivables totalled NOK 76 million, and other current receivables, including prepaid expenses and income accrued but not yet invoiced, amounted to NOK 40 million. Cash and cash equivalents held at the end of the second quarter totalled NOK 655 million. Current liabilities, which consist of other non-interest-bearing liabilities, amounted to approximately NOK 341 million, of which prepayments from customers and tax payable accounted for NOK 137 million and NOK 90 million respectively. Interest-bearing debt consists of a bond loan that matures in May 2023 with a coupon of 3M Nibor +0.79% Fixed assets 30 June 30 June 31 Dec IT systems Registrations Goodwill Deferred tax assets Tangible assets Financial fixed assets Current assets Receivables Treasury bills Cash and liquid assets Assets Equity Contributed equity Non-controlling interests Total equity Liabilities Pension liabilities Deferred tax liabilities Interest bearing debt Current liabilities Equity and liabilities

11 Cash flow Cash flow is reported in accordance with IAS 7. Oslo Børs VPS Holding recorded a decrease in cash and cash equivalents of NOK 216 million in the second quarter. In connection with adjusting to CSDR, NOK 100 million was invested in the quarter in government bonds with a maturity of twelve months or less. In the second quarter an ordinary dividend of NOK 181 million was distributed (NOK 166 million in 2017). In addition, an extraordinary dividend of NOK 430 million was paid after the group issued a bond loan totalling NOK 450 million. Cash and cash equivalents held at the end of the second quarter totalled NOK 654 million. Cash flow from - operational activities investment activities investments in systems and tangible assets investments in subsidiaries investments in treasury bills financial income financing activities Cash and cash equivalents at period's start Change in cash and cash equivalents Cash and cash equivalents at period's end Cash flow per share (NOK) -5,03-3,35 0,59 1,40 0,59 Equity Equity amounted to NOK 584 million at the end of the second quarter, and the equity ratio was 38%. Equity was affected by the NOK 450 million bond loan issued by the group and the subsequent distribution of an extraordinary dividend totalling NOK 430 million. 31 Dec Equity at period's start Total comprehensive income Dividends Purchase of own shares Acturial gains/losses in the period Change in non-controlling interests etc Equity at period's end Equity ratio 38 % 71 % 38 % 71 % 72 % 11

12 Shareholder information Oslo Børs VPS Holding ASA share price: The graph shows movements in the share price of Oslo Børs VPS Holding ASA over the last five years. The company has issued 43,004,000 shares. Approximately 0.9 million shares were traded in the second quarter, with prices from NOK 112 to NOK 129. The last registered trade in the second quarter of 2018 was at NOK 115. Dividends last five years Ordinary dividend per share (NOK) 7,00 7,00 8,20 6,75 6,45 8,20 Payout ratio vs EPS adjusted for amortisations and write-downs 113 % 111 % 111 % 92 % 93 % 98 % Special dividend 4,50 10,00 Oslo Børs VPS Holding ASA 20 largest shareholders at 13 August

13 Key figures Financial Earnings per share (NOK) 2,18 2,65 4,33 4,66 8,30 Diluted earnings per share (NOK) 2,18 2,65 4,33 4,66 8,30 Change in cash per share (NOK) -5,03-3,35 0,59 1,40 0,59 Return on equity 35,7 % 43,5 % 35,3 % 38,8 % 33,7 % Return on total capital 31,5 % 38,5 % 31,1 % 34,7 % 31,2 % Net operating margin 46,7 % 50,0 % 46,4 % 47,7 % 44,9 % Operational OSEBX index at period's end 879,14 698,58 879,14 698,58 814,45 Change in period 9,2 % 1,6 % 7,9 % 2,2 % 19,1 % Equities - no. of transactions (1000s) Equities - value of turnover (NOKbn) Equities - market value listed companies (NOKbn) No. of companies listed Change in period Number of trade transactions processed in VPS (1000s) Number of VPS-accounts (1000s) Derivatives - no. of contracts traded (1000s) Turnover derivatives (NOK million) Financial market data - number of end-users We hereby confirm that, to the best of our knowledge, the summarised half-yearly accounts for the period 1 January to 30 June 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting, and that the information contained in the half-yearly report gives a true and fair view of the assets, liabilities, financial position and profit or loss of the company and group taken as a whole, and provides a true and fair summary of the information mentioned in Section 5-6, fourth paragraph, of the Securities Trading Act. The Board of Directors of Oslo Børs VPS Holding ASA Oslo, 15 August 2018 Catharina E. Hellerud Chair of the Board Ottar Ertzeid Deputy Chair of the Board Øyvind G. Schanke Board member Silvija Seres Board member Roy Myklebust Board member Thomas B. Skjønhaug Board member Stina Hauknes Board member Bente A. Landsnes CEO 13

14 OSLO BØRS VPS HOLDING ASA PO Box 460 Sentrum 0105 Oslo