Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board
of Euronext, said:
“In the third quarter of 2019, Euronext grew its revenue by 20.4%, to €181.7m,
its EBITDA by 23.0%, to €108m, and its reported net income by 25.8%, to
€63.5m, driven by organic growth, continued cost control and the consolidation
of Oslo Børs VPS.
The diversification strategy of the Group was further enhanced with non-volume
related revenue amounting to more than 50% and covering 129% of total
operating expenses. Euronext’s Group EBITDA margin reached 59.4%, thanks to
continued cost discipline on a like-for-like basis and despite the slightly
dilutive impact of Oslo Børs VPS on EBITDA margin. Adjusted EPS grew by 15.1%
to €0.98 per share, thanks to the accretive impact of Oslo Børs VPS
acquisition coupled with organic performance.
The recent weeks were marked by the release of Euronext’s strategic plan,
‘Let’s grow together 2022’, with a strong focus on growth, innovation and
sustainable finance. The Euronext Green bond initiative was created early
November, showing the strong engagement of Euronext to accelerate sustainable
growth.”
Euronext Q3 2019 financial performance
Revenue
In the third quarter of 2019, consolidated Euronext revenue increased to
€181.7 million, up +20.4%, mainly driven by the consolidation of Oslo Børs
VPS, the contribution of Investor Services, the strong performance from
Corporate Services as well as solid performance by the cash trading and FX
trading businesses. On a like-for-like basis (excluding the consolidation of
Oslo Børs VPS, Commcise and OPCVM360 in Q3 2019), consolidated Euronext
revenue increased by +2.5% in Q3 2019, to €154.6 million.
Non-volume related revenue^6 accounted for 52% of total Group revenue in Q3
2019, increasing from 46% of total Group revenue in Q3 2018. The operating
cost coverage ratio^7 was at 129% in Q3 2019, compared to 110% in Q3 2018.
EBITDA
Operational expenses excluding Depreciation & Amortisation increased to €73.8
million, up +16.8%, i.e. €10.6 million, as a result of the consolidation of
Oslo Børs VPS, Commcise and OPCVM360 costs for €14.5 million, partially offset
by the impact of IFRS 16 (€2.7 million) and a strong cost control marked by
the decrease in professional services to €9.3 million. On a like-for-like
basis, operational expenses excluding Depreciation & Amortisation decreased by
-6.1% compared to Q3 2018.
As a consequence, EBITDA for the quarter was €108.0 million, up +23.0%,
representing a margin of 59.4%, up +1.2 points compared to Q3 2018. On a
like-for-like basis, EBITDA for Q3 2019 was up +8.6%, to €95.3 million, and
EBITDA margin was 61.6%, up +3.5 points, compared to the same perimeter in Q3
2018.
Net profit
Depreciation and Amortisation accounted for €13.1 million in Q3 2019, up
+103.3%, resulting from the consolidation of Oslo Børs VPS PPA for €3.4
million (accounted for 3.5 months in Q3 2019 to catch up two weeks of
consolidation in Q2 2019) and the adoption of IFRS 16 (see appendix). On a
like-for-like basis, Depreciation & Amortisation was up +28.5% to €8.3
million, mainly due to IFRS 16 impact.
Operating profit before exceptional items was €94.9 million, a +16.6% increase
compared to Q3 2018. On a like-for-like basis, operating profit before
exceptional items was up +7.0%, to €87.0 million.
€0.3 million of exceptional costs was booked in Q3 2019, compared to €8.8
million in Q3 2018 that resulted from the agreement for the early termination
of the trading services contract provided by Deutsche Börse AG to Euronext
Dublin, as well as advisory costs and impairments.
Net financing expense for Q3 2019 was €2.0 million compared to a net financing
income of €0.1 million in Q3 2018, resulting mainly from interest expense.
Results from equity investments amounted to €2.1 million in Q3 2019, mainly
resulting from the contribution from LCH SA, of which Euronext owns an 11.1%
stake. In Q3 2018, €0.9 million in results from equity investments was
reported.
Income tax for Q3 2019 was €30.4 million, impacted by adjustments on deferred
tax assets and liabilities. This translated into an effective tax rate of
32.1% for the quarter (Q3 2018: €22.6 million and 30.7%).
