Euronext Publishes Q1 2019 Results - Q1 2019 Results bolstered by acquisitions and strong operating performance

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Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext, said:

Until the 2018 financial year, payments made under operating leases were charged to profit or loss on a straight line basis over the period of the lease. On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets for which associated payments are recognised on a straight-line basis as an expense in profit or loss.The adoption of IFRS 16 from 1 January 2019 led to the recognition of €2.7 million of operating expenses in Depreciation and Amortisation in Q1 2019

In the first quarter of 2019, Euronext consolidated revenue increased to €152.6 million, up +1.4%, mainly driven by the strong performance of the Listing business resulting from the consolidation of Euronext Dublin, the consolidation of Commcise (Investor Services) and increased activity of Corporate Services. On a like-for-like basis (excluding the consolidation of Euronext Dublin and Commcise in Q1 2019), Euronext consolidated revenue decreased by -4.7% in Q1 2019, to €143.4 million.

Non-volume related revenue amounted to 47% of total Group revenue in Q1 2019, increasing from 42% of total Group revenue in Q1 2018. The operating cost coverage ratio was 114% in Q1 2019, compared to 108% in Q1 2018.

Operational expenses excluding Depreciation & Amortisation increased to €63.3 million, up +8.2%, mainly due to the consolidation of Euronext Dublin (from Q2 2018) and Commcise (from Q1 2019). On a like-for-like basis, operational expenses excluding Depreciation & Amortisation decreased -2.1% compared to Q1 2018, including the increase in salaries and employee benefits, mainly related to positive one-off items in Q1 2018.

EBITDA for the quarter was €89.3 million, down -3.0%, representing a margin of 58.5%, down -2.6 points compared to Q1 2018. On a like-for-like basis, EBITDA for Q1 2019 was down -6.4%, to €86.1 million, and EBITDA margin was 60.0%, down 1.1 pts, compared to the same perimeter in Q1 2018.

Depreciation and Amortisation accounted for €8.8 million in Q1 2019, up +69.0%, primarily due to the adoption of IFRS16. On a like-for-like basis, Depreciation & Amortisation was up +53.4% to €8.0 million.

Operating profit before exceptional items was €80.4 million, a -7.3% decrease compared to Q1 2018. On a like-for-like basis, operating profit before exceptional items was down -10.0%, to €78.1 million.

€3.3 million of exceptional costs were booked in Q1 2019 compared to €1.0 million in Q1 2018, resulting mainly from the process related to the contemplated acquisition of Oslo Børs VPS, as well as settlement and restructuring costs.

Net financing income for Q1 2019 was €0.8 million compared to a net financing expense of €0.4 million in Q1 2018, thanks to a positive foreign exchange impact.

Results from equity investments amounted to €2.0 million in Q1 2019, stemming from the contribution from LCH SA of which Euronext owns an 11.1% stake since 29 December 2017. In Q1 2018, €1.5 million of results from equity investments were reported, resulting from the contribution from LCH SA.

Income tax for Q1 2019 was €23.2 million, representing an effective tax rate for the quarter of 29.0% (Q1 2018: €26.3 million and 30.3%).

Share of non-controlling interests mainly relating to Euronext FX (formerly FastMatch) (97% owned), Skope (60% owned), InsiderLog (80% owned), Commcise (78% owned) and Company Webcast (51% owned) amounted to €0.7 million in Q1 2019.

As a result the reported net profit share of the Group for Q1 2019 decreased by -6.6%, to €56.1 million. This represents a reported EPS of €0.81 basic and €0.80 fully diluted in Q1 2019, compared to €0.86 basic and €0.86 fully diluted in Q1 2018. The number of shares used for the basic calculation was 69,630,567 and for the fully diluted calculation was 69,917,865.

Adjusted EPS is down -1.7% in Q1 2019, at €0.87, compared to €0.89 in Q1 2018.

In Q1 2019 Euronext generated a net cash flow from operating activities of €59.5 million, compared to €75.0 million in Q1 2018.

As at 31 March 2019, Euronext had net debt of €91.1 million and €419.1 million of cash and cash equivalents.

