4Q14 Earnings Presentation

February 11th, 2015

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 in which BM&FBOVESPA operates; (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.
2

4Q14 and 2014 Highlights

Returning capital to shareholders and delivering on the strategic plan
4Q14 vs. 4Q13

2014 Highlights

Total revenue: R$592.8 MM (+13.4%)

Financials
Total revenue: R$2,246.5 MM (-5.0% )
Adj. expense: +2.9%, considerably below average inflation
Net income: R$977.1 MM (-9.7%)
Adj. net income: R$1,478.7 MM (-8.1%)
Adj. EPS: R$0.805 (-4.1%)
REFIS: net impact of R$63.1 MM (one-off charge in 3Q14)

BM&F seg.: R$217.7 MM (+10.3%)

Bovespa seg.: R$272.3 MM (+23.1%)
Others: R$102.9 MM (-1.5%)

Net revenue: R$533.4 MM (+12.4%)

Adj. expense1: R$174.9 MM (+3.8%)
Operating income: R$283.1 MM (+27.2%)
Net income: R$232.4 MM (+27.6%)
Adj. net income2: R$373.2 MM (+9.2%)

Adj. EPS: R$0.204 (+13.7%)

EBITDA3: R$375.2 MM (+28.0%)
EBITDA margin: 70.3%

Returning capital to shareholders

Payout: R$781.6 MM (80% of the GAAP net income)
Share buyback: R$936.6 MM (4.8% of the free-float)
Delivering on the strategic plan
Clearinghouses integration: live in derivatives (Aug14)
New data center: construction concluded (1H14)
Fixed income: securities registration platform (Mar14)
Prices and incentives: changes and improvements(2H14)
SMEs: incentives to access the capital market (2H14)

1 Excludes depreciation, stock grant plan principal and social charges -, stock options plan, tax on dividends from the CME Group, transfer of fines collected, provisions
and discontinued operations. Excludes deferred taxes recognized in correlation with temporary differences from amortization of goodwill for tax purposes, stock
options plan cost, investment in associate (CME Group) accounted under the equity method of accounting, net of taxes related to dividends and taxes paid overseas to be
3
compensated. According to CVM Rule 527/12 that does not exclude equity method accounting.

BM&F Segment Performance

Higher ADV of mini contracts and interest rate in USD
4Q14 vs. 4Q13

ADV AND AVERAGE RPC

ADV: 2.56 MM contracts; +14.7%

(ADV in millions of contracts and RPC in R$)

Mini contracts: +106.1%

Interest rate in USD: +51.3%

Contracts with RPC referred in USD represented ~30% of the ADV

and ~51% of the revenue in BM&F segment in 4Q14

Equity-based indices: +49.1%

RPC: -4.9% (mix effect)
Higher participation of mini contracts (cheaper than
average) and HFTs (discounts)

2014 vs. 2013

ADV: 2.58 MM contracts; -9.3%
Interest rate in R$: -23.7%
Interest rate in USD: +40.9%

RPC AND FX RATE

(in R$)

Mini contracts: +49.2%

RPC: +5.3% (mix effect and FX rate)
Interest rate in R$: lower participation in overall ADV; and
volumes concentrated in longer maturities (higher RPC)

FX and Interest rate in USD: Real depreciation vs. USD

pushed RPC up
Average PTAX rate (R$/US$) in the period (using the end of each month).

Bovespa Segment Performance

Volumes from options on indices expiration impacted margins
4Q14 vs. 4Q13

ADTV AND TRADING/POST-TRADING MARGINS

ADTV: R$8.65 bn (+30.7%)

Turnover Velocity: 87.5% vs. 64.4% in 4Q13
Average market cap.: -3.8%
Margin: 5.012 bps vs. 5.322 bps (-5.8%)
Extraordinarily high volumes connected to the exercise
of options on indices (fees are not applied to a
significant portion of those)
Higher participation of day traders

2014 vs. 2013

ADTV: R$7.29 bn (-1.7%)

MARKET CAPITALIZATION AND TURNOVER VELOCITY

Turnover velocity: roughly flat

Average market cap.: roughly flat
Margin: 5.287 bps vs. 5.423 bps (-2.5%)
Changes in fee policies in 2013
Higher participation of day traders
Volumes connected to the exercise of options on
indices
5

4Q14 Revenue Breakdown

Diversified revenue base
THE BUSINESS MODEL STRENGTH
The diversified revenue base provided by our business
model becomes particularly relevant in an more
challenging environment and should help to preserve
our robust financial profile

