Hello, and welcome to the Euronext Q2 2019 Results Conference Call. Throughout the call, all participants will be in listen only mode and afterwards there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Nezha Stefan Bruzhna, CEO and Chairman of the Managing Board of Euronext. Sir, please go ahead with your meeting.
Good morning, everybody, and thank you for joining us this morning for the Euronext Q2 2019 results conference call and webcast. I'm Stephane Boudnas, the UN Chairman of the Managing Board of Euronext. And I will start with the highlights of this Q3 of 2019. Then Georgio Modica, the CFO of Euronext, will further develop the main financials of the quarter. And I will update you on the status of the integration of Oslo's EPS before opening for questions, together with Antonia Thia, member of the Managing Board of Euronext.
So if we move to Page 5, you can see that Euronext reported a strong set of results for Q2 2019, driven by both improved revenue diversification and continued cost management. And when we look into the details, clearly, revenue increased in Q2 2019 by plus EUR 2,700,000, up 1.8 percent to a total of EUR 159,000,000. The improved group revenue profile and the efficient yield management mitigated the impact of declining trading volumes over the quarter. Oslo BPS contributed to EUR 4,500,000 revenues for the last 2 weeks of June. As you know, we have completed these acquisitions on the 14th June.
Our services offering, namely 2 family of services or services to issuers, the corporate services and our services to investors or investors, TataFish recorded double digit growth, contributing to our revenue diversification. Our trading business resisted very well despite a subdued volume environment, thanks to our efforts on two fronts, yield management and market share management. And overall, this quarter, non volume related businesses accounted for 48% of total revenues versus 44% in Q2 2018, even though we don't yet have the full impact of Oslo VPS consolidation, which as you know has a significant component of post rate CSD business in its portfolio. At the same time, we continue to demonstrate the Euronext cost discipline. Group costs, excluding G and A, decreased by minus 11% and were down by minus €7,500,000 as a result of the continuing cost discipline and the cost optimization in Dublin that more than offset the impact of the incremental costs related to the consolidation of Oktogoz, UPS and ComSYS.
As a result, group EBITDA strongly increased by +12 percent in Q2 2019 to a total amount of €98,100,000 and this overall translates into an EBITDA margin of 61.7%, 5.7 points higher than the EBITDA margin of Q2 last year. Overall, this strong operating performance over the quarter resulted in a plus 4.5% increase in adjusted EPS at an absolute number of €0.93 per share. And in Q2 2019, reported net income was down minus 4.4 percent at €53,400,000 impacted by 2 components. First, the postponement of the dividend paid by Euroclear that we expect to receive this year, not in Q2, obviously, but in Q4 2019 and various exceptional items related to the transaction cost of the Osterbos VPS acquisition. Moving to Slide 6.
This quarter saw the continued deployment, as indicated earlier, of our diversification strategy and of our geographical expansion. As mentioned several times, in June, we closed the acquisition of Ostrogoths UPS, as announced when we launched our offer in January this year. Integration preparation began on the acquisition date on the 14th June, and we are currently designing our joint ambition and operational plan that we will communicate to our investors on the occasion of the Investor Day on 11 October. 2nd, we successfully launched a €500,000,000 10 year bond that was 6x oversubscribed with an annual coupon of 1.1%. Euronext is rated A- stable outlook by S and P, taking into account the OZIBORTH's EPS acquisition.
And our pro form a net leverage is around 1.9x, and we still have room to maneuver for further expansion while maintaining our strong investment growth. We also expanded our range of innovative services and solutions for clients through small targeted investments that are very important to keep the innovative dimension of the company. We subscribe the entire €5,000,000 capital increase for TOKINI Solutions. TOKINee Solutions provides private market security issuers with end to end solutions to issue, manage and transfer tokenized securities on public blockchain. And this investment will allow Euronext to further develop digital asset solutions that continue to serve its clients and benefit from the impact of the tokenization trends.
Lastly, on the governance side, some of our reference shareholders decided in June to renew their reference shareholders' agreement for another 2 years, and they now account for 23.27 percent of the unit share capital. So I now leave the floor to Giorgio Modica for the detailed presentation of the Q2 2019 financial results.
