Interim report. Second quarter of 2017

Transcription

1 Interim report Second quarter of 2017

2 Main features of the second quarter: Continued high level of activity in the primary market in the second quarter Nine companies admitted to listing in the quarter, 29 new equity issuers registered with VPS 185 new fixed income issues admitted to listing, 470 new fixed income issues registered with VPS Share savings accounts from 1 September 2017 New tax-efficient scheme for personal pension saving Audun Bø to be the new Chief Executive Officer of VPS as of 1 October 2017 Operating revenue NOK 259 million (236) EBITDA NOK 138 million (119) Earnings per share NOK 2.65 (1.91) Business activities in the quarter (same period last year in brackets) Oslo Børs VPS Holding reports a profit of NOK 114 million for the second quarter of 2017 (NOK 82 million) and a profit of NOK 201 million (NOK 130 million) for the first six months of the year. Operating revenues Operating expenses EBITDA Operating profit (EBIT) Earnings for the period Earnings per share (NOK) 2,65 1,91 4,66 3,02 6,27 Earnings per share (NOK) before amortisations and write-down 2,66 1,92 4,70 3,65 6,93 Like the first quarter, the second quarter was characterised by high levels of activity in the primary markets for both equities and fixed income issues. The level of activity in the secondary market for equities was somewhat lower than in the second quarter of Reported revenue for the second quarter of 2017 was NOK 259 million, which is NOK 23 million higher than in the second quarter of Revenue related to listing and registration was in total NOK 26 million higher than in the second quarter of 2016, NOK 2 million of which amount relates to the consolidation of NOTC with effect from the second quarter of Revenue related to the trading and settlement of equities and fixed income issues was in line with the second quarter of 2016, while revenue related to trading in derivatives was NOK 3 million lower than in the second quarter of Revenue from the mutual funds area was NOK 2 million higher than in the second quarter of Reported revenue for the first six months of 2017 was NOK 48 million higher than in the first six months of 2016, with revenue related to listing and registration NOK 48 million higher in the first six months of 2017 than in the same period last year. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 121 million in the second quarter of 2017, an increase of NOK 4 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 2017 were NOK 12 million higher than in the first six months of The increase principally relates to the modernisation program at VPS, trading system projects at Oslo Børs and the financial sector tax. Net financial income for the second quarter of 2017 totalled NOK 21 million, an increase of NOK 15 million from the same period in Net financial income for the first six months of 2017 was also NOK 15 million higher than in the first six months of The group s acquisition of the remaining 50% of NOTC AS and its change to a wholly owned subsidiary 2

3 company from a joint venture meant that under IFRS the group s previous equity stake in NOTC had to be re-measured. This led to income of NOK 14.6 million being recognised in the quarter, and that net financial income in the quarter has increased accordingly. Share savings accounts from 1 September 2017 New tax-efficient scheme for personal pension saving Audun Bø to be the new Chief Executive Officer of VPS The Norwegian Ministry of Finance has determined that the rules for share savings accounts will enter into force with effect from 1 September VPS will have finalised its services and solutions for share savings accounts as of this date. The Norwegian Government has proposed a more attractive tax-efficient scheme for personal pension saving. VPS will, in the same way as for share savings accounts, offer efficient services and solutions for use by providers of such schemes. Audun Bø (54) has been appointed as the new Chief Executive Officer of VPS. He will take up the position 1 October Audun Bø joins VPS from the Eika Group where he is Executive Vice President, Products and Marketing. He has 30 years of experience in the finance industry, both from Eika and from previous roles, including as CEO of Orkla Finans and DNB Markets, where he was also an Executive Vice President and a member of DNB s executive management team. Audun Bø has been on the Board of Directors of VPS since 2008, and has been the Chair of the Board for the past year. This means he is very familiar with VPS and the company s strategy, as well as with the changes taking place in the market and at VPS customers. Central securities depositories are facing major changes over the next few years both in terms of the services they provide and the technology they use. Over the next few years VPS will have to take a number of proactive strategic decisions to develop the range of services it offers and to adapt its activities to customers future needs. John-Arne Haugerud will continue as CEO until Audun Bø takes up his position. John-Arne Haugerud will subsequently continue to play a role at the Oslo Børs VPS group and at VPS, including as the Chair of the Board of Directors of the subsidiary Centevo until 31 March High volume of issues and new 185 new fixed income issues were admitted to listing on Oslo Børs and Nordic ABM in the records again in the second quarter second quarter of 2017, while 470 new fixed income issues were registered with VPS in the quarter. A total of 2,020 fixed income issues with total outstanding value of NOK 1,750 billion are now listed on the Oslo Børs and Nordic ABM marketplaces. Both the number of fixed income issues and the outstanding value of the issues listed are new records. 3,032 fixed income issues are registered with VPS. VPS combining its fund and asset management services into a subsidiary company VPS is combining its Fund Services business area with its subsidiary company Evolution. Its objective is to set up a combined unit that will create growth by delivering sought-after services to fund and asset management companies more quickly and efficiently than VPS and Evolution can achieve independently. VPS will separate its fund services activities that do not require official authorisation and combine these with VPS Swedish subsidiary company Evolution Software Sweden AB (Evolution). The transaction is scheduled for 1 September 2017, at which point Evolution will change its name to Centevo AB. We see an increasing need for our services to be delivered from one provider to make the processes involved as simple as possible for customers. This is an area that Oslo Børs VPS is keen to focus on further. Centevo will be one of the leading companies in this market in the Nordic region. Our aim is to strengthen this position further. Setting up Centevo will involve a number of positive changes. It will create a provider with significant resources and expertise, customers will be able to access more services from the same provider, resources will be used more efficiently, and product and service development will be quicker. Dialogue with customers and contractual issues are also areas that will be simpler for customers. VPS will also develop its offer in the securities register area to ensure it remains attractive for fund management companies to register their funds with VPS and for fund investors to hold their fund units on a securities account that is available in VPS Investor Services. 3

