2018 Q3 financial results

BVB BURSA DE VALORI BUCUREȘTI SA

 

FINANCIAL REPORT FOR 3Q 2018

Romania was maintained by the FTSE Russell rating agency on the list of countries monitored for a possible reclassification from the Frontier Market to the Secondary Emergency Market, according to the most recent edition of the Annual Country Classification Review published on 26 September 2018. According to the FTSE Russell report, in September 2018, the FTSE Russell Advisory Committee for Country Classification changed favorably the rating regarding the permissible OTC transactions and liquidity. With regard to the MSCI global index provider, it has improved Romania's accessibility criteria to three aspects: market regulation, information flow and trading, according to the Global Market Accessibility Review published on June 20, 2018.

The cumulative value of all financial instruments traded on the Bucharest Stock Exchange (BVB) reached the level of RON 9.55 bn from the beginning of the year to the end of September, while the average daily trading value on the main market for equities, including offers, was RON 41.33 mn.

The capitalization of the Romanian companies was over RON 95 bn at the end of the first nine months, while the capitalization of all listed companies on the regulated market of BVB exceeded RON 168 bn in the last trading session of September.

At the beginning of September, the BVB Indices Commission approved the inclusion of Sphera Franchise Group (SFG stock symbol) and Purcari Wineries (WINE stock symbol) in the main market index, BET, and BET-TR, the index including dividends from the companies included in the BET index. The number of companies that may be part of the BET and BET-TR indices has been expanded previously from 15 to 20 so that the two indices reflect the evolution of the most liquid companies listed on the BVB.

The BET-Total Return (BET-TR), which includes dividends from companies in the main stock market index, continued its sustained growth rate and advanced by 17.5% at the end of the first nine months. BET-TR reached record highs in September, the highest level since its launch in 2014.

BET index, that includes the 15 most traded companies listed on the BVB, except the SIFs, increased by 8.5% during January-September this year and had the second highest growth rate in the major indices of the stock exchanges in the EU. Only ten EU-level stock exchanges were able to record positive results at the end of the first nine months of this year.

The first bonds issue of Transilvania Bank (TLV), with a total value of EUR 285 mn, started trading on BVB in July.

The project to identify the best central counterparty solution (CCP) for the local capital market, a necessary solution for relaunching the derivatives market on the BVB, advanced. Thus, in July, the services of a specialized external consultant were commissioned to carry out an impact study for the CCP solution. Upon completion of the study, the BVB will initiate procedures for consulting shareholders at a General Meeting of Shareholders, in order to approve the best CCP solution for the Romanian capital market.

In the first 9 months of 2018, the BVB Group recorded operating revenues of RON 28.98 mn (9 months 2017: RON 29.20 mn), a decrease of 1% compared to the same period of the previous year, mainly influenced by the evolution of the trading segment but also by the FCI services and other services segment.

Revenues generated by BVB, representing the Group's trading segment, amounted to RON 17.17 mn (excluding intra-group transactions) in the first 9 months of 2018, down by 6% compared with the same period of 2017 (9 months 2017: RON 18.28 mn), amid a drop of the trading values by 12% on all markets, including offers. The comparison is made with a 2017 period dominated by the largest public offers, of Fondul Proprietatea (1Q 2017), DIGI, AAGES (2Q 2017), but also by the bond issues launched by Globalworth, Unicredit and The International Investment Bank (3Q 2017).

The local and cross-border settlement activity performed by the Central Depository (DC) reached the level of RON 7.24 mn, similar level compared to the first nine months of 2018 (9 months 2017: RON 7.18 mn), due to the increase in revenues from the maintenance of participants in the DC system, which compensated for the decrease of the incomes from the local and cross-border settlement activity. Revenues from the registry rose significantly in the first nine months of the year, by 49% compared to the same period of the previous year, due to the increase in services rendered to issuers and to holders of financial instruments.

In the first nine months of the year, DC's operating revenues reached RON 11.44 mn (excluding intra-group transactions), which corresponds to an increase of 14% compared to the similar period of 2017.

Regarding the consolidated operating expenses, they accounted for RON 21.48 mn, up by 3% compared to the first nine months of last year (9 months 2017: RON 20.88 mn), mainly influenced by a slight increase in personnel costs due to the application of a new policy for recognizing the estimated expenditures on benefits and adjustments of the remuneration policies of the BVB Group and the increase in the costs with services provided by third parties as a result of the implementation of legal requirements (The Central Securities Depositary Regulation - CSDR, GDPR, etc.) and the outsourcing of some services.

The operating profit of the BVB Group amounted to RON 7.50 mn, marking a decrease by 10% as a cumulative effect of the decrease of the operational revenues by 1% and the increase of the operational expenditures by 3%.

The operating result of the third quarter of 2018 of RON 0.69 mn, down by 71%, was affected by the decrease of the total traded value by 50%, respectively by 32% on the equities segment, leading to a 14% decrease in the operational revenues, to the value of RON 7.68 mn (3Q 2017: RON 8.91 mn), while the expenditures advanced by 6%, mainly due to the increase in the expenditures with the services rendered by third parties as a result of the requirements determined by the application of CSDR and GDPR, as well as the category of other operational expenditures determined by the increase in depreciation expenses, increase related to the investments in the BVB Group's infrastructure put into operation in the fourth quarter of 2017, and other operating expenses.

The net financial revenues of the first nine months of 2018, amounting to RON 2.76 mn, mainly obtained from interest on financial assets placed in government securities and bank deposits, recorded a significant advance against the same period last year (9 months 2017: RON 0.45 mn), being favorably influenced by unrealized exchange rate fluctuations in the revaluation of foreign currency financial instruments, which generated a gain of 0.48 mn compared to the same period of 2017, when it was registered a loss of RON 1.31 mn.