Thank you, Stefan, and good morning, everyone. I would like to highlight that for the Q2 of 2019, the organic performance of the group excludes also Board's EPS consolidated for the last 2 weeks of June, ComSight and any project costs supported by Euronext for their integration. In the Q2 of 2019, Euronext consolidated revenue reached EUR 169,000,000 with an increase of EUR 2,700,000 or 1.8% versus the Q2 of 2018. These results are mainly driven by the strong performance of our services offering, including Comsys with EUR 1,200,000 of revenues and the consolidation of Oslo BPS contributing EUR 4,500,000 to the revenues of the group. On a like for like basis, Euronext consolidated revenue decreased 1.7% as a result of a trading environment that remained soft.
Looking now at the different business lines. Listing revenue grew 8.6 percent to EUR 28,700,000. This performance reflects the above 50% growth of Corporate Services and the consolidation of Oslo BPS listing activities. The impact of soft volumes across all asset classes on trading revenues was partially offset by improved revenue capture. Cash trading posted a good yield of 0.54 basis points this quarter and a solid market share at 68.2 percent and similar trend O'Neill apply to derivatives and spot FX as well.
We will see the details in the coming slides. Advanced Data Services posted a good quarter with revenue up 5.2% to EUR 30,900,000, thanks to the performance of indices and the consolidation of Oslo Borse VTS. Cash fee, settlement and other postpaid revenue reported a strong growth of 38.8 percent, mainly driven by the consolidation of BPS postpaid activities in Norway. In the Q2 of 2019, non volume related revenue accounted for 48% of total revenue, reflecting notably the increased portion of services in our revenue mix. This ratio is not yet run rate as it does not embed a full quarter of Oslo BOSS VPS.
Lastly, non volume related revenue covered under 24% of our cost excluding D and A compared to 100% in the Q2 last year, showing the promising results of our diversification and cost optimization efforts. Moving to Slide 9, I would like to start highlighting that the investment in corporate servicing are paying off. With revenue growth of more than 50% versus last year, Corporate Services confirmed to be one of the growth engine of the Listing business. As a result, in addition to the contribution of Oslo Board's EPS for EUR 1,000,000, listing revenue increased 8.6% in the Q2 to EUR 29,700,000. Let's focus now on equity first.
Primary market activity remained slow as the market continues to be affected by macro uncertainty in Europe. This quarter, we are proud to welcome Marius to Euronext, the largest company in Iceland by market value, which has chosen our market for its secondary listing. This listing gives us confidence in Euronet's value proposition for Nordic companies willing to expand their shareholder base and access to international capital markets. In addition, we had 5 new SME listing this quarter strengthening our SME listing franchise. Secondary market activity slightly improved since the start of the year, mainly driven by technical deals due to large cap financing needs.
Lastly, our debt franchise reporting a strong growth, demonstrating our leadership global position in this market. Moving now to cash trading in Slide 10. The Q2 of 2019 saw subcu volumes with ADV declining 11.6 percent to EUR 7,400,000,000. However, a strengthened yield and a strong market share partially offset the cash trading revenue, which this quarter decreased 5.9 percent to EUR 50,700,000 or 6.7% on a purely organic basis. More specifically, market share was 68.2%, as reminded by Stephane, 2.1 points higher than last year in an environment of very low volatility, yield was up 7.3% at 0.54 basis points.
Please note that those metrics for the quarter exclude Oslo Borse Exchange. ETF trading was impacted by low volatility, while the number of ETFs listed increased to 1208 at the end of June 2019. Slide 11. Derivative revenues was down 2.8% to EUR 10,600,000 as improved revenue capture partially offset declining volume impacted by a low level of volatility this quarter. Revenue capture was up at €0.30 per lot.