Listing revenue was €28.0 million in Q1 2019, an increase of +28.1% compared to Q1 2018. This good performance was driven by the integration of Euronext Dublin (+€5.5 million) and incremental revenue from Corporate services (+€1.4 million). On a like-for-like basis, listing revenue increased by +2.7%.

Primary equity issues activity was low in Q1 2019, marked by macro uncertainties in Europe. During the first quarter of 2019, Euronext welcomed 5 new listings on its markets, exclusively SME deals, compared to 10 listings in the first quarter of 2018. The Tech SME initiative demonstrated the attractiveness of Euronext’s value proposition with 4 of the new listings coming from non-Euronext markets. In Q1 2019, €36 million were raised on Euronext, compared to €931 million last year.

Activity on the secondary market remained modest, primarily driven by technical deals. In Q1 2019, €4.8 billion were raised in secondary equity issues, compared to €9.3 billion in Q1 2018.

In total, €262.4 billion in equity and debt were raised on Euronext’s markets in Q1 2019, compared to €221.1 billion in Q1 2018.

Corporate services delivered a strong performance, generating €5.1 million in revenue in Q1 2019, compared to €3.7 million in Q1 2018, reflecting high levels of commercial intensity with both issuers and non-listed users.

Average daily volume for cash trading decreased to €7.2 billion in Q1 2019, down -16.9% compared to Q1 2018. In an subdued volumes environment, cash trading revenue decreased by -13.3% in Q1 2019, to a total of €48.3 million, with an average yield over the quarter of 0.53bps, up +1.9% compared to Q1 2018. On a like-for-like basis, cash trading revenue decreased by -15.1%.

Cash trading market share throughout the first quarter of 2019 averaged 66.1%, compared to 66.2% in Q1 2018.

The average daily transaction value of ETFs on the electronic order book was €212 million over Q1 2019, down -36.8% compared to Q1 2018, in a low volatility environment. The total number of ETFs listed on Euronext was 1,185 at the end of March 2019.

Derivatives trading revenue decreased in Q1 2019, to €10.4 million, compared to €10.6 million in Q1 2018. Average daily volume on individual equity derivatives was up +2.7% at 313,899 contracts, while the average daily volume on equity index derivatives was down -7.7% to 220,812 contracts. On a like-for-like basis, derivatives trading revenue decreased by -1.5%.

Commodity products recorded increasing average daily volumes in Q1 2019, up +2.7% to 51,155 contracts.

Yield on derivatives averaged 0.28bps in Q1 2019, stable compared to Q1 2018.

Spot FX trading activity on Euronext FX spot foreign exchange market recorded average daily volumes of $19.8 billion, down -2.1% compared to Q1 2018. Thanks to efficient yield management in a challenging market environment, and a positive foreign exchange rate, spot FX trading generated €5.8 million of revenue in Q1 2019, up +10.4% compared to Q1 2018. On a like-for-like basis, spot FX trading revenue is up +10.4%.

Investor Services, encompassing the activities of Commcise, a provider of award-winning research evaluation and commission management solutions for financial services firms of which Euronext acquired 78% of the capital in December 2018 reported €1.1 million of revenue in the first quarter of 2019. The business continued to grow, benefiting from Euronext`s financial standing and reach and expertise with asset managers and broker dealers.

Advanced Data Services reported revenue up +3.8% to €30.8 million in Q1 2019 due the consolidation of Euronext Dublin activities. On a like-for-like basis, Advanced Data Services revenue are stable, +0.6% compared to Q1 218

Clearing revenue was slightly up in Q1 2019, at €13.2 million, +1.4% compared to Q1 2018, resulting from higher treasury income, while derivatives volumes slightly decreased compared to Q1 2018. On a like-for-like basis, clearing revenue was up +1.4%

Revenue from Interbolsa in Portugal and other post-trade activities was stable at €5.5 million in Q1 2019, -0.1% compared to Q1 2019 resulting from lower corporate actions offsetting an increase in assets under custody. On a like-for-like basis, revenue from Interbolsa was down -0.1%

Euronext Technology Solutions & Other revenue increased by +4.4% in Q1 2019, to €9.3 million, supported by an increased activity in Managed Services solutions. On a like-for-like basis, revenue was stable at +0.2% compared to last year.