4 Oslo Børs acquires remaining 50% of NOTC AS Oslo Børs previously owned 50% of the share capital of NOTC AS. NOTC AS owns the information system for unlisted shares in Norway. In April, Oslo Børs purchased the remaining 50% of the share capital in the company from the Norwegian Securities Dealers Association for NOK 23.3 million. NOTC AS reported a profit for the year after tax of NOK 4.2 million for Major system releases at VPS and Oslo Børs In March Oslo Børs successfully implemented Millennium Exchange Release 9.1, providing customers with a lot of new functionality, including new functionality in the North Sea Dark Pool. At the same time VPS successfully implemented a significant version update for its systems, which has made available a new subscription client integrated with BankID and Norwegian banks joint register of accounts and addresses (KAR), and functionality for opening and managing share savings accounts and transferring securities to them. Oslo Børs is now working on Millennium 9.2, which offers MiFID II functionality, with the release expected to be implemented in the fourth quarter of Financial Reporting Outlook for 2017 Oslo Børs VPS Holding will in line with the Oslo Børs Code of Practice for IR continue to prepare and publish quarterly interim reports. There will be presentations in connection with the second and fourth quarters. The company will as before be available for questions in connection with its quarterly reports. Operating expenses for 2017 before capitalisation of internal costs, depreciation and amortisation are expected to be in excess of NOK 500 million. This includes expenses in 2017 in relation to a MiFID II version of Oslo Børs trading system Millennium Exchange, adapting VPS systems to the EU s CSD Regulation (CSDR), the financial sector tax that was approved by the Norwegian Parliament in December 2016, and the change of CEO at VPS. The financial sector tax consists of an extra payroll tax of 5% on the salaries and other remuneration received by financial sector employees in addition to the corporation tax rate remaining at 25% for financial sector companies. The group s operating revenue varies in line with the level of activity in the securities market. Oslo Børs VPS is committed to offering a range of products and a pricing structure that are competitive and that encourage active use of the group s services. Oslo Børs VPS anticipates that its marketplace activities will continue to face intense competition, and it also expects increasing competition for the group s post-trade activities. 4