On the business side, our recently launched total return future contract continued to gain traction, while our new market participant program for commodity designed to develop the nonphysical market continued to attract new flows. Finally, Euronext FX generated €5,400,000 this quarter, reporting a decrease of 2.5% versus Q2 of 2018 as a positive revenue mix mitigated the impact of challenging market condition with spot FX ADV down 18.5 percent to USD 17,500,000,000 Moving to Slide 12, advanced data services revenue was up 5.2 percent to EUR 30,900,000 primarily resulting from the consolidation of Oslo BPS activities and the good performance of indices. In addition, we invested in early July in OPC VM 360, a leading data fund provider to complement Euronext advanced data services offering and support its ambition to provide value added services to both buy side and sell side clients in Europe. Revenue from Euronext Technology Solution and Other decreased 3.1% to 8 €700,000 due to a delay in OPTIC commercial product revenue recognition, while managed service and safety colocation business performed well. Clearing revenue was slightly down at EUR 14,200,000 with lower derivative volumes, only partially offset by higher treasury income.
Revenue from custody and settlement strongly increased to €7,700,000 benefiting from the 1st consolidation of VPS activities contributing EUR 2,100,000 while the organic business remains stable. Investor Services that account for Comsized Business report €1,200,000 of revenues. The integration with Euronext is underway and the business continued to grow benefiting from Euronext reach and Expertise. Moving to Slide 13. EBITDA for the quarter increased 12% to €98,100,000 This growth is mainly explained by our continued effort on cost management and revenue diversification.
From a top line perspective, revenues at Boston Perimeter decreased EUR 2,700,000 due to lower trading volumes, while Oslo BTS comp size and other non organic element contributed 5,500,000 euros As a reminder, Oslo Board's EPS is consolidated from 14 June 2019, thus only for 2 weeks this quarter. Looking at costs, we considered EUR 2,400,000 of OpEx from comp size and also both this quarter. In this respect, I would like to highlight that this level of cost includes positive seasonal FX in salary cost for Norway. Organic operating expenses, excluding D and A, strongly decreased €10,200,000 as a result of the impact of IFRS 16 on costs. As already mentioned in the Q1, this accounts EUR 2,700,000.
Favorable base effect, as you remember, last year, we reported EUR 1,500,000 our cost discipline translated into EUR 5,000,000 of organic cost decrease. Although we will not communicate the full plan for Oslo BORZ VPS now but at the Investor Day, we would like to anticipate that Oslo VPS integration cost will gain traction in the 3rd Q4, partially through OpEx, and some new projects might be launched. This is why despite the good performance on cost, we don't amend our 2019 cost guidance announced in February as we expect cost to grow low single digit in 2019 versus 2018. With respect to the integration of Euronext Dublin, I would like to highlight that out of the targeted €8,000,000 of expected run rate savings, euros 7,500,000 have been already delivered as of June 2019. Overall, EBITDA margin increased to 61.7% in the Q2 of 2019, while on a like for like basis, the EBITDA margin was merely at the same level as 61.9%.
Moving to Slide 14 for the net income bridge. This slide is self explanatory, but I would like to underline some of the items that explain the decrease in reported net income. The main reason for this decrease is, as expected, the year. As a reminder, it represented for Euronext EUR 4,300,000 in the Q2 of 2018. Exceptional items this quarter are mainly related to M and A costs for the completed acquisition of OZBRO BORZ VPS.
On the other front, D and A mechanically increased due to the adoption of IFRS 16 and were also impacted by PPA of recent acquisition. In this respect, I would like to highlight that the PPA for Oslo will be completed in the Q3 of 2019. Net financing expenses increased mainly reflecting adverse FX impact. Lastly, income tax rate increase resulting from higher nondeductible exceptional items this quarter. Excluding PPA and exceptional items, adjusted net income was up 4.5%, translating into adjusted EPS of €0.93 for the quarter.
To conclude with financial on Slide 15, over the quarter, 40.3% of the EBITDA was transformed into net operating cash flow. This increase from 25.5% in the same period last year is explained by the impact of 1 off linked to the completion of the acquisition of Euronext Dublin in the Q2 of 2018. As far as the leverage is concerned, following the launch of our second bond, our net debt stands at EUR 783,000,000 representing a net leverage of 1.9x pro form a, leaving us further M and A for Power before reaching our strong investment grade floor. Looking at the bottom of the slide, as of the end of the Q2 of 2019, our liquidity position remains strong, close to EUR 680,000,000 including undrawn RCF of €355,000,000 I now hand back the floor to Stephane Buschner.
