Electing new officers; financial results

At the annual general meeting of the BSE held on Wednesday, the owners elected the members of the Board of Directors and the Supervisory Board, and approved the report for the 2016 business year, along with the Supervisory Board and the auditor reports. According to the annual report, BSE’s EBITDA for 2016 was HUF 383 million, while its profit after tax amounted to HUF 73 million. Based on a General Meeting resolution, the company will not pay a dividend. The profit from 2016 will be used as a profit reserve in order to continue the market-development strategy. The three-year terms of the Board of Directors and Supervisory Board members expired, due to which the General Meeting elected a new Board of Directors and Supervisory Board.

The following persons were elected as members of the company’s Board of Directors for three years:

Dr. György Bacsa, Director for Group Business Development, MOL Nyrt.

Dr. Ádám Balog, President and CEO, MKB Bank Zrt.

Róbert Barlai, Managing Director, OTP Bank Nyrt.

András Miklós Fucsara, Information Technology Director, National Bank of Hungary;

Zsolt Kuti, Head of the Directorate for Monetary Policy and Money Market Analysis, National Bank of Hungary

Dr. Géza Máté, Legal Director, National Bank of Hungary

Richárd Végh, CEO, Budapest Stock Exchange Ltd.

The General Meeting re-elected Richárd Végh as the Chairman of the Board of Directors.

The General Meeting elected the following persons as members of the Supervisory Board for the next three years:

Lajos Bartha, Head of the Financial Structures Directorate, National Bank of Hungary

Dr. Ferenc Gerhardt, Deputy Governor, National Bank of Hungary

Dr. Kolos Viktor Kardkovács, Monetary Council Member, National Bank of Hungary

Orsolya Kása, Accounting Directorate, National Bank of Hungary

Károly Régely, CEO, Concorde Értékpapír Zrt.

Dr. Zsolt Selmeczi-Kovács, CEO, GIRO Zrt.

The General Meeting decided that Dr. Ferenc Gerhardt will continue to chair the Supervisory Board.

In addition, resolutions were passed on the remuneration of the officers and on the amendment of the Supervisory Board’s rules of procedure.

Richárd Végh, President and CEO of BSE talked about the financial results and also the achievements made to date under the 2016-2020 stock exchange development strategy. In 2016, a lengthy trend was broken, namely that the year finally saw numerous new companies appear on the trading floor: six successful stock exchange launches, including two initial public offerings took place. Both Duna House’s HUF 2.6 billion IPO and ALTEO’s HUF 1.4 billion IPO were completed successfully, and so were Erste Mortgage Bank’s HUF 46 billion mortgage bond and Wingholding’s EUR 36 million bond issues. EXIM Bank’s bond issue and listing was intriguing because EXIM’s EUR 75 million issue was the very first in Hungary with a negative yield. Finally, Tündérszikla’s bond issue also went well, with the issue of bonds of a total nominal value of HUF 350 million.

Among transactions over the past six years (after 2010), Duna House’s transaction is the second largest IPO (only CIG Pannónia’s IPO reached a higher value). Among SPOs, ALTEO’s capital increase was of the highest value.

The fact that the government supports and pays particular attention to developing the domestic capital market to achieve long-term, sustainable economic growth and innovation is an important message for economic players. The state can contribute to developing the stock exchange in numerous forms; without such support, the chances of accomplishing impressive successes drop substantially in the short term. The support of the government in 2016 contributed to the development of a market-friendly regulatory environment, and to promoting the use of EU resources to develop the stock exchange.

Outstanding performances in 2016: indices and important stocks

The key BSE indices and the performance of key stocks were also presented. The results were phenomenal: the BUX index and the BUMIX index rose by 37.8% and 22.9%, respectively, from the start of 2016 (up until 21/04/2017). These were an excellent result in the region and Europe, as well as globally. Since September 2016, CETOP’s value, which includes Romanian securities, has increased by 19.8%. BUX closed at a historical record value, 32,025.60 points, on 28 December 2016. In 2017, this record was broken: the index closed at 34,324.99 points on 21 February.

Stock turnover and capitalisation also grew. In line with the price increase, stock capitalisation improved by 30% in 2016. The capitalisation to GDP ratio was 18.9% in 2016, 4% higher than the previous year’s (14.90% in 2015).

It is good news for investors that the total dividend amount paid by blue chip companies will be 20% higher than in 2016. Beyond the regular dividend payers, RÁBA (HUF 20) and ALTEO (HUF 130) started paying dividends again after 15 years. Also, Appeninn paid dividend this year for the first time in its history.

Outlook: the most important projects for 2017 – the BSE believes in SMEs

From the perspective of the stock exchange, the development of a diversified issuing structure is vital and it would also help raise turnover. As part of the diversification effort, BSE turns to SMEs by opening a new market. The timing is not incidental. At this time, due to the availability of resources, companies do not feel any pressure, but this will change: MNB’s loan programme has been closed, EU funding is expected to run out by 2019-2020, and interest rates will possibly rise, too. SMEs prepared for the period of public capital market funding will have a serious edge in competition. They are assisted by BSE’s ELITE Programme, which launched in April 2017, and by the National Stock Exchange Development Fund (to be started in the second half of 2017) which will help the listing of 5-6 companies per year with its HUF 20 billion capital. The Fund will be able to generate extra demand as an investor, and it will also provide a risk-sharing tool for private investors. In addition, it will provide resources to businesses and exit opportunities for current owners.

At the General Meeting, Richárd Végh, President and CEO of BSE, said that the implementation of the strategy adopted last year is on schedule. More success stories are expected in 2017, especially in the area of issues. Furthermore, the domestic legal environment will continue to change, specifically to allow Hungarian companies to enter the stock exchange with less difficulty.