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BURSA DE VALORI BUCURESTI SA - BVB

Preliminary financial results as of December 31, 2017

Release Date: 2/14/2018 8:30:10 AM

IRIS Code: 25C0D

 

The Bucharest Stock Exchange (BVB) had one of the most dynamic years in its history in 2017, marked by the listing of four new private companies on the main market of the BVB and by the effervescence in the corporate bond segment.

The value traded on all markets in 2017 was RON 13.91 bn, up 24% over the previous year or by 28% over the average of the last 10 years. The average daily trading value of the regulated market, including initial and secondary public offerings, increased by 32% in 2017 compared to 2016, from RON 36.45 mn to RON 48.02 mn, and reached, the maximum of the last 3 years. The value traded on all markets in the last quarter of 2017 exceeded RON 3.03 bn, similar value to the previous year.

Initial public offers continued in the last quarter of 2017 by the listing of Sphera Franchise Group (25% of its shares for RON 285 mn) and Transilvania Insurance Broker (25% of its shares for RON 9 mn). In December 2017, MedLife (M) successfully completed the share capital increase operation through the Bucharest Stock Exchange. During the operation, 2,053,082 new shares were issued, with a nominal value of RON 0.25. MedLife thus managed to finance RON 65,563,435 (EUR 14.2 mn), financial resources for the implementation of the growth plans and development of the company.

The year 2017 recorded a dynamic bond sector on the BVB, consisting in the issuing of bond offers totaling EUR 279 mn, the first execution of bonds with EUR settlement, followed by their listing on the BVB, as well as the dual listing of bond issuers.

The stock market capitalization of Romanian companies listed on BVB increased by 20% in 2017 compared to 2016 and reached almost EUR 20 bn. A historic record of more than EUR 35 bn was also registered in the capitalization of all listed companies on the main market of the BVB.

The BET, expanded from June 2017 to 13 companies by inclusion of Digi Communications (DIGI), reached 7,753 points at the end of 2017, an increase of 9% YTD. The shares that investors bought in the companies included in the BET-TR index, which includes also dividends paid by the companies included in the BET index, increased by more than 19% in 2017. Nearly 24% growth was also registered by BET-XT-TR, the index that includes the most traded 25 companies listed on the BVB and the dividends granted by them.

In December 2017, the BVB Board approved the granting of Participant status in the BVB trading system on the regulated spot market and registration in the Participants’ Register for ING Bank N.V. Amsterdam Bucharest Branch.

On December 15, 2017, the Bucharest Court admitted the merger between the Bucharest Stock Exchange SA and SIBEX - Sibiu Stock Exchange S.A., the effective date of the merger being December 29, 2017. Starting with January 1, 2018, the effective merger implementation process took place. As a result of the merger, starting October, a number of 12 companies listed at SIBEX decided to list on ATS market of BVB, following the legal steps related to this process according to BVB regulations, and were admitted to trading within the Financial Instruments Section admitted to trading within BVB ATS, shares segment - AeRO Standard. Also, a number of 24 companies listed on SIBEX have been legally transferred to BVB ATS, according to the Financial Supervisory Authority (FSA) regulations, in the AeRO Base category, 18 of which are tradable.

During 2017, the BVB Group recorded consolidated operating revenues of over RON 38.05 mn (12 months 2016: RON 31.58 mn), an increase of 21% compared to the same period of the previous year, growth generated by all segments of the Group's activity:

§  The revenues generated by BVB, representing the Group's trading segment, amounted to RON 23.35 mn (excluding intra-group transactions) in 2017, up by 20% compared with 2016 (12 months 2016: RON 19.43 mn), amid the increase in traded values.

§  The local and cross-border settlement activity of the Central Depository (DC) registered an increase in 2017 due to the increase of the volumes traded on the BVB and the increase of the cross-border activity of the participants. In 2017, DC's operating revenues reached RON 13.69 mn (excluding intra-group transactions), which corresponds to an increase of 17% compared to 2016.

§  In 2017 post-trading revenues grew by 19% compared to the previous year up to RON 9,70 mn (12 months 2016: 8,12 million lei), due to the increase in trading activity of BVB, which generated a 26% increase in local settlement revenues from RON 2.23 mn to RON 2.80 mn. The 15% increase in revenues from the admission and maintenance of the participants in the clearing-settlement system of custodians, from RON 5.62 mn to RON 6.47 mn, due to the increase in the portfolio managed by DC following the registration of new financial instruments listed on BVB at the end of 2016 and during 2017 (ie MedLife, Digi Communications NV Sphera Franchise Group SA shares and bonds issued by the International Bank for Investments and UniCredit Bank, etc.) contributed also to the increase of the revenues from this segment.

§  The revenues obtained from the registry services increased by 11% compared to the previous year, from RON 3.59 mn to RON 3.99 mn, due to the increase of the income obtained from the activity of distribution of dividends and other amounts of money.