Thank you, Georgios. Moving on to Slide 17, I just wanted to update you on the status of the integration of the Orthoverse VPS. As you know, we started integration work on 14 June when we closed the acquisition. And as of the 4th July, we owned 100% of the shares of Holstegers EPS. So from a governance perspective, we made some changes to the Osterberg's UPS Board of Directors to include 2 new independent Norwegian directors.
In addition, we and as announced initially, Oskarbo's VPS CEO, Horvat Abrahamson, has been appointed as member of the Euronext Managing Board, subject to regulatory and shareholders' approval. On the operating side, we are currently assessing the organization and processes in Oslo as well as the possible terms and conditions of the technology platform migration schedule. We are also mapping revenue opportunities, and we will present our joint operating plans and ambitions for Norway and the Nordic region at our Investor Day in October. So to conclude, we are very pleased to invite you to our 2019 Investor Day that will take place in Paris on Friday, 11 October 2019. And during that meeting, we will present our new strategic ambition and our plans and our financial targets for 2022.
Thank you. And we are now available for your questions with Antonia Attia, Managing Board Member and Georgios Modica.
Thank Our first question comes from the line of Kyle Voigt from KBW. Please go ahead.
Hi, good morning. Thank you for taking my question. So I guess my first is on just in July as we launched a consolidation on market data costs and looking at the potential for consolidated tape in Europe. You anticipate any negative consequences from that review? And maybe you can help us understand whether it'd be for or against that consolidated tape plan?
We take part very actively to this consultation. We do not comment on ongoing consultation with regulators and supervisors.
Okay. Maybe I'll move to a separate question then. Just given that there's a large deal that may have to be worked through by one of your UK exchange peers over the next 18 months, Just considering the size of that deal, will that help inform your capital priorities near term just in terms of maybe wanting to focus on deleveraging to have capacity, should there be some smaller divestitures that need to happen through that competition review?
So this is Georgios speaking. So I guess that as we commented several times, Euronet is proactively looking at ways to strengthen its business profile, which means that we are constantly engaged in looking at what could be available and what could strengthen our profile, which means that we will clearly be very attend to the opportunities that might emerge in the future. And if there will be opportunities for us, we will take them. So in terms of overall strategy, nothing changes. The objective of the group, again, is to diversify as we did our revenue mix and strengthen our profile.
And if there will be opportunity emerging in the market, we will look for sure at those.
Understood. Thank you very much.
Thank you. Our next question comes from the line of Johannes Thormann from HSBC. Please go ahead with your question.
Good morning. Several questions from my side. First of all, your trading cash trading did pretty well, but your spot FX trading continues to worry. And even if volumes in the general market do fall, it seems that you're losing market share, although the yield on trade is probably good. How can you steer against this?
Is this a joint venture with any of your competitors an option for you to increase in size where the market is concentrating and then also looking for M and A? And the second thing is, could you be a bit more precise and give a clearer indication how much cost of Oslo were in Q2 and what we should expect in the next quarters? And last but not least, just an update on your tax rate run rate would be appreciated. Thank you.
So let me start from the first one. As you correctly pointed out, the general market of FX, the spot part is suffering from a reduction. Where I would disagree with you is that based on our computation, Euronext effect is not suffering from a dilution of the market share. Clearly, we are not happy with the overall reduction. But in terms of competitiveness, our platform is not losing ground.
What we intend to do in the future is something that we already communicated on, which means that we are about to launch a new matching engine in Asia, and we're willing to further expand our revenue mix so to diversify then be able to attract even more clients on our existing platform. When it comes to M and A, we remain disciplined. But clearly, FX is one of the areas that we might looking to strengthen our business profile. You did ask as well a question with respect to the cost base, the integration of Oslo BORZ VPS. And what I can tell you is that the cost base of Oslo BOS VPS to consolidate this quarter is slightly lower than EUR 2,000,000, which means that the profitability attached to the revenues we consolidated does not differ significantly from the one of the group.
