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1Q15 Earnings Presentation

May 15, 2015

May 2015

1
Public
Public

Forward Looking Statements


This presentation may contain certain statements that express the managements expectations, beliefs and
assumptions about future events or results. Such statements are not historical fact, being based on currently
available competitive, financial and economic data, and on current projections about the industries BM&FBOVESPA
works in.
The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, target and other
similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that
could cause actual results to differ materially from those projected in this presentation and do not guarantee any
future BM&FBOVESPA performance.

The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA
services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive
industries BM&FBOVESPA operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b)
government policies related to the financial and securities markets; (iv) increasing competition from new entrants
to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the
implementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain an
ongoing process for introducing competitive new products and services, while maintaining the competitiveness of
existing ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the
offer of BM&FBOVESPA products in foreign jurisdictions.
All forward-looking statements in this presentation are based on information and data available as of the date they
were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information or future
development.
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities where such offer or sale would be unlawful prior to registration or qualification
under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of
the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.

1Q15 Highlights (vs. 1Q14)


Growth driven by BM&F segment and other revenues not tied to volumes
FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

Total revenues: R$577.3 MM, +5.9%

BM&F segment:

BM&F seg.: R$250.9 MM, +10.8%

ADV: 2.7 million contracts, -3.1%

Bovespa seg.: R$218.1 MM, -0.7%

RPC: R$1.489, +13.7%

Other: R$108.3 MM, +9.5%

Bovespa segment:

Net revenues: R$520.4 MM, +6.5%


Adjusted expenses: R$138.6 MM, +1.6%
Operating income: R$299.0 MM, -1.6%

ADTV: R$6.65 billion, +3.0%


Margin: 5.292 bps, -0.10 bps
Other business lines (not tied to volumes):

EBITDA: R$376.5 MM, -1.8%

Securities lending: +4.9% in average open interest and


rebates removal starting from Jan15

(EBITDA margin 72.3%)

Tesouro Direto: +40.6% in assets under custody

Financial results: R$61.6 MM, +28.9%


Adjusted net income: R$ 391.3 MM, +4.2%

1Q15 UPDATES ON MAIN INITIATIVES

Adjusted EPS: R$0.217, +7.1%

iBalco: (i) new products and features in the fixed income


securities registration platform; and (ii) migration of OTC
derivatives to the new platform

RETURNING CAPITAL TO SHAREHOLDERS

Enhancements in prices and incentives: some of the changes


announced in 2H14 were implemented and are positively
impacting the Companys earnings

Payout: dividends of R$223.6 MM in 1Q15, 80% of


GAAP net income

Investment in Bolsa de Comercio de Santiago (BCS): equity


investment of R$43.6 million, representing 8.3% of BCS

Expenses adjusted to Companys (i) depreciation and amortization; (ii) stock grant plan principal and payroll taxes - and stock options plan; (iii) tax on dividends from the CME Group; and (iv) provision
and transfer of fines. According to CVM Rule 527/12 that does not exclude equity method of accounting. Excludes deferred taxes recognized in relation with temporary differences from amortization
of goodwill for tax purposes; costs from stock options and stock grant plans, net of tax deductibility; investment in affiliate (CME Group) accounted under the equity method of accounting, net of taxes
related to dividends received from CME Group; and taxes paid overseas to be compensated.

BM&F Segment Performance


FX rate depreciation positively impacting RPC
AVERAGE DAILY VOLUME (ADV) AND AVERAGE REVENUE PER CONTRACT (RPC)

ADV: 2.7 million contracts, -3.1% Y-o-Y


-21.5%: Int. Rates in BRL

(in millions of contracts)

Contracts priced in USD represented ~33% of derivatives


ADV in 1Q15

+50.4%: Int. Rates in USD


+75.3%: Mini Contracts

RPC: R$1.489 per contract, +13.7% Y-o-Y


Depreciation of BRL against USD

Mix effect (different groups of contracts and futures


versus options)
Removal of 10% discount for DMA

RPC AND FX RATE


(in R$)

