VP achieved satisfactory profits in 2007 of DKK 172.5 million before tax, representing growth of DKK 21.2 million compared to 2006, when VPs profit was DKK 151.3 million, excluding the proceeds from the sale of the do-micile property of DKK 41.3 million.
The profit on ordinary activities was DKK 165.9 million in 2007, compared to DKK 147.3 million in the previous year.The growth is primarily due to a rise of DKK 97.2 million in net turnover, which can be attributed to new record turnover on the Danish securities market in 2007.
VP has also experienced satisfactory growth in a number of new product areas, including the share register administration business, which was acquired in mid 2006. The growth was achieved despite VP reducing prices with effect from 1 October 2007, which entailed a loss in net turnover for thefinal quarter of DKK 18.5 million.
VPs total operating costs including depreciation were DKK 295.5 million in 2007, representing an increase of DKK 78.6 million compared to 2006. This increase is largely due to a high level of activities as a result of the record turnover on the securities market, as well as to operating costs and depreciation on goodwill regarding the share register administration activities acquired in 2006.
Net capital at the close of 2007 amounted to DKK 225.7 million. The tied-up security reserve amounted to DKK 57.3 million and the combined return on the net capital and the tied-up security reserve was 46% in 2006, compared to 63% in the previous year. The board of directors of VP has proposed to the annual general meeting (AGM) that a dividend of DKK 3,000 per share be paid to the companys shareholders, corresponding to a total of DKK 120 million.
With a new turnover record on the securities market in 2007, VP continued its development of existing business areas while launching a range of new ac-tivities in the area of securities services. At the close of 2007, VP Investor Services had concluded share register ser-vice agreements with 175 companies. The activity developed from over 100 agreements originally made in 2006, when VP took over the business area from Danske Bank and Nordea Bank.
In 2007, VP Investor Services co-operated at AGMs with 70 joint stock companies and unittrusts. VP Investor Services participated in 52 Annual General Meetings and assisted with, among other things, the registration of shareholders and the counting of votes in ballots.
VP is actively working on the computerization of the share culture. In October 2007, VP Investor Services hosted an inspiration seminar with 115 delegates from 71 companies, where the focus was on the computerisation of general meetings and of investor relations. As part of the computerisation of the share culture, VP introduced the Inves-torportal in 2007. The Investorportal is an Internet service that enables investors to subscribe and unsubscribe to company publications and provide contact details. It also enables investors to register or appoint a proxy electronically for AGMs and shareholder meetings.
A further three VP products were launched in 2007: vp.AKTIELN, vp.ANALYSEand vp.INSIDER.Through vp.AKTIELN, VP is able to offer cost-effective administration as well as accounting and financial reporting to companies wishing to use share options for remuneration. Through an employee portal, employees can become involved in the relevant phases of the share option arrangement. This access helps to minimise the administrative expenses involved with the system.
Through vp.ANALYSE, VP is able to meet the requirements of companies and unit trusts for statistics on all investors. The product provides companies or unittrusts, with securities issued through VP, with a unique opportunity to obtaindetailed statistics on the ownership, ownership behaviour and trading pat-terns of these securities.
Using vp.INSIDER, VP is able to facilitate the work of listed companies in fulfill-ing their legal obligations in relation to insider registration, reporting and sale and purchase books. Furthermore, the product enables transactions from 3.5 million accounts to be recorded and both insiders and companies to be notified of transactions that are subject to a reporting obligation.
In 2007, VP Financial Information was transferred to Telekurs Financial Information Ltd. following several years of strong growth in the business area, with 70 clients and turnover in the millions. As a result of increasing consolidation on the market and a growing demand for the internationalisation of data, VP chose to sell the business, but will continue tosupport the service, via Telekurs.
Danish securities are not currently eligible for use as security for credit in the Eurozone. Eligibility will in practice require either the adaptation of the Euro-systems eligibility procedures or issuance through a CSD in the Eurozone. In order to ensure that there is a solution whereby securities issued at VP will be able to achieve eligible status in the Eurozone, VP investigated the possibility of establishing a branch office in a country within the Eurozone in 2007.
In 2007, the ECB further developed its proposal to consolidate the settlement of transactions in euros on a joint platform under the auspices of ECB under the name TARGET2-Securities (T2S). The ECB expects the establishment of T2S to make it easier and cheaper to settle cross-border securities transactions from 2013. VP is taking part in various working groups as part of the T2S pro-ject along with the Danish market participants.
Mexico is faced with having to build and finance up to one million new dwellings over the next 20-30 years and has chosen a financing model based on the Danish mortgage credit model. Together with Soros Fund Manageme-nt, Totalkredit and Danmarks Nationalbank, VP assisted Mexico in taking charge of the project through Hipotecaria Total (HiTo) and will be able, in future, to offer mortgage credit loans based on the Danish model to the local mortgage credit banks (Sofoles).
The first phase of the project was launched at the end of 2007, when the first loan, with its associated bonds,was issued in Mexico. Now that the first loan has been paid out, it is expected that the issuing of new loans will pick up speed in 2008. The launch has also aroused significant international interest in the Mexican solution. On this basis, VP and Soros have decided to examine the opportunities for and consequences of expanding the cooperation from Mexico to include other countries.
Finally, VP has joined forces with six other European CSDs in a joint venture, Link Up Markets, which will increase the efficiency and reduce thecosts of post-trade cross-border transactions in securities in Europe. This solution will allow both VP and our clients to reap the benefits of cheaper and more direct access to cross-border securities transactions among the seven partners that make up 50% of the European securities market as early as 2009.