Oslo Børs VPS Q4 2017 - otc.nfmf.nootc.nfmf.no/public/news/17476.pdf · 2 Main features of the fourth quarter: Continued high level of activity in both the primary and secondary

Interim report Fourth quarter of 2017

2

Main features of the fourth quarter:

Continued high level of activity in both the primary and secondary markets

Eight companies admitted to listing on Oslo Børs/Oslo Axess/Merkur Market, one new company

registered on the NOTC list and 56 new equity issuers registered with VPS

150 new fixed income issues admitted to listing and 400 new fixed income issues registered with VPS

173,000 share savings accounts set up in VPS as of end 2017

Operating revenue NOK 252 million (234)

EBITDA NOK 107 million (108)

Earnings per share NOK 1.78 (1.71)

The Board will increase the interest-bearing during the first six months of 2018, with subsequent

payment to shareholders

Proposal to pay a dividend of NOK 4.20 per share, in addition to NOK 4.00 paid in December 2017

Business activities in the quarter (same period last year in brackets)

Oslo Børs VPS Holding reports a profit of NOK 76 million for the fourth quarter of 2017 (NOK 74 million) and a profit of NOK 357 million (NOK 269 million) for 2017 as a whole.

The fourth quarter was characterised by the benchmark index reaching new all-time highs and continuing high levels of activity in the primary and secondary equity and fixed income markets. Reported revenue for the fourth quarter of 2017 was NOK 252 million, which is NOK 18 million higher than in the fourth quarter of 2016. Revenue related to listing and registration was in total NOK 16 million higher than in the fourth quarter of 2016, NOK 1 million of which amount relates to the consolidation of NOTC with effect from the second quarter of 2017. Revenue related to the trading and settlement of equities and fixed income instruments was NOK 2 million higher than in the fourth quarter of 2016, while revenue related to trading in derivatives was NOK 2 million lower than in the fourth quarter of 2016. Revenue from the mutual funds area was in line with the fourth quarter of 2016, while revenue related to market data was NOK 1 million higher. Reported revenue for 2017 as a whole was NOK 94 million higher than in 2016, with revenue related to listing and registration NOK 82 million higher than in 2016. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value amounted to NOK 145 million in the fourth quarter of 2017, an increase of NOK 19 million from the fourth quarter of 2016. Operating expenses before capitalisation of internal costs, depreciation and amortisation of excess value for 2017 as a whole were NOK 43 million higher than in 2016. The increase principally relates to the financial sector tax, projects at both Oslo Børs and VPS (including MiFID 2, CSDR, share savings accounts, and modernisation projects), the appointment of a new CEO of VPS and increases in activity-dependent costs.

4th Quarter 4th Quarter

2017 2016 2017 2016

Operating revenues 251 781 233 631 995 091 901 052

Operating expenses 153 243 139 218 547 960 551 881

EBITDA 106 760 107 587 481 486 430 177

Operating profit (EBIT) 98 538 94 412 447 131 349 171

Earnings for the period 76 014 73 655 356 817 269 421

Earnings per share (NOK) 1,77 1,71 8,30 6,27

Earnings per share (NOK)

before amortisations and write-down 1,78 1,73 8,36 6,93

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Net financial income for the fourth quarter of 2017 totalled NOK 3 million, a decrease of NOK 1 million from the same period in 2016. Net financial income for 2017 as a whole was NOK 14 million higher than in 2016. The group’s acquisition of the remaining 50% of NOTC AS – and its change to a wholly owned subsidiary 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, and to net financial income in 2017 increasing by NOK 14 million.

