- Turnover: 46.2 million euros, a year-on-year increase of 26.4 per cent
- Operating profit: 17.0 million euros, a 0.8 per cent rise on the previous year
- Profit before extraordinary items, appropriations and taxes: 18.5 million euros, a year-on-year increase of 0.8 per cent
- Net profit for the period: 13.1 million euros, a year-on-year increase of 0.3 per cent increase
- The Tallinn Stock Exchange was entered in the Group's financial statements as of 30 April 2001.
Half-year consolidated turnover grew by 26.4 per cent to 46.2 million euros (Q1, Q2/2000: 36.6 Me). Costs amounted to 29.3 million euros (19.7 Me). The increase in costs was due to sustained business expansion and the focus on new business areas, with personnel costs of 11.5 million euros (6.4 Me) increasing the most and other operating costs of 14.2 million euros (10.4 Me).
Operating profit of 17.0 million euros (16.8 Me) rose by 0.8 per cent. Operating profit accounted for 36.7 per cent (46.0 per cent) of turnover. Financial income increased slightly to 1.5 million euros (1.5 Me). The growth in financial income was attributable to the realised exchange-rate gain of 1.2 million euros on the mature, index-linked bond. Profit before extraordinary items, appropriations and taxes totalled 18.5 million euros (18.3 Me), showing a rise of 0.8 per cent year on year. The 13.1 million euro net profit for the period was somewhat higher than in the previous year (13.0 Me). Despite the investments required by business expansion and new businesses, the financial performance was at a healthy level. This was supported, above all, by high sales of Finnish derivative products at Eurex and a stronger demand for electronic market data.
Investments of 5.4 million euros (3.8 Me) were primarily made in computer hardware, software and office premises. Investments also included the purchase of the Tallinn Stock Exchange shares for 1.2 million euros.
Earnings per share, at 0.97 euros, remained at the previous year's level. Equity per share rose by 20.8 per cent to 5.05 euros (4.18 e).
The Tallinn Stock Exchange (TSE) was entered in the Group's financial statements as of 30 April 2001. All figures in this Interim Report are unaudited.
The business area's year-on-year turnover rose by 11.0 per cent to 10.5 million euros (9.5 Me). The transaction volumes of Settlement and Depository were smaller than in the previous year, and the depository value fell significantly from the previous year. The business area's profitability was still affected by the large-scale invest-ments made in the previous financial period.
The business area's development projects progressed as planned in the report period.
Profitability will probably fall short of the previous year's level.
Issuer Services
Issuer Services' turnover for January-June 2001 amounted to 8.4 million euros (9.7 Me). The decrease in turnover weakened the profitability of the business area.
Due to market conditions, the general interest in IPOs remained subdued, whereas the listing of new products, covered warrants and stock options continued brisk. Three new companies were listed on the Main List during the report period. The June-end number of listed stock options and covered warrants totalled 29 and 45, respec-tively. The number of IPOs and capital reorganisations is also estimated to remain lower in the third quarter. Stock-option and covered warrant listings will probably remain at the current level.
Issuer Services' turnover and profitability for the financial year as a whole will probably fall short of the previous year's level.
Securities Services
The reported turnover amounted to 3.6 million euros (2.7 Me), showing a 33.0 increase over the previous year. Market conditions affected the Securities Services performance less than expected.
Securities Services' Back-Office services are scheduled to be up and running at the end of the financial year. They are not expected to make any significant profit in the current year.
The general market conditions and the degree of trading activity towards the end of the year will have an impact on the business area's development. Turnover for the entire financial year is expected to be somewhat higher than in the previous year.
eHEX
eHEX continued to invest heavily in development projects. The first and second quarter turnover of the eHEX business area reached 0.3 million euros, and the business remained in the red.
eHEX launched an IR service, designed for listed companies, in early April, and the first clients have already adopted the service. eHEX renewed the agreement on the provision of a monthly report on mutual funds with the Finnish Association of Mutual Funds.
eHEX will continue to invest in new business development, thus showing a loss for the current financial year.
Baltic operations
The ownership arrangements between HEX and the shareholders of the Tallinn Stock Exchange (TSE) were completed during the report period, with the result that HEX's shareholding in the TSE rose to 60.3 per cent.
The TSE's Extraordinary General Meeting on 3 May 2001 elected President and CEO Jukka Ruuska (President and CEO), Heikki Sirve (Executive Vice President) and Jouni Torasvirta (Executive Vice President) as Board members representing HEX. Jukka Ruuska was elected the TSE's Board Chairman.
In May, HEX's Baltic operations formed a business area, covering the TSE and the Baltic Liaison unit. The TSE is led by CEO Gert Tiivas. Päivi Laaksomies was appointed Senior Vice President in charge of the Baltic Liaison unit.
The TSE Group's and HEX's operational co-operation projects were launched in May, embracing the operational and technical definition projects related to trading and settlement and depository.
Turnover of Baltic Operations for April-June totalled 0.2 million euros. Due to non-recurring expenses, the business area's performance was slightly in the red.
SHARES AND SHAREHOLDERS
With a total of 13,471,728 shares, the June-end number of registered shareholders amounted to 152. A total of 15.7 per cent of shares were nominee registered.
EMPLOYEE STOCK-OPTION INCENTIVE SCHEME
The number of stock options and the number of HEX Plc shares subject to subscription based on the stock options, in accordance with HEX's employee stock-option incentive scheme, is 1,400,000. In accordance with the subscription terms, the original subscription price of 12.50 euros has been reduced to 11.70 euros by the dividend paid on 29 March 2001. The scaled share subscription period based on stock options will begin on 1 November 2002, 1 November 2003, 1 November 2004 and 1 November 2005 and will expire for all stock options on 30 November 2007.
If the company is not listed on the stock exchange, the subscriber is entitled to compensation in terms of salary or wages equalling the value of the increase in shareholders' equity. For this purpose, a 0.6 million euro entry, affecting the company's result, has been made in accruals.
Through the stock-option incentive scheme, employee shareholding in the company may not exceed 9.4 per cent of shares and voting rights.
SHAREHOLDER AGREEMENT
In connection with the formation of HEX Group in 1998, major shareholders entered into a shareholder agreement, under which the parties agreed on their pre-emptive rights to their shares in the Group and on their stand on the election of the Board of Directors as well as on the limitation of liability pertaining to the operations of the Finnish Central Securities Depository. The agreement also sets objectives for developing the book-entry securities system.
Parties to the agreement include the State of Finland, the Bank of Finland, OKR issuers, Merita Group, OKO Group, Sampo Group and Aktia Savings Bank PLC.
HUMAN RESOURCES
As of 30 April 2001, the Tallinn Stock Exchange's 23 employees are included in the Group's personnel. At the end of the report period, there were 373 employees, whereas a year ago the corresponding figure was 267. There were 290 employees at the end of 2000.
EVENTS AFTER THE PERIOD
In early July, HEX launched a new HEXTech index for technology shares. The aim is to begin the trading of options and forward contracts subject to the index. The new HEX-25 index will replace the FOX index at the beginning of September. This marks an end to the HEX-20 index.
YEAR-END OUTLOOK
Continuous growth in turnover will depend on market conditions and the schedule of the launch of new services. Relative profitability will fall short of the previous year's level due to the investments caused by rapid expansion and the growth of new business.
