Monday 16 July 2018

ISE deal not driven by tax - Euronext

First quarter results for the Irish Stock Exchange show income of €8.5m, up 14.7pc compared to the same time in 2017. Photo: Bloomberg
First quarter results for the Irish Stock Exchange show income of €8.5m, up 14.7pc compared to the same time in 2017. Photo: Bloomberg
Donal O'Donovan

Donal O'Donovan

Euronext funded the €137m takeover of the Irish Stock Exchange by issuing bonds at an interest rate of just 1pc. The Paris-based group's CEO insisted yesterday that buying the Irish rival was not tax driven.

Financial results yesterday show Euronext's first-quarter core earnings rose 25.1pc driven by trading revenue.

Those group results don't include Irish revenue, which was not consolidated to the new parent's accounts in the period.

First quarter results for the Irish Stock Exchange show income of €8.5m, up 14.7pc compared to the same time in 2017.

Along with the results, Euronext said that in April it had issued a €500m seven-year bond, with an annual coupon - or interest bill - of 1pc. Proceeds were used to refinance a €165m term loan and to replace short-term debt that had been used for the acquisition of the Irish Stock Exchange a month earlier; as well as for general corporate purposes.

Euronext operates exchanges in Paris, Amsterdam, Brussels, London and Lisbon, and now Dublin.

For the group, the first quarter of this year was marked by the return of volatility and double-digit growth across all asset classes, CEO Stephane Boujnah said in a conference call following earnings.

On the conference call with analysts, the CEO said the decision to buy in Ireland was not linked to corporation tax.

"First question, we have no intention whatsoever to reallocate profits to other locations. We pay taxes where we make revenues and profits.

"So, there will be no tax impact at group level of the acquisition of the Irish Stock Exchange," he said.

The deal had been initiated by the Irish Stock Exchange, in response to Brexit, he said.

"The Irish Stock Exchange decided to start - to explore alternative strategy following the reading they had on Brexit," he told analysts.

The group is now looking at other potential takeovers, he said.

In the early part of this year, revenue increases were driven by strong volume in cash trading, while listing revenue, linked to new deals, fell 4.3pc to €18m.

The group said it does expect to see share listings in the second and third quarters of the year.

"The first quarter of 2018 marked a strong start to the year, with very high revenue capture from trading activities in a volatile environment and good performance from our market data and indices businesses," Mr Boujnah said.

Irish Independent

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