Proposal to the Annual General Meeting to pay a dividend of NOK 4.20 per share, making the total dividend for the 2017 financial year NOK 8.20

The Board of Oslo Børs VPS Holding intends to propose to the Annual General Meeting that a dividend of NOK 4.20 per share should be paid in respect of the 2017 financial year. This is in addition to the dividend of NOK 4.00 paid in December 2017. The dividends for 2017 will therefore together total NOK 8.20 per share, which is equivalent to 98% of earnings per share before amortisation and write-downs. The proposed dividend is conditional on proposed dividend payments by subsidiaries to Oslo Børs VPS Holding ASA being approved by the Financial Supervisory Authority of Norway.

Best year ever for the primary market

More new debt and equity capital was raised in 2017 than in any previous year. The combined total value of debt and equity capital raised on the Oslo Børs marketplaces in 2017 was NOK 412 billion, which is NOK 56 billion or 14% more than in 2016, the previous record year. The large number of companies admitted to listing helped increase the amount raised in the equity market to new highs. 21 companies were admitted to Oslo Børs’ marketplaces in 2017, the highest number since 2007. In addition, dividend payments were also at a record level in 2017. At VPS, the number of equities/equity certificates and fixed income issues registered increased by 259 or 7% to reach 3,537 at the end of 2017. The total amount raised at VPS in these categories of securities (both listed and unlisted) reached NOK 565 billion in 2017, an increase of 26% from 2016. The total market value of registered securities increased 12% to NOK 5,602 billion.

Initial impact of MiFID II MiFID II entered into force on 3 January 2018. The proportion of market trading taking place on traditional stock exchanges has increased. Oslo Børs is no exception to this, and in January 2018 it had a market share of trading in OBX shares of approximately 63%, up from approximately 58% in both January 2017 and 2017 as a whole. Equity trading in European dark pools has decreased by around 15%.

The savings market The Norwegian authorities introduced two new official regulations for the Norwegian savings market in 2017. Share savings accounts were introduced on 1 September and there has been strong growth in terms of the number of customers and accounts. At the end of 2017, 173,000 share savings accounts had been set up in VPS, and the total for the market as a whole was around 250,000 accounts. Individual pension saving (IPS) accounts were introduced on 1 October. IPS accounts have not seen such a strong uptake, either in the market as a whole (approximately 50,000 accounts) or at VPS (approximately 6,000 accounts). The Norwegian authorities have also proposed the introduction of “individual pension accounts” and are currently carrying out a consultation exercise in relation to a draft of the proposed official regulation. Continued growth in the Norwegian savings market is therefore expected in the years ahead.

Strategy The environment in which the group operates is seeing extensive changes of a technological,

competitive and regulatory nature. The securities market is seeing increasing levels of interest and use. This is particularly the case in relation to the savings and pension markets. On the basis of the current picture, the Board has decided on a strategy of organic growth for Oslo Børs, with a target of achieving growth in both the Norwegian and international markets. Oslo Børs will progress its strategy by concentrating on important sectors in the Norwegian securities market as well as by developing and selling value-adding services. Oslo Børs is well-positioned to compete in this market. In 2018 the Board will particularly focus on its strategy for VPS. This will include considering how best to position this company for further growth in light of the changes in the regulatory framework caused by the introduction of CSDR. The Board has also considered the group’s capital structure. During the first six months of 2018 the Board will increase the amount of interest-bearing debt held by Oslo Børs VPS Holding ASA by around NOK 450 million (i.e. by an amount approximately equivalent to the group’s average annual EBITDA over the last three years), with a payment then subsequently made to shareholders.

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Outlook Operating expenses for 2018 before capitalisation of internal costs, depreciation and amortisation are expected to be in excess of NOK 500 million. Included in this figure is an increase in costs at Centevo in relation to planned development activities at the company. 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.