REVENUE FROM DERIVATIVES

(BM&F + BOVESPA) REPRESENTED
41.5% DO TOTAL
40.3%: Cash market
6.4%: Trading
33.9%: Post-trading

5.0%: Stock and indices derivatives

36.5%: Financial/commodity derivatives

Total Revenue
R$592.8 MM

14.5%: Brazilian real interest rate contracts

14.7%: FX contracts
3.4%: USD interest rate contracts
3.9%: Other financial/commodity derivatives
18.2%: Other revenue
3.4%: Securities lending
3.1%: Depository, custody and back-office
3.0%: Vendors
2.0%: Listing
1.6%: Trading access

Includes trading and post-trading.

4Q14 Expenses Breakdown

Impacts from non-recurring expenses; growth below inflation
ADJUSTED EXPENSES (4Q14 vs. 4Q13)
(in R$ millions)

Adjusted expenses: +3.8%

Adjusted personnel: -1.9%
Headcount reduction

Higher capitalization of personnel costs connected

to projects
Data processing: +35.7%
Non-recurring payment of R$9.5 MM for upgrade
rights of PUMA Platform

Third party services: -32.4%

Non-recurrence of success fee payment of R$8.0
million for legal advisors in the 4Q13
Others: +28.5%
Transferring of R$9.3 MM to BSM to fund its
activities
Results of discontinued operations (Bolsa Brasileira de Mercadorias BBM)
BM&FBOVESPA discontinued in December 2014 the partnership with Brazilian Commodities Exchange (BBM), writing off
its equity stake (50.1%) in this company. As a consequence, we had a negative result of R$7.4 MM in 4Q14 and R$7.8 MM
in 2014
In order to preserve comparability with the adjusted expense guidance and previous periods, the adjusted expenses for
4Q14 and 2014 include R$0.88 MM and R$5.16 MM, respectively, registered under results of discontinued operations
*Include expenses with maintenance in general, taxes (ex dividends) from CME Group, board and committee members compensation and others (ex provisions).

Expenses Control Discipline

Delivering efficiency through a diligent expense management
ADJUSTED EXPENSES
(in R$ millions)

: +2.9%
: +7.5%
: +6.5%

: -3.6%
: +5.8%

: +2.2%

: +6.4%

: +5.9%

2010 - 2014
: +8.9%
: +27.0%
Between 2010 and 2014,
adjusted expenses fell 14.3%
in real terms

Adj. expenses corrected by inflation

WHAT EXPECT
FOR 2015

Corrected by IPCA.

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

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

Expenses Control Discipline

Delivering efficiency through a diligent expense management

Prioritization of activities, review of contracts and enhancement of

processes have led to greater efficiency

1.8%

Third party
services

-12.8%

-19.5%

Marketing

-23.8%

-29.6%

-20.6%

-26.7%

Total
Personnel

Data
processing

10.2%

Real Change

48.5%

12.5%

Data
processing

-4.3%

Nominal
Change

19.7%

-14.3%
1,8%

Third party
services

Total
Personnel

2.8%

(in R$ millions)

2014 vs. 2010

-17.3%

-40.8%

Marketing

Real Change

-73.3%

-80.9%

Communicat.

Nominal
Change

Communicat.

2014 vs. 2013

-48.2%

-62.9%

(in R$ millions)

Includes personnel expenses and capitalization and excludes stock option and bonus expenses, Calculated based on the annual wage increase between 2010 and
2014 for personnel expenditure and the IPCA of services accumulated from Jan 2011 to Dec 2014 for the other lines of expenses

Financial Highlights
Consistently returning capital to shareholders, while preserving financial robustness
CASH AND FINANCIAL INVESTMENTS
(in R$ millions)

RETURNING CAPITAL TO SHAREHOLDERS

Payout
Maintaining consistency in paying out at least 80% of the
GAAP net income
R$185.9 MM in 4Q14 (shareholders position of April 15)

R$781.6 MM in 2014
Share buyback
2014: 90 MM shares (R$936.6 MM) repurchased, 4.8%
of the free-float
4Q14: 23 MM shares (R$228.5 MM)
New program: up to 60 MM shares in 2015
85 MM shares canceled (current share count 1.815 bi)

INVESTIMENTS (CAPEX)
FINANCIAL RESULT

4Q14: R$86.7 MM (R$240.2 MM in 2014)

Financial result reached R$54.1 MM, an increase of

5.0% from 4Q13, mainly explained by 14.5% higher
financial revenue, that was partially offset by a 29.9%
increase in financial expense

2014: R$230 260 MM

CAPEX budget ranges

2015: R$200 230 MM
2016: R$165 195 MM

Includes earnings and rights on securities in custody.

