Bursa de Valori Bucuresti SA (BVB) Earnings Call Transcript & Summary

Okay, perfect. Thank you very much. So we will start the presentation of our full year 2023 preliminary financial results. As per usual, we will be recording this presentation. So yes, today, we have Mr. Virgil Stroia, our CFO; Ms. Cristina Radulescu, our Senior Financial Controller; myself, Remus Danila, Head of Investor Relations. Adrian Tanase, our CEO, will be joining us in 10 to 15 minutes as he [indiscernible] outside the office. So I'll start by sharing our presentation. So a quick update on the BVB share in the last quarter. So what is very, very, very relevant here, we have continued, let's say, our outperformance compared to the broader market. BVB share price reached a new high during the Q4 of last year with a promising high with RON 72. Now we're trading around probably RON 66. In terms of ownership structure, we have seen fairly minor changes during the quarter. There was a slight decrease in the Romanian institutional investors compensated by a 1% increase in the foreign institutional ownership. Also, we have seen again a significant increase in the number of shareholders. Currently, we have close to 6,000 shareholders. As per usual, again a very brief look on the Q4 number. So we have had a very strong operational performance, both stand-alone and consolidated level. The main driver was the high liquidity in the market. The volume growth almost doubled compared to Q4 2022. And also, at the Central Depository level, we have seen a 50% increase in Q4 for revenues, again aligned pretty much with the trading volume, higher settlement fees, higher fees for OTC trades. So yes, the performance was strong across the board. Looking more in the volume. And here again, we are focusing on the top left chart [indiscernible] for shares. We have seen a significant increase compared to previous quarter. But the previous quarter included the Hidroelectrica trade. But if we compare with the previous quarter here, we see the volumes significantly higher, so about RON 5 billion compared to an average of RON 3 billion quarterly. Again, our financial performance is strongly correlated in the value in the market. So hopefully, this RON 5 billion quarterly volume stick. Then obviously, let's say, the pace for our financial performance will be higher than we could see in the previous years. Also, a quick update on the main events which took place in Q4 but also some update on some recent developments in Q1. So since November last year, we have a new Board of Directors. So we had the election in November. Five new Board members out of the nine are new Board members. And also, the new Board were authorized by the regulator. The new Board was approved by the regulator, in fact, rather earlier, in fact, last week. So they are all authorized and in place. Also, we have an important update regarding the derivative markets. The regulator also approved the -- or authorized the derivative markets. The authorization process is in the final milestone. Adrian will give you more insights into the CCP authorization process. Regarding the primary market, we see several directions there. On one hand, we see the government looking at potentially [indiscernible] in IPOs. And this is part of the conditional requirement for the recovery and resilience package from the European Union [indiscernible] end of 2026. And we see already being organized [indiscernible]. So hopefully, we will have concrete information in the coming quarters. Also, for primary markets, we see rising interest in terms of bond financings. So here, we had in January, a fairly large, almost EUR 80 million municipal bond issuance from the Cluj county. And also, at the end of [indiscernible], the sector is expected to look as well for financing through the bond market later in the year. And so we have Romgaz, which announced EUR 500 million of bond issuance towards the end of the year. In terms of private companies, we hear the short term is not very, let's say, clear. So we don't have a very strong pipeline in the short term. Again, there are many discussions which we hear. We hear the brokers and the banks domestically [indiscernible] targets. And we see a strong interest among the companies to look for the potential of the stock exchange. So we are optimistic that until the end of the year, we will see significant activity on the primary market among local privately owned companies. Also, what we see as a very interesting development starting with November, December last year and accelerating in this quarter is the involvement of the local authorities in the implementation [indiscernible] for development of the capital market. Of course, there are many main topics in the strategy [indiscernible] 2023. What is very important to mention here is that we see progress in terms of updating and modernizing the legislation for capital markets [indiscernible] with the process of raising capital for already listed companies. So we see the regulator [indiscernible] working on updated [indiscernible] we hope will contribute to make the market even more and more friendly for investors and each of us. Regarding the MSCI, so this has been a very big topic for a number of years already. So right now, the potential or the view we have regarding the potential increase of the watchlist in 2024 is not very clear and very obvious. The liquidity has certainly improved. So we see good volumes in the market. On the other hand, looking at the methodology, the liquidity we have is spread quite broadly across many issuers in the market. We have seen a lot of small, mid-cap or, let's say, even the large caps creating very good volumes in the last quarter. On the other hand, MSCI is looking at the largest cap, so we have Banca Transilvania, Petrom, Romgaz and Hidroelectrica. And there, the liquidity is not constant or it doesn't always see the [indiscernible] that we're looking for. So we're still working hard with the local stakeholders and foreign investors about it. And we hope that it will bring the good news, but the picture is not 100% clear. So Adrian, you're ready for a quick CCP updates?

Yes. So we have achieved the remaining requests on the regulator, the ESMA. The [indiscernible] colleagues has been called already, have participated in one of their meetings in December. And we have two, three big requests remaining, and we are working on them. One of them, we already have applied, the National Bank of Romania, to be notified as a SaFIR system in terms of settlement of the trades, [indiscernible] actually one of the guarantees of the margins. This is one. So the application of [indiscernible] National Bank has been already done at the beginning of January. And we are waiting for this decision from National Bank of Romania. And then we have to repeat some tests, technical tests and do audit them. And this is already -- will be initiated very soon. And we have to change our risk models according with the feedback we received from our [indiscernible] colleagues, from ESMA especially. And we have to audit those -- again those risk models. And this is an ongoing process. We have contracted already the auditor. Pricewaterhouse is our auditor and probably will be finished by mid of March. So this is the current status. We are working heavily on the last three requests from the authorities. And they have just put into public debate the proposed programs that we have to respond to their request by 12 months. And we are -- yes, we are considering this as being too long, the period. And we have already sent feedback to the authorities that 6 months is okay, it's enough. And hopefully, they will agree and we will have the file declared complete soon. So we have -- yes, we are remaining with the timeline that this year to -- so by mid of -- or around mid of the year to be -- to receive the authorization and to become operational in the CCP in the second half of this year. And in the meantime, probably, as Remus has mentioned, we have received authorization condition by the signing with the authorities before the derivatives market by the FSA.

So Cristina will give you more and more details about the results.

So regarding the preliminary financial results of 2023, at the individual level, operating revenues exceeded RON 50 million, over EUR 10 million, 55% [indiscernible] 2022, mainly led by [indiscernible] increase in trading volumes in the second part of the year. Increases were recorded on the other segments such as revenues from issuance fees, higher by 10% [indiscernible]. Operating expenses of almost RON 28 million are up 22% compared to 2022 that is basically the effect from the inflation increase, mainly in personnel and other operating expenses as well as additional expenses related to [indiscernible]. Operating profit of RON 22.6 million with an increase of RON 12.7 million compared with 2022 [indiscernible]. Net profit of RON 22 million, double compared with 2022 with a net margin of 44%, up 10%. If we look at the fourth quarter results [indiscernible] was an exceptional one. If we exclude the one-off revenues [indiscernible], operating revenues reported an increase of 21%, driven by higher base revenues on share [indiscernible]. Operating expenses decreased [indiscernible] compared to previous quarter and determined by higher operating [indiscernible] expenses such as [indiscernible]. At a consolidated level, operating revenues reached the highest value of almost RON 83 million, up 46% compared to 2022 due to trading and post-trading segments significant increase [indiscernible]. Operating expenses increased by 24%, up to RON 59.4 million compared with the previous year, impact of inflation increase at the consolidated level [indiscernible]. A significant increase in operating profit of RON 14.5 million over the previous year up to RON 23.4 million. Financial results increased by 84% year-on-year, up to RON 6.6 million based on higher net interest income and other financial income. Net profit is at such a high level of RON 25.6 million, or EUR 5 million, RON 15.1 million higher compared to 2022. Looking at the breakdown of segments compared with 2022. Trading segment had the highest increase of group revenue. It represents 61% of the [indiscernible] revenue. The post-trading segment had [indiscernible] an increase of RON 7 million, up to RON 22.3 million, increase based on revenues resulting from the transactions [indiscernible]. Registry segment revenues had also an increase of 13% [indiscernible]. Some more details here on operating expenses at the individual level. The increase of 22% was increased partly by personnel expenses higher by RON 2.2 million for [indiscernible]. And [indiscernible] expenses increased over RON 3.5 million, which is the inflation impact was affected by higher marketing and promotional expenses [indiscernible] related to [indiscernible] project and [indiscernible]. At consolidated level, an increase of 24% is influenced obviously by the [indiscernible] Regarding the financial position, at the end of 2023, at the individual level, there is an increase of 20% or RON 145.4 million. The main variations are being generated by the recognition of [indiscernible] with impact on right-of-use asset and lease liability of about RON 9 million and the improvement [indiscernible]. Also, the increase in current assets, so it's mainly [indiscernible]. At consolidated level, total assets are RON 237 million, 20% [indiscernible]. There is the same impact of recording the [indiscernible] at group level and [indiscernible], together with the [indiscernible] equity increased at consolidated level basically by 15% at RON 178 million, [indiscernible], share option plan benefits and increase in minority interest value [indiscernible] by minority shareholders [indiscernible].

Thank you.

Thank you. Remus already mentioned about the [indiscernible].

So if you have any questions perhaps? So nobody has any questions or clarifications? And in this case, thank you very much for joining us. And we'll speak again in 3 months in a new location. Have a nice day.

Thank you.

Thank you.