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Oslo Børs

Reported revenue for Oslo Børs for the fourth quarter of 2017 was NOK 130 million (NOK 121 million), an increase of NOK 9 million from the same period in 2016. Revenue from the primary market was NOK 6 million higher, while revenue from the sale of market data was NOK 1 million higher. Reported revenue for Oslo Børs for 2017 as a whole was NOK 60 million higher than in 2016. Revenue from the primary market was NOK 55 million higher than in 2016, while revenue from the sale of market data was NOK 4 million higher. Revenue related to trading was NOK 1 million lower than in 2016. The OSEBX Index (the Benchmark Index) was 814.45 at the end of 2017, an increase of 4.0% in the quarter. Six companies were admitted to listing in the fourth quarter on the Oslo Børs and Oslo Axess marketplaces, two companies were admitted to trading on Merkur Market, and three companies were removed from listing/trading. At the end of 2017, a total of 214 companies were listed on Oslo Børs and Oslo Axess, while 14 companies were listed on Merkur Market. There were 44 companies registered on the NOTC list at the end of 2017, with one company newly registered on the list and four removed in the quarter. A total of 2,085 fixed income issues were listed on Oslo Børs and Nordic ABM (Alternative Bond Market) at the end of 2017, representing an increase of 210 relative to the end of 2016. Listing fees paid by issuers in the fourth quarter of 2017 totalled NOK 34 million, an increase of NOK 5 million from the same period in 2016. Document inspection and admission to listing fees in the fourth quarter of 2017 totalled NOK 21 million, an increase of NOK 1 million from the same period in 2016. Revenue of NOK 1 million from NOTC AS is included in the figures for the fourth quarter and of NOK 5 million in the figures for 2017 as a whole. The value of shares, ETFs and equity certificates traded in the fourth quarter of 2017 totalled NOK 288 billion (NOK 267 billion), an increase of 8% from the fourth quarter of 2016. We estimate that in the fourth quarter of 2017 Oslo Børs had a market share of trading in OBX shares of approximately 59%, which is slightly higher than in the same period in 2016. Oslo Børs had 50 member firms at the end of 2017, of which 18 are local firms and 32 are remote members. The overall level of activity in the derivatives market in the fourth quarter of 2017, as measured by the number of contracts traded, was approximately 20% lower than in the same period in 2016. The level of activity when measured in value terms was approximately 8% higher than in the same period in 2016. Fish Pool reported total contract turnover of 17,186 tonnes for the fourth quarter of 2017, representing a decrease of approximately 30% from the same period in 2016. Total revenue related to trading in the fourth quarter of 2017 was NOK 35 million, in line with the same period in 2016. Revenue related to trading in shares and fixed income instruments in the fourth quarter of 2017 was NOK 2 million higher than in the same period in 2016, while revenue related to trading in derivatives was NOK 2 million lower. Revenue from Fish Pool, which is included in revenue related to trading in derivatives, was NOK 1 million lower than in the fourth quarter of 2016 at NOK 3 million (NOK 12 million for 2017 as a whole, as compared to NOK 16 million in 2016).

The estimated number of end users of market data from Oslo Børs at the end of 2017 was approximately 8% higher than at the end of 2016. The number of professional users was lower, while the number of private users was higher. There was also an increase in non-display use of market data. Revenue related to market data for the fourth quarter of 2017 was NOK 34 million, an increase of NOK 1 million from the same period in 2016. Salary and other operating expenses for the fourth quarter of 2017 totalled NOK 59 million, an increase of NOK 1 million relative to the same period in 2016. Salary and other operating expenses for 2017 as a whole were NOK 13 million higher than in 2016. The increase largely relates to trading system projects at Oslo Børs and the financial sector tax.


