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Earnings Release
Earnings Release
2Q12
MARKET CAPITALIZATION R$20.3 bi (Jun. 30, 2012)
RATINGS Standard & Poors BBB+ (counterparty credit rating) A-2 (issuer)
Moodys A1 (global scale issuer) A3 (Brazilian local currency issuer) Baa1 (global notes)
Password: BMFBOVESPA
www.bmfbovespa.com.br/ir
ri@bmfbovespa.com.br
Expenses adjusted to Companys depreciation, stock options plan costs, tax on dividends from the CME Group and provisions. 2 Net income adjusted to eliminate deferred liability recognized in correlation with temporary differences from amortization of goodwill for tax purposes, the impact of the stock options plan, the investment in associates (CME Group) accounted for under the equity method net of taxes and taxes paid overseas to be compensated.
R$603.2
15.7%
0.7%
R$ 521.3
17.2%
15.7%
8.5%
44.5% 46.1%
23.8%
28.5%
36.7%
39.7%
2Q11
Trd/Sttlmnt BM&F Segment
2Q12
Trd/Sttlmnt Bovespa Segment Other Revenues
15.2%
Financial Derivatives (Post-Trading) Other Revenue - BM&F Seg. (FX and securities)
Other Revenues
Other revenues (not related to trading and settlement) were R$94.9 million (15.7% of gross revenues), rising 5.9% yearover-year. Securities lending and depository services were key contributors to revenue growth. Securities lending: Revenues in 2Q12 rose by 9.0% over 2Q11, reaching R$18.7 million (3.1% of the gross revenues). This growth is attributed mainly to the higher level of activity in securities lending services, measured by the average financial value of open interest positions which rose 3.1% year-over-year. Depository, custody and back office services: Revenues from these services reached R$25.2 million (4.2% of the gross revenues), a 9.7% increase compared to 2Q11. The Tesouro Direto product continues to perform well with revenues reaching R$5.5 million, a 59.4% year-over-year increase, mainly reflecting incentives introduced by BM&FBOVESPA for the market participants. Revenues from central securities depository services fell by 4.5% to R$17.0 million from R$17.8 million, following a 4.4% decrease in the average number of custody accounts. Market data sales (Vendors): Revenues for this segment reached R$17.4 million (2.9% of the gross revenues), representing a 6.6% gain year-over-year. This increase is primarily explained by the 23% depreciation in the Brazilian Real against the U.S. Dollar between 2Q12 and 2Q11. Roughly 45% of market data sales revenues are collected from foreign investors and are denominated in U.S. Dollars.
EXPENSES BM&FBOVESPA remains focused on rigorous cost control measures in 2Q12. Expenses totaled R$166.1 million in 2Q12, flat compared to 2Q11 and 1Q12. The Company has revised downward its budget for 2012 adjusted OpEx, now ranging from R$560 million to R$580 million (compared to the previous range of R$580 million - R$590 million). This change demonstrates the Companys effort to reduce expenses through improvements in its tracking processes and the introduction of stricter internal policies that result in R$7 million reduction. Additionally, the improvements on methodology for capitalizing certain personnel costs contributed with other R$8 million, amounting to R$15 million reduction (difference between the mid-ranges of previous and the new 2012 guidance). Adjusted expenses were R$127.9 million in 2Q12, in line with the Companys new budget range for 2012 (R$560.0 million to R$580.0 million). The Company reduced adjusted expenses by 11.0% compared to 2Q11, primarily due to reduced personnel costs, reprioritization of marketing and promotion campaigns, and capture of higher efficiency in certain expense lines. Reconciliation of Adjusted Expenses
(in R$ millions) Total Expenses Depreciation Stock options plan Tax related to CME dividends Provisions Adjusted Expenses 2Q12 166.1 (24.0) (8.2) (4.7) (1.4) 127.9 2Q11 166.8 (10.1) (10.1) (2.2) (0.6) 143.7 Change 2Q12/2Q11 -0.4% 137.5% -19.5% 112.1% 138.8% -11.0% 1Q12 166.2 (21.9) (8.4) (9.8) (0.7) 125.4 Change 2Q12/1Q12 0.0% 9.5% -2.8% -51.4% 85.8% 2.0%
