- 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
- BME posted a net profit of €41.5 million in the first quarter 2011, up 15% year on year
- The ratio of the operating cost base covered by revenues not linked to trading volumes reached 102% in 2010, which indicates that BME maintains a favourable operational gearing
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 2010, 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 €154.2 million in 2010, up 2.7% from 2010, in what was a generally difficult year for companies that manage stock markets. Commenting on these figures, Antonio Zoido, Chairman of BME, said: “stripping out extraordinary items recorded in both years, the aggregate profit figure was 8.9% higher than in the previous year. This result is very satisfactory, given that this comparison is more consistent and it better gauges the company's performance”.
During his address to shareholders, the Chairman of BME stressed that the positive results are the product of the business model adopted by the company, “which is based on the vertical expansion of business activities, the control of costs, which in 2010 decreased by 3.4%, the diversification of products and services, and the generation of revenues not directly linked to transaction volumes. Diversification has become one of the cornerstones of our strategy, as is made very clear by one indicator in particular: revenue not directly linked to volumes was equivalent to 102% of the cost base at year-end”.
Antonio Zoido highlighted that during a very challenging 2010, BME managed to maintain a considerable degree of stability in earnings, despite being highly dependent on the economic cycle due to the nature of its business. “The performance of two of BME's main financial management monitoring indicators – added Mr. Zoido - compare very favourably with those of other international market operators. This has been the case year after year”. The efficiency ratio improved, falling to 31.6% at year-end compared to 33.7% in 2009. Similarly, Return on Equity (ROE) was 34.3% in 2010 and 32.5% in 2009.
In his speech, Antonio Zoido advanced the financial results of the company for the first quarter of 2011 and stated that “Market performance in the first three months of the year has been positive and the company’s financial results have likewise been very favourable. Net profit grew to €41.5 million, a 15% increase over the €36.1 million reported in the first quarter of 2010”.
A POSITIVE YEAR 2011 FOR THE FINANCING OF COMPANIES
The year 2011 can be, according to the Chairman of BME, a positive year for companies, the financial sector, investors, the State coffers, the Stock Exchange and society at large, as “in recent months there has been news of numerous plans to carry out sizeable IPOs in the year: the announcements by the authorities of forthcoming privatisations, such as of the State lottery and the Canal de Isabel II water company, as well as the intentions of several savings banks, such as Bankia, Caixabank, Banca Cívica and Banco Mare Nostrum and of private companies, including Atento, Talgo and Día”.
CHALLENGES IN THE SECTOR: NEW REGULATIONS
During his address at the Annual General Shareholders Meeting, Antonio Zoido touched upon the major issues affecting the sector today:”In 2011 and 2012, a slew of regulatory changes will affect the sector, not only because the European Union is going to create three new oversight bodies, including the European Securities and Markets Authority (ESMA) for the securities sector, but also because new rules are being drafted”.
According to Zoido, “transparency should be a relevant element that regulators take into account in devising each of these rules. The difficulty lies, in fact, in ensuring transparency. It is my opinion that the required transparency will be brought about only by strictly enforcing regulations. In addition, transparency should be broadened to include all kinds of markets and assets, such as Fixed Income, especially with regard to retail investors”.
The future model for the sector is being shaped as a highly regulated industry with a strong degree of oversight. Antonio Zoido added that in this context, “BME's strategy is centred on continuing to strengthen the foundations of the business, that is, to do, in a highly consolidated manner, what we know how to do, which is to manage the Spanish securities markets day in and day out, effectively, with transparency and through innovation, and using the best technology so as to maximise liquidity and access for investors and issuers.
THE STOCK EXCHANGE CONSOLIDATION
At the end of his address to the Annual General Shareholders Meeting, Antonio Zoido dealt with the corporate moves that are taking place in the sector and stated: “BME continually analyses its strategy to reflect a range of factors including: the development of the markets, the needs of its clients, competition, regulatory changes and, naturally, mergers and acquisitions in the sector.
BME performs this analysis with a dual objective, as it has already noted on numerous occasions: to create shareholder value and to manage its markets with the utmost efficiency, security and transparency. And it does so secure in the knowledge that it leads the way in profitability and efficiency and that it has built a diversified and robust business model with an exceptionally bright future”.
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. BME covers its cost base with revenue not linked to trading volumes. This means that every euro generated from the trading or the settlement of any of the 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”.
The solvency and robustness of BME’s balance sheet remain a distinctive feature of the company: the company has no debt and its own equity at the end of 2010 stood at €448.4 million.
As regards the shareholder remuneration policy, Javier Hernani concluded his address highlighting that “BME’s pay-out stands at 86% of 2010 net earnings, one of the highest ratios in the sector, the second highest among the major Spanish listed companies and 30 points above the average pay-out of IBEX 35® companies. The company’s dividend yield, with current BME prices, would come in at over 8.5%”.