2017 2016 2017 2016

Oslo Børs


Salary and other operating expenses 59 481 58 058 218 032 205 218

EBITDA 70 729 63 281 287 605 240 324

Capitalisation of internal resources 0 0 0 0

Depreciations and write-downs 1 310 3 756 7 267 16 159

Amortisations 0 0 0 0


283 297 264 216 267 302 257 252 2880

100

200

300

400

Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417

Equities - value of turnover (NOK billion)

40.785 41.901 43.874 44.225 45.950 52.555 48.300 48.085 49.7080

10.000

20.000

30.000

40.000

50.000

60.000

Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417

Market data - number of end users

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VPS

Fourth-quarter operating revenue for VPS totalled NOK 120 million (NOK 112 million), an increase of NOK 9 million from the fourth quarter of 2016. In the issuer area, registered securities saw an increase in the number of limited companies registered with VPS as well as an increase in the number of fixed income issues registered relative to the fourth quarter of 2016. At the end of 2017, 1,005 (999) limited companies and 3,174 (2,935) fixed income issues were registered with VPS. Revenue from the issuer area for the fourth quarter of 2017 totalled NOK 35 million, an increase of NOK 1 million from the same period in 2016. Revenue from the issuer area for 2017 as a whole was NOK 8 million higher than in 2016. The market value of VPS-registered mutual funds at the end of 2017 was NOK 598 billion (NOK 504 billion), representing an increase of 19% relative to the end of 2016. The number of mutual funds transactions totalled 0.5 million in the fourth quarter, down 30% from the same period in 2016. Revenue from the mutual funds area for the fourth quarter of 2017 was NOK 18 million, a decrease of NOK 1 million relative to the fourth quarter of 2016. Revenue from the mutual funds area for 2017 as a whole was NOK 3 million higher than in 2016. The number of transactions in the settlement area in the fourth quarter of 2017 was 4% lower than in the same period in 2016. Revenue from the settlement area for the fourth quarter of 2017 totalled NOK 28 million, in line with the same period in 2016. Revenue from the settlement area for 2017 as a whole was NOK 5 million higher than in 2016. In the investor area, the market value of holdings at the end of the fourth quarter of 2017 was 12% higher than at the end of the fourth quarter of 2016. 1.36 million VPS accounts were registered at the end of 2017, of which 1.25 million are income-earning for the investor area (the other accounts are share savings accounts which did not generate revenue in 2017 or accounts that affect income in the funds area). The total number of income-earning accounts at the end of 2017 was 15% higher than at the end of 2016. Revenue from the investor area for the fourth quarter of 2017 was NOK 34 million, an increase of NOK 8 million relative to the same period in 2016. Revenue from the investor area for 2017 as a whole was NOK 18 million higher than in 2016. Salary and other operating expenses for the fourth quarter of 2017 were NOK 16 million higher than in the same period in 2016. Salary and other operating expenses for 2017 as a whole were NOK 28 million higher than in 2016. The increase to a large extent relates to the financial sector tax, work on projects (including CSDR, share savings accounts and modernisation projects), the appointment of a new CEO and an increase in activity-dependent costs.


2017 2016 2017 2016

VPS



EBITDA 38 008 45 595 200 196 193 299



Amortisations 940 940 3 759 3 759


3.155 2.978 3.024 2.820 3.429 3.851 2.824 3.022 3.2860

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417

Number of trade transactions processed in VPS (1000)

1094 1114 1121 1131 1082 1108 1.124 1154 1248

4659 4524 4607 47004997 5075 5106

5409 5602

0

1.000

2.000

3.000

4.000

5.000

6.000

950

1.000

1.050

1.100

1.150

1.200

1.250

1.300

Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417

Number of VPS accounts and value of holdings in VPS

# income-earning accounts (1000) Holdings (NOK bill)

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Oslo Market Solutions

Operating revenue for the fourth quarter of 2017 was NOK 1.1 million higher than in the same period in 2016, while operating expenses were NOK 1.0 million higher. Operating revenue for 2017 as a whole was NOK 2.5 million higher than in 2016, while operating expenses were NOK 2.1 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 www.osloborsvps.no 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


2017 2016 2017 2016




EBITDA 439 296 1 966 1 574


Depreciations and write-downs 26 35 102 152


Operating profit (EBIT) 413 261 1 864 1 422

http://www.osloborsvps.no/

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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.