Personnel: Personnel expenses totaled R$79.6 million in 2Q12, falling 9.8% year-over-year mainly due to improved methodology for capitalizing certain personnel costs and decreased stock option expenses. Adjusted personnel expenses: Excluding the impact of stock option expenses, adjusted personnel expenses declined by 8.5% year-over-year to R$71.4 million. This reduction reflects the Companys improved methodology for capitalizing certain personnel costs. In 2Q12 this capitalization was R$7.2 million higher than in 2Q11. Data processing: Data processing expenses totaled R$24.9 million, a 7.5% increase over 2Q11, mainly due to higher software maintenance costs for the PUMA Trading System, which demands improvements in technology infrastructure. Depreciation and Amortization: Depreciation and amortization totaled R$24.0 million, growing 137.5% over 2Q11 due to an increase in the Companys IT investments and an R$6.8 million credit to depreciation and amortization of certain IT expenses in 2Q11. Communications: Communications expenses were R$4.5 million in 2Q12, falling 23.6% year-over-year. This is primarily the result of the Companys efforts to reduce postal service costs by shifting investor access of custody statements and trade notices from paper to online and consolidating information sent by mail into one single statement. Marketing: Marketing expenses reached R$4.8 million, a 55.4% decrease year-over-year, reflecting strategic reprioritization of marketing campaigns and lower advertising campaigns costs. Taxes: Tax expenses totaled R$5.8 million, a 55.1% increase year-over-year as a result of higher taxes related to dividends received from the CME Group, which were R$4.7 million, reflecting an increase in CME Groups payout in early 2012.
taxes paid abroad by the CME Group. Net of this provision, this line totaled R$24.8 million, increasing 12.3% year-overyear primarily due to the depreciation of the Brazilian Real against the U.S. Dollar. Net interest income: Net interest income for 2Q12 was R$54.7 million, a 22.8% decline year-over-year. Financial revenues fell to R$77.2 million in 2Q12, down 12.2% mainly due to lower interest rates. Financial expenses rose to R$22.5 million from R$17.1 million in 2Q11, resulting mainly from the depreciation of the Brazilian Real against the U.S. Dollar. Income tax and social contribution: Income tax and social contribution totaled R$172.1 million in 2Q12. Current taxes and social contribution amounted to R$36.7 million, including R$1.0 million in cash taxes, a R$17.5 million offset against the above mentioned provision for taxes paid abroad by the CME Group and a R$18.2 million offset against tax credits accumulated by the Company. Deferred taxes and social contribution of R$135.4 million were recognized in 2Q12, composed of R$134.8 million from temporary differences from amortization of goodwill for tax purposes and R$0.6 million in tax credits reversal by the Company. Deferred income tax and social contribution have no cash impact. Income tax and social contribution grew 72.8% year-over-year (R$72.5 million), mainly due to: i) a 19.9% increase in earnings before taxes (R$78.3 million); ii) a R$17.5 million offset against provision for taxes paid abroad by the CME Group that was not recognized in 2Q11; and iii) the recognition of deferred tax credits of R$26.1 million in 2Q11 mainly from the payment of interest on shareholders equity declared over that quarter. Net income and adjusted net income: Net income and adjusted net income grew 2.0% and 3.4% year-over-year, respectively. The 24.6% increase in the operating income was partly offset by the above mentioned reduction in net interest income and by higher income tax and social contribution, even though only R$1 million of the last one has cash impact. Capex: Investments of R$45.2 million were capitalized in 2Q12, of which R$44.1 million consisted of investments in technology and R$1.1 million were investments in facilities and equipment. CaPex of R$71.9 million for 1H12 is within the Companys 2012 budget (R$230.0 million to R$260.0 million). Dividends: On August 7, 2012, the Companys Board of Directors approved R$240.1 million as dividend distribution to be paid on October 31, 2012, based on shareholders registration dated August 09, 2012. Share buyback program: From July 2011 to June 2012, the Company repurchased 31.28 million shares at an average price per share of R$9.22. This represents 52.1% of total approvals for the Share Buyback Program ending on June 30, 2012. On June 26, 2012, the Board of Directors approved a new Share Buyback Program ending on June 28, 2013, authorizing acquisition of up to 60 million shares.
