Interim report First quarter of 2017

Transcription

1 Interim report First quarter of 2017

2 Main features of the first quarter: High level of activity in the primary market Higher levels of trading and settlement activity in equities than in preceding quarters Operating revenue NOK 252 million (227) EBITDA NOK 124 million (107) Earnings per share NOK 2.02 (1.11) Business activities in the quarter (same period last year in brackets) Oslo Børs VPS Holding reports a profit of NOK 87 million for the first quarter of 2017 (NOK 48 million). Operating revenues Operating expenses EBITDA Operating profit (EBIT) Earnings for the period Earnings per share (NOK) 2,02 1,11 6,95 Earnings per share (NOK) before amortisations and write-down 2,03 1,72 7,35 The first quarter was characterised by a high level of activity in the primary market for both equities and fixed income instruments. The level of activity in the secondary market for equities was also higher than in the first quarter of Reported revenue for the first quarter of 2017 was NOK 252 million, which is NOK 25 million higher than in the same period in Revenue related to listing and registration was in total NOK 22 million higher than in the first quarter of Revenue related to the trading and settlement of equities and fixed income issues was NOK 6 million higher, while revenue relating to trading in derivatives was NOK 3 million lower. Revenue related to market data was NOK 2 million higher, while revenue from the mutual funds area was NOK 2 million lower. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 128 million in the first quarter, which represents an increase of NOK 8 million from the same period in The increase relates to the modernisation program at VPS, trading system projects at Oslo Børs and the financial sector tax. Board approached by shareholders The Board of Directors has been approached by some shareholders who would like the Board to initiate a process to identify alternative strategic scenarios for the group. The agreement of the vast majority of the shareholders would be needed for any such changes to take place. The Board has therefore surveyed its largest shareholders and notes that they hold a range of different views on the strategic development of the group. The Board of Directors addresses strategic considerations on a continual basis and will pursue alternatives considered to be value-creating for the group s shareholders for which the conditions for success are in place. 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 VPS is keen to focus on 2

3 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. High volume of issues and new records again in the first quarter 159 new fixed income issues were admitted to listing on Oslo Børs and Nordic ABM in the first quarter of 2017, while 475 new fixed income issues were registered with VPS in the quarter. The Board of Directors of VPS starting work on finding a new CEO for VPS A total of 1,932 fixed income issues with an outstanding value of NOK 1,753 billion are now listed on Oslo Børs and Nordic ABM. Both the number of fixed income issues and the outstanding value of the fixed income issues listed are new records. 2,984 fixed income issues are registered with VPS. At the end of the first quarter, securities with a total value of NOK 5,074 billion were registered in the securities register, which is the highest ever total value. Central securities depositaries are facing major changes over the next few years both in terms of the services they provide and the technology they use. The Board of Directors of VPS is keen to ensure continuity in relation to the strategic changes that need to be decided upon and implemented at VPS over the next few years, and it will accordingly start its work on finding a new CEO for VPS this year. John-Arne Haugerud will remain as CEO until the new CEO is in place, and he will continue to assist the group and VPS in both 2017 and 2018, including with following up numerous major projects and processes that are underway at VPS and by serving as the Chairman of the Board of Directors of Centevo. Oslo Børs acquires remaining 50% of NOTC AS Major system releases at VPS and Oslo Børs Outlook for 2017 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. For 2016 NOTC AS reported a profit for the year after tax of NOK 4.2 million. In March Oslo Børs successfully implemented Millennium Exchange Release 9.1, providing customers with a lot of new functionality, including dark to lit sweep orders 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. Operating expenses for 2017 before capitalisation of internal costs, depreciation and amortisation are expected to be in the order of NOK 480 million to NOK 490 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) and the financial sector tax that was approved by Parliament in December The financial sector tax will represent an extra 5% tax on the salaries and other remuneration received by financial sector employees in addition to 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. Oslo Børs VPS will also in the future consider adjusting certain of its fees and prices, as well as further measures to improve the efficiency of its organisation and services for the benefit of its customers. 3

4 Oslo Børs Oslo Børs Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) Reported revenue for Oslo Børs for the first quarter of 2017 was NOK 124 million (NOK 108 million), an increase of NOK 16 million from the same period in Revenue related to trading in shares, ETFs, equity certificates, fixed income instruments and derivatives was down NOK 2 million, while revenue from the primary market was NOK 17 million higher. Revenue from the sale of market data for the first quarter of 2017 was NOK 2 million higher than in the same period in The OSEBX Index (the Benchmark Index) was at the end of the first quarter of 2017, an increase of 0.6% in the quarter. On the Oslo Børs and Oslo Axess marketplaces, one new company was admitted to listing in the first quarter, while three companies were removed from listing. One company was admitted to trading on Merkur Market in the first quarter. At the end of the first quarter of 2017, a total of 210 companies were listed on Oslo Børs and Oslo Axess, while 12 companies were listed on Merkur Market. A total of 1,932 fixed income issues were listed on Oslo Børs and Nordic ABM (Alternative Bond Market) at the end of the first quarter of 2017, representing an increase of 197 relative to the end of the first quarter of Listing fees paid by issuers in the first quarter of 2017 totalled NOK 29 million, an increase of NOK 4 million from the same period in Document inspection and admission to listing fees in the first quarter of 2017 totalled NOK 18 million, an increase of NOK 13 million from the same period in The value of shares, ETFs and equity certificates traded in the first quarter of 2017 totalled NOK 302 billion (NOK 297 billion), an increase of 2% from the first quarter of We estimate that in the first 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 first 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 first quarter of 2017, as measured by the number of contracts traded, was approximately 17% lower than in the same period in The level of activity when measured in value terms was approximately 9% lower than in the same period in Fish Pool reported total contract turnover of 11,396 tonnes for the first quarter of 2017, representing a decrease of approximately 30% from the same period in Total revenue related to trading in the first quarter of 2017 was NOK 35 million, down from NOK 37 million in the same period in Revenue related to trading in shares and fixed income issues in the first quarter of 2017 was NOK 1 million higher than in 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 1 million lower than in the first quarter of The estimated number of end users of market data from Oslo Børs at the end of the first quarter of 2017 was approximately 25% higher than at the end of the first quarter of The number of professional users was lower, while the number of subscriptions by private individuals was higher. Revenue from market data for the first quarter of 2017 was NOK 36 million, an increase of NOK 2 million from the first quarter of Salary and other operating expenses for the first quarter of 2017 totalled NOK 54 million, an increase of NOK 5 million relative to the same period in The increase is to a large extent due to cost-increasing non-recurring items related to MiFID II and trading system projects in the first quarter of 2017, as well as to the financial sector tax. Equities - value of turnover (NOK billion) Market data - number of end users Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 0 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 4