Over the same period, the Group's consolidated operating expenses increased by 13%, from RON 25.53 mn to RON 28.82 mn, generating combined a 53% advance of the preliminary operating profit to RON 9.24 mn (12 months 2016: RON 6.04 mn) and an improvement with 5 percentage points of the operating margin. Expenditure growth was driven mainly by the increase of the other operating expenses as a base effect, as the reversal of the provision for litigation recorded by the Central Depository in previous years, amounting to RON 1.35 mn generated a decrease in operating expenses in 2016, and to a lesser extent due the increase in personnel expenses and the recording of expenses for the preparation of the BVB-SIBEX merger.

The financial income of RON 3.65 mn was mainly represented by the interests generated from the government bonds and bank deposits, in RON and foreign currency, of the Group entities and the sale of available-for-sale financial assets (shares held in other stock exchanges). The unrealized exchange rate differences related to the foreign currency financial investments amounted to RON (1.15) mn, (2016: RON 0.57 mn, positive exchange rate diff.)  were recorded due to the appreciation of RON against the USD, partially counterbalanced by the depreciation of the RON against EURO. Thus, in 2017, a net financial profit of RON 2.51 mn was recorded (2016: RON 3.04 mn).

The preliminary consolidated net profit for the year 2017 reached the level of RON 14.68 mn (12 months 2016: RON 7.76 mn), up by 89% compared to the previous year, 88% generated by the Group's trading segment, which increased from RON 6.61 mn to RON 12.88 mn. The profit attributable to the shareholders of the parent company was RON 14.20 mn (12 months 2016: RON 7.59 mn). Without taking in consideration the merger impact, BVB recorded a preliminary individual net profit of RON 9.90 mn (2016: RON 7.50 mn), an increase with 32% and a 100% achievement of the 2017 Budget. 

As a result of the merger by absorption between BVB and SIBEX, the share capital of the BVB increased by RON 3,750,480, respectively 375,048 shares at the nominal value of RON 10 per share. As the absorption of SIBEX was done by exchange of shares (the exchange rate being 0.01200795 SIBEX shares for 1 BVB share), the calculation of the merger records resulted in a share premium amounting to RON 6,598,896, as a difference between the value of the shares issued by the BVB at nominal value and the value of the BVB share at the effective date of the merger of RON 29.6 / share, representing the equivalent of the consideration paid by the BVB.

The fair value measurement at the effective date of the merger (December 29, 2017) of both, the assets and liabilities taken over and the consideration transferred (BVB shares) generated an income from a gain from bargain purchases of RON 2.88 mn, in accordance with the provisions of IFRS 3 "Business combinations".

The use of the tax loss carried over by SIBEX, as a result of BVB-SIBEX merger, and the compensation of the fiscal profit computed for the BVB 2017 result before the merger, led to a neutral tax result and a corporate income tax impact of RON 0.94 mn, compared to an expense of RON 1.32 mn registered by the Group in 2016, and to a revenue from deferred income tax of RON 0.33 mn., based on the fiscal result carry over and unused at the end of 2017.

 

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

 

 

2017 (prelim)

2016

Change (%)

4Q 2017 (prelim)

4Q

2016

Change (%)

 

 

 

 

 

 

 

Operating revenue

38.05

31.58

21%

8.85

8.28

7%

Operating expenses

(28.82)

(25.53)

13%

(7.93)

(6.38)

24%

Operating profit

9.24

6.04

53%

0.92

1.90

-52%

Net financial revenue/(expenses)

2.50

3.04

-18%

2.06

2.01

2%

Gain on bargain purchases

2.88

-

-

2.88

-

-

(Losses)/Gains from the impairment in associates

(0.03)

-

-

(0.02)

-

-

Profit before tax

14.59

9.08

61%

5.84

3.91

49%

Profit for the period

14.68

7.76

89%

7.31

3.47

110%

Total comprehensive income

15.52

7.72

101%

7.89

3.63

117%

EPS attributable to owners (RON/share)

1.7600

0.9888

78%

0.8600

0.4188

105%

 

 

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

 

2017 (prelim)

2016

Change (%)

2017 (prelim)-

without merger impact

2016

Change (%)

4Q 2017 (prelim)

4Q

2016

Change (%)

Operating revenue

23.69

19.75

20%

23.69

19.75

20%

5.14

5.26

-2%

Operating expenses

16.03

14.04

14%

15.69

14.04

12%

4.31

3.87

+11%

Operating profit

7.66

5.71

34%

7.99

5.71

40%

0.83

1.39

-40%

Net financial revenue/(expenses)

3.43

3.32

3%

3.43

3.32

3%

1.95

1.69

15%

Gain on bargain purchases

2.88

-

-

-

-

-

2.88

-

-

(Losses)/Gains from the impairment in associates and subsidiaries

(0.06)

(0.27)

-79%

(0.03)

(0.27)

-89%

(0.04)

(0.15)

-70%

Profit before tax

13.92

8.76

58%

11.40

8.76

30%

5.62

2.93

92%

Profit for the period

14.25

7.50

90%

9.90

7.50

32%

7.12

2.50

184%

                     

 

 

The Preliminary Financial Report as of December 31, 2017 is available for shareholders, investors and general public as of February 14, 2018, 8:30AM local time. The printed version shall be 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.ro, in the “Investor relations/Financial figures/Financial statements” section, at http://www.bvb.ro/InvestorRelations/FinancialFigures/FinancialReports.

 

 



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