PERFORMANCE BY SEGMENT
In 2Q12, both the Bovespa and BM&F segments posted all-time highs for average daily traded value (ADTV) and average daily volume (ADV), respectively. BOVESPA SEGMENT The Bovespa segment posted an ADTV of R$7.6 billion in 2Q12, growing a solid 23.0% year-over-year and 6.7% over the previous quarter. This increase is mainly due to higher turnover velocity in comparison to 2Q11 and 1Q12 activity, which was driven by higher foreign investor activity and expiration of options on Ibovespa in April and June. As the Company continues to diversify its revenue base, areas of growth include: HFT: HFT posted a growth of 35.7% year-over-year with an ADTV of R$1.2 billion in 2Q12. The ADTV for HFT represented 9.4% of the total volume in 2Q12, compared to 7.4% in 2Q11. ETFs: The ADTV for ETFs rose by 347.5% year-over-year, totaling R$155.8 million in 2Q12 (2.0% of the overall cash market). Tesouro Direto: The average number of investors accessing this product grew by 36.2% year-over-year and average value under custody rose by 56.0%. BM&F SEGMENT The BM&F segment posted record ADV with 3.4 million contracts in 2Q12, increasing 25.7% year-over-year and 23.7% over the previous quarter. This growth is mainly due to higher volumes traded in Brazilian Real-denominated interest rate, stock indices and mini contracts, which grew 31.4%, 101.2% and 94.6%, respectively, over 2Q11. RPC was almost flat, up 0.5% year-over-year, due to the mix of contracts traded. A higher participation of Brazilian Real-denominated interest rate contracts that have below-average RPC offset the RPC increase from FX futures and U.S. Dollar-denominated interest rate contracts with above-average RPC. HFT represented a 6.3% share in the total volume traded in the BM&F segment in 2Q12, compared to 5.0% in 2Q11. The ADTV for HFT was 442.5 thousand contracts in 2Q12, growing 76.3% year-over-year.
2Q12 Gross Revenues Trading / Settlement - BM&F Derivatives Foreign Exchange Securities Trading / Settlement - Bovespa Trading fees Clearing fees Others Other Revenues Securities Lending Listing Depositary, custody and back-office Trading access (Brokers) Vendors Brazilian Commodities Exchange BM&F Bank Others Revenue deductions PIS and Cofins Service tax Net Revenues Expenses Personnel Data processing Deprec. and Amortization Third Party Services Maintenance Communications Marketing Taxes Board Compensation Others Operating Income Equity account Financial Income Financial Revenues Financial Expenses Income before Taxes Income Tax and Social Contribution Current Deferred Net Income Net Margin Attributable to: BVMFs Shareholders Net Margin Minority Interest EBITDA EBITDA Margin Sharecount EPS attributable to BVMFs Shareholders (R$) Adjusted Net Income Adjusted Expenses Adjusted EBITDA Adjusted EBITDA Margin Adjusted EPS (R$) 603,245 239,634 235,351 4,277 6 268,701 63,765 196,550 8,386 94,910 18,747 11,748 25,157 13,072 17,380 839 5,358 2,609 (62,094) (54,627) (7,467) 541,151 (166,111) (79,552) (24,905) (23,986) (9,299) (2,629) (4,501) (4,775) (5,789) (1,679) (8,996) 375,040 42,351 54,678 77,202 (22,524) 472,069 (172,072) (36,722) (135,350) 0 299,997 55.4% 300,082 55.5% (85) 403,771 74.6% 1,930,357,074 0.155454 422,942 (127,859) 411,928 76.1% 0.219100
2Q11 521,324 191,148 186,909 4,177 62 240,574 168,915 56,668 14,991 89,602 17,202 11,617 22,937 12,078 16,301 1,343 5,096 3,028 (53,685) (46,912) (6,773) 467,639 (166,762) (88,172) (23,169) (10,101) (11,732) (2,559) (5,895) (10,700) (3,733) (1,572) (9,129) 300,877 22,091 70,815 87,886 (17,071) 393,783 (99,593) (966) (98,627) 0 294,190 62.9% 294,171 62.9% 19 313,216 67.0% 1,958,140,957 0.150230 409,150 (143,725) 323,342 69.1% 0.208948
