Euronext today reported its 2015 metrics which largely saw increases across key metrics when compared to its 2014 figures. Euronext Net profit for 2015 came in at €172.7 million, increasing by +46.1% compared to the prior year. This represents an earnings per share (EPS) of €2.47 basic and €2.46 fully diluted, compared to €1.69 both basic and fully diluted in 2014.
The listings business and cash trading operations benefited from overall strong trading volumes that were attributed to the volatility during 2015 that surrounded the economic uncertainties from Greece in the first half and China in Q3, as well as European Central Bank (ECB) stimulus.
The group exceeded several of its pre-IPO objectives, and plans an increased dividend to be proposed in May 2016 of EUR 1.24 per share, which represents a pay-out ratio of 50% of the 2015 net profit and is based on the number of outstanding shares during the period.
Euronext NV CEO Stephane Boujnah said in the official statement: “Our strong results in 2015 were underpinned by a supportive Eurozone economic environment; macro uncertainty has been a solid driver of volumes on Euronext’s markets. Our revenue performance, combined with a rigorous approach to cost control, allowed Euronext to achieve, a year ahead of schedule, the objectives set out at its IPO.”
“We are pleased to be in a position to improve the value we deliver to our shareholders, proposing for approval at our AGM in May the payment of €1.24 dividend per share, an increase of nearly 50% compared to last year. Trading activity in 2016 has been resilient so far; Euronext is well positioned to benefit from volatility emerging from the current environment. I look forward to presenting, in the course of the second quarter of 2016, our new strategic plan. This plan will be structured on two key pillars: revenue growth and cost discipline.”
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Changes to the group’s cost structure helped lower operational expenses by 14.3% not including depreciation and amortization, from EUR274M in FY2014 to EUR234.7 M, and which translated into a 12.1% decrease on a reported basis (compared with EUR267.1M reported for FY2014). The improvements on revenue and costs help to improve earnings before income tax amortizations and depreciation (EBIDTA)
EBITDA increased strongly in 2015 to €283.8 million, representing a margin of 54.7% compared to 41.8% on an adjusted basis (FY 2014: €197 million) and to 45.8% on a reported basis (FY 2014 reported: €225.4 million).
Derivatives, Commodities and FX
Adverse weather conditions in both Western Europe and in the Midwest Plains which created harvesting uncertainties had caused the group’s commodities business to benefit from higher volumes (+8.6%) and due to the situation in Ukraine in the first quarter of the year, yet in Q4 it slowed down as expected after the Q3 spike. During 2015, 14.3 million lots were exchanged in Euronext commodities markets, an absolute record since their start in 1994.
Derivatives trading revenue fell by -4.3% in 2015 YoY, down to to €44.5 million, related to fee cuts in the Netherlands to address competition, and market share was brought back to 60% on average. The group said its single stock futures complex had open interest at 75,000 lots at the end of January 2016, and showed improved prospects as the January open interest figures exceeded the combined open interest of AEX, BEL and PSI Index Futures for the first time.
Financial derivatives suffered from lower volumes in 2015 (-4.8% on index products, -9.9% on individual equity products), in line with volatility and competition in the Netherlands. As a result of the fee cut in the Netherlands to address competition, market share was brought back to 60% on average.
The Exchange offers six cash-settled FX contracts listed on the Euronext Amsterdam Derivatives Market, including options and futures on the EUR/USD, GBP/USD, and EUR/GBP pairs, which can be used by market participants for hedging foreign exchange risk, or to diversify investment strategies or for currency investing and arbitrage. Euronext’s currency derivatives have the benefits of being exchange-traded and therefore centrally cleared, as described on the company’s website. According to people familiar with the matter in a recent statement to Finance Magnates, the FX derivatives products represent a very small portion of the overall derivatives trading volumes and subsequent results during the 2015 year.
Euronext recently made headlines after it reported its average daily cash order earlier this month, which surged to $9486 million (€8682 million) during January 2016, or 16.7% MoM from $8126 million December 2015. The figure also represented a consecutive monthly growth after what was a largely weak Q4 in terms of volumes for Euronext. Across a yearly timeframe, January 2016’s volumes also illustrated a growth of less than 1.0% YoY from $9427 million (€8630 million) back in January 2015.