- The General Meeting agrees to also distribute a final dividend of €50 million
- The company’s pay-out stands at 89%, one the highest rates for any listed company and in the Exchanges sector
- BME has distributed over €1 billion in dividends since the company was founded in 2003
- BME posted a net profit of €36 million in the first quarter 2010, up 8% on the same period in 2009
- The ratio of the operating cost base covered by revenues not linked to trading volumes reached 105% in 2009, 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 €83.3 million interim dividend against 2009 earnings paid out in September and December last year, total €164 million (a total dividend of €1.972 per share).
BME posted net profit of €150 million in 2009, a generally difficult year for companies that manage stock markets. These results have, though, allowed the company to maintain its high levels of efficiency and profitability.
During his address, the Chairman of BME highlighted that “in one of the most difficult years we have known –and faced with the current economic crisis- BME has made a profit that can be considered to be highly satisfactory, and it has held to its commitment to providing favourable returns to its shareholders through dividends”. Antonio Zoido stressed that since the company was founded, in 2003, it has distributed over €1 billion in dividends.
BME’s Pay Out remains at 89%, up from 86% in 2008 and one of the highest rates for any listed company and for any company in the Exchanges sector. Based on the stock’s current price, the dividend yield stands at around 9%.
During its address to the shareholders, Antonio Zoido stated that “If we compare these results with those of the world’s other main Exchanges over the same period (for example, the NYSE Euronext reported a 130% drop in profit to 152 million; Deutsche Börse fell by 52% to €496 million; the Toronto Stock Exchange fell by 42.5% to €69 million and the net loss of €29 million posted by the Tokyo Stock Exchange), we can conclude that BME’s performance was very satisfactory”.
Thanks to the company’s sound financial structure and the effort made in achieving efficient management of the cost base, these results have allowed the company to develop its strategy, initiatives and projects in an agile and efficient way. “Proof of the company’s good management is that its efficiency ratio, measured as operating costs divided by operating income, stood at 33.7% at year-end 2009, and that ROE stood at 32.5% in 2009 – both of these remain benchmarks in the sector.”
According to the Chairman of BME “one of the most important lessons we have learnt from this crisis is that market liquidity cannot be taken for granted. On the contrary, liquidity is a scarce commodity that requires certain conditions to develop over the medium term, and it has specific needs and priorities that must be met for it to exist. In this sense, I believe the BME has demonstrated its resilience, as liquidity in Spanish stocks has remained excellent”.
The financial crisis has prompted inevitable actions in favour of better financial regulation.
These regulatory processes may be very important for the development of the markets. The Chairman of BME stated: “in my opinion, regulatory processes must be based on greater transparency; lower risk which is better controlled; providing more information and better price setting, in addition to increasing protection for investors”.
In his speech to the shareholders, Antonio Zoido mentioned that “regulated markets have not failed their financial systems. They have operated - and continue to operate - as expected. During times of crisis they have worked very well. It would have been extremely serious if, at certain critical moments, organised markets had not enjoyed the credibility and functionality required for the price formation of the equities traded on them”.
Transparency has become an essential factor in market credibility. Price formation and provision of liquidity are two fundamental aspects of stock markets. “The current European regulatory framework is leading to fragmentation of order flows and the abusive use of prices formed in regulated markets”.
According to the Chairman of BME, the Diversification of business areas and the development and implementation of new products and services has developed into a highly important strategic factor. “As a result, in 2009 the company dedicated a great deal of effort and channelled resources into driving forward a number of diverse projects, some of which also have a clear international orientation and place BME at the forefront”.
In his speech, BME Finance Director Javier Hernani said that, based on the company’s market model, “the efficient and integrated management of the cost base eliminates overlappings, allows resources to be shared and results in more homogeneous results along the 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 continues to cover its cost base with revenue not linked to trading volumes.The ratio of the operating cost base covered with this kind of revenues reached 105% in this quarter. This means that every euro generated from the trading or the settlement of any equity, fixed income and derivatives instrument automatically becomes part of the company’s operating margin”.
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 2009 stood at €453 million.
BME has greeted the year 2010 on a more positive tone than last year, with net profit of €36 million in the first quarter, up 8% from the same period in 2009 and up 7% from the fourth quarter. It is in fact the best quarterly result posted by BME in the last five quarters.