~55% of derivatives revenue in 1Q15 came


from contracts priced in USD

MINI CONTRACTS
(in thousands of contracts)
8.8%

11.3%

11.9%

16.4%

16.0%

% of total ADV
Includes FX, Int. Rate in USD, Mini FX and Commodities contracts. Calculated as the average fluctuation of the end-of-month PTAX exchange rate (compiled by the Central Bank) as at the end of each
month in the period from December 2013 through February 2014, and then in the period from December 2014 through February 2015, as these rates provide the basis on which we calculate average
RPC for 1Q14 and 1Q15, respectively.

Bovespa Segment Performance


Higher level of market activity in the cash market
AVERAGE DAILY TRADING VALUE (ADTV)
(in R$ billions)

1Q15 vs. 1Q14: +3.0%


ADTV reached R$6.65 billion, as a result of:

Turnover velocity increase to 71.8% from 69.0% in


1Q14
-1.4% market capitalization Y-o-Y

MARKET CAPITALIZATION AND TURNOVER VELOCITY

TRADING MARGINS (in basis point - bps)


Markets
Cash market
Derivatives on single stocks
Options market (stocks / indices)
Forward market
Total Bovespa

1Q15
4.986
14.202
14.698
12.999
5.292

1Q14
5.068
13.737
14.121
12.998
5.389

(in R$ trillions)

1Q15 vs. 1Q14: -0.10 bps


Trading/post-trading margins impacted by:
Lower participation of equity derivatives in total volume
Higher volumes tied to the expiration of options on
indices
Greater participation of day traders
5

1Q15 Revenues Breakdown


Diversified revenues base
DERIVATIVES REVENUES (BM&F + BOVESPA) ACCOUNTED FOR 45.9% OF THE TOTAL

42.6%: Derivatives (BM&F Seg.)


$
$
$

Total Revenues
R$577.3 million

16.5%: Interest rate in BRL contracts


17.0%: FX Contracts
5.2%: Interest rate in USD contracts
3.9%: Other Financial/Commodity contracts

3.3%: Stock and Indices Derivatives (Bovespa Seg.)


33.9%: Cash Market (Bovespa Seg.)

5.2%: Trading
28.7%: Post-Trade
20.2%: Others not tied to volumes
P

Influenced by:
P Enhancements in prices and incentives (implemented in 1Q15)
$ FX rate

1Trading/post-trading.

$
P

3.8%: Securities Lending


3.2%: Depository, Custody and Back-Office
3.3%: Vendors
2.1%: Listing
1.7%: Trading Access
6.1%: Others

1Q15 Expenses Breakdown


Continued efficiency through a diligent expense management
ADJUSTED EXPENSES - Y-O-Y INCREASE (DECREASE) ON KEY EXPENSE ITEMS
(in R$ millions)

Adjusted expenses increased 1.6%,


versus an inflation of +8.1%
Adjusted personnel (+6.9%): non-recurring
provision of R$6.8 million
Data processing (+5.4%): higher maintenance
expenses following the BM&FBOVESPA
Clearinghouse deployment in Aug14
Third party services (-15.6%): lower expenses
with consulting services
Other (-3.5%): showed a decrease even
considering higher energy costs and
provisions

WHAT EXPECT
FOR FY15

Adjusted expenses budget: between R$590 million and R$615 million


Change from 2014 should vary between -0.4% and +3.8%, significantly
bellow expected inflation

Expenses adjusted to Companys (i) depreciation and amortization; (ii) stock grant plan principal and payroll - taxes and stock options plan; (iii) tax on dividends from the CME
Group; and (iv) provisions and transfer of fines. IPCA last 12 months until March 2015 (Source IBGE). Excluding the impact of stock grant/option expenses. 4Include expenses with
maintenance, board and committee members compensation and others.