5 Oslo Børs Oslo Børs Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Aksjer - omsetning i verdi, NOK mrd. Reported revenue for Oslo Børs for the second quarter of 2017 was NOK 133 million (NOK 116 million), an increase of NOK 17 million from the same period in Revenue related to trading in derivatives was NOK 3 million lower than in the second quarter of 2016, while revenue from the primary market was NOK 19 million higher. Reported revenue for Oslo Børs for the first six months of 2017 was NOK 34 million higher than in the same period in Revenue from the primary market was NOK 36 million higher than in the first six months of 2016, while revenue from the sale of market data was NOK 2 million higher. Revenue related to trading in derivatives was NOK 6 million lower than in the first six months of The OSEBX Index (the Benchmark Index) was at the end of the second quarter of 2017, an increase of 1.6% in the quarter. On the Oslo Børs and Oslo Axess marketplaces, six companies were admitted to listing in the second quarter (including one transfer), while five companies were removed from listing. Three companies were admitted to trading on Merkur Market in the second quarter. At the end of the second quarter of 2017, a total of 211 companies were listed on Oslo Børs and Oslo Axess, while 15 companies were listed on Merkur Market. A total of 2,020 fixed income issues were listed on Oslo Børs and Nordic ABM (Alternative Bond Market) at the end of the second quarter of 2017, representing an increase of 252 relative to the end of the second quarter of Listing fees paid by issuers in the second quarter of 2017 totalled NOK 30 million, an increase of NOK 4 million from the same period in Document inspection and admission to listing fees in the second quarter of 2017 totalled NOK 27 million, an increase of NOK 13 million from the same period in Revenue of NOK 1.7 million from NOTC AS is included in the figures for the second quarter. Four new equities are registered on NOTC since the acquisition in April. The value of shares, ETFs and equity certificates traded in the second quarter of 2017 totalled NOK 257 billion (NOK 264 billion), a decrease of 3% from the second quarter of We estimate that in the second quarter of 2017 Oslo Børs had a market share of trading in OBX shares in excess of 57%, which is slightly higher than in the same period in Oslo Børs had 50 member firms at the end of the second quarter of 2017, of which 18 are local firms and 32 are remote members. The overall level of activity in the derivatives market in the second quarter of 2017, as measured by the number of contracts traded, was approximately 20% lower than in the same period in The level of activity when measured in value terms was approximately 5% lower than in the same period in Fish Pool reported total contract turnover of 19,890 tonnes for the second quarter of 2017, representing a decrease of approximately 47% from the same period in Total revenue related to trading in the second quarter of 2017 was NOK 34 million, down from NOK 37 million in the same period in Revenue related to trading in shares and fixed income issues in the second quarter of 2017 was in line with the same period in 2016, while revenue related to trading in derivatives was NOK 3 million lower. Revenue from Fish Pool, which is included in revenue from trading in derivatives, was NOK 3 million lower than in the second quarter of The estimated number of end users of market data from Oslo Børs at the end of the second quarter of 2017 was approximately 10% higher than at the end of the second quarter of The number of professional users was lower, while the number of private users was higher. Non-display use of data has also increased. Revenue related to market data for the second quarter of 2017 was NOK 34 million, in line with the same period in Salary and other operating expenses for the second quarter of 2017 totalled NOK 51 million, an increase of NOK 2 million relative to the same period in Salary and other operating expenses for the first six months of 2017 were NOK 7 million higher than in the same period in The increase relates to trading system projects at Oslo Børs as well as to the financial sector tax. Financial market data - number of end users Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 5

6 VPS Number of trade transactions processed in VPS (1000) VPS Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Second-quarter operating revenue for VPS totalled NOK 126 million (NOK 118 million), representing an increase of NOK 8 million from the second quarter of In the issuer area, registered securities saw a reduction 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 2017, 1,003 (1,005) limited companies and 3,032 (2,833) fixed income issues were registered with VPS. Revenue from the issuer area for the second quarter of 2017 totalled NOK 45 million, an increase of NOK 4 million from the same period in Revenue from the issuer area for the first six months of 2017 was NOK 8 million higher than in the same period in The market value of VPS-registered mutual funds at the end of the second quarter of 2017 was NOK 558 billion (NOK 446 billion), representing an increase of 25% relative to the end of the second quarter of The number of mutual funds transactions totalled 0.7 million in the second quarter, up 4% from the same period in Revenue from the mutual funds area for the second quarter of 2017 was NOK 21 million, an increase of NOK 2 million relative to the second quarter of Evolution is included in the VPS Fund Services reporting unit and reported revenue of NOK 6 million in the second quarter of 2017, in line with the same period in Revenue from the mutual funds area for the first six months of 2017 was in line with the same period in The number of transactions in the settlement area in the second quarter of 2017 was 7% lower than in the same period in Revenue from the settlement area for the second quarter of 2017 totalled NOK 25 million, a decrease of NOK 1 million from the same period in Revenue from the settlement area for the first six months of 2017 was NOK 4 million higher than in the same period in In the investor area, the market value of holdings at the end of the second quarter of 2017 was 11% higher than at the end of the second quarter of million VPS accounts were registered at the end of the second quarter of 2017, of which 1.1 million are income-earning for the investor area (the other accounts affect income in the funds area). The total number of income-earning accounts at the end of the second quarter of 2017 was 0.3% higher than at the end of the second quarter of Revenue from the investor area for the second quarter of 2017 was NOK 33 million, an increase of NOK 3 million relative to the same period in Revenue from the investor area for the first six months of 2017 was NOK 5 million higher than in the first six months of Salary and other operating expenses for the second quarter of 2017 were NOK 1 million higher than in the same period in Salary and other operating expenses for the first six months of 2017 were NOK 5 million higher than in the same period in The increase to a large extent relates to the modernisation program at VPS and the financial sector tax. Number of VPS accounts and value of holdings in VPS Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 # income-earning accounts (1000) Holdings (NOK bill) 6

