Half-year financial results as of June 30, 2018

BVB BURSA DE VALORI BUCUREȘTI SA

HALF-YEARLY FINANCIAL RESULTS AS OF JUNE 30, 2018

The first half of the year brought on Bucharest Stock Exchange (BVB) two companies listings, two bond issues, a market reshuffle, but with an increase of 11% in the total return index, and a recognition from the MSCI global index provider on the improvement of three criteria of access to the local capital market.

Total value of transactions with financial instruments listed on BVB after the first half of the year exceeded RON 7.4 bn, up by 11% year-on-year. The average daily trading value with shares in the main market increased by 3.3%, above the level of RON 45 mn.

The performance of the local capital market contributed to several aspects that could improve the investment experience, which was recognized internationally by one of the most important rating agencies, MSCI. The global index provider has improved and recognized Romania's accessibility criteria for three aspects: market regulation, information flow and trading, results that validate capital market projects in Romania and recognize the improvement of investors' perception of the local market.

At the end of the first six months, the stock market capitalization of Romanian companies exceeded EUR 20 bn, while the capitalization of all companies listed on the regulated market of the BVB almost reached EUR 36 bn, in the last trading session of June.

The Romanian capital market has managed to maintain the Top 5 rallies among the main European stock indices in this period, with an advance of the BET index of 4.3%. A strong upward trend was recorded by the BET-TR total return index of the local stock exchange, which exceeded 11,500 points.

At the end of April started trading the municipal bond issued by Bucharest Municipality of RON 555 mn value, with a maturity of 10 years and an interest rate of 5.6% per annum. In the second half of May, Globalworth, the largest real estate investment company in Central and Eastern Europe, started trading on the same main market, the value of the issue being EUR 550 mn. Corporate bonds are traded on the Bucharest Stock Exchange in euro and the settlement is carried out directly in the European currency (facility implemented at BVB Group level in 2017). On June 26, Banca Transilvania announced the successful closing of the private placement of EUR-denominated unsecured Tier 2 Capital subordinated bonds bearing an interest of EURIBOR 6M+3.75% per annum, due in 2028, with an aggregate nominal value of EUR 285 mn. The already consistent use of this mechanism shows the maturity and development of the local capital market.

BVB has continued the actions and projects to promote the capital market for investors and entrepreneurs both at national and international level. In the second quarter, the companies listed on the BVB met with foreign investors in events and roadshows in London, Warsaw, Vienna, Budapest, New York and Washington. In May, BVB, with the support of Wood & Company, together with the Warsaw and Prague stock exchanges, met with US investors at the Investors Days in Central and Eastern Europe conference to promote investment opportunities for their countries. 34 companies from Romania, Poland and the Czech Republic met with 84 institutional investors representing the largest 59 investment houses in the US.

In June, BVB organized the seventh edition of the Individual Investors Forum, where 20 speakers supported a large audience of about 400 people, potential and experienced investors, numerous presentations and workshops dedicated to saving and investment on the stock exchange.

The second edition of the BVB project for entrepreneurs, “Made in Romania”, has been running successfully since the beginning of the year: the 15 finalist companies were awarded at the “Made in Romania” Gala on April 25, and from May to the November the finalists and the other 35 semi-finalist companies benefit from an intensive training program dedicated to the development of their business.

The approval of the BVB General Shareholder Meeting on April 16 to initiate the central counterparty (CCP) initiative for the markets managed by BVB resulted in the launch of a project to identify the best CCP solution for the local capital market. The CCP solution is required, as per the current EU regulatory requirements, for the relaunch of the BVB derivatives market.

At Group level, the Central Depository (DC) settlement activity increased in the first half of 2018 by 5% compared to the same period of the previous year, mainly as a result of the increase in revenues from the maintenance of participants in the DC system. Also, revenues from the register increased significantly, by 65%, ​​compared to the same period of the previous year, mainly due to the increase in the revenues from the activity of the registry, the services rendered to the issuers, as well as to the holders of financial instruments, but also on account of the increase of the portfolio value managed by the custodians.

The BVB Group's operating income grew by 5% between January and June 2018 compared to the same period of the previous year, up to a level of RON 21.30 mn, an increase generated by the increase in the total traded value on the BVB markets, as well as by the increase in revenues from services rendered by DC for the issuers and for custodians of financial instruments.

Revenues generated by BVB, representing the Group's trading segment, amounted to RON 13.18 mn (excluding intra-group transactions) in the first half of 2018, up by 2% compared to the first half of 2017 (1H 2017: RON 12.96 mn).

Revenues from the post-trading segment, in the first half of 2018, are of RON 4.99 mn, increased by 5% compared to the same period of 2017, mainly due to the increase of the portfolio value managed by the custodians.

The increase of only 1% in the operating expenses in the first half of 2018, up to RON 14.49 mn, allowed a 14% increase in the consolidated operating profit of the BVB Group, reaching the level of RON 6,81 mn (1H 2017: RON 5,98 mn).

