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- Antonio Zoido, re-elected Chairman of BME
- The General Meeting of BME agrees to distribute a final dividend, refund contributions to its shareholders and distribute an extraordinary dividend
- The efficiency and ROE ratios compared favourably with the competition and were above (over 13 and 18 points respectively) the sector average in 2012
- BME posted a net profit of €33 million in the first quarter 2013
- In the first quarter, BME ranks 2nd in Europe and 5th in the world by investment flows channelled to companies, at over $10 billion
- Re-election of Joan Hortalá i Arau, Ramiro Mato García-Ansorena, Tomás Muniesa Arantegui as Directors. Appointment of Pablo Forero Calderón as new Director
BME’s General Shareholders Meeting, which was held today in Madrid, agreed to pay a final dividend of €0.60 per share, as well as a reduction of the company’s share capital to refund contributions to its shareholders by decreasing the par value of each share by €0.23, and the distribution of a €0.142 per share extraordinary dividend against unrestricted reserves. After adding up these items, the total payment by BME to its shareholders represents an amount of €81 million.
The approval of these payments, together with those paid out in September and December last year, bring a total dividend of €1.97 per share, which is, in comparative terms, the highest remuneration received by shareholders in the stock market operator sector.
This policy is possible thanks to a number of factors, among them the operating leverage. That is, revenue not linked to trading volume allows the company to cover its cost base comfortably. “Revenue not linked to trading volumes covered 118% of the cost base, up 6 points from the ratio of 112% posted by the company at the end of 2011 and is, once again, well above that of its peers”, stated Antonio Zoido, Chairman of BME, during his address to the General Shareholders Meeting.
In addition, BME has just approved a plan to promote financial culture among its retail shareholders, free of charge to them, in this way fulfilling the commitment taken on by the Chairman, Antonio Zoido, last year.
BME obtained in 2012 satisfactory results despite the difficult environment, with a net profit of €135.5 million, down 12.7% year on year while revenue came in at €296.2 million, down 7.8% on 2011. The operating costs for the past year totalled €98.9 million, up only 0.6% year on year, which is well below the inflation rate for 2012.
During his speech to the company’s shareholders, Antonio Zoido stressed that “the business has kept developing despite the uncertainty caused by the crisis. The result has been always positive and the company’s financial structure remains very sound and without debt”.
Prevailing uncertainty has also impacted trading volumes. In 2012 the number of trades on the stock market decreased by 11% and the trading volume was down 24.5%, partly due to the ban on short selling, which between January and February was limited to financial securities and was extended to all securities on the Spanish market from July to February 2013.
The Chairman of BME stated that “the ban on short-selling for all listed companies has contributed to lower Equities and Derivatives trading, while at the same time diminishing liquidity, resulting in increased bid and ask spreads and higher implicit transaction costs for investors”.
However, the slump in trading on the Spanish Stock Market was mirrored across the board, with decreases of 24% on the German stock market, 23% on Nasdaq and 25% on the New York stock market.
The trend followed by the main financial performance indicators compared favourably with the sector average. The efficiency ratio was 33.4% for 2012, 13 points above the sector average while ROE was 32% at the end of last year, more than 18 points above the corresponding ratio posted by the competition.
THE SPANISH STOCK EXCHANGE, LEADER IN FINANCING TO COMPANIES
In 2012, the Spanish stock market has been very active in terms of capital increases. The Spanish market has taken the lead in the financing of companies through capital increases, channelling €29 billion, in this way ranking sixth worldwide for new investment flows channelled to companies.
Based on this measure, BME maintains a very solid position in the world stock exchange ranking in the first quarter. With data of the WFE, BME ranks second in Europe and fifth in the world, with more than $10 billion channelled to companies.
MORE CAPITAL AND LESS DEBT
The Chairman of BME stressed during his address that the crisis has shown how the excessive recourse to debt does not support growth and therefore a new financing model, less dependent on leverage, should be promoted. Finding ways to stimulate employment becomes a top level priority. “New funding methods that complement traditional bank credit must be found to finance companies, which are the main creators of employment. Regulated markets stand out as offering one of the most compelling alternatives to achieve this objective”, stated Zoido.
Stock markets have a crucial role to play in coming out of the crisis. Therefore, it could be counterproductive to impede this mechanism for cleaning up and bolstering economies. New taxes or restrictions on trades could impact negatively on the cost of capital, at a time when this capital is needed by companies to finance themselves. It could equally even discourage investors from investing in share capital.
The worst forecasts of a reduction in trading and the displacement of investments towards unregulated instruments are fulfilled by the Financial Transaction Tax being contemplated in Europe, for example. Antonio Zoido said, “We hope that the authorities reflect on whether it is opportune and advisable to introduce this tax, given that trading volumes and market liquidity would be prejudiced if this tax were introduced. It would also be difficult to apply this tax across the board, which would nonetheless be a requisite for ensuring it is neutral and does not distort the market. The final outcome could be an increase in the cost of capital, and could reduce investments in share capital and divert funds to other financial centres. Besides, the cost savings for issuers and investors that MiFID was intended to bring about to stimulate competition, would be offset by higher transaction costs”.
The General Shareholders Meeting also approved the re-election of Antonio Zoido as Chairman of BME, and the re-election of Joan Hortalá i Arau, Ramiro Mato García-Ansorena and Tomás Muniesa Arantegui as Directors. Besides, it appointed Pablo Forero Calderón to the Board, representing La Caixa.
SPEECH BY THE GENERAL MANAGER
In his speech, BME General Manager, Javier Hernani, stressed how the solvency and solidity of the balance sheet continue being distinctive features of the robustness of the company: the generation of cash by the company from ordinary activities contributes a large amount of financing for BME, allowing the company to fund investment projects without external debt. “BME covers its cost base with revenue not linked to trading volumes. An eventual pick up in these will be directly reflected in the profits generated by BME”, added Hernani.
As regards the company’s results in the first quarter, Javier Hernani stressed the lifting of the short-selling ban and the subsequent, gradual pick up in trading volumes. In the first quarter, “BME posted a net profit of €33 million, down 7.1% from a year earlier, but up 8.55% from the fourth quarter in 2012 and up 6.45% from the third quarter in 2012. The Equity and Derivatives business units also show gradual improvement”, added Javier Hernani.