For the first quarter of 2019, the average daily transaction value on the Euronext cash order book stood at €7,239 million, down             -16.9% compared to the same period last year.

The average daily transaction value of ETFs on the electronic order book was €212 million over Q1 2019, down -36.8% compared to Q1 2018. The total number of ETFs listed on Euronext was 1,185 at end of March 2018.

The overall average daily volume on Euronext derivatives stood at 585,867 contracts (-1.5% compared to the first quarter of 2018) and the open interest was 17,385,594 contracts at the end of March 2019 (-0.7% compared to the end of March 2018).

The average daily volume on Euronext FX’s spot foreign exchange market stood at $19,774 million in Q1 2019, down -2.1% compared to the same period last year.

In line with the current dividend distribution policy of Euronext, it is proposed to distribute 50% of 2018 reported net profit. As a result, subject to shareholder approval at the company’s Annual General Meeting of Shareholders to be held on 16 May 2019, the annual gross dividend on the 2018 results to be paid in 2019 amounts to €1.54 per share.

Payment of the annual dividend would then occur on 24 May 2019.

On 4 April 2019, Euronext filed its 2018 registration document, including the 2018 annual report and director’s report, to the Dutch Authority for the Financial Markets (AFM) on 3 April 2019. This Registration Document was prepared in accordance with Annex 1 of EC Regulation 809/2004, and with article 5:25c of the Wet op het financieel toezicht, filed in English with, and approved by, the Stichting Autoriteit Financiële Markten (the “AFM”) on 3 April 2019 in its capacity as competent authority under the Wet op het financieel toezicht (as amended) pursuant to Directive 2003/71/EC (as amended, including by Directive 2010/73/EU).

The 2018 registration document is available in English on the Euronext website: , and at the registered office of Euronext N.V.: Beursplein 5, 1012 JW Amsterdam, The Netherlands.

On 24 December 2018, Euronext announced it had approached the Board of Directors of Oslo Børs VPS Holding ASA (“Oslo Børs VPS”) to seek its support for a €625m cash tender offer for all the outstanding shares of Oslo Børs VPS, the Norwegian Stock Exchange and national CSD operator, headquartered in Oslo. On 14 January 2019, Euronext published the offer document for its previously announced all-cash tender offer to acquire all issued and outstanding shares of Oslo Børs VPS for NOK 6.24 billion (€625m). The offer document and other publications in relation to the offer are available on Euronext’s website, .

Following an invitation to consider an acquisition of shares in Oslo Børs VPS organized by a group of its shareholders, Euronext has secured support for the offer from Oslo Børs VPS shareholders representing the majority of the total number of outstanding shares through irrevocable binding pre-commitments to tender shares in the context of the offer and share purchases. These irrevocable undertakings remain valid regardless of any competing offer that has been or may be made in the context of this transaction until 31 August 2019. In addition, 22 shareholders decided on 11 February 2019 to strengthen their commitment to support Euronext’s offer by extending the deadline for their irrevocable pre-commitments to the end of December 2019. The original offer price of NOK145 per share, i.e. NOK6.24 billion (€625m) for all outstanding shares of Oslo Børs VPS, has been amended to NOK158 per share, i.e. NOK6.79 billion (€692m) on 11 February 2019, in order to demonstrate Euronext’s willingness to share the benefits of this transaction with Oslo Børs VPS shareholders, the majority of whom supports Euronext’s offer and to continue the dialogue with the minority of Oslo Børs VPS’ shareholders who have not yet committed their shares to Euronext. The acceptance period of the tender offer commenced on 14 January 2019, and has been amended on 11 March 2019, on 1 April 2019 and on 6 May 2019 so that Euronext will continue to receive and accept acceptances of the Offer up to 31 May 2019 at 18:00 Central European Time.

On 4 March 2019, Euronext noted that the Oslo Børs VPS Board of Directors has considered Euronext’s increased offer announced on 11 February 2019 as equal to the updated Nasdaq offer from a purely financial point of view. Euronext also noted that, following Nasdaq’s announced decision to match Euronext’s offer, the Board of Directors has upheld its recommendation of Nasdaq as the preferred bidder in line with its commitment to do so under any circumstances. Euronext reiterated that it has already secured a majority of the shares of Oslo Børs VPS’s, that its minimum ownership condition has therefore been fulfilled and that it will complete the transaction once regulatory clearance has been obtained, after the satisfaction of the other conditions in its offer.