But as I highlighted in my comment, this is due to seasonal effect in staff cost in Norway for the last 2 weeks of June, and this is linked to the holiday season. So when it comes to your projection, you should take into consideration a level of profitability, which is more in line with the historic one and the one that we have disclosed for the 1st and the second quarter, which is closer to the range 45%, 48%. Final question when it comes to the tax rate. This quarter, as you pointed out, the tax rate was higher. When it comes to the end of the year, we will need to see what are if there are going to be changes, but we expect the tax rate to normalize at the level between around 29%, 28%.
Okay. Thank you.
Thank you. Our next question comes from the line of Ian White from Autonomous Research. Please go ahead.
Hi, morning. Thanks for taking my question. Just one from my side, please. Just on the cash markets performance, obviously, the yield performance there was quite strong as was the market share. Could you just give us some details about what you did specifically in order to achieve that and whether it's sustainable, please?
Thank you.
So as you very well know, we look at constantly ways to maximize market share and yield. So as you have seen, we were able to extract a little bit more yield than with respect to the Q1. A part of that growth is linked to the lower trading volumes that, as you are aware, usually command a higher yield. When it comes to the sustainability of that yield, we believe that yield or the level or level of yield, which is in between the one of this quarter and the one of the previous quarter, would be sustainable for the remainder of 2019. So yield in between 0.53, 54, this is something that we look at as sustainable.
Got it. And on the market share, please?
On the market share, a part of that increase is linked to the very good performance of the market share in continuous trading. And a part of this, but there is not a big difference between the first and the second quarter is linked to the volumes, which are traded at the closing auction.
Got it. Thank you.
Thank you. Our next question comes from the line of Ron Heidenrich from ABN AMRO. Please go ahead.
Good morning, gentlemen. A few questions from my side. Firstly, on the clearing business, that was significantly better than expected. The yield there was about 0.04 basis points better. Despite the mix effect not that clear with commodities being in line with Q1.
So could you elaborate a little bit what happened there? Then secondly, the growth in Fast Match coming back to the FX platform is not as expected. Have you or are you adjusting your growth outlook going forward on that business? Is it now only going to grow in line with market whereas before you bought it, you were winning market share? The platform was winning market share?
And then on Technology Solutions, it was a bit disappointing this quarter. It looks like there's a timing difference from the wording that you use, so delivery project recognition difference. Is that indeed correct? Should we therefore expect a big markup in the 3rd quarter? And then finally, if I may, the cost of professional services was significantly lower than normal.
Would that be a new run rate? Or are there any one offs there that should take into account? Thank you.
Starting from your first question, clearly, if I look at the yield on clearing without the treasury income part, I would say that the rate is quite stable. So clearly, the treasury income part is an important element to that. And this explain why your overall in margin shows an increase. On your second question on Fast Match, the element that you should take into consideration is that Fast Match is a spot FX platform today that is characterized by a very high level of performance, which means that in the revenue mix, the volumes are significantly affected by the operations of high high situation for the platform. In the last 12 months, we have vastly improved the mix of clients and the number of clients.
And this is an effort that we will continue doing together with the widening the scope of service offered. So clearly, there is still room to go, but we believe that we're going in the right direction. And this performance, given the characteristic of the company, mix and the current market trends do not surprise us. Your then there was a question on professional services. In this respect, the situation is fairly simple.
As we commented many times, in professional service so the first element I would like to highlight, as we said several times, there are there was a part of CapEx in our OpEx in the sense that we for the development of OPTIC, we were helped by consultants. Now these consultants are fading out as the delivery of step 2 and step 3 are getting to the end. And this is the main driver of the reduction of professional services. But clearly so in one sense, this is sustainable. On the other sense, as I highlighted, we are embarking in a new project and a part of the cost for the integration of Norway are going to be OpEx.
And therefore, this is the reason we do not change the guidance of cost for the remainder of the year. Then you had another question that on the market solution, the market solution, again, I believe that you should not treat it as a constant decrease. We will catch up on that. Again, the effect that you see this quarter is more related to a delay in the delivery of certain optic commercial optic project rather than anything else.
Thank you very much for that. Very clear.
Thank you. You. Thank you. We have no further questions coming through. So I'll hand back to our host, if I may.
Thank you very much to all of you and have a good day.
Thank you for joining this morning's conference call. You may now disconnect your line.