7 Oslo Market Solutions Oslo Market Solutions Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Operating revenue for the second quarter of 2017 was NOK 0.2 million lower than in the same period in 2016, while operating expenses were NOK 0.6 million higher. Operating revenue for the first six months of 2017 was NOK 0.3 million higher than in the same period in 2016, while operating expenses were NOK 0.9 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 Write-downs 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) 2,65 1,91 4,66 3,02 6,27 Diluted earnings per share (NOK) 2,65 1,91 4,66 3,02 6,27 Earnings per share (NOK) before amortisations and write-down 2,66 1,92 4,70 3,65 6,93 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. The segment information reported has been prepared in accordance with IFRS 8. Oslo Børs Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) VPS Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Oslo Market Solutions Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Other/eliminations Operating revenues Salary and other operating expenses EBITDA 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 123 million at the end of the second quarter. Of this, trade receivables totalled NOK 84 million, and other current receivables, including prepaid expenses and income accrued but not yet invoiced, amounted to NOK 39 million. Cash and cash equivalents held at the end of the second quarter totalled NOK 664 million. Current liabilities amounted to approximately NOK 289 million, of which prepayments from customers and tax payable accounted for NOK 119 million and NOK 52 million respectively. Fixed assets 30 June 30 June 31 Dec IT systems Registrations Goodwill Deferred tax assets Tangible assets Financial fixed assets Current assets Receivables Cash and liquid assets Assets Equity Contributed equity Non-controlling interests Total equity Liabilities Pension liabilities Deferred tax liabilities 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 144 million in the second quarter. A dividend totalling NOK 166 million was paid in the second quarter. Cash and cash equivalents held at the end of the second quarter totalled NOK 664 million. Cash flow from - operational activities investment activities investments in systems and tangible assets investments in subsidiaries 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) -3,35-3,78 1,40 0,05 0,59 Equity Equity amounted to NOK 1,025 million at the end of the second quarter, and the equity ratio was 69%. 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 69 % 71 % 69 % 71 % 73 % 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 1.1 million shares were traded in the second quarter, with prices from NOK 90 to NOK 113. The last registered trade in the second quarter of 2017 was at NOK 111. Dividends last five years Dividend per share (NOK) 7,00 7,00 8,20 6,75 6,45 Payout ratio vs EPS adjusted for amortisations and write-downs 113 % 111 % 111 % 92 % 93 % In addition to dividends above, a special dividend of NOK 4,50 per share was paid out in August Oslo Børs VPS Holding ASA 20 largest shareholders at 3 August

13 Key figures Financial Earnings per share (NOK) 2,65 1,91 4,66 3,02 6,27 Diluted earnings per share (NOK) 2,65 1,91 4,66 3,02 6,27 Earnings per share (NOK) before amortisations and write-down 2,66 1,92 4,70 3,65 6,93 Change in cash per share (NOK) -3,35-3,78 1,40 0,05 0,59 Return on equity 43,5 % 32,1 % 38,8 % 25,2 % 26,2 % Return on total capital 38,5 % 30,1 % 34,7 % 23,3 % 24,8 % Net operating margin 50,0 % 45,5 % 47,7 % 36,6 % 38,8 % Operational OSEBX index at period's end 698,58 602,86 698,58 602,86 683,87 Change in period 1,6 % 4,3 % 2,2 % -1,2 % 12,1 % 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 2017 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, 9 August 2017 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 Sissel Bakker Board member Bente A. Landsnes CEO 13

14 OSLO BØRS VPS ASA PO Box 460 Sentrum 0105 Oslo