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EBITDA margin: 66.3% in the 4Q08 vs. 68.0% in 4Q07; 68.0% in the FY08 vs. 62.9% in the FY07
Expenses reduction: decrease in the 4Q08 reflects delivery of mergers synergies - BRL 53.3 million annualized reduction in 4Q08 operational expenses compared to 2007 base (adjusted for inflation)
398
4Q07
356
4Q08
1.377
FY07
1.602
FY08
HIGHLIGHTS
DMA development in BM&F Segment: in Mar09 trades through DMA represented almost 7% of the total traded Decrease in volumes in 2H08: negative impact on the results, but partially offset by a higher turnover velocity (Bovespa Segment) and by a temporarily higher RPC due to the ending of the discount policy (BM&F Segment) Individual Investors: increase of their share in 2008 135
4Q07
128
4Q08
543
545
FY07
FY08
Cost savings: additional reduction in operational expenses, which would reach BRL 450 million
Dividends: BRL 139.4 million distribution of interest on shareholders equity and BRL 60.6 million in dividends
222
4Q07
202
4Q08
756
FY07
910
FY08
4Q08 Net revenues Operating expenses Operating Income Oper. Margin (variation in p.p) EBITDA EBITDA Margin (variation in p.p) Net income Net Margin (variation in p.p.) Diluted EPS 355.5 227.4 64.0% 235.6 66.3% 202.4 56.9% 0.101
2008 1,602.0 (544.5) 1,057.5 66.0% 1,089.4 68.0% 909.6 56.8% 0.452
2007 1,376.6 (543.4) 833.3 60.5% 866.2 62.9% 755.9 54.9% 0.376
(128.1) (134.7)
-4.9% (137.2)
Revenues: full year comparison shows a major improvement in 2008, but the 4Q08 trends shows the impact of the global crisis, with a large drop in the market cap levels Operating Expenses: declined in 4Q08 vs. 4Q07 by 4.9% and by 6.6% sequentially due to cost savings from the integration process
Revenues Pro-Forma
Gross Revenues composition Pro-Forma - 4Q08
BRL Thousands
Operational Revenues BM&F Segment Trading / Clearing fees Others Bovespa Segment Trading / Clearing fees Securities Lending Listing Depository and custody Trading access (Brokers) Other Operational Revenues Vendors Others Net Operational Revenues
4Q08
396,369 147,585 144,410 3,175 206,317 169,342 6,413 8,000 17,317 5,245 42,467 11,187 31,280 355,514
3Q08
454,914 170,386 167,832 2,554 264,601 225,291 12,368 7,496 15,868 3,578 19,927 11,523 8,404 408,756
4Q07
443,014 137,873 135,970 1,903 294,591 261,918 14,544 6,180 11,949 10,550 6,155 4,395 397,639
BM&F Segment (trading and clearing) 36% Bovespa Segment (trading and clearing) 43%
Others 21%
Despite the decline in revenues tied to trading activity, the revenues from other services increased by 88.1% over the prior year to BRL 82.6 million, mainly from: Depository: higher number of investors (mainly individuals)
Listing: Novo Mercado listing fee discount policy terminated
Revenue Margin
BM&F Segment - RPC (in BRL)
BM&F SEGMENT
The increase in the BM&F Rate per Contract (RPC) reflects the positive impact of the changes in the pricing policy as well as the BRL depreciation
1.522
4Q07
4Q08
2007
2008
BOVESPA SEGMENT
The margin reduction in 4Q08 is due to a higher participation of day trades in the total traded value
6.707
6.246
6.408
6.501
4Q07
4Q08
2007
2008
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
FX Rates (Thousands)
571 564 570 434 375 473
110 92 88
Indices (Thousands)
112 87 83 69 88
527
535
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
153
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
4Q07
1Q08
2Q08
3Q08
4Q08
2M09
2007
2008
2001
2002
2003
2004
2005
2006
2007
2008
*Relation of the trading value in the cash market and the market cap of the exchange
Expenses Pro-Forma
Operational expenses Pro-Forma 4Q08
BRL Thousands
Operational Expenses Personnel Data processing
4Q08
128,137 50,945 28,674 10,338 8,212 5,353 5,226 4,051 1,856 1,083 985 372 11,042
3Q08
137,158 55,364 36,843 11,470 8,030 5,324 4,287 2,972 1,267 1,200 928 (1,916) 11,389
4Q07
134,736 55,995 33,297 12,825 7,388 7,890 4,161 2,819 1,090 858 551 2,943 4,919
Others 23%
Personnel 40%
Third Party Services Deprec. and Amortization Marketing Communications Maintenance Board Compensation Leases Supplies Taxes Other
The 4Q08 operating expenses decreased by 4.9% over the prior year to BRL 128.1 million. In 2008, it increased by 0.2% to BRL 544.5 million. The decrease in 4Q08 reflects the achievement of planned merger synergies Personnel: 9.0% decline in 4Q08 over the prior year and 8.0% sequentially. In 2008, the drop was 0.5%
Data processing: decline by 13.9% over the prior year and 22.2% sequentially. In the full year comparison, it increased by 4.6% Marketing: decline by 32.2% in 4Q08 over the prior year and flat sequentially. In 2008, it dropped by 26.1%.