The financial revenues of the first half of 2018, amounting to RON 1.86 mn, mainly obtained from interest on financial assets placed in government securities and bank deposits, recorded a significant advance against the same period of last year (1H 2017: RON 0.1 mn), being favorably influenced by the unrealized exchange rate fluctuations in the revaluation of foreign currency financial instruments, which generated a gain of RON 0.41 mn compared to the same period of 2017, when it was registered a loss of RON 1.10 mn.

The consolidated net profit in the first half of 2018 was of RON 6.99 mn, up by 36% compared with the net result obtained in the same period of the previous year (1H 2017: RON 5.15 mn) with a net margin of 33%, 85% of the net result being generated by the Group's trading segment.

On June 11, 2018, BVB started to pay the dividends from the 2017 net profit of RON 13.55 mn, representing 100% of the net profit after reserves. The gross dividend for 2017 was RON 1.6862 / share.

 

Financial and operating highlights

 

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

 

1H

2018

1H

2017

Change (%)

2Q

2018

2Q

2017

Change (%)

 

 

 

 

 

 

 

Operating revenue

21.30

20.29

5%

9.41

11.10

-15%

Operating expenses

14.49

14.31

1%

7.37

8.08

-9%

Operating profit

6.81

5.98

14%

2.04

3.02

-32%

Net financial revenue/(expenses)

1.86

0.10

1,834%

1.65

(0.36)

563%

Profit before tax

8.67

6.08

43%

3.69

2.67

38%

Profit from continuing operations

7.22

5.15

40%

3.05

2.32

31%

Profit from discontinued operation

(0.23)

      -

-

(0.09)

      -

-

Profit for the period 

6.99

5.15

36%

2.96

2.32

28%

Total comprehensive income

6.99

5.34

31%

2.96

2.39

24%

EPS attributable to owners (RON/share)

0.8371

0.6200

35%

0.3430

0.2577

33%

 

 

Profitability ratios (%)

 

1H

2018

1H

2017

 

2Q

2018

2Q

2017

 

 

 

 

 

 

 

 

Operating margin

32%

29%

 

22%

27%

 

Net margin

33%

25%

 

31%

21%

 

Return on equity

6%

5%

 

3%

2%

 

* Indicators based on consolidated financial results

 

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

 

1H

2018

1H

2017

Change (%)

2Q

2018

2Q

2017

Change (%)

 

 

 

 

 

 

 

Operating revenue

13.34

13.15

1%

5.13

7.04

-27%

Operating expenses

7.63

8.37

-9%

3.81

4.98

-24%

Operating profit

5.71

4.78

19%

1.32

2.06

-36%

Net financial revenue/(expenses)

2.53

1.16

119%

2.37

0.76

213%

Profit before tax

8.07

5.94

36%

3.63

2.81

29%

Profit for the period

6.86

5.14

33%

3.14

2.53

24%

 

 

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

Trading value

1H

2018

1H

2017

Change (%)

2Q

2018

2Q

2017

Change (%)

 

 

 

 

 

 

 

Shares, units, rights

5,810

6,459

-10%

2,246

3,705

-39%

Certificates

182

150

22%

95

54

75%

Fixed-income

1,466

87

1,589%

1,337

32

4,024%

Total

7,457

6,696

11%

3,677

3,792

-3%

Avg. daily value (shares, without offers)*

45.44

43.97

3%

36.36

45.16

-19%

Avg. daily value (shares, including offers)*

46.97

51.69

-9%

36.36

60.74

-40%

*Value for the Regulated market

 

 

 

Operating indicators, post-trading and registry segments

 

1H

2018

1H

2017

Change (%)

2Q

2018

2Q

2017

Change (%)

 

 

 

 

 

 

 

No. companies with registry contract at CSD

887

876

1%

887

876

1%

No. procedures resulted from issuers’ corporate events

296

221

34%

273

202

35%

Local settlement

 

 

 

 

 

 

Value of trades settled on net basis (RON bn)

13.93

15.19

-8%

5.09

8.66

-41%

Value of trades settled on gross basis (RON bn)

1.94

2.20

-12%

0.73

1.31

-44%

Settlements through T2S platform (euro)

 

 

 

 

 

 

Value of trades settled on gross basis (EUR mn)

517.29

-

-

515.28

-

-

 

 

 

 

 

 

 

Avg. monthly portfolio managed by custodians (RON bn)

41.39

38.09

9%

40.48

39.04

4%

 

 

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

 

1H

2018

1H

2017

Change (%)

2Q

2018

2Q

2017

Change (%)

 

 

 

 

 

 

 

Closing price (e-o-p)

24.90

32.70

-24%

24.90

32.70

-24%

Weighted average price

27.58

31.84

-13%

25.96

33.24

-22%

High (intraday)

30.70

35.50

-14%

28.70

35.50

-19%

Low (intraday)

22.90

27.70

-17%

22.90

29.90

-23%

Total trading value (RON mn)

17.31

13.74

26%

6.00

8.32

-28%

Average trading value (RON mn)

0.14

0.11

27%

0.10

0.14

-28%

 

The complete version of the Financial Report as of June 30, 2018, is available for shareholders, investors and general public starting with August 10, 2018. 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 shall be available on our website www.bvb.roin the “Investor relations/Financial figures/Financial statements” section, at http://www.bvb.ro/InvestorRelations/FinancialFigures/FinancialReports.