Shares of non-controlling interests mainly relating to Euronext FX (formerly
FastMatch) (97% owned), Skope^8 (60% owned), InsiderLog (80% owned), Commcise
(78% owned), OPCVM360 (60% owned) and Company Webcast (51% owned) amounted to
€0.8 million in Q3 2019.
As a result, the reported net profit share of the Group for Q3 2019 increased
by +25.8%, to €63.5 million. This represents a reported EPS of €0.91 basic and
€0.91 fully diluted in Q3 2019, compared to €0.73 basic and €0.72 fully
diluted in Q3 2018. The number of shares used for the basic calculation was
69,641,223 and for the fully diluted calculation was 69,879,574.
Adjusted EPS^9 is up +15.1% in Q3 2019, at €0.98, compared to €0.85 in Q3
2018.
In Q3 2019 Euronext generated a net cash flow from operating activities of
€75.9 million, compared to €70.8 million in Q3 2018.
At 30 September 2019, Euronext had net debt of €739.0 million and €325.1
million of cash and cash equivalents, representing a net debt on last twelve
months pro-forma EBITDA equal to 1.8x.
Q3 2019 business highlights
Listing revenue was €34.8 million in Q3 2019, an increase of +25.1% compared
to Q3 2018, driven by the strong performance of Euronext’s Corporate Services
(+€1.7 million) and Oslo Børs VPS contributing €5.9 million. On a
like-for-like basis, listing revenue increased by +3.9%.
Primary equity issuances reported an active quarter in Q3 2019 with a dynamic
trend on IPOs, despite mixed market conditions marked by macro uncertainties
in Europe, demonstrating Euronext’s strong value proposition for international
companies willing to expand their shareholder base and access international
capital markets. Euronext welcomed two international large cap listings with
Prosus, the South-African international internet assets group of Naspers, and
Titan, a leading Greek cement company. In addition, Euronext welcomed
10 SME listings on its markets. In Q3 2019, €221 million was raised on primary
markets on Euronext, compared to €175 million last year.
Activity on the secondary market remains stable compared to Q3 2018,
reflecting uncertainty around economic growth and light M&A activity. In Q3
2019, €6.1 billion was raised in secondary equity issues, compared to €6.4
billion in Q3 2018.
In total, €314.4 billion in equity and debt was raised on Euronext’s markets
in Q3 2019, compared to €239.1 billion in Q3 2018.
Corporate Services reported a strong performance, generating €6.0 million in
revenue in Q3 2019, including €0.3 million of contribution from Oslo Børs VPS,
compared to €4.0 million in Q3 2018, reflecting strong client traction across
all the services offered.
Trading
In €m, unless stated otherwise Q3 2019 Q3 2018 % var
Trading revenue 70.8 64.9 +9.0%
Cash trading 53.4 48.5 +10.0%
ADV Cash market 7,928 7,232 +9.6%
Derivatives trading 11.5 11.0 +4.0%
ADV Derivatives market (in lots) 577,448 543,740 +6.2%
Number of trading days 66 65
Spot FX trading 6.0 5.4 +10.8%
ADV Spot FX Market (in USDm) 19,375 19,397 -0.1%
Number of trading days 66 65
Cash trading
Cash trading revenue increased by +10.0% in Q3 2019, to a total of
€53.4 million, driven by the contribution from Oslo Børs VPS and an uptick in
volatility in August. On a like-for-like basis, cash trading revenue increased
by +4.4%. Average daily volume for cash trading increased to €7.9 billion in
Q3 2019, up +9.6% compared to Q3 2018^1. The average yield over the quarter
was 0.51bps, amounted to 0.53bps on a like-for-like basis^10, compared to
0.52bps in Q3 2018. The cash trading market share throughout the third quarter
of 2019 averaged 69.4% on a consolidated basis, and 69.7% on a like-for-like
basis, an increase from 65.7% in Q3 2018.
The average daily transaction value of ETFs on the electronic order book was
€227 million over Q3 2019, up +13.3% compared to Q3 2018, driven by upticks in
volatility. The total number of ETFs listed on Euronext was 1,226 at end of
September 2019.