Change 2Q12/2Q11 15.7% 25.4% 25.9% 2.4% -90.3% 11.7% -62.3% 246.8% -44.1% 5.9% 9.0% 1.1% 9.7% 8.2% 6.6% -37.5% 5.1% -13.8% 15.7% 16.4% 10.2% 15.7% -0.4% -9.8% 7.5% 137.5% -20.7% 2.7% -23.6% -55.4% 55.1% 6.8% -1.5% 24.6% 91.7% -22.8% -12.2% 31.9% 19.9% 72.8% 3,701.4% 37.2% 0.0% 2.0% -747 bps 2.0% -745 bps -547.4% 28.9% 764 bps -1.4% 3.5% 3.4% -11.0% 27.4% 698 bps 4.9%
1Q12 560,420 201,647 197,585 4,054 8 263,431 62,641 199,560 1,230 95,342 21,113 11,716 23,697 12,195 15,694 894 5,287 4,746 (57,599) (50,661) (6,938) 502,821 (166,171) (78,477) (24,695) (21,911) (8,061) (2,716) (4,589) (4,921) (10,939) (1,647) (8,215) 336,650 37,525 65,544 86,719 (21,175) 439,719 (159,298) (19,200) (140,098) 0 280,421 55.8% 280,426 55.8% (5) 368,328 73.3% 1,930,492,956 0.145261 409,190 (125,370) 376,716 74.9% 0.211962
Change 2Q12/1Q12 7.6% 18.8% 19.1% 5.5% -25.0% 2.0% 1.8% -1.5% 581.8% -0.5% -11.2% 0.3% 6.2% 7.2% 10.7% -6.2% 1.3% -45.0% 7.8% 7.8% 7.6% 7.6% 0.0% 1.4% 0.9% 9.5% 15.4% -3.2% -1.9% -3.0% -47.1% 1.9% 9.5% 11.4% 12.9% -16.6% -11.0% 6.4% 7.4% 8.0% 91.3% -3.4% 0.0% 7.0% -33 bps 7.0% -32 bps 1600.0% 9.6% 136 bps 0.0% 7.0% 3.4% 2.0% 9.3% 120 bps 3.4%
Note: the variations in comparisons for Trading fees and Clearing fees are explained by the changes in the fee structure that rebalanced the trading and post-trading fees in August 2011.
2Q12 Gaap net income* Stock options program Deferred tax liabilities Equity accounting (net of taxes) Taxes paid overseas to be compensated Adjusted net income *Attributable to BM&FBOVESPA shareholders. 300.1 8.2 134.8 (37.6) 17.5 422.9
2Q12 Personnel Expenses Stock Options Adjusted Personnel Expenses 79.6 (8.2) 71.4
Assets Current Cash and cash equivalents Financial investments Accounts receivable Other receivables Taxes recoverable and prepaid Prepaid expenses Non-current Long-term receivables Financial investments Defer. income tax and social contrib. Judicial deposits Other receivables Investments Interest in associate Interest in subsidiaries Investment properties Property and equipment Intangible assets Goodwill Software and projects Total assets
06/30/2012 3,498.5 47.1 3,180.6 55.0 18.9 176.6 20.3 20,762.7 1,095.5 897.7 103.1 92.6 2.2 2,929.4 2,893.4 35.9 338.9 16,398.9 16,064.3 334.6 24,261.2
12/31/2011 2,401.1 64.6 2,128.7 46.5 11.8 132.1 17.4 21,188.8 1,767.4 1,589.1 80.6 95.0 2.8 2,710.1 2,673.4 36.7 357.2 16,354.1 16,064.3 289.8 23,589.9
Liabilities and equity Current Collateral for transactions Earnings and rights on securities in custody Suppliers Salaries and social charges Provision for taxes and contrib. payable Income tax and social contribution Interest payable on debt issued abroad and loans Dividends and interest on own capital payable Other liabilities Non-current Debt issued abroad and loans Deferred income tax and social contribution Provision for conting. and legal obligations Equity Capital and reserves attrib. to shareholders of BVMF Capital Capital reserve Revaluation reserves Revenue reserves Treasury shares Carrying value adjustments - other compr. income Additional dividends proposed Retained Earnings Non-controlling interest Total liabilities and equity
06/30/2012 2,097.2 1,388.4 42.6 18.9 73.3 24.1 55.2 36.1 149.7 308.8 2,756.5 1,228.3 1,472.3 55.9 19,407.6 2,540.2 16,028.1 22.2 577.3 -501.3 289.1 79.2 356.5 19,391.4 16.2 24,261.2
12/31/2011 1,929.9 1,501.0 39.0 56.4 60.0 31.8 4.5 33.6 4.2 199.4 2,402.5 1,138.7 1,204.6 59.2 19,257.5 2,540.2 16,033.9 22.5 804.0 -521.6 128.3 233.6 19,241.0 16.5 23,589.9