On 8 April 2019, Euronext received the recommendation by the Norwegian Financial Supervisory Authority (Finanstilsynet) to the Norwegian Ministry of Finance, recommending that Euronext should be approved as a suitable owner of up to 100% of the capital of Oslo Børs VPS, as applied for, without ownership or other restrictions. Following this, on 13 May 2019, Euronext received clearance from the Norwegian Ministry of Finance to acquire up to 100% of Oslo Børs VPS capital. Reaching this critical milestone, Euronext confirms its intention to complete the transaction by the end of June 2019.

The Ministry’s decision was one of the last major conditions to complete the transaction since most of the other condition precedents highlighted in Euronext’s offer document were already met, including but not limited to: (i) Euronext has already secured more than the majority of the capital of Oslo Børs VPS (53.4%) including pre-commitments, shares tendered to the offer, and directly owned shares and (ii) the Euronext’s college of regulators has given its non-objection to the contemplated transaction. Euronext’s shareholders have been asked to approve the transaction at the AGM on 16 May 2019 and Euronext’s Reference Shareholders who represent 23.86% of Euronext’s capital have confirmed joint support.

Following requests from Oslo Børs VPS shareholders who to date have either yet to tender their shares to any offer, or tendered to the competing offer, whether Euronext would offer liquidity to all remaining shareholders, Euronext confirms that it will ensure that all remaining shareholders will get an opportunity to tender their shares to Euronext at the same terms in connection with or following final regulatory approval and fulfilment of all offer conditions, through an extended, new or re-opened offer.

Euronext is convinced that the transaction will be of great benefit to Oslo Børs VPS and all its clients, employees and the wider Norwegian financial community. In particular, Euronext remains strongly committed to supporting the strong international listing franchise in the oil, seafood and shipping sectors that Oslo Børs VPS has developed over many years, as well as its very successful listings of bonds and equity certificates. In addition, Euronext will continue to support Norwegian SMEs, leveraging on the strengths of its large SME markets. Euronext remains strongly committed to securing the position of VPS, the national CSD, through technology investments, maintained operational independence and continued local supervision and regulation. Euronext also remains committed to ensuring appropriate Norwegian representation in the Boards of Directors of the acquired entities including independent board members and employee representatives. Euronext has already announced that Tom Vidar Rygh, Senior Advisor at international private equity fund Nordic Capital and previous Chairman and Member of the Board of Oslo Børs, will join the Board of Directors of Oslo Børs VPS post completion of the transaction and subject to regulatory approval.

Following the successful completion of the acquisition of Oslo Børs VPS, Euronext will keep pursuing its growth strategy through high value-added acquisitions aimed at strengthening the business profile of the group, while maintaining its commitment to keep a strong investment grade credit rating profile. The indicative net leverage of the combined group would be c. 2x 2018 Net debt /EBITDA, assuming the acquisition of 100% of Oslo Børs VPS’ capital.

On 8 April 2019, Euronext signed a supplemental agreement with nine banks aiming to amend the €250 million revolving credit facility originally dated 12 April 2017.

This new agreement enabled Euronext to increase the credit facility to €400 million and set the a new maturity of 5 years plus a two-year extension possibility.

On 16 April 2019, Euronext announced the rebranding of FastMatch, its Electronic Communication Network (ECN) for Foreign Exchange (FX) trading, as Euronext FX .This rebranding reflects the evolution of FastMatch since it joined the Euronext Group. While the FastMatch brand name is synonymous with speed and best-in-class technology, Euronext stands for transparency, regulatory robustness, fairness and accountability. FastMatch was perceived as an industry disruptor thanks to its award-winning technology. While maintaining its technology leadership, the company has gained operational maturity and can now rely on the backing of a large and stable organisation such as Euronext. The FastMatch name will not disappear as it remains the brandname of the trading technology powering Euronext FX trading.

Building on the name and network of the Euronext teams will allow Euronext FX to acquire larger institutional clients, to interact more closely with Euronext’s distribution network, to leverage Euronext’s market data services and to rely on improved infrastructure support.

