BME posts a net profit of €164.9 m. in 2014, up 15.2% year on year

THE BEST ANNUAL RESULT SINCE 2008 

The net profit for the fourth quarter was €42.7 million, the best quarter in 2014

• Revenue grew 14.2% in the fourth quarter and 11.3% in 2014
• ROE climbed 5 points during the year to 40.9%
• The efficiency ratio improved 2 points during the year to 30.2%
• The total amount of investment flows channelled into the Exchange was €36.1 billion in 2014, a 12.5% surge, posi­tioning the exchange second in the European rankings in terms of funds placed

BME reported net profit for the year 2014 of €164.9 million, an increase of 15.2% year-on-year. This is the highest annual net profit since 2008. Results in the fourth quarter outstripped those of the other quarters in the year, with €42.7 million in net profit, up 12.4% compared to the same period in 2013, and 10.9% higher quarter on quarter.

Revenue during the fourth quarter was 14.2% higher than that generated a year earlier -totalling €93.4 million; €342.5 million over the entire year (+11.3%). The largest contributors to the increase in revenue and profit for the year were the Equity, Information, IT and Consulting, and Derivatives business units.

Operating costs in 2014 totalled €103.5 million, up 4.3% year-on-year. Fourth quarter operating costs stood at €29.3 million, 18.4% higher than a year earlier. The additional operating costs are those incurred by the Settlement and Registration business unit and the Clearing business unit as a result of the migration and adaptation activities carried out to comply with new European regulations and the reform of the Spanish Clearing and Settlement System.

EBITDA for 2014 increased by 14.6% year-on-year to €239 million. Meanwhile, the EBITDA of €64.1 million posted in the fourth quarter was 12.5% higher than in the same period of the previous year.

Both returns on equity (ROE) and the operating cost/income ratio (efficiency ratio) improved year-on-year. ROE climbed 5 points during the year from 35.9% to 40.9%, while the efficiency ratio improved 2 points from 32.2% at the 2013 close to 30.2%.

Earnings per share in 2014 totalled €1.98, of which €0.51 corresponded to the fourth quarter.

EQUITIES

Turnover continued to recover throughout 2014 compared to performance of previous years. Turnover from cash trades totalled €884.7 billion in 2014, 25.6% more than in 2013. Turnover from equity trades totalled €270.7 billion in the fourth quarter of 2014, 23.4% higher than in the same period in 2013.

The number of trades hit an all-time high in the year reaching 71.1 million, up 45.8% on the maximum a year earlier. The trend in the number of trades highlights the interest in and upturn in activity enjoyed by the Spanish market during the year thanks to the large investor and algorithmic trading segment, which is more intensive in terms of trade numbers.

EBITDA accumulated by the business unit during the year amounted to €118.4 million, having increased by 26.2% year-on-year.

The total amount of investment flows channelled into the Exchange was €36.1 billion in 2014, a 12.5% surge in new funds released onto the market compared to 2013; positioning the exchange second in the European rankings in terms of funds placed. Of this amount €14 billion was placed in the last quarter, up 113.7% from the same period in 2013.

SETTLEMENT

Revenues generated by the business unit in the fourth quarter totalled €22.1 million, 13% higher than those obtained in the same quarter in 2013. Cumulative 2014 revenues hit €83 million (+1.9%).

A total of 55.1 million trades were settled during the year, 15% more year-on-year. In the fourth quarter of the year, 16.2 million trades were settled, representing an uptick of 17% on the same period in the previous year.

Full-year operating costs amounted to €18.7 million and €6.5 million for the fourth quarter, rising 33.2% and 68.9%, respectively, as a result of internal and external costs of developments associated with the reform of the Spanish Clearing and Settlement system whose entry into force is scheduled for the fourth quarter of 2015. These costs led to EBITDA dropping by 0.8% in the fourth quarter compared to 2013, reaching €15.6 million. EBITDA for 2014 totalled €64.2 million (-4.7%). 

CLEARING

The business unit generated revenues of €17.7 million in 2014, 9.4% above the figure for 2013. Fourth-quarter revenues amounted to €4.6 million, down 2.3% on the same quarter a year earlier.

The business unit saw a rise in operating costs over the year and the quarter versus the previous year of 44.2% and 66.5%, respectively. This increase in operating costs is result of internal and external costs of developments associated with the reform of the Spanish Clearing and Settlement system whose entry into force is scheduled for the fourth quarter of 2015.

After deducting operating costs, the business unit’s EBITDA for the year totalled €9.7 million and €2.1 million for the fourth quarter, having fallen by 8.7% and 34.6%, respectively, compared to 2013.

INFORMATION

In the fourth quarter of 2014, the Information business unit continued along the same path as in previous quarters, boosting the number of subscribers, clients, connections and services. This upturn was reflected in revenues, which topped €10.7 million, 26.3% higher in the fourth quarter than in the same period of 2013. Off the back of the fourth quarter contribution, full-year revenues in 2014 hit €38 million, up 15.1% year-on-year.

EBITDA totalled €8.5 million in the fourth quarter, showing a 30.5% increase versus the same period in 2013, while EBITDA for 2014 reached €29.6 million (+16%).

The number of clients with direct connections to BME’s information servers hit a new high in the fourth quarter, having risen 21.2% since the same period in the previous year. Total connected clients, including direct and indirect connections, is up 4.8% from a year earlier.

DERIVATIVES

The total volume of contracts traded in financial derivative products in the fourth quarter of 2014 was 10.7% lower than in the fourth quarter of 2013. Nevertheless, the volume accumulated over the entire year exceeded 56 million contracts; up 2.9% compared to the 2013 total.

Despite the overall drop in the number of contracts in the fourth quarter, the robust performance of the index-linked derivatives contracted had a positive impact on the unit’s revenues. Revenue in the fourth quarter totalled €3.3 million, up 13.2% on revenue obtained during the same period in 2013. Cumulative revenue for 2014 amounted to €12.4 million, an increase of 6.6% year-on-year. 

EBITDA for the fourth quarter reached €2 million (+13.7%) and it totalled €7.1 million in 2014 (+17%).

FIXED INCOME 

The trading volume of fixed-income securities in 2014 stood at €1.25 trillion, 10.5% down versus 2013. Performance was better in terms of nominal amount traded, up 52% year-on-year, although the uptick was underpinned by public debt issues, since corporate fixed-income issues listed shrank 11.9%.

Despite the falls in trading volume and admissions of private fixed-income issues, the surge in cash trading volumes and the gradual rise (especially in the fourth quarter) of admissions in the private fixed-income segment and the MARF enabled the Fixed Income business unit to post a year-on-year drop in revenue of just 2.8% at year end and achieve a slight rise of 0.1% in the fourth quarter compared to a year earlier.

The relative improvement in revenues came at the same time as the progress made to contain costs. As a result, the business unit was able to grow EBITDA by 3.7% (€6.5 million) over the year, and by 32.6% (€1.5 million) in the quarter versus 2013.

IT & CONSULTING

The diversification of IT and Consulting activities swayed in favour of the fourth quarter results. Revenues totalled €5.1 million, rising 38.6% compared to those generated in the fourth quarter of 2013. EBITDA climbed 141.6% from €884,000 in the fourth quarter of 2013 to €2.1 million in the fourth quarter of 2014.

The business unit’s year-end figures for revenues and EBITDA were also positive. Revenues rose year-on-year by 11% to €18.8 million, while the unit generated EBITDA of €7.8 million, 16.1% up on the €6.7 million posted a year earlier.