BME to distribute a supplementary dividend to its shareholders, 8% higher than last year´s

ORDINARY GENERAL SHAREHOLDERS’ MEETING OF BME

BME’s General Shareholders Meeting, which was held today in Madrid, agreed to pay a supplementary dividend of €0.65 per share on 9 May, which is 8% higher than the one paid for the same concept over the last four years. The total ordinary dividend payment to its shareholders, of a gross €1.65 per share, will represent a 3% increase on last year’s.

The Spanish stock market was among the world’s top performers in 2013, notching up a 21% gain and delivered its best result since 2009. The positive trend extended into early 2014, underpinned by renewed confidence among large investors, especially international investors. “The IBEX 35®is at its highest level in nearly three years. Since June 2012, the index has rebounded by more than 75%. The resilience of the Spanish market is clear, having managed to stay in the black despite bouts of uncertainty in emerging economies and political strife in several areas around the globe”, stated Antonio Zoido.

For the Chairman of BME, there are a number of factors explaining the performance by our market. First is the investor appeal of listed Spanish companies. The crisis left Spanish stocks trading near long-run lows, with valuations failing to reflect the strong track records of many businesses represented in the market. 

With the situation beginning to improve, BME obtained net profit of €143.1 million 2013. This marked an increase of 5.7% from 2012 and heralds a positive trend reversal in the crisis. Revenue in 2013 rose 3.9% to €307.7 million, while EBITDA was up 5.7% at €208.5 million.

BME’s income statement in 2013 underscores the Group’s continued financial soundness, with business growth accompanied by zero debt, leaving us with a positive net cash position.

“I would add here that the company achieved a net profit of 42.2 million euros in the first quarter of 2014, an increase of 28% year-on-year and our best first quarter since 2008”, added Antonio Zoido.

FUTURE CHALLENGES AND THE ROLE OF THE MARKETS

The Chairman of BME stated during his speech that the markets have been undergoing a profound transformation and modernisation process in recent years that has continued despite the crisis. Technology has driven spectacular growth by securities markets, while regulation and oversight have focused on trading systems, which allow the markets to meet their basic purpose of price discovery.

"The crisis will have a major impact on the other primary function of securities markets: to finance businesses”, added Zoido.

In effect, one of the key elements of the crisis has been, and still is, excessive leveraging, as demonstrated by the high level of existing debt. The need to remedy this situation is readily apparent in regulatory developments and the stricter capital requirements imposed on providers of financing to the system.

The evidence of the impact is conclusive: lending by banks to the real economy in Europe is 50% lower now than in 2009. Between 2010 and 2013, for a highly representative set of non-financial IBEX 35® companies, bank financing fell 35%, while short-term financing on debt markets rose 65%.

In short, “markets will tend to meet all the financing requirements of companies’ various balance sheet items. The challenge will be particularly important for small- and medium-sized companies”, said Mr Zoido.

STRENGTHENING THE ROLE OF STOCK MARKETS, BME’S OBJECTIVE

The independence and strong credibility of securities markets, which were demonstrated throughout the crisis, must come to the fore. The market’s role will always be to provide companies with financing, but the modus operandi and the assets involved will probably have to adapt to new situations.

According to Antonio Zoido, the process will be complicated and there will be risks along the way. Regulatory and supervisory bodies will have much to say in this respect. They will be in charge of delimiting tightly regulated activities, such as traditional markets, and making them compatible with other types of initiatives emerging and being developed separately.

BME has upheld its policy over time of reinforcing the two cornerstones of its activity: facilitating financing for business and transparent, efficient and fair price discovery for all market participants.

Regulatory issues will play a crucial role in shaping the trends of markets and companies such as ours.

“Traditional markets such as ours have the opportunity to demonstrate their efficiency and security as agents that provide financing to companies. It will not be easy and we will be facing new challenges in this scenario. However, we have the opportunity and conditions necessary to do so”, stated Antonio Zoido at the end of his speech.

The Shareholders’ General Meeting also approved the re-election, as members of the board, of Alvaro Cuervo, Rosa Maria Garcia, Karel Lannoo, Manuel Olivencia, Margarita Prat and ratified Ignacio Garralda and Carlos Fernández as board directors.

SPEECH BY THE GENERAL MANAGER

In his speech, BME General Manager, Javier Hernani, stressed the financial soundness and robustness of BME’s balance sheet as the company maintains a very positive operational gearing, which enables it efficiently to convert growth into profit with great efficiency.Currently,BME continues to cover its cost base with revenue not linked to trading volumes.The ratio of the operating cost base covered with this kind of revenues reached 114% in 2013. “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”, stated Hernani.

BME has turned its ​​efficiency and profitability into its hallmarks, stressed the General Manager during his address: “earnings per share reached 1.72 euros, net profit for2013took ROE to35.9%, an improvement of nearlyfour pointson the previous yearand 24 pointsabove the sector. The efficiency ratio, which measures the percentage of costs incurred in relation to each unit of revenue obtained, stood at 32.2%, more than 12 points above the sector average”.

As regards the dividends to be distributed to shareholders of BME, they represent “96% of the company’s net profit for 2013, one of the highest pay-out ratios in the sector and in the Spanish stock market”, stated Mr. Hernani.