EBITDA = Operating revenue - Salary and other personnel expenses - Other operating expenses


2017 2016 2017 2016


Operating expenses


Salary and other personnel expenses 87 060 76 501 305 706 278 304

Other operating expenses 57 961 49 542 207 899 192 571


Amortisations 940 940 3 759 3 759

Write-downs 0 0 0 0

Operating expenses before capitalisation of internal

resources, depreciations and amortisations 145 021 126 043 513 605 470 875

Total operating expenses 153 243 139 218 547 960 551 881

EBITDA 106 760 107 587 481 486 430 177


Net financial items 2 583 3 498 23 366 9 507

Ordinary pre-tax profit 101 121 97 910 470 497 358 678

Tax 25 107 24 255 113 680 89 257

Earnings for the period 76 014 73 655 356 817 269 421

Actuarial gains/losses defined benefit pension plans 123 -7 665 123 -7 665

Tax-effect -31 1 916 -31 1 916

Total comprehensive income 76 106 67 906 356 909 263 672

Profit/loss attributable to non-controlling interests 2 26 23 122

Profit/loss attributable to owners of the parent 76 104 67 880 356 886 263 550


Diluted earnings per share (NOK) 1,77 1,71 8,30 6,27

Earnings per share (NOK) before amortisations and write-down 1,78 1,73 8,36 6,93

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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. Transactions between companies in the same segment are not eliminated within the segment. The segment information reported has been prepared in accordance with IFRS 8.


2017 2016 2017 2016

Oslo Børs



EBITDA 70 729 63 281 287 605 240 324





VPS



EBITDA 38 008 45 595 200 196 193 299



Amortisations 940 940 3 759 3 759





EBITDA 439 296 1 966 1 574




Operating profit (EBIT) 413 261 1 864 1 422

Other/eliminations

Operating revenues -5 601 -5 214 -21 670 -18 062

Salary and other operating expenses -3 182 -3 630 -13 386 -13 042

EBITDA -2 419 -1 584 -8 284 -5 020




Operating profit (EBIT) -2 419 -1 584 -8 284 -5 020

Total operating revenues 251 781 233 631 995 091 901 052

Total salary and other operating expenses 145 021 126 043 513 604 470 875

Total EBITDA 106 760 107 587 481 486 430 177

Total capitalisation of internal resources 0 0 0 0

Total depreciations and write-downs 7 281 12 236 30 596 77 248

Total amortisations 940 940 3 759 3 759

Total operating profit (EBIT) 98 539 94 412 447 132 349 171

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Balance sheet Current receivables totalled approximately NOK 105 million at the end of the fourth quarter. Of this, trade receivables totalled NOK 74 million, and other current receivables, including prepaid expenses and income accrued but not yet invoiced, amounted to NOK 31 million. Cash and cash equivalents held at the end of the fourth quarter totalled NOK 629 million. Current liabilities, which consist of other non-interest-bearing liabilities, amounted to approximately NOK 235 million, of which tax payable accounted for NOK 110 million.

31 Dec 31 Dec

2017 2016

Fixed assets

IT systems 25 277 41 235

Registrations 6 200 6 200

Goodwill 534 459 491 569

Deferred tax assets 49 565 53 413

Tangible assets 50 789 40 261

Financial fixed assets 8 896 18 913

Current assets

Receivables 106 612 106 524

Cash and liquid assets 629 255 603 862

Assets 1 411 053 1 361 977

Equity

Contributed equity 1 008 923 989 916

Non-controlling interests 483 459

Total equity 1 009 406 990 375

Liabilities

Pension liabilities 162 551 164 348

Deferred tax liabilities 2 377 3 204

Current liabilities 236 719 204 050

Equity and liabilities 1 411 053 1 361 977

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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 85 million in the fourth quarter. A dividend totalling NOK 172 million was paid in the fourth quarter. Cash and cash equivalents held at the end of the fourth quarter totalled NOK 629 million.