The consolidated net profit for the first nine months of the year reached RON 8.15 mn (9 months 2017: RON 7.38 mn), up by 10% compared with the first nine months of the previous year, with a net margin of 28%, 85% of the net result being generated by the Group's trading segment. The profit attributable to the shareholders of the parent company was RON 7,87 mn (9 months 2017: RON 6,92 mn).

The consolidated net profit in the third quarter of 2018 was RON 1.16 mn, down by 48% compared with the net result obtained in the same period of 2017 (3Q 2017: RON 2.23 mn) with a margin net of 18%, 84% of the result being generated by the Group's trading segment.

 

Financial and operating highlights

 

Consolidated financial performance – BVB Group (RON mn, unless otherwise stated)

 

9M

2018

9M

2017

Change (%)

3Q

2018

3Q

2017

Change (%)

 

 

 

 

 

 

 

Operating revenue

28.98

29.20

-1%

7.68

8.91

-14%

Operating expenses

21.48

20.88

3%

6.99

6.57

6%

Operating profit

7.50

8.32

-10%

0.69

2.33

-71%

Net financial revenue/(expenses)

2.76

0.45

520%

0.90

0.35

159%

Profit before tax

10.26

8.75

17%

1.59

2.67

-40%

Profit from continuing operations

8.57

-

-

1.35

-

-

Profit from discontinued operation

(0.42)

      -

-

(0.19)

      -

-

Profit for the period

8.15

7.38

10%

1.16

2.23

-48%

Total comprehensive income

8.15

7.63

7%

1.16

2.29

-50%

EPS attributable to owners (RON/share)

0.9782

0.9000

9%

0.1411

0.2800

-50%

 

 

Profitability ratios (%)

 

9M

2018

9M

2017

 

3Q

2018

3Q

2017

 

 

 

 

 

 

 

 

Operating margin

26%

28%

 

9%

26%

 

Net margin

28%

25%

 

15%

25%

 

Return on equity

7%

7%

 

1%

2%

 

 

 

Individual financial performance – BVB only, (RON mn, unless otherwise stated), including intra-group transactions

 

9M

2018

9M

2017

Change (%)

3Q

2018

3Q

2017

Change (%)

 

 

 

 

 

 

 

Operating revenue

17.41

18.55

-6%

4.07

5.40

-25%

Operating expenses

11.20

11.72

-4%

3.57

3.35

+7%

Operating profit

6.21

6.82

-9%

0.50

2.05

-75%

Net financial revenue/(expenses)

3.28

1.48

122%

0.75

0.32

131%

Profit before tax

9.31

8.30

12%

1.24

2.36

-48%

Profit for the period

7.89

7.13

11%

1.03

1.98

-48%

 

 

Operating highlights, trading segment (RON mn, all markets)

Trading value

9M

2018

9M

2017

Change (%)

3Q

2018

3Q

2017

Change (%)

 

 

 

 

 

 

 

Shares, units, rights*

7,804

9,392

-17%

1,994

2,932

-32%

Certificates

253

200

27%

71

50

41%

Fixed-income*

1,489

1,287

16%

     23

1,200

-98%

Total

9.545

10.879

-12%

2.088

4.183

-50%

Avg. daily value (shares, without offers)*

40.33

44.43

-9%

30.62

45.82

-33%

Avg. daily value (shares, including offers)*

41.33

49.51

-17%

30.62

45.82

-33%

*Value for the Regulated market

 

Operating indicators, post-trading and registry segments

 

9M

2018

9M

2017

Change (%)

3Q

2018

3Q

2017

Change (%)

 

 

 

 

 

 

 

No. companies with registry contract at CSD

884

886

0%

884

886

0%

No. procedures resulted from issuers’ corporate events

333

249

34%

309

221

40%

Local settlement

 

 

 

 

 

 

Value of trades settled on net basis (RON bn)

18.89

24.68

-23%

4.96

9.49

-48%

Value of trades settled on gross basis (RON bn)

2.92

3.21

-9%

0.99

1.01

-2%

Settlements through T2S platform (euro)

 

 

 

 

 

 

Value of trades settled on gross basis (EUR mn)

517.29

117.5

340%

0.01

117.5

-100%

 

 

 

 

 

 

 

Avg. monthly portfolio managed by custodians (RON bn)

41.05

38.72

6%

40.39

39.99

1%

 

 

Share statistics for BVB as parent company (RON, unless otherwise stated)

 

9M

2018

9M

2017

Change (%)

3Q

2018

3Q

2017

Change (%)

 

 

 

 

 

 

 

Closing price (e-o-p)

25.00

31.20

-20%

25.00

31.20

-20%

Weighted average price

26.83

32.36

-17%

24.58

33.50

-27%

High (intraday)

30.70

35.50

-14%

25.40

34.80

-27%

Low (intraday)

22.90

27.70

-17%

23.70

31.10

-24%

Total trading value (RON mn)

22.51

20.24

11%

5.20

6.50

-20%

Average trading value (RON mn)

0.12

0.11

12%

0.08

0.10

-20%

 

The complete version of the Financial Report as of September 30, 2018 is available for shareholders, investors and general public as of November 14, 2018, 8:30 AM local time. The printed version is available at BVB’s headquarters, located in Bucharest, 34-36 Carol I Blvd, 14th floor, district 2, and the online version is available on our website www.bvb.ro, in the “Investor relations/Financial figures/Financial statements” section, at http://www.bvb.ro/InvestorRelations/FinancialFigures/FinancialReports.