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As its merger with the London Stock Exchange continues to inch forward, Deutsche Börse AG published its results for the second quarter of 2016 on Wednesday.
Consolidated net revenue rose 10 per cent compared with the same quarter of the previous year, to €600.7 million (Q2 2015: €547.1 million). Besides consolidation effects, the increase was largely driven by positive developments in index derivatives and in the commodities business within the Eurex segment; in Clearstream’s international business, as well as in the index business in the Market Data + Services segment.
At €275.8 million, and despite consolidation effects, adjusted operating costs were only up slightly year-on-year (Q2 2015: €273.4 million). Adjusted net profit for the period thus amounted to €218.5 million (Q2 2015: €180.8 million). Basic earnings per share, adjusted for non-recurring effects, increased to €1.17 (Q2 2015: €0.98).
During the quarter under review, Deutsche Börse sold International Securities Exchange Holdings (ISE) to Nasdaq, Inc., for cash consideration of US$1.1 billion. Accordingly, the consolidated income statement was prepared based on continued operations, excluding ISE’s contributions from the results for the reporting period and the previous year’s figures. This also applies to the post-tax book gain, realised upon the sale closure, of approximately €565 million.
Gregor Pottmeyer, Chief Financial Officer of Deutsche Börse AG, commented on the quarterly results:
Once again, the Eurex segment generated very good results, contributing to the Group’s double-digit net revenue growth. Thanks to targeted cost-containment measures, operating costs (excluding non-recurring and consolidation effects) were slightly lower. We were thus able to fully leverage the scalability of our business model: adjusted net profit rose by 21 per cent, outgrowing revenue. On this basis, after the first six months we are fully on track to achieve our full-year forecast.
Pottmeyer continued: “The sale of the ISE led to a cash inflow of around €1 billion during the second quarter. We will use a part of these funds to fully redeem outstanding private placements with an aggregate volume of approximately US$290 million. We have not yet decided upon the use of the remaining funds.”
Results Q2 2016
Deutsche Börse Group’s net revenue rose by 10 per cent, compared to the same quarter of the previous year, to €600.7 million (Q2 2015: €547.1 million), mainly driven by strong business development in the Eurex segment. Specifically, traded volumes in Eurex index derivatives, and in power and gas products at the European Energy Exchange, increased significantly. Moreover, international business in the Clearstream segment and index business in the Market Data + Services segment both developed positively.
Net revenue also rose due to consolidation effects, including from the 360T® foreign exchange platform, which has now been consolidated since the fourth quarter of 2015. Net interest income from the banking business – which is included in net revenue – showed a marked increase to €21.1 million (Q2 2015: €14.1 million). Since 1 May 2015, net interest income has included interest income and expenses pertaining to the Eurex segment, on top of income from the Clearstream segment, which the clearing house generates by investing cash collateral posted by its clients.
At €316.3 million, operating costs were up year-on-year (Q2 2015: €285.2 million), largely due to higher non-recurring effects which rose to €40.5 million (Q2 2015: €11.8 million). The increase was largely attributable to higher costs in connection with mergers and acquisitions, restructuring costs, as well as litigation provisions. Adjusted for these non-recurring effects, and despite consolidation effects, costs were up only slightly, to €275.8 million (Q2 2015: €273.4 million). The result from equity investments totalled €–5.4 million in the second quarter (Q2 2015: €–4.1 million); the net figure included an impairment charge on an investment. Adjusted for this special effect, the result from equity investments was €0.7 million (Q2 2015: €–0.2 million).
Deutsche Börse Group’s consolidated earnings before interest and taxes (EBIT) amounted to €279.0 million during the period under review (Q2 2015: €257.8 million). Excluding the non-recurring effects mentioned above, consolidated EBIT was €325.6 million, up 19 per cent year-on-year (Q2 2015: €273.5 million).
The Group’s financial result was €–17.8 million (Q2 2015: €–13.9 million). The Group’s adjusted effective tax rate for the second quarter of 2016 was 27.0 per cent (Q2 2015: 25.9 per cent), in line with expectations. Accordingly, the net profit for the period attributable to shareholders of Deutsche Börse AG in the second quarter of 2016 stood at €183.5 million (Q2 2015: €168.2 million). Excluding the non-recurring items outlined above, the net profit for the period was €218.5 million (Q2 2015: €180.8 million). Basic earnings per share, based on the weighted average of 186.8 million shares outstanding, amounted to €0.98 (Q2 2015: €0.91). Adjusted for non-recurring effects, basic earnings per share were €1.17 (Q2 2015: €0.98).