Long-term Incentive Plan Based on Stock Grants


Impacts of changes in the long-term incentive plans
AS OF 1Q15 BM&FBOVESPA STARTED TO RECORD EXPENSES RELATED TO STOCK GRANTS
Impacts on the Income Statement

Overview of the stock grant plan

Basis for calculation


Price reference
Impacted by BVMF3
market price variation
(volatility on expenses)
Accounting accrual

Principal amount

Payroll taxes

# of shares granted

# of shares granted x 60.3%

Share price on the grant


date

Share price on the transfer


date

No

Yes

Pro-rata for vesting period

Pro-rata for vesting period

Form of payment

Shares

Cash

Time of payment

Share transfer date

Share transfer date

Yes

Yes

Tax deductible

Income Statement (consolidated)

in R$ millions

Net revenues

Expenses

(18.3)

Personnel

(18.3)

Stock grant principal amount

(9.9)

Stock grant payroll taxes

(8.4)

Operating income

(18.3)

Equity on income of investees

Financial results

Earnings before taxes


Income tax and social contribution
Net income

(18.3)
6.2
(12.1)

Impacts on the income statement

Transition impacts (from stock options to stock grants)


R$25.0 million non-recurring expense related to payroll taxes from the transition (not considered on the
table), as announced in the Notice to the Market released on February 4, 2015.
There will be a small residual amount of stock options plans outstanding. In 1Q15, expenses related to that represented only 0.05% of the personnel line. For each stock grant
program, a minimum total term of 3 years from the stock grant date and the last date for transfer shall be respected. Moreover, a minimum waiting period of 12 months shall be
respected (i) between the stock grant date and the first transfer date and (ii) between each of the lots of shares, after the first transfer.

Accounting Treatment of the Investment in CME Group


Changes introduced by Law 12,973/14
NEW ACCOUNTING TREATMENT OF THE INVESTMENT IN CME GROUP

Dividends paid by CME Group


Taxes on dividends received from CME Group are
no longer recognized as expenses
Dividends received from CME will be added to the
Companys tax base calculation (tax book only)
Withholding taxes on dividends paid overseas will
offset the increase in the Companys tax base (tax
book only)

Impacts on the Income Statement


Income Statement (consolidated)
Net revenue
Expenses

Taxes
Operating income
Equity in income of investees

Equity in income of investees


Equity in income of investee will be calculated
based on CME Groups net income (after taxes),
instead of the earnings before taxes
Corporate taxes paid overseas by CME no longer
will impact equity income and income tax lines in
the income statement

Financial Results
Earnings before taxes

Income tax and social contribution


Net income
Impacts on the income statement

Impact on the net income vis--vis the previous


treatment will depend on the amount paid in
dividends, versus the amount recognized as equity
in income of investees
9

Financial Highlights
Consistently returning capital to shareholders
CASH AND FINANCIAL INVESTMENTS

RETURNING CAPITAL TO SHAREHOLDERS

(in R$ millions)

Payout
R$223.6 million in dividends (80% of the 1Q15 GAAP net
income): payment on May 29th (shareholders position of
May 18th)
Share Buyback

YTD15: 6.8 million shares (R$63.7 million). The current


share buyback program allows the acquisition of up to 60
million shares until Dec15

FINANCIAL RESULT
Financial result of R$ 61.6 million, up 28.9% from 1Q14,
mainly due to higher average interest rates and higher
average cash and financial investment positions

CAPEX

Available funds: Q-o-Q increase, mainly due to


additional cash position held to cover dividend
payments due in 1H15 (R$409.5 million)

1Q15: R$ 42.4 million


Capex budget ranges:
2015: between R$200 230 million
2016: between R$165 195 million

Includes earnings and rights on securities in custody.


Includes third party collateral at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).