SYNERGIES The annualized cost reduction in 4Q08 reached BRL 53 million compared to 2007 base expenses (adjusted for inflation) Headcount: through Mar09, a reduction of almost 30% was reached in the combined total of employees and outsourced personnel, as follows
IT processes: cost reduction from mainframe migration to low platform and the renegotiation of service provider agreements
Marketing and Administrative: 50% reduction in mandatory releases and publications and renegotiation of more favorable conditions regarding third party service providers
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Payout: BRL 139.4 million in interest on shareholders equity approved in Dec08 (to be paid on or before April 15, 2009). Additional BRL 60 million in dividends proposed by the Board
Stock Options and Leasing Expenses: non-cash charge of BRL 27.6 million taken in 4Q08 to adjust our Financial Statements to the new accounting standards, moving towards IFRS
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Full electronic connection with the Exchange allows higher diligence on the order intermediation process and provides facilities to market participants
Allows the trading of high frequency (algorithmic) traders
Growing percentage of DMA originated trades within the total daily average ORDER ROUTING AGREEMENT WITH CME/GLOBEX
Weak volumes in 2H08 but signs of potential upside in 1Q09 DMA Evolution
140,000 120,000 8.0%
Number of contracts
Aug 29th Traditional DMA Sep 30th Globex to GTS routing Dec 3rd DMA via Provider
100,000 80,000
4.0% 60,000 40,000 20,000 ago/08 set/08 out/08 nov/08 dez/08 jan/09 Nr. of contract via DMA fev/09 mar/09* DMA share in total volume 3.0% 2.0% 1.0% 0.0%
2009
Feb 9th GTS to Globex routing
Cash Markets
MegaBolsa
770,000
1,500,000
290m/s
8m/s
Derivatives
GTS
200,000
200,000
25m/s
8m/s
Clearinghouses merger (derivatives, stocks and corporate bonds, FX spot and government bonds)
New Sinacor (ERPs for Brokerage houses) Construction of the Contingency Site
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Individuals 31.1%
4Q07
3Q08
4Q08
2007
2008
New products for individual investors Direct Treasury via Home Broker: making the access to government bonds more friendly New ETFs available for trading
14
New Products
BM&F SEGMENT 2008 U.S. dollar options contract with reset
New Indices: Small Cap, MidLarge Cap, Consumption and Real State
Exchange-Traded Funds (ETF): iShares Ibovespa, iShares BM&FBOVESPA MidLarge Cap and iShares BM&FBOVESPA Small Cap 2009 Listing Segments: revision of Novo Mercado rules and stimulus for Bovespa Mais
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Product Interest Rates in BRL Interest Rates in USD FX Rates Indices Commodities OTC Web Trading Total
Feb 16 - Mar 11, 2009 0.938 2.077 2.753 1.936 2.725 3.238 0.202 1.494
BOVESPA Trading: reduction of clearing fees charged to retail investors and private and public companies in the cash market (beginning in April, 2009) Other activities
Depository Service: adoption of a percentage charge system based on value under custody with the depository (beginning in Apr09)
ADRs: studies on establishment of a fee to be charged for ADRs
Market Data: closer to international prices (beginning in Apr09) Listing: adjustments in the charges collected from listed issuers (since Jan09)
New incentives to attract fixed income bonds issued by listed companies Access Technology Package: more flexibility for each participant
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Macroeconomic environment
Market environment Strong presence of risk aversion
International financial regulation undergoing intense change at the global level Trends
Gradual migration of the OTC market to exchange environment through standardization Strengthening of the CCP activity
Emergence of the high frequency trading activity in our markets, providing significant liquidity with low leverage and margin requirements Opportunities for BM&FBOVESPA
Improve our trading systems with better electronic connectivity, lower latency and higher capacity Stimulate sustainable growth of volumes and liquidity through appropriate pricings for different classes of participants, especially retail Deliver products and services that allow accessible risk management and cross margining
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Summary
Year over year increase in gross revenues but the reduction in trading volumes in the 2H08 negatively impacted 4Q08 financial results Reduction of expenses due to cost savings (synergies) from the integration process
Lower volumes on both segments, partially offset by a higher RPC and turnover velocity
Boost in capacity and reduction of latency through investments in new technologies Continuous efforts focused on facilitating market access through DMA Technological architecture designed to meet the necessities of high frequency trading