Derivatives trading
Derivatives trading revenue increased +4.0% in Q3 2019, to €11.5 million,
compared to €11.0 million in Q3 2018. On a like-for-like basis, derivatives
trading revenue was stable. Average daily volume on individual equity
derivatives was up +1.4% at 274,352 contracts, while the average daily volume
on equity index derivatives was up +21.1% to 243,886 contracts.
Commodity products recorded a decline in average daily volumes in Q3 2019,
down -25.1% to 54,027 contracts compared to Q3 2018.
Yield on derivatives averaged €0.30 in Q3 2019, down -3.6% compared to Q3
2018, resulting from a less favourable product mix over the quarter.
Spot FX trading
Spot FX trading activity on Euronext FX spot foreign exchange market recorded
average daily volumes of $19.4 billion, flat compared to Q3 2018. Thanks to
positive foreign exchange impact and yield management, spot FX trading
generated €6.0 million of revenue in Q3 2019, up +10.8% compared to Q3 2018.
¨Investor Services
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, and Investor Services activities from Oslo Børs VPS, reported
€1.8 million of revenue in Q3 2019. The business continued to grow, benefiting
from Euronext’s financial standing, reach and expertise with asset managers
and broker dealers.
Advanced Data Services
Advanced Data Services reported revenue up +13.9% to €33.5 million in Q3 2019
due the good performance of index activities, particularly on ESG products and
the consolidation of Oslo Børs VPS. On a like-for-like basis, Advanced Data
Services revenues were up +1.1% compared to Q3 2018, thanks to the good
performance of the ESG indices business, partially offset by the decrease of
market data revenue.
Clearing
Clearing revenue was down in Q3 2019, at €13.3 million, -6.5% compared to Q3
2018, resulting from a less favourable derivatives product mix (see above).
Custody, Settlement and other post-trade
Revenue from Custody, Settlement and other post-trade activities, notably
encompassing Interbolsa and VPS activities, increased by +221.4% to €17.5
million in Q3 2019, resulting mainly from the consolidation of Oslo Børs VPS.
Both VPS and Interbolsa reported a good performance driven by an increased
settlement activity.
On a like-for-like basis, revenue from Custody, Settlement and other
post-trade was slightly up +1.0%.
Euronext Technology Solutions & Other revenue
Euronext Technology Solutions & Other revenue increased by +9.5% in Q3 2019,
to €9.9 million, as a result of good performance by hosted services and the
consolidation of Oslo Børs VPS. On a like-for-like basis, revenue was up +3.9%
compared to last year.
Corporate highlights of Q3 2019, since publication of Q2 2019 results on 31
July 2019
Volumes in Q3 2019
For the third quarter of 2019, the average daily transaction value on the
Euronext cash order book stood at €7,928 million, up +9.6%^11
compared to the same period last year.
The average daily transaction value of ETFs on the electronic order book was
€227 million over Q3 2019, up +13.3% compared to Q3 2018. The total number of
ETFs listed on Euronext was 1,226 at end of June 2019.
The overall average daily volume on Euronext derivatives stood at 577,448
contracts (+6.2% compared to Q3 2018) and the open interest was 18,431,726
contracts at the end of September 2019 (-0.2% compared to the end of September
2018).
The average daily volume on Euronext FX’s spot foreign exchange market stood
at $19,375 million in Q3 2019, stable compared to the same period last year.
Corporate highlights since 30 September 2019
8 October 2019 EGM results
In Euronext’s Extraordinary General Meeting (EGM) that took place on 8 October
2019, all the items on the agenda were approved.
These items were as follows:
1. Appointment of Nathalie Rachou as an independent member of the
Supervisory Board (97.42% votes in favour)
2. Appointment of Morten Thorsrud as an independent member of the
Supervisory Board (97.70% votes in favour)
3. Re-appointment of Stéphane Boujnah as a member of the Managing
Board and CEO (99.99% votes in favour)
4. Appointment of Håvard Abrahamsen as a member of the Managing
Board (99.99% votes in favour)
5. Appointment of Simone Huis in ‘t Veld as a member of the
Managing Board (100% votes in favour)
6. Amendment of the remuneration policy (71.91% votes in favour)