10

Revenues Diversification iBalco


Focus on customers demands and needs
GATHERING THE RIGHT ATTRIBUTES FOR A STRATEGIC MARKET POSITIONING

One-Stop-Shop

Specialized teams with full time


dedication to iBalco

Customer service

Quality
Simplified fee structure
Customized solutions
Capital efficiency

ROADMAP
Financial Letters
Variable Yield CDB

Bank instruments

Agribusiness
Credit Bills
(LCA)

2011

OTC Derivatives

COEs with
Physical
Delivery

Time Deposit (CDB)


Real Estate Cred. Bills (LCI)
Struct. Notes (COE)

2013
NDF
without
CCP

2014

Feb15
NDF
with CCP

Repos

Abr15 May15
Swap
(new platform)

Swap
(cash flow)

Flex
Options

11

Strategic Developments Recent Updates


Delivering on the strategic plan

Building a world-class IT and


operations infrastructure

Products/markets development
and revenue diversification

BM&FBOVESPA Clearinghouse

Greater liquidity for listed products

Conclusion of the IT development of the equities


phase expected for 4Q15, followed by the tests
processes (launching will depend on tests results and
regulatory approval)

New market makers for options and futures (soybean,


coffee, WTI and equity-based index)
Efforts to attract more lenders to the securities lending
platform (local pension funds and foreign investors)
Inflation futures scheduled for 2Q15

PUMA Trading System


669 days without any interruption

Enhancements in the price and incentive policies

New Data Center

Implemented in 1Q15: DMA; securities lending; issuers; and


options on equity indices fees

2015: beginning of the moving process

Implementation in 2Q15: mini contracts; Int. Rate in BRL fee


rebalancing; and depositary
Partnership with S&P Dow Jones Indices

Development of new equity and fixed income indices


Investment in Bolsa de Comercio de Santiago Chile
Equity investment of 8.3% (R$43.6 million)
As of May 14, 2015

12

APPENDIX

13

Bovespa Segment Margins


FEE POLICY FOR EXERCISE OF OPTIONS ON INDICES
The trading and post-trading fees apply only on the spread
Spread: difference between market price and strike price (notional of overall open positions)
(in R$ billions)

Actual ADTV and margins


ADTV 1Q15 vs. 1Q14: +3.0%
Margin 1Q15 vs. 1Q14: -0.10 bps

(in R$ billions)

Normalized ADTV and margins


(excluding the portion not
charged for)
ADTV 1Q15 vs. 1Q14: +3.2%
Margin 1Q15 vs. 1Q14: -0.05 bps

14

Growth Products
Increasing revenues diversification
REVENUES GROWTH OF SELECTED PRODUCTS

Products well accepted by clients, with continuous developments to maintain growth trend

Securities Lending
Tesouro Direto
Market maker for options on single stocks
Exchange traded funds (ETF)
Agribusiness credit bills (LCA)
Real estate investment funds (FII)
Non sponsored Brazilian Depositary Receipts (BDRs N1 NP)

CAGR
(2011-15):

+16.3%

(In R$ millions)

15

Stock Grants vs. Stock Options


Main impacts on expenses and earnings

Stock Grants: assuming the same nominal amount distributed as


variable remuneration, the impact on expenses is higher...
Stock Options

Stock Grants

Amount ($) originally granted (Vco) = Qo x Vo

Amount ($) originally granted (Vca) = Qa x Va

Qo: # of options Vo: option fair price (premium of the


option calculated with a binomial
model)

Qa: # of stocks Va: stocks fair price (~market price)

Payroll taxes (E) = Qe x Pt x 0,603


Qe: # of stocks delivered Pt: stock price in the delivery date

Years
Progr. 1
Progr. 2
Progr. 3

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

Progr. 4

0.25Vco 0.50Vco 0.75Vco

Vco

Years
Progr. 1

0.25Vco

Progr. 5
Impact on
expenses

Vco

Progr. 2

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

Progr. 3
Progr. 4

0.25Vca

Progr. 5
Impact on
expenses

0.25Vca 0.50Vca
+E
+E

0.75Vca
+E

Vca
+E

Vca
+E

16

Stock Grants vs. Stock Options


Main impacts on expenses and earnings

... while impact on earnings is mostly offset by the deductibility of


the expense (principal amount and payroll taxes)
Stock Options
Years
Progr. 1
Progr. 2
Progr. 3

