BME to distribute a final dividend to its shareholders 37% higher than last year´s

ORDINARY GENERAL SHAREHOLDERS’ MEETING OF BME

• The General Meeting of BME agrees to distribute €0.89 per share on 8 May
• Non-resident investors own 43% of the Spanish listed shares at end-2014, a record high
• BME’s net profitfor the first quarterof2015was47 millioneuros,up 11.5% year-on-year
• The efficiency ratio and ROE were favourable (17 and 23 points respectively) above the sector average in 2014
• The cost base coverage ratio in 2014 was 112%.
• Board members Juan March and Santos Martínez Conde are ratified

BME’s General Shareholders Meeting, which was held today in Madrid, agreed to pay a final dividend of €0.89 per share on 8 May, which is 37% higher than that paid for the same concept the previous year. The total ordinary dividend payment to its shareholders is of a gross €1.89 per share, a 15% increase on last year’s.

The company’s net profit in 2014 totalled €165 million, up 15.2% on the previous year, the best result since 2008.

The diversification of the BME’s revenue sources has provided the company with a solid position and a structure suited to confront the coming regulatory and technological changes. The years 2013 and 2014 saw the implementation of such services as REGIS-TR, Co-location Services, BME Clearing, Information Services, SEND for Public Debt, alternative market segments such as MARF, new IBEX indices and products that have met the demands of investors and the needs of listed companies. “Among the projects underway are the Cash Equities Clearing; Collateral Management, BME Securities Solutions; Feed for relevant facts and the creation of a fund subscription and redemption platform”, said Antonio Zoido.

In 2014, BME achieved the best results in six years, at a time when the Spanish Stock Market has reinforced its position as one of the most important in the world in terms of capitalisation, financing, dividends and liquidity. “The return on the IBEX 35® at the close of 2014 was +3.7% and remains positive at the start of 2015. Since 2013, the index has accumulated two consecutive years of gains, with growth of 42%. The valuation of many companies have picked up, the market volatility has halved compared to 2008 – when the crisis started – and the overall capitalisation of the listed companies stands at €1.2 trillion”, stated Antonio Zoido.

For the Chairman of BME, the year 2014 was marked by the return to the market of institutional and retail investors as well as the developments in the stock exchange business, which remains under the same foundations: growth of product and service offering, cost control and diversification of revenue sources, all this at the highest reliability and transparency levels. 

The appeal of the Spanish market among institutional and retail investors keeps growing, with households and non-residents as the preeminent owner groups. Households are again the second largest owners of listed shares, accounting for 25% of all, according to the latest data for 2014, which is more than double the EU average. As for non-residents “the data point to a record high in terms of share ownership, as they represent over 43% of the total, two points above the previous record”, added Antonio Zoido.

The investment flows channelled through the stock exchange in 2014 totalled €36.11 billion, up 12.5% year-on-year, ranking the Spanish market as second in Europe, only lagging behind London and taking its place among the top exchanges worldwide. The figure has tripled in the first quarter of the year compared to the same period in 2014. “Spain ranks second in the world in terms of the value of its IPOs in the first quarter, just behind Shanghai”, pointed Zoido.

The Chairman of BME also reflected on the alternative financing instruments with which the company contributes to the development and growth of the economy, the MAB and the MARF. “Any support of these markets and their investors will be beneficial to the recovery of the Spanish economy”, said Antonio Zoido.

“While we are facing a scenario that is complex but heartening and full of opportunities it is now the time for companies and markets to take centre stage. In the case of stock exchanges, to reactivate their financing role and as regards companies, to take this opportunity to improve their balance sheet structure and expand internationally through different channels”, stated Zoido. And to this end, he added, SMEs should change their structure and increase their size to become more productive and competitive and to have better access to financing.

The Shareholders’ General Meeting also ratified Juan March and Santos Martínez Conde. as members of the board.

SPEECH BY THE GENERAL MANAGER

In his speech, BME’s General Manager, Javier Hernani, stressed the financial soundness of BME’s balance sheet, as the company maintains its operational gearing intact and has no debt. The ordinary funds generated by the company allow it to sit on a high level of cash, which is enough to carry out its investment projects without debt.

BME converts growth into profit with great efficiency, thanks to its cost base coverage ratio with revenue not linked to trading volumes. This ratio reached 112% in 2014. Thanks to this situation, the pickup in trading volumes and therefore in the revenue derived from trading and settlement have become part of the company’s profit. 

BME ended the 2014 fiscal year with €418.9 million in equity, after deducting the €33.3 million and €50 million interim dividends distributed in September and December 2013 respectively. “If we deduct the final dividend (€74.2 million), the company’s consolidated total equity amounts to €344.7 million”, said Javier Hernani.

BME’s net profit takes ROE to 40.9%, a five-point improvement on the previous year and 23 points above the sector average. The efficiency ratio, which measures the percentage of costs incurred in relation to each unit of revenue obtained, stands at 30.2%, a two-point improvement on that for 2013 and more than 17 points above the sector average. For Hernani, this situation clearly indicates that “BME has turned its ​​efficiency and profitability into its hallmarks”.

The General Manager mentioned the first quarter’s main financial references. BME’s net profit for the first quarter of 2015 totalled €47 million, an increase of 11.5% on the year ago figure and 10.2% higher than the fourth quarter of 2014, showing an upward trend of three consecutive quarters and the strongest first quarter results since 2008.

Operating revenues for the first quarter were up 8.2% to €93 million and costs increased 6.5% during the same period. “Without the effect of extraordinary items – mainly associated with the Reform of Clearing and Settlement in Spain - costs would have fallen by 0.3%”, said Hernani.

To conclude its address and in connection with the distribution of dividends by the company, Javier Hernani highlighted that “BME distributes 96% of the company’s net profit for 2014, one of the highest pay-out ratios in the sector and in the Spanish stock market”.