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Deutsche Börse AG concluded financial year 2006 with the best result in its history. According to the preliminary figures published by the company on Wednesday, sales revenue climbed by 14 percent to €1,854.2 million in 2006 (2005: €1,631.5 million). The company earned a further €150.7 million in net interest income from banking business (2005: €112.7 million). The above-average increase in EBITA (Earnings before interest, tax and goodwill impairment) of 45 percent to €1,029.1 million (2005: €710.9 million) is due to the strong sales growth in all market areas and effective cost management. The net income for 2006 reached €668.7 million, as against €427.4 million in the previous year. Basic earnings per share, calculated on the basis of a weighted average number of 99.4 million shares outstanding, increased considerably by 68 percent to €6.73 (2005: €4.00).
Reto Francioni, CEO of Deutsche Börse, said, “The preliminary figures show that we were once again able to considerably increase our sales revenue and result in 2006 as against the previous year. Furthermore, we laid the foundation for further organic growth in all business segments in 2006. The strong start to the year supports our expectation that we will be able to set new records with respect to both sales and earnings in financial year 2007.”
Strong performance in the fourth quarter made a significant contribution to the record results for financial year 2006: sales revenue increased by 14 percent to €466.4 million (Q4/2005: €408.8 million). At €310.0 million, costs, on the other hand, remained on the same level as in the same quarter of the previous year (Q4/2005: €306.3 million) despite the considerable increase in business volume and related additional costs, e.g. for fee and commission expenses from banking business, and despite higher provisions relating to the stock option program due to the substantial increase in the share price. EBITA thus amounted to €225.7 million – an increase of 26 percent (Q4/ 2005: €178.9 million). Basic earnings per share rose to €1.50 in the fourth quarter (Q4/2005: €0.96).
The Executive Board of Deutsche Börse is proposing to increase the dividend from €2.10 to €3.40 per share. This would correspond to a dividend distribution ratio of 50 percent, which falls within the guidelines for the ongoing capital management program that were unveiled in May 2005. Due to the excellent business performance in 2006, Deutsche Börse plans to buy back further shares totaling an amount of €125 million before the Annual General Meeting on 11 May 2007. Together with the proposed dividend of €3.40 per share for 2006, this would then produce a total capital management program volume of around €1.9 billion up to and including May 2007. Furthermore, the company wants to cancel 2 million shares from the shares held in treasury by the end of the first quarter of 2007. This measure will reduce the number of outstanding shares in the company to 100 million, as against 111.8 million prior to the launch of the program in 2005.
Mathias Hlubek, CFO of Deutsche Börse, said, “These excellent results will allow us to buy back additional shares totaling some €125 million before this year’s Annual General Meeting. The systematic implementation of our ongoing capital management program means that the result for 2006 is only distributed among an average of 99.4 million outstanding shares, as against around 111.8 million shares before the program was launched in 2005.”
Subject to the approval of the Supervisory Board and the Annual General Meeting, Deutsche Börse wants to implement a capital increase using share premium and provide shareholders with an additional new share, known as a bonus share, for each of their existing shares as part of this measure. This step is designed to further boost trading liquidity in Deutsche Börse’s shares. The shareholders must consent to a corresponding proposal at the Annual General Meeting before the measure can be implemented. Deutsche Börse will release details with respect to the technical implementation at a later stage.
Segment reporting for financial year 2006
In the Xetra segment, sales revenue rose by 27 percent to €314.1 million, as a result of increased trading activity both on the Xetra trading system and in floor trading (2005: €247.7 million). The number of transactions on Xetra rose by 32 percent to 107.7 million (2005: 81.3 million transactions). The number of contract notes in floor trading rose by 22 percent to 33.8 million (2005: 27.7 million contract notes). EBITA in the segment grew by 59 percent to €179.0 million (2005: €112.6 million). The considerable increase in profitability is due, in particular, to the company’s continued commitment to strict cost management and to the high scalability of the business.
Trading activity in the Eurex segment increased by 22 percent as against the prior year and reached a new record of 1,527 million contracts traded (2005: 1,249 million). The equity index products made the largest contribution to this growth, increasing by 46 percent in the year under review. Thanks to the strong growth in contracts traded, the Eurex segment’s sales revenue increased by 19 percent to €597.8 million (2005: €503.5 million). With costs down on the prior year, Eurex was able to report an above-average increase in its EBITA of 55 percent to €392.7 million (2005: €253.9 million). The sale of 70 percent of U.S. Futures Exchange LLC to Man Group plc. had a positive impact on the segment result: the transaction generated extraordinary income of around €24 million in the third quarter of 2006.
Clearstream’s business was characterized by an increase in the volume of securities held in custody and a rise in the number of settlement transactions. In the custody business, the total value of securities held in custody at Clearstream, the figure used to calculate custody fees, increased by 11 percent to €9,696 billion (2005: €8,752 billion). In Clearstream’s settlement business, the number of settlement transactions increased by a total of 17 percent to total 62.9 million (2005: 53.9 million). Sales revenue in the Clearstream segment increased by 11 percent to €700.3 million in the year under review (2005: €630.5 million), while net interest income from banking business grew by 34 percent to €150.7 million (2005: €112.7 million). EBITA in the segment grew by 39 percent to €324.3 million (2005: €233.4 million). This was possible because costs only increased slightly year-on-year, while sales revenues and net interest income from the banking business, on the other hand, increased considerably.
In 2006, Market Data & Analytics generated sales revenue of €148.1 million, which corresponds to an increase of 14 percent as against the previous year (2005: €130.0 million). This was driven by increased demand for real-time trading data. EBITA in the segment grew by 29 percent to €58.7 million (2005: €45.5 million). Despite a slight rise in costs due to investments in new products and services, the increased revenues prompted a significant improvement in the segment’s result as against the prior year.
When examining the results recorded by Information Technology, we must take into account the structural changes in the segment as against the previous year. entory AG and its subsidiaries were sold to Softlab GmbH on 1 October 2005. After adjustment for the revenues of the entory sub-group, external revenues increased by 17 percent to €93.9 million (2005 including entory: €119.8 million). This increase is due mainly to the higher transaction volumes on the IT platforms operated. The internal revenue generated with other segments within Deutsche Börse Group, on the other hand, remained virtually unchanged year-on-year at €344.5 million (2005: €340.6 million). EBITA in the Information Technology segment grew by 3 percent to €93.8 million in 2006 (2005: €91.1 million).