Stock Grants

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

0.25Vco

Progr. 4

0.25Vco

0.25Vco

0.25Vco
-

0.25Vco 0.50Vco 0.75Vco

Vco

Expenses are not tax deductible

Years
Progr. 1

Progr. 5
Impact on
expenses
Expenses
deductibility

Vco

Progr. 2

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

0.25Vca

Progr. 3
Progr. 4

0.25Vca

Progr. 5
Impact on
expenses
Expenses
deductibility

0.25Vca 0.50Vca
+E
+E

0.75Vca
+E

Vca
+E

Vca
+E

Deduction of 34% on Vca + E

Expenses 100% deductible

17

Stock Grants vs. Stock Options


Example of impact assuming share price changes going forward

The nominal amount of payroll


taxes changes in line with the
share price variation (up or
down)

Scenario with stable price


Year
5
6
7
Vca ($)
1,000 1,000 1,000
Qa (#)
100
100
100
Va ($)
10
10
10
Pe ($)
10
10
10
Principal Expense 1,000 1,000 1,000
Payroll Taxes
603
603
603
Total Expense
1,603 1,603 1,603
Tax Deduction (+)
545
545
545
Income Impact (-) 1,000 1,014 1,029

8
1,000
100
10
10
1,000
603
1,603
545
1,043

9
1,000
100
10
10
1,000
603
1,603
545
1,058

An increase in the share


price will result in higher
payroll taxes...

Scenario with share price increase


Year
5
6
7
8
Vca ($)
1,000 1,000 1,000 1,000
Qa (#)
100
91
83
77
Va ($)
10
11
12
13
Pe ($)
11
12
13
14
Principal Expense 1,000 1,000 1,000 1,000
Payroll Taxes
663
707
733
741
Total Expense
1,663 1,707 1,733 1,741
Tax Deduction (+)
566
580
589
592
Income Impact (-) 1,098 1,127 1,144 1,149

9
1,000
71
14
15
1,000
729
1,729
588
1,141

... on the other hand, if the


share price decrease, it will
result in lower payroll taxes

Scenario with share price decrease


Year
5
6
7
8
Vca ($)
1,000 1,000 1,000 1,000
Qa (#)
100
111
125
143
Va ($)
10
9
8
7
Pe ($)
9
8
7
6
Principal Expense 1,000 1,000 1,000 1,000
Payroll Taxes
543
496
460
433
Total Expense
1,543 1,496 1,460 1,433
Tax Deduction (+)
525
509
496
487
Income Impact (-) 1,018
987
964
946

9
1,000
167
6
5
1,000
411
1,411
480
931

Company after a transition period with four open stock grant programs.

18

Stock Grants vs. Stock Options


Impacts on the income statement and balance sheet
Income Statement
Income Statement (Consolidated)
Total revenues
Revenue deductions
Net revenues
Expenses
Personnel

Balance Sheet
Assets
Current / Non-current
Cash and financial
investments

Liabilities and equity


Current
Payroll taxes provision

Long-term receivables

Non-current

Investments

Shareholders equity

Propriety and equipment

Capital reserve

Intangible assets

Treasure shares

Total assets

Total liabilities and


shareholders equity

Operating income
Equity in Income of Investees
Financial result
Earnings before taxes
Income tax and social contribution
Net income

Financial statements lines impacted by the stock grant plan.

