Integration update
2001 has seen significant progress in Euronext's integration and business development culminating in the IPO, which was completed in early July. The main milestones achieved include:
- January: Clearing 21 ® , the state-of-the-art clearing software, launched for Euronext Paris
Launch of the NextTrack segment for Exchange Traded Funds (ETFs) - February: Euronext Amsterdam and Brussels clearing activities merged with Clearnet
- April: New Euronext version of NSC equities trading system launched at Euronext Paris
- May: New Euronext version of NSC equities trading system launched at Euronext Brussels
- May: Major chapters of Euronext single trading Rule Book agreed by regulators
- June: Signed memorandum of understanding for merger with BVLP Portugal
First half Transfer of IT activities in Euronext Brussels and Amsterdam to Atos-Euronext - July: IPO completed
Reached agreement with Euroclear for the merger of Dutch and Belgian settlement organisations and Euroclear/Clearnet agreement: Euroclear taking a 20% stake in Clearnet. - September: Euronext launches Winefex ® Bordeaux, futures contracts for en primeur fine Bordeaux
red wines
HEX (the Helsinki exchange) and Euronext sign cross-membership and cross-access agreement for cash trading. - October: NSC equities trading system successfully launched at Euronext Amsterdam. As a
result, all members of Euronext's cash markets trade according to the rules of the
Euronext Market Model
The board of Liffe, the London derivatives exchange, agrees on the terms of a recommended cash offer by Euronext November: Launch of Powernext, the new power market based in Paris
Start of screen trading pilot project at the Amsterdam derivatives markets
Euronext shares included in SBF120 and SBF250 indices - December: Euronext and BVLP reach agreement on the terms of a merger, which was completed in January 2002.
(in € million) 2001 2000
| 2001 | 2000 unaudited (pro forma) | Change % | |
| Revenues | 697.9 | 692.2 | +0.8 |
| Cost and Expenses | 579.9 | 530.8 | +9.2 |
|
Primary
expenses after depreciation and after |
524.3 | 457.6 | +14.6 |
|
EBIT
before goodwill amortisation, after |
173.6 (1) | 234.8 (2) | -26 |
| Net Profit before goodwill amortisation | 146.4 | 145.9 | +0.3 |
| Net Profit (after goodwill amortisation) | 127.33 | 127.03 | +0.2 |
(1) Exceptional items are mainly IPO costs (€ 16.1 million, part not charged to equity) and an early retirement plan for Paris employees (€ 29.5 million).
(2) Exceptional items were merger costs (€ 18.5 million) and provisions for migration and litigations (€ 70 million).
Cost structure
Total expenses increased by 9.2% (€ 49.1 million); however, after retreatments of exceptional items partially linked to the migration in 2000 and 2001, primary expenses after depreciation increased by 14.6% (€ 66.7 million), to € 524.3 million.
This increase is in part due to GL Trade's growth (€ 20 million). The remainder is attributable to the substantial specific integration efforts deployed in 2001, which do not reflect a durable shift in our cost structure. These costs include € 14 million of consultancy fees linked to the launch of the migration and € 14 million for the two-year amortisation of Clearing 21 ® , according to Group accounting policy.
Cost synergies from the harmonisation of systems will start showing in 2002. The group's total headcount, which was stable in 2001, will decline by 5% by the end of 2002. IT costs should also decrease substantially as a result of synergies kicking-in during 2002.
Segmental reporting
For the year 2001, Euronext publishes for the first time its full accounts in the form of a segmental breakdown. This makes it more straightforward to match operational costs with the revenues generated for any given activity.
In EUR Million
| Cash Trading | Listing | Derivatives Trading | Clearing | Settlement & Custody | Information Services | Sales of Software | Other Income | |
| Segment Revenues | 211.6 | 47.3 | 106.3 | 128.7 | 32.8 | 55.9 | 101.6 | 13.5 |
| External Sales | 177.4 | 49.7 | 84.3 | 172.8 | 33.3 | 64.3 | 101.6 | 14.6 |
| EBIT | 73.7 | 22 | 19.4 | 32.2 | 2.2 | 9.1 | 18.1 | 0 |
| Margin | 34.8% | 46.5% | 18.2% | 25.0% | 6.7% | 16.3% | 17.8% | 0% |
Reallocations: Approximately 26% of clearing revenues have been allocated to the cash trading and derivatives trading businesses, as well as approximately 13% from information services.
Highlights
Cash trading
The total number of trades in 2001 was 9.3% lower than in 2000. Owing to our fee structure revenues fell only by 6%.
Listing fees
Due to the worldwide economic slowdown the number of IPOs and secondary offerings has decreased; nevertheless, we achieved revenues of € 49.7 million, a decrease of only € 10 million compared with the record year 2000.
Derivatives trading
The events of September 11, combined with the climate of economic uncertainty, led to highly volatile financial markets. Volumes increased by 22% and revenues rose by 2.5%.