5 VPS VPS Operating revenues Salary and other operating expenses EBITDA Depreciations and write-downs Amortisations Operating profit (EBIT) First-quarter operating revenue for VPS totalled NOK 127 million (NOK 119 million), representing an increase of NOK 8 million from the first 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 first quarter of At the end of the first quarter of 2017, 1,004 (1,024) limited companies and 2,984 (2,813) fixed income issues were registered with VPS. Revenue from the issuer area for the first quarter of 2017 totalled NOK 34 million, an increase of NOK 4 million from the same period in The market value of VPS-registered mutual funds at the end of the first quarter of 2017 was NOK 532 billion (NOK 432 billion), representing an increase of 23% relative to the end of the first quarter of The number of mutual funds transactions totalled 0.8 million in the first quarter, down 42% from the same period in This is due to loss of a customer at the end of the first quarter of Revenue from the mutual funds area for the first quarter of 2017 was NOK 25 million, a decrease of NOK 2 million relative to the first quarter of Evolution is included in the VPS Fund Services reporting unit and reported revenue of NOK 6 million in the first quarter of 2017, in line with the same period in Revenue from the mutual funds area for the first quarter includes non-recurring revenue of NOK 2 million. The number of transactions in the settlement area in the first quarter of 2017 was 29% higher than in the same period in The number of investor transactions was 46% higher. Revenue from the settlement area for the first quarter of 2017 totalled NOK 30 million, an increase of NOK 5 million from the same period in In the investor area, the market value of holdings at the end of the first quarter of 2017 was 12% higher than at the end of the first quarter of million VPS accounts were registered at the end of the first 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 first quarter of 2017 was 0.5% lower than at the end of the first quarter of Revenue from the investor area for the first quarter of 2017 was NOK 37 million, an increase of NOK 2 million relative to the same period in Salary and other operating expenses for the first quarter of 2017 were NOK 3 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 trade transactions processed in VPS (1000) Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q Number of VPS accounts and value of holdings in VPS Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q Income-earning accounts (1000) Holdings (NOK bill) 5

6 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 first quarter of 2017 was NOK 0.4 million higher than in the same period in 2016, while operating expenses were also NOK 0.4 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. 6

7 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) 2,02 1,11 6,27 Diluted earnings per share (NOK) 2,02 1,11 6,27 Earnings per share (NOK) before amortisations and write-down 2,03 1,72 6,93 EBITDA= Operating revenue - Salary and other personnel expenses - Other operating expenses 7

8 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)

9 Balance sheet Current receivables totalled approximately NOK 126 million at the end of the first quarter. Of this, trade receivables totalled NOK 93 million, and other current receivables, including prepaid expenses and income accrued but not yet invoiced, amounted to NOK 33 million. Cash and cash equivalents held at the end of the first quarter totalled NOK 808 million. Current liabilities amounted to approximately NOK 345 million, of which prepayments from customers and tax payable accounted for NOK 171 million and NOK 66 million respectively. Fixed assets 31 March 31 March 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

10 Cash flow Cash flow is reported in accordance with IAS 7. Oslo Børs VPS Holding recorded an increase in cash and cash equivalents of NOK 204 million in the first quarter. Cash and cash equivalents held at the end of the first quarter totalled NOK 808 million. Cash flow from - operational activities investment activities investments in systems and tangible 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) 4,75 3,83 0,59 Equity Equity amounted to NOK 1,077 million at the end of the first quarter, and the equity ratio was 68%. 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 68 % 69 % 73 % 10

11 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 1.6 million shares were traded in the first quarter, with prices from NOK to NOK 93. The last registered trade in the first quarter of 2017 was at NOK 91. 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 24 April

12 Key figures Financial Earnings per share (NOK) 2,02 1,11 6,27 Diluted earnings per share (NOK) 2,02 1,11 6,27 Earnings per share (NOK) before amortisations and write-down 2,03 1,72 6,93 Change in cash per share (NOK) 4,75 3,83 0,59 Return on equity 33,6 % 18,2 % 26,2 % Return on total capital 30,5 % 16,6 % 24,8 % Net operating margin 45,4 % 27,3 % 38,8 % Operational OSEBX index at period's end 687,85 577,75 683,87 Change in period 0,6 % -5,3 % 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 The Board of Directors of Oslo Børs VPS Holding ASA Oslo, 26 April

13 OSLO BØRS VPS ASA PO Box 460 Sentrum 0105 Oslo Telephone: