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

Hello. Welcome to the Bucharest Stock Exchange video conference for the presentation of the 2025 preliminary financial results. As an introduction, my name is Alexandru Stefan, and I'm Managing Investor Relations for the Bucharest Stock Exchange. Here with me are also Mr. Remus Vulpescu, CEO of the Bucharest Stock Exchange; Mr. Razvan Szilagyi, CFO of the Bucharest Stock Exchange; as well as Ms. Cristina Radulescu, Manager for Financial Controlling. We will start the video conference with a few words from our CEO, Mr. Remus Vulpescu. Remus, please.

Thank you, Alex. Hello, everyone. Very good to meet again. We like very much how the year 2025 has ended and also how we see [ Audio Gap ]. We believe the market has a lot of strength [Technical Difficulty] the volumes as well as the trends. We like how the Ministry of Public Finance keeps going forward with issuing Fidelis, which is a gateway for the retail investors to the stock market that we operate. We keep building the market and later on this year, but probably in the first half, we will launch the growth market on the multilateral trading system that we also operate. we keep building the CCP. And we have obtained confirmation and completion of the file, which is the first early on in January from the regulatory authorities. We are optimistic and confident that we will also get a good assessment on the documents in the file on the processes, on the technical system that CCP operates. So we actually are quite confident that CCP will also be authorized this year. After authorization, there will be a time for operationalization. And after that, the CCP will go to the market. No dates for completion of these stages just yet. But whenever they will be available with a high degree of confidence, we will probably announce the market in order to start as well preparing for the derivatives market that CCP will actually enable. Looking forward to answering your questions as well after the presentation. I will pass on to Alex again to keep going with the presentation.

Thank you very much. We will have the presentation in just a few minutes. I will give the floor also to Mr. Razvan Szilagyi, our new CFO, for a few words.

Thank you very much, Alexandru. Good afternoon, and welcome to our conference. I will cover very briefly 4 topics, a brief look at quarter 4, 2025, then a quick look at the entire year 2025 and then a few words about, I would say, important events around the closing of the year, namely the reevaluation of our participation in CCP.RO and also the process of increasing the share capital of Bucharest Stock Exchange. [indiscernible] good so we continue to benefit of high trading volumes that we've seen in the market. All 3 quarters growth, operating revenues, operating revenues of over [ RON 1 million ], which generated a net profit if we exclude the influence of the revaluation of our participations is generated to a bit over RON 1 million net profit in each and every month. So considering this if we get to the rest of the year, we are closing the year with a net profit of RON 8.5 million, which is also influenced by the revaluation of the participation in CCP. In a nutshell, our participation if we look at the book value is around EUR 15 million. The revaluation report at end of 2025 shows a depreciation of 26%, which is roughly EUR 4 million. As an impact on the financial results. It means that we added an extra depreciation of RON 1 million to our financial statements, and this results in the net profit of RON 8.5 million. As an explanation, we already recognized in the previous quarters depreciation of our participation. So the final adjustment is of RON 1 million, which leads to a total depreciation recognized within 2025 of a bit more than RON 7 million. And last topic, the share capital increase, as you know, our shareholders approved starting of the process to increase our capital. We had, in the calendar, let's say, 2 steps. One was offer to existing shareholders is finalized recently. And we have seen subscription of over 77% of the possible shares to be issued. As a result, the Board of Directors decided not to continue with the second phase. So basically, we will do the next necessary steps in order to close the capital increase, which assumes an audit process and in the end, an approval from the financial supervisory authority. So only after the steps will be completed, we can say that we have finalized share capital increase. Otherwise, I would say that we are on the right track according to the plan calendar. So this is my brief presentation. Of course, we'll have time to answer your questions in the end.

Okay. I will share a few words about our stock price. So over the course of 5 years, we are up 99%. We are underperforming the main market index bet. It is to be mentioned that from the start of the year, the share price has increased by 10%. In terms of the shareholding structure, as you know, this is very stable. We have a number of -- a total number of 6,600 shareholders. In terms -- some words about the trading evolution in the last quarter of the year. As was noted also before me, we had a robust fourth quarter of the year. In terms of the trading value for equity-like instruments, the turnover was up 40%, compared to the same period of the previous year. In terms of only the regulated market and regular transactions, we registered also an increase -- a comparable increase of 34%. In terms of the fixed income instruments, we registered a slight decline of 7%, compared to the same period of the previous year. Nevertheless, the entire trading value for offers, yes, was up 17%, compared to the previous year. And the market has performed well as well with an increase of 23% compared to the last quarter of the previous year. And just to touch again maybe on the key events that happened in the previous quarter. We had a total liquidity of RON 12.3 billion, which is 9% up, compared to the previous period of the same year. The equity segment was up 39%. We had a very good evolution of the Cris-Tim Family Holding IPO, which was finalized successfully with the company raising a value of RON 454 million during the IPO. And the entire offer was oversubscribed 5x while the retail branch was oversubscribed by 40x. At the same time, we had also some listings of bonds. I will name BCR bonds. I will name the Romgaz bonds that were listed part of the Neptun Deep project. The Ministry of Finance continued its monthly issuances of government bonds with a value of RON 5 billion. Also, the main market index ended the quarter on a strong footing. The year-to-date performance was 46%, which was the best evolution of the bet index in the last 16 years. Some expectations regarding the first quarter of 2026. We have a robust start of the year with the main market index up 18% year-to-date. Again, this is the best start of the year since January 2012. In terms of market liquidity, this is quite abundant and has been up 43%, compared to the previous year. We are currently having an average daily trading value of RON 257 million. We have a new member in terms of the trading participants. This is Raiffeisen Bank that rejoined as a member, which plans to launch a digital interface for the brokerage services. Also in terms of offers, we have ongoing IPO of Electro-Alfa International. And following the offer period, we have seen a new record for the IPO market at BVB. The retail tranche of the offer was oversubscribed by Citibank. The entire offer has been of RON 584 million. And the IPO closed early after only 5 days with the final offer price determined at the top of the price range. So again, we are having signals from the market that is strong interest for successful companies with good growth prospects. Also, the Ministry of Finance will continue the Fidelis government bond issuances on a monthly basis. As Razvan already mentioned, the share capital increase has been completed and is currently pending audit as well as FSA authorization. Also, BVB participated in the share capital of the International Stock Exchange of Moldova with an amount of EUR 400,000. I will now give the floor to my colleague, Cristina Radulescu, for the presentation of the financial results.

Thank you, Alex. So as my colleagues mentioned, Q4 2025 was a strong one with strong development at individuals, but also at consolidated level. In terms of operating revenues on the Trading segment, we had an intense trading activity, but also higher public offers, 31%, compared with 2024 and also supported by the increases recorded on market data and issuers fees revenues. Post-Trading and Registry segment was also positively influenced by the trading segment -- trading activity, but also by the increases in portfolio values and the issuance operations provided. Operating expenses increased at group level due to the cost incurred by CCP related to the compensation system and third-party services and supplementary personnel necessary for the authorization and operationalization process. As already mentioned, we have valued our participation in CCP at the end of the year. And the result was that in Q4, we recorded an additional impairment of RON 1 million. Operating and net financial performance was improving in Q4 2025, compared with the same quarter of previous year at both individual and group level. Moving on to the year-to-date figures. In 2025 at individual level, operating revenues increased by 4%, reaching RON 43.5 million, directly impacted by the trading revenues, which increased by 8% or RON 2 million, compared with 2024, driven by share transactions, boosted by the institutional portfolio rebalancing, index providers adjustments and several significant deals made in 2025, together with the impact from higher public offers. The positive impact was sustained by issuer fees revenues, which increased by 6%, exceeding RON 6 million and market data revenues up 11%, reaching the value of RON 5.5 million. Operating expenses at individual level remained slightly at the same level, compared with the previous year. The increase in personnel expenses due to higher employees mainly were compensated by the decreases reported on third-party services and other operating expenses. We will enter in detail in the next slides related to them. Operating profit reaches RON 13.9 million, 13% compared with 2024 and our expectation by 115%. Financial result is influenced by the amount of RON 7.6 million recorded in 2025 additional impairment related to BVB's participation in CCP. We closed the year with a preliminary profit of RON 8.5 million. Moving on to the consolidated figures. Operating revenues increased at group level by 7%, reaching RON 84 million. We had positive developments recorded in all segments, active segments of the group, which were directly impacted by the liquidity on the market and also the increase in value of the companies listed. Operating expenses reached RON 78.5 million at the group level and the increase of 15% or RON 10 million is mainly due to the new cost recorded by CCP related to the process of authorization and operationalization required. Operating profit at consolidated level is RON 5.67 million, almost half compared with the previous year, but this incorporates the impact of operating expenses recorded by CCP. Financial results is a profit of RON 5.3 million and comes mainly from the interest income recorded by the group companies received for the liquidities. Preliminary net profit at group level reached RON 9 million. A few words about the trading revenue segments financial performance. So trading segment represents 51% of the group operating revenues out of which trading revenues represent 68%. Post-trading segment represents 33% from the total revenues and had a margin of 40%, reaching RON 27.5 million in revenues, a 12% increase compared with previous year. Registry segment reaches RON 13.6 million in revenues in 2025, up 10% compared with previous year. Regarding the evolution of operating expenses at BVB individual. As I mentioned, the level remain constant compared with previous year, but it was a compensation between the increase in 4% personnel expenses driven by higher average number of employees and the annual adjustment of the salaries according to the Personnel Remuneration and Retention policy. Together with a decrease in 5% compared with 2024 in third party services expenses up to RON 3.7 million, here we have a base effect from some one-off services related to BVB ongoing projects as well as some one-off expenses related to the headquarter relocation. Other operating expenses decreased by 5% to RON 9.6 million due to lower marketing and protocol expenses alongside with some one-off expenses related to the headquarters relocation. The decreases had also -- I'd like to mention that the decrease was part of some efficiency measures applied during the year in order to optimize the cost spending. Related to the operating expenses evolution at group level, consolidated operating expense increased by 15% or RON 10 million as I mentioned earlier. This increase is given mainly to CCP increasing cost related to higher third-party services for the compensation system and functional audits and specific consultancy services, higher operating expenses primarily due to depreciation and infrastructure, hardware and software equipment, increases in IT maintenance costs and one-off expenses related to the termination of lease contracts. Also there was an increase in personnel expenses due to the completion of personnel scheme in order to meet the authorization requirements. Part of this consolidated expenses increase is also due to the personnel expenses increase at group level, except the one mentioned at CCP, we had the impact from the annual salary adjustment applied at group level. Regarding the financial position, assets increased by 6% at individual level up to RON 139 million, mainly coming from the noncurrent assets following capitalization of some software developments for the trading systems. We haven't recorded our participation in Moldova Stock -- International Stock exchange of exchange of EUR 400,000 and also the participation with the CCP share capital increase RON 15 million. Of course, we have the impact on our investment in subsidiaries of recorded impairment to CCP in 2025. Current assets decreased by 10%, but mainly due to the decrease in liquidities used to participation in CCP share capital increase. At group level, total assets amount to RON 259 million, increase of 8% compared with previous year, growth driven mainly by higher current assets and improved liquidities. Equity amount RON 200 million impact from the current year result, but also to the additional contribution for minority shareholders in CCP. That's it from me. If you have any questions for us, please let us know.

Thank you, Cristina. As Cristina mentioned, we will now give the floor for questions.

I believe dividends for 2025 will be proposed to the shareholders after having more clarity on further investments that may be needed in order to advance the current projects that you're already aware of. So I don't have a figure now. I'm not sure if [indiscernible] has any.

No.

[indiscernible] on the annual financial statements.

We do not expect events that would prevent us from proposing dividends to be paid for 2025. So that's most I can say right now.

Thank you. Is there any other question? If needed, we can answer Romanian. I see there is one more question.

As a matter of fact, I believe that we will see at least a couple.

We are encouraged by the Electro-Alfa International IPO, again, more than RON 580 million, significant for the start of the year. Given the current valuation of the market, it is possible to see IPOs of similar sizes more frequently.

I would also add a bit on this. I don't know about large IPOs. But based on the discussions that we had with the market participants, there are a number of discussions, I would say, mainly around potential midsized IPOs. But of course, we will see how many of these will come to reality.

If any changes in the fee schedule will occur, they will be announced in advance to the market. I can assure you of that. At this time, I cannot confirm or exclude changes -- material or immaterial changes in our fee schedule for market participation. So all the information will be released officially when available.

Okay. I will ask again if there is any other question. If that is not the case -- we have one more question.

Thank you for the question. Bucharest Stock Exchange will be a Software-as-a-Service provider. So therein lies also the answer to your question about monetization. It will be a typical Software-as-a-Service contract between the Bucharest Stock Exchange and the International Stock Exchange of Moldova. That's going to be the official name. And so far, if goes very well, the International Stock Exchange of Moldova works for obtaining the authorization from the local national authority. There is staffing already ongoing. There are trainings already ongoing. We will develop that. And also this year, we expect to see significant developments in this project as well, which I have not mentioned because the Bucharest Stock Exchange is a minority shareholder there besides being the provider of Software-as-a-Service, of course. So that is not a subsidiary of the Bucharest Stock Exchange. But thank you for the question. And thanks for the opportunity to tell a few words about this. When we do look at other markets, we also do look at regional cooperation, and we take this very seriously, whether or not cooperation by several stock exchanges in Central Europe can provide products, value to the capital markets, to the savings and investment union, to the future of the European capital market. We are present in all the significant initiatives, and we will definitely be involved in those significant developments in our region because we are a market that is visible in the region and the Bucharest Stock Exchange is determined to build further on the regional leadership that I personally believe very strongly it can provide. Thank you for the question.

Okay. So thank you for participating in the video conference call presenting the preliminary financial results for 2025. You will find the presentation from today on our Investor Relations section of our web page. Also, if you have further questions, please don't hesitate to reach us over e-mail or over phone. Thank you again.

Thank you. Have a nice day.

Thank you. Goodbye.

Have a good day.

You too.