- The General Meeting agrees to pay a final dividend of €82.13 million.
- The company’s pay-out stands at 86%, among the highest in the industry worldwide.
- BME has distributed over €850 million since 2002.
- BME posted a net profit of €33.5 million in the first quarter of 2009.
- BME maintains an exceptional operational gearing. The ratio of the operating cost base covered by revenues not linked to trading volumes reached 107% in the first quarter of 2009.
BME’s General Shareholders Meeting, which was held today in Madrid, agreed to pay a final dividend of €82.13 million– or €0.986 per share. Combined with the €82.13 million distributed in January, this payment brings the total for 2008 to €164 million, in line with the ordinary dividend paid out in 2007.
This dividend puts the total payout from 2008 profits at 86%, which is among the highest payout ratios in the industry, the second highest among the major listed Spanish companies and 30% higher than the average payout among IBEX 35® companies. Based on current stock prices, the dividend yield stands at around 10%.
BME ended the year with net profit of €190.7 million, a decrease of 5.2% from an exceptional year in 2007. Still, the 2008 profit figure represented an increase of 46.1% over 2006, thus consolidating an upward trend: compound annual growth in net profit of 26.8% over the past five years. 2
SPEECH BY THE PRESIDENTS OF THE COMMITTEES
In her speech to the General Meeting, the Chairwoman of BME’s Audit Committee, Margarita Prat, an independent director of the company, reviewed the committee’s activities in 2008. She highlighted the committee’s approval of the company’s annual accounts and management report – both individual and consolidated – for 2008.
In his speech, the Chairman of the Appointments and Remuneration Committee, Manuel Olivencia, an independent director of the company, provided information on the committee’s activities during the year. He highlighted the reports in favour of the reelection of Tomás Muniesa Arantegui, Antonio J. Zoido Martínez, Joan Hortalá i Arau and Ramiro Mato García-Ansorena as members of the Board of Directors for a statutory period of four years.
These reelections were today approved at the General Meeting.
SPEECH BY ANTONIO ZOIDO
The Chairman of Bolsas y Mercados Españoles stressed that "BME’s strategy has been, and will continue to be, to pass all improvements in efficiency on to the shareholders. In this way dividends become the most direct form of allowing shareholders to participate in the company’s ability to compete". Antonio Zoido reiterated that since its creation, in 2002, BME has distributed over €850 million in dividends.
During his address to the company’s shareholders, Antonio Zoido stated that "against this challenging economic and financial backdrop, the strength of BME’s integrated business model, which is efficient and effective in controlling costs and generating synergies across its seven business units, helped soften the blow of the global financial crisis and the ensuing drop in trading volumes on some markets".
The Chairman of BME also said that "the integrated business model not only provides a solid basis for growth, it also contributes to raising operating efficiency, which is a cornerstone of our strategy. The efficiency ratio for 2008 was 29.2%, which is much more favourable than the sector average of 46%".
FOLLOWING THE CRISIS, A MORE FAVOURABLE ENVIRONMENT
In connection with the unfolding crisis, Antonio Zoido said that "to tackle the prevalent and widespread lack of confidence, it seems vital to foster 3
transparency and rapid disclosure, liquidity, rigour and market discipline, to establish strict and prudent requirements, adequate risk control, correct asset valuations and the ability to form credible prices".
"The crisis has reinforced the exemplary role played by the stock exchange in the economy and financial system. As has been widely acknowledged, in the face of a far-reaching liquidity crunch, the stock exchanges emerged as a fundamental liquidity benchmark and a model of reliability and transparency", added the Chairman of BME.
EQUITIES, AN OPPORTUNITY AND AN INDICATOR
"I agree with those who believe that the partial recovery of the $34 trillion of equity value that has been wiped out worldwide could play a special role in a global economic recovery", stated Antonio Zoido, who added that the equity rally in the United States and the European Union in past weeks alone has created value of around $7.4 trillion, equivalent to about five times the Spanish GDP.
Following the sharp correction of the past year and a half, the P/E multiple of many listed companies has reached record lows in many markets. At the end of March 2009, Spanish equities were trading at a P/E of 7.3 times, compared to a monthly average of 16 times during the last 23 years.
In Spain we have witnessed P/Es as low as this on just two occasions in the last 30 years, when the 10-year bond rate traded at between 13% and 16%; now it stands at just above 4%.
In conclusion, Antonio Zoido highlighted that all change brings risks, but also opportunities, and the international financial crisis presents us with the opportunity to improve the current system. Against this backdrop, stock exchanges need to be assessed on their proven ability to carry out, efficiently and responsibly, their mission, even in the most difficult of times.
SPEECH BY THE FINANCIAL DIRECTOR
In his speech, BME Finance Director Javier Hernani said that "BME’s business model continues to combine a diversification of revenue sources and cost control, while at the same time integrating the entire stock market value chain". He added that "looking back five years, it is worth mentioning that the compound revenue growth rate stands at 15%, in contrast with a compound cost growth rate of 2.7%. This data prove the solid operational gearing on which we manage our resources".
The solvency and robustness of BME’s balance sheet are a distinctive feature of the company: the company has no debt and its own equity at the end of 2008 stood at €466 million. If the final dividend proposed at the General Meeting is deducted, the company’s total own equity on a consolidated basis would stand at 383.9 million euros. 4
During his speech to shareholders, Javier Hernani reviewed BME’s main financial figures and stressed that efficiency and profitability have become the company trademark in the sector where it operates. Earnings per share totalled €2.28 , the net profit for 2008 brings ROE to 39.4%, the efficiency ratio stands at 29.2% and the margin on sales, measured as net profit to total operating revenue stands at 54%.
"As we have seen, the deterioration of the economic and financial scenario has been accordingly reflected in the results posted by BME in 2008 and its effect still persists in the first quarter of 2009. The company’s net profit for the first quarter 2009 was €33.5 million, a 40% decline from the outstanding first quarter 2008", added BME’s Financial Director when mentioning the results for the first quarter 2009.
BME has a very positive operational leverage, which enables it efficiently to convert growth into profit with great efficiency. BME currently covers its cost base with revenue not linked to trading volumes. The ratio of the operating cost base covered with this kind of revenues reached 107% for this quarter. 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. An eventual rise in trading volume will contribute directly to the company’s bottom line.