- The General Meeting agrees to distribute a final dividend of €50 million and a €31 million extraordinary dividend
- The company’s pay-out stands at 86%, one the highest rates for any listed company in Spain and the highest in the Exchange operators sector
- The ratio of the operating cost base covered by revenues not linked to trading volumes reached 112% in 2011, the best in the history of BME
- BME posted a net profit of €35.5 million in the first quarter 2012
BME’s General Shareholders Meeting, which was held today in Madrid, agreed to pay an extraordinary dividend of €31 million – or €0.372 per share. This, combined with the €50 million final dividend (a gross €0.6 per share) it will distribute and added to the interim dividend against 2011, paid out in September and December last year, total €164 million (a total dividend of €1.972 per share), the same dividend as last year.
BME’s Pay Out remains at 86%, one of the highest rates for any listed company in Spain and the highest in the sector of exchange operators.
BME posted net profit of €155.1 million in 2011, up 0.6% from 2010 in a year marked by the company’s 180th anniversary, a year plagued by financial tensions and a decline in the global economic outlook. Antonio Zoido said during his address to shareholders: “stripping out the effect of extraordinary items reported in both years, profit for 2012 was up 3.3% year on year”
The Chairman of BME highlighted that these healthy results for 2011 are all the more impressive given the fierce levels of international competition and the regulatory bans which took a heavy toll on trading in Equities and Derivatives.
“Operating costs – added Mr. Zoido - fell 4.7% to reach €98.3 million, while EBITDA remained unchanged at €223.1 million. These results, coupled with BME's streamlined financial structure and now extremely efficient cost management, have enabled the company to implement its strategy, initiatives, and projects effectively and flexibly”
BME's prudent management of resources and its increased value are reflected in two parameters typically used to draw comparisons with the competition: the efficiency ratio closed 2011 at 30.6%, representing a 14-point lead over the average for the sector. This ratio measures the percentage of costs incurred in relation to each unit of revenue obtained. In addition, year-end ROE (35.1%) was 17 points above the sector average. ROE stands for return on equity.
As regards the operational gearing of BME, Mr. Zoido stressed that “Revenue not linked to trading volumes covered 112% of the cost base at year-end, an extremely good and unique position to be in and the best result in the history of BME”.
During his address to shareholders, Antonio Zoido summarised the financial results for the first quarter of 2012, with net profit reaching €35.5 million. These welcome figures for March were unable to offset the drop in trading witnessed in January and February. Nevertheless, “However, I would like to highlight – added Mr. Zoido – that the monthly gross result of BME in March, at €18.3 million, is the best figure recorded by BME since August 2011”.
THE SPANISH STOCK EXCHANGE HAS FULFILLED ITS FINANCING ROLE
Investment flows channelled through the exchange in 2011, including both new shares and those already in circulation, were up 35.1% on the same figure for 2010.
These figures make BME (with US$53.28 billion) the leading European market in capturing new investment flows towards companies, and the fourth largest worldwide, behind only the New York Stock Exchange (US$111.33 billion), the Shenzhen Stock Exchange (US$73.77 billion), and the Hong Kong Stock Exchange (US$63.04 billion), according to data published by the World Federation of Exchanges (WFE) at the close of 2011.
“I would also highlight – added Mr. Zoido - the excellent performance of the Mercado Alternativo Bursátil, (MAB). MAB has significant growth potential, following a natural process that will take time. In 2011, five companies were admitted to trading on MAB and, perhaps more interestingly and significantly, others have proceeded with rights issues. In 2012, a further four companies have been added, bringing the grand total to 21.”
CONSOLIDATION IN THE INDUSTRY
During his address to shareholders, Antonio Zoido summarised and commented on the corporate moves initiated in 2011, which did not materialise.
Antonio Zoido said: “BME has kept a prudent stance. These are extremely complex deals involving the media, politicians and regulatory bodies and I believe our cautious strategy has been spot on. All these failed initiatives have naturally taken up the valuable time and resources of the directors, while leading to significant associated costs. The vertical integration model, already in place at BME since 2001, is the operational route cherished by most stock exchanges, including those that were critical of this type of structure. We will continue to analyse, as we have always done, any interesting opportunities that may come up for improving the future of BME and its strategic position”
BME AND THE NEW REGULATIONS
At the end of his address to the Annual General Shareholders Meeting, Antonio Zoido analysed the context in which the company operates and the new regulations that are being drafted. According to the Chairman, “BME is currently operating within an unsatisfactory framework, one plagued by excessive fragmentation, particularly within the share markets. We are confident that this fragmentation will be corrected through the new regulations as I believe it undermines the economic role of our stock markets”.
Organised markets, particularly share markets, have reacted well and very transparently to the crisis and are clearly the component of all financial systems worldwide that has worked the best. The markets have even been able to provide much needed financing to all kinds of companies, particularly when we consider the current importance of financing through capital given the high levels of existing debt. “Certain supranational institutions, in their attempts to resolve some of the problems stemming from the crisis, are not attaching sufficient weight to this crucial role of channelling savings and investments towards companies. It would therefore be enormously beneficial if we could receive clearer and more unequivocal support on the vital role the stock markets have to play”.
In connection with the increase in transparency within bond markets and the efforts made to bring them into line with stock market operations, Zoido stated that “volumes at SEND, the Fixed Income electronic platform launched by BME in response to this endeavour, are increasing and continue to grow at a significant pace”.
SPEECH BY THE FINANCIAL DIRECTOR
In his speech, BME Finance Director Javier Hernani said: “the company’s business model continues combining firmly revenue diversification and const control while integrating the whole market value chain”. He also stressed that “BME has a very positive operational leverage, which enables it efficiently to convert growth into profit with great efficiency. Revenue not linked to trading volumes covered 112% of the cost base at year-end 2011, a 10 point improvement on the previous year. This means that every euro generated from the trading or the settlement of any of the Equity, Fixed Income and Derivatives instruments traded on the market automatically becomes part of the company’s operating margin. Therefore, an eventual pick up in trading volumes will be directly reflected in the profits generated by BME”.
As regards the shareholder remuneration policy, Javier Hernani concluded his address highlighting that “BME’s pay-out stands at 86% of 2011 net earnings, one of the highest ratios in the sector. The company’s dividend yield, with current BME prices, would come in at over 11%”.