In April 2019, the average daily transaction value on the Euronext cash order book stood at €7,413 million, down -5.9% compared to April 2018 and down -4.0% from the previous month.

The average daily transaction value on the ETF order book was €200 million, down -17.8% compared to April 2018 and down -7.1% from the previous month. At the end of April 2019, 1,178 ETFs were listed on Euronext compared to 1,150 at the end of December 2018.

In April 2019, the overall average daily volume on derivatives reached 585,386 contracts, up +2.0% compared to April 2018 and down -2.0% compared to the previous month. In detail:

Year-to-date, the overall average daily volume on Euronext derivatives stood at 585,751 contracts (-0.7% compared to 2018 YTD) and the open interest was at 17,421,316 contracts (-4.7% compared to the end of April 2018).

In April 2019, the average daily volume on the spot foreign exchange market of Euronext FX, operating as a Euronext company since August 2017, stood at $16,021 million, down -17.3% compared to April 2018 and down -23.9% from the previous month.

In April 2019, €4.4 billion were raised in follow-on equity of which a €567 million public offer from Ramsay Generale de Santé to finance the acquisition of Swedish competitor Capio. A total of €119.7 billion were raised on Euronext in bonds, of which seven green bonds listed for a total amount exceeding €2 billion.

Website :

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Euronext is the leading pan-European exchange in the Eurozone, covering Belgium, France, Ireland, The Netherlands, Portugal and the UK. With 1,300 listed issuers worth €3.5 trillion in market capitalisation as of end March 2019, Euronext is an unmatched blue chip franchise that has 24 issuers in the Morningstar® Eurozone 50 Index℠ and a strong diverse domestic and international client base. Euronext operates regulated and transparent equity and derivatives markets and is the largest centre for debt and funds listings in the world. Its total product offering includes Equities, Exchange Traded Funds, Warrants & Certificates, Bonds, Derivatives, Commodities and Indices. Euronext also leverages its expertise in running markets by providing technology and managed services to third parties. In addition to its main regulated market, Euronext also operates Euronext GrowthTM and Euronext AccessTM, simplifying access to listing for SMEs.  

For the latest news, find us on Twitter (twitter.com/euronext) and LinkedIn (linkedin.com/euronext).

This press release is for information purposes only and is not a recommendation to engage in investment activities. This press release is provided "as is" without representation or warranty of any kind. While all reasonable care has been taken to ensure the accuracy of the content, Euronext does not guarantee its accuracy or completeness. Euronext will not be held liable for any loss or damages of any nature ensuing from using, trusting or acting on information provided. No information set out or referred to in this publication July be regarded as creating any right or obligation. The creation of rights and obligations in respect of financial products that are traded on the exchanges operated by Euronext`s subsidiaries shall depend solely on the applicable rules of the market operator. All proprietary rights and interest in or connected with this publication shall vest in Euronext.This press release speaks only as of this date. Euronext refers to Euronext N.V. and its affiliates. Information regarding trademarks and intellectual property rights of Euronext is located at www.euronext.com/terms-use.© 2019, Euronext N.V. - All rights reserved.The Euronext Group processes your personal data in order to provide you with information about Euronext (the "Purpose"). With regard to the processing of these personal data, Euronext will comply with its obligations under the Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 (General Data Protection Regulation, “GDPR”), and any applicable national laws, rules and regulations implementing the GDPR as provided in its privacy statement available at: .In accordance with the applicable legislation you have rights as regard to the processing of your personal data:

For comparative purposes, the company provides unaudited non-IFRS measures including:

Non-IFRS measures are defined as follows:

Non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures and should be read only in conjunction with the consolidated financial statements.

Due to the adoption of IFRS 16 on 1 January 2019, Euronext reported in Q1 2019 a €2.7m positive impact on its EBITDA, a slightly positive impact on its operating profit (€0.1m) and an unsignificant impact on its net income. This impact in Q1 2019 is expected to be similar for the four quarters of 2019.

 

* included New Listings incl over allotment, Follow-ons on Equities, Corporate Bonds on Euronext Listed Issuers.**(Euronext, Euronext Growth and Euronext Access)

*END*

 

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Globe Newswire: 16:45 GMT Wednesday 15th May 2019

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