Clearing
Revenues increased by 2.2 % to € 172.8 million. The decrease in cash trading volumes was more than offset by the volume increase in derivatives and the increase of the value per trade on the French cash market, thus enabling us to show a good growth figure despite the difficult market environment.
Settlement and custody
Settlement and custody revenues increased by 5.3% to € 33.3 million. Settlement and custody activities in Brussels and Amsterdam were sold to Euroclear at the beginning of 2002. This segment will no longer appear in Euronext's accounts in the future.
Information services
Cote Bleue was sold for 60% as of October 2001. Revenues of Cote Bleue are only consolidated until the end of September. This causes a shortfall of € 1.5 million in the revenues. Revenues from sales of market data amounted to € 64.3 million, a slight decrease of 6.4% compared to the same period a year earlier. This decrease of € 4.4 million is due to the harmonisation of our fee structure and the centralisation of the data feeds, resulting in a cost reduction for our clients.
Sales of developed software/solutions
GL Trade's revenues grew from € 69.7 million to € 101.6 million, due to excellent international expansion. 2000 revenues included a € 7.1 million contribution from Euronext SCRL, which has since been sold to Atos Euronext.
Other Revenues
In accordance with IAS segmentation principles, revenues in respect to previous years, which had been reported as other income in Q3, have been reclassified to the relevant categories of primary revenues. The resulting decrease (€ 3.1 Million) in other income is balanced by an equal increase of primary revenues.
Dividend Policy
To pursue a policy of providing shareholders with annual dividends in line with companies of similar size and profitability subject to, among other things, our future capital requirements, actual and projected profitability and prevailing market dividend yields, the Supervisory Board of Euronext has decided on a dividend of 35 euro cents per share for the year 2001. This amount was set at a level putting Euronext's dividend yield in line with the average yield of comparable companies. The total amount will represent € 42 million.
To facilitate future comparisons, Euronext is publishing pro forma accounts for 2001,
including Euronext.Liffe and Euronext Lisbon (formerly Liffe and BVLP, respectively). Liffe and BVLP accounts are not yet audited.
Pro forma figures (in € million) 2001
Primary
expenses including depreciation and EBIT
before goodwill amortisation, after
Total revenues of Enlarged Euronext reached € 957.9 million in 2001. The evolution of the pro forma net profit reflects the cost of provisioning legacy systems at Liffe.
Enlarged Euronext revenue breakdown
The combination of Euronext and Liffe businesses increases the resilience of the group's revenues and reduces our exposure to variations in the business cycle.
The derivatives activity is counter-cyclical to the cash trading activity, thus creating a natural hedge of our revenue stream. When cash trading activity falls, this is compensated by a rise in derivative trading activity, and vice-versa.
Outlook for the year 2002
Based on the activity observed in the markets since the beginning of the year, the Company expects the overall level of its revenues (Liffe + BVLP + Euronext after Euroclear agreement) to increase slightly, while continuing technical integration efforts would start to generate costs benefits.
The annual results and accounts are available on the Euronext website at
http://www.euronext.com/en/euronext_org/news/press_releases/news.jsp?news.id=5956&lang=EN&isin="etype=STOCKQUOTE
.
Key dates
The AGM on 18 April 2002 will take place in Amsterdam.
The Supervisory Board of Euronext NV has decided to enlarge the Managing Board of Euronext N.V. with two new members: Mr Hugh Freedberg and Mr Manuel Monteiro.
It is the intention of the Supervisory Board to appoint three new members : Mr George Cox, Mr Ricardo Espirito Santo Salgado and Sir Brian Williamson. In addition it is the intention of the Supervisory Board to appoint Mr Paul van den Hoek, who will replace Mr Kleiterp who retires as a member of the Supervisory Board and to re-appoint Mr de La Serre and Mr Vermeiren as members of the Supervisory Board.
All appointments and re-appointments of members to the Supervisory Board and the
Managing Board will be part of the agenda of the company's annual meeting on 18 April 2002.
2001(pro forma)
2000 (pro forma)
Change %
Revenues
957.9
886.6
+8.04
Total Expenses
834.2
716.9
+17.6
758.8
650.5
+16.6
199.1
236.1
-15.67
Net Profit before goodwill amortisation
118.5
133.0
-10.90
Million Euros
2001
2000
Change %
Cash trading
187.75
209.98
-10.59
Listing fees
50.49
60.21
-16.14
Derivatives trading
252.10
194.41
29.67
Clearing
173.29
170.75
1.49
Settlement and
custody
45.57
46.37
-1.73
Information
services
95.21
95.09
0.13
Sales of developed
software/solutions
109.85
76.77
43.09
Other income
43.66
33.00
32.30
Date
Press Release
Financial Advertisements
AGM convocation
20/03/2002
Annual report available
20/03/2002
AGM
18/04/2002
Q1 sales
May 2002
13/05
14/05
Q2 sales
August 2002
12/08
13/08
Half-year results 2002
August 2002
30/08
02/09
Q3 sales
November 2002
13/11
14/11
Q3 Quarterly results
December
Q4 sales
February 2003
13/02
14/02