Equity

Equity amounted to NOK 1,010 million at the end of the fourth quarter, and the equity ratio was 72%.


2017 2016 2017 2016

Cash flow from

- operational activities 87 097 67 008 397 333 323 844

- investment activities 766 -1 436 -32 687 -6 819

- investments in systems and tangible assets -1 311 -3 703 -29 119 -17 650

- investments in subsidiaries 0 0 -16 206 0

- financial income 2 077 2 267 12 638 10 831

- financing activities -172 911 -112 935 -339 253 -291 645

Cash and cash equivalents at

period's start 714 303 651 225 603 862 578 482

Change in cash and cash equivalents -85 048 -47 363 25 393 25 380

Cash and cash equivalents at

period's end 629 255 603 862 629 255 603 862

Cash flow per share (NOK) -1,98 -1,10 0,59 0,59

4th Quarter 4th Quarter 31 Dec 31 Dec

2017 2016 2017 2016

Equity at period's start 1 105 821 1 034 585 990 375 1 018 111

Total comprehensive income 76 014 73 655 356 817 269 421

Dividends -172 000 -111 776 -337 535 -290 170

Purchase of own shares -766 -523 -666 -284

Acturial gains/losses in the period 92 -5 749 92 -5 749

Change in non-controlling interests etc 245 183 323 -953

Equity at period's end 1 009 406 990 375 1 009 406 990 375

Equity ratio 72 % 73 % 72 % 73 %

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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 1.2 million shares were traded in the fourth quarter, with prices from NOK 108 to NOK 125. The last registered trade in the fourth quarter of 2017 was at NOK 124.50.

Oslo Børs VPS Holding ASA – 20 largest shareholders at 12 February 2018

Dividends last five years 2012 2013 2014 2015 2016 2017

Dividend per share (NOK) 7,00 7,00 8,20 6,75 6,45 8,20

Payout ratio vs EPS adjusted for

amortisations and write-downs 113 % 111 % 111 % 92 % 93 % 98 %

In addition to dividends above, a specia l dividend of NOK 4,50 per share was paid out in August 2014.

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Key figures

The Board of Directors of Oslo Børs VPS Holding ASA Oslo, 14 February 2018

4th Quarter 4th Quarter 31 Dec 31 Dec

2017 2016 2017 2016

Financial


Diluted earnings per share (NOK) 1,77 1,71 8,30 6,27

Earnings per share (NOK) before amortisations and write-down 1,78 1,73 8,36 6,93

Change in cash per share (NOK) -1,98 -1,10 0,59 0,59

Return on equity 27,6 % 28,3 % 33,7 % 26,2 %

Return on total capital 26,8 % 27,9 % 31,2 % 24,8 %

Net operating margin 39,1 % 40,4 % 44,9 % 38,8 %

Operational

OSEBX index at period's end 814,45 683,87 814,45 683,87

Change in period 4,0 % 9,8 % 19,1 % 12,1 %

Equities - no. of transactions (1000s) 6 257 5 839 24 935 23 322

Equities - value of turnover (NOKbn) 288 267 1 098 1 044

Equities - market value listed companies (NOKbn) 2 535 2 180

No. of companies listed 214 212

Change in period 2 -1

Number of trade transactions processed in VPS (1000s) 3 287 3 429 12 984 12 251

Number of VPS-accounts (1000s) 1 248 1 082

Derivatives - no. of contracts traded (1000s) 1 844 2 296 7 530 8 855

Turnover derivatives (NOK million) 51 716 47 801 191 919 191 151

Financial market data - number of end-users 49 708 45 950

OSLO BØRS VPS HOLDING ASA PO Box 460 Sentrum

0105 Oslo

www.osloborsvps.no

Documents

Oslo Børs VPS Q4 2017 - otc.nfmf.nootc.nfmf.no/public/news/17476.pdf · 2 Main features of the fourth quarter: Continued high level of activity in both the primary and secondary