New pricing policies aimed at rebalancing our sources of revenues, reducing cross subsidies and stimulating liquidity for all classes of participants Development of new products that match with investors expectations and needs
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APPENDIX
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4Q08
Operational Revenues Trading / Clearing Systems - BM&F Derivatives Foreign Exchange Securities Brazilian Commodities Exchange BM&F Bank Trading / Clearing Syst. Bovespa Trading fees Clearing fees Securities Lending Listing Depository and custody Trading access (Brokers) Other Operational Revenues Vendors Commodities classification fees Others Revenue deductions PIS and Cofins Service tax Net Operational Revenues 396,369 147,585 137,973 6,376 61 2,008 1,167 206,317 123,700 45,642 6,413 8,000 17,317 5,245 42,467 11,187 1,373 29,907 -40,855 -36,450 -4,405 355,514
4Q07
443,014 137,873 130,859 4,919 192 1,448 455 294,591 175,473 86,445 14,544 6,180 11,949 10,550 6,155 1,194 3,201 -45,375 -40,880 -4,495 397,639
% 4Q08x4Q07
-10.50% 7.00% 5.40% 29.60% -68.20% 38.70% 156.50% -30.00% -29.50% -47.20% -55.90% 29.40% 44.90% 302.50% 81.80% 15.00% 834.30% -10.00% -10.80% -2.00% -10.60%
3Q08
454,914 170,386 162,226 5,526 80 1,752 802 264,601 158,587 66,704 12,368 7,496 15,868 3,578 19,927 11,523 1,784 6,620 -46,158 -41,354 -4,804 408,756
% 4Q08x3Q08
-12.90% -13.40% -15.00% 15.40% -23.80% 14.60% 45.50% -22.00% -22.00% -31.60% -48.10% 6.70% 9.10% 46.60% 113.10% -2.90% -23.00% 351.80% -11.50% -11.90% -8.30% -13.00%
2008
1,783,358 634,230 601,275 21,302 330 7,865 3,458 1,050,774 635,091 259,355 48,528 29,776 62,523 15,501 98,354 43,359 3,535 51,460 -181,347 -162,752 -18,595 1,602,011
2007
1,531,192 596,246 566,452 21,305 930 6,118 1,441 871,952 498,803 269,707 50,335 21,803 31,304 62,994 21,943 3,785 37,266 -154,555 -140,222 -14,333 1,376,637
% 2008 x 2007
16.50% 6.40% 6.10% 0.00% -64.50% 28.60% 140.00% 20.50% 27.30% -3.80% -3.60% 36.60% 99.70% 56.10% 97.60% -6.60% 38.10% 17.30% 16.10% 29.70% 16.40%
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21
Net Revenues Operating Expenses Operating Result Operational Margin EBITDA EBITDA Margin Goodwill Amortization Financial Result Net Income Before Tax Income Tax and Soc. Cont. Deferred Income and Soc. Cont. Minority Interests Net Income Net Margin
2008 1,602,011 (723,658) 878,353 54.8% 913,493 57.0% (324,421) 305,972 859,904 (212,741) 119,138 (1,567) 645,596 40.3%
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Operational Revenues Trading / Clearing Systems - BM&F Trading / Clearing Systems-Bovespa Other Operational Revenues Revenue deductions Net Operational Revenues Operational Expenses Operating Income Financial Income Income before Taxes Income Tax and Social Contribution Def. Inc.Tax and Soc. Contribution Minority Interest Net Income
396,369 147,585 206,317 42,467 (40,855) 355,514 (128,137) 227,377 83,100 310,477 (96,339) (11,128) (606) 202,404
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Gross Revenues Net Revenues Operational Expenses (1) Operational Income Operational Margin Goodwill Amortization (ii) Interest Income, net Net income before taxes on profits Income Tax / Social Contribution payable / deferred Net income for the period Net Margin
(ii) Goodwill amortization excluded for Pro Forma calculation
Corporate Non-recurring 1,783,358 1,602,011 (729,483) 179,113 872,528 179,113 54.5% (324,421) 324,421 305,972 121 859,904 (503,655) (212,741) 120,509 645,596 (264,008) 40.2%
Pro-Forma 1,783,358 1,602,011 (544,545) 1,057,466 66.0% 306,093 1,363,559 (452,388) 909,605 56.8%
(i) Here are recognized the accounting adjustments resulting from the new standards
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Assets Current Cash and Cash Equivalent Other Credits Long Term Assets Permanent Investments Fixed Intangible Total Assets (BRL Thousands) 2,038,937 1,784,296 254,641 735,387 17,655,765 1,318,282 247,850 16,089,633 20,430,089
Liabilities and Stockholders' Equity (BRL Thousands) Current 1,075,744 Cash Collateral 585,963 Others 489,781 Long Term Liabilities 46,729 Minority Interests 15,892 Stockholders' Equity Total Liabilities and Equity 19,291,724 20,430,089
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(1) (2)
The tax shield from Interest on Equity Capital to be paid regarding 2H08's results (recorded in Q408) was distributed between deferred and current taxes
26
Derivatives Forward Market Options Martket Stocks and Equity Derivatives Fixed Income Total
27
Trading BM&F
Trading BOVESPA
April 6th
Custody and Low price charged for custody Securities services (e.g. BRL6.9 per custody Lending account) Low prices charged for market participants, compared with international benchmark
April 6th
Market Data
April
Listing
Increase in the lower price paid Small and medium companies paying by the listed companies; end of a very low price and big companies exception for some categories of paying a high price issuers Free access for seat members
2009
Market Access
2009
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