19

Financial Statements
Summary of balance sheet (consolidated)
ASSETS

LIABILITIES AND SHAREHOLDERSEQUITY


(in R$ millions)

Current assets

03/31/2015 12/31/2014

(in R$ millions)
Current liabilities

3,118.1

2,785.2

323.1

500.5

2,536.8

1,962.2

258.2

322.5

23,379.6

22,478.2

1,608.2

1,522.5

1,474.8

1,392.8

133.4

129.8

4,564.7

3,761.3

426.5

421.2

16,780.2

16,773.2

Others

Goodwill

16,064.3

16,064.3

Minority shareholdings

Total Assets

26,497.7

25,263.5 Liabilities and Shareholders eq.

Cash and cash equivalents


Financial investments
Others
Non-current assets
Long-term receivables

Financial investments
Others
Investments
Property and equipment
Intangible assets

03/31/2015 12/31/2014
2,215.3

1,891.8

1,454.7

1,321.9

760.6

569.9

Non-current liabilities

4,744.1

4,383.2

Foreign debt issues

1,957.1

1,619.1

2,588.6

2,584.5

198.4

179.6

19,538.3

18,988.4

2,540.2

2,540.2

14,270.1

15,220.4

2,718.7

1,218.9

9.2

8.9

26,497.7

25,263.5

Collateral for transactions


Others

Deferred Inc. Tax and Social


Contrib.

Others
Shareholders equity
Capital stock
Capital reserve

20

Financial Statements
Net income and adjusted expenses reconciliations
ADJUSTED NET INCOME RECONCILIATION (in R$ millions)

GAAP net income*


Stock Grant/Option (recurring)
Deferred tax liabilities (goodwill tax benefits)
Equity in income of investees (net of taxes on dividends)
Recoverable taxes paid overseas
Adjusted net income

1Q15

1Q14

279.5
12.1
137.5
(37.8)
391.3

256.3
6.9
138.6
(44.6)
18.2
375.4

Change
1Q15/1Q14
9.1%
76.7%
-0.8%
-15.3%
4.2%

4Q14
232.4
7.0
138.6
(34.7)
29.8
373.2

Change
1Q15/4Q14
20.2%
72.9%
-0,8%
9,1%
4.8%

*Attributable to BM&FBOVESPA shareholders.

ADJUSTED EXPENSES RECONCILIATION (in R$ millions)

Total Expenses
Depreciation
Stock grant/option plan
Tax on dividends from the CME Group
Provisions
BBM impact
Adjusted Expenses

1Q15

1Q14

221.4
(30.6)
(43.4)
(8.8)
138.6

184.7
(29.5)
(6.9)
(5.5)
(7.8)
1.4
136.5

Change
1Q15/1Q14
19.9%
3.6%
532.3%
14.1%
1.6%

4Q14
250.4
(32.1)
(7.0)
(32.8)
(4.4)
0.9
174.9

Change
1Q15/4Q14
-11.6%
-4.8%
518.7%
101.8%
-20.7%

21

Financial Statements
Summary of income statement (consolidated)
SUMMARY OF INCOME STATEMENT (in R$ millions)
Change
Change
4Q14
1Q15/1Q14
1Q15/4Q14

1Q15

1Q14

Net revenues

520.4

488.6

6.5%

533.4

-2.4%

Expenses

(221.4)

(184.7)

19.9%

(250.4)

-11.6%

Operating income

299.0

303.8

-1.6%

283.1

5.6%

57.5%

62.2%

-473 bps

53.1%

439 bps

Equity in income of
investees

46.9

50.2

-6.5%

67.5

-30.5%

Financial result

61.6

47.8

28.9%

54.1

13.9%

Net income*

279.5

256.3

9.1%

232.4

20.2%

Adjusted net income

391.3

375.4

4.2%

373.2

4.8%

Adjusted EPS (in R$)

0.217

0.203

7.1%

0.204

6.4%

Adjusted expenses

(138.6)

(136.5)

1.6%

(174.9)

-20.7%

Operating margin

*Attributable to BM&FBOVESPA shareholders.

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Contact

Investor Relations Department


Phone: 55 11 2565-4729 / 4418 / 4207 / 4834 / 7938
ri@bmfbovespa.com.br
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