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

10

Financial Highlights
Consistently returning capital to shareholders while preserving financial robustness

Distribution of most of the cash generation, reaffirming the

commitment to return capital to shareholders
Payout
(% of GAAP earnings)
2009: 80%
2010: 100%
2011: 87%
2012: 100%
2013: 80%
2014: 80%

+
Share Buyback
More than 13% of freefloat repurchased in
almost 7 years (2H082014)

Cash Generation after Investments and Interest Payments

(Accumulated between Jan 2009 and Dec 2014, in R$ million)

Cash Position
R$2,117 MM

Indebtedness
R$1,666 MM

Rating
Moodys
Baa1 (issuer global scale)
Baa2 (issuer BR scale)
Baa1 (global notes)
S&P
BBB (counterparty cred.)
A-2 (issuer)

Data of BM&FBOVESPA (not consolidated): excludes variation in financial transactions and collateral pledged by participants, proceeds raised in connection with the
acquisition of CME Group shares in 2010. Data from Dec 2014 and excludes third party resources (investors collateral, resources deposited in the BM&FBOVESPA Bank
and others).

11

Strategic Developments
Delivering on the strategic plan

Building a world-class IT and

operations infrastructure

Products/markets development
priorities

BM&FBOVESPA Clearinghouse

Listed products

Aug14: deployment of the first phase (derivatives)

of the new BM&FBOVESPA Clearinghouse and of the
new risk model CORE

New market makers for options and futures

4Q15: expected conclusion of the IT development of

the equities phase (launching will depend on tests
results and regulatory approval)

Foreign securities (non-sponsored BDRs, ETFs and futures)

New inflation-linked futures
Launching of the fixed income EFTs

Partnership with S&P to develop new indices

Securities lending

PUMA Trading System

575 days without any interruption

Sec lending development by attracting more lenders

(attraction of local pension funds and foreign investors)
Fixed income and OTC
Securities registration: structured notes (COE) with physical
delivery, new time deposits (CDB) and financial bills (LF)

New Data Center

OTC derivatives: SWAPs and flexible options

2014: conclusion of the construction

Tesouro Direto

2015: beginning of the moving process

New features and improvements and incentives for the

distribution channel

12

APPENDIX

13

Bovespa Segment Performance

Margins negatively impacted by the exercise of options on indices
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)

Actual ADTV and

margins
ADTV 4Q14 vs. 4Q13: +30.7%
Margin 4Q14 vs. 4Q13: -5.8%

Normalized ADTV and

margins (excluding the
not charged portion)
ADTV 4Q14 vs. 4Q13: +25.0%

Margin 4Q14 vs. 4Q13: -1.5%

14

Growth Products
Increasing revenue diversification
REVENUE 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
(2010-14):

+22.5%

(In R$ millions)

15

Financial Statements
Summary of Balance Sheet (Consolidated)
ASSETS

LIABILITIES AND SHAREHOLDERSEQUITY

(in R$ millions)

12/30/2014

12/31/2013

(in R$ millions)

2,785.2

4,319.5

500.5

1,196.6

Collateral for transactions

1,962.3

2,853.4

Others

322.5

269.5

22,753.0

21,577.2

1,797.3

1,135.4

1,392.8

820.8

404.6

314.6

3,761.3

3,346.3

421.2

423.2

16,773.2

16,672.3

Others

Goodwill

16,064.3

16,064.3

Minority shareholdings

Total Assets

25,538.3

25,896.7 Liabilities and Shareholders equity

Current assets
Cash and cash equivalents
Financial investments
Others
Non-current assets
Long-term receivables
Financial investments

Others
Investments
Property and equipment
Intangible assets

12/30/2014 12/31/2013

1,891.8

2,710.8

1,321.9

2,073.0

569.9

637.9

Non-current liabilities

4,658.0

3,886.9

Foreign debt issues

1,619.1

1,426.2

Deferred Inc. Tax and Social Contrib.

2,859.3

2,295.8

179.6

165.0

18,988.4

19,298.9

2,540.2

2,540.2

15,220.4

16,056.7

1,218.9

687.3

9.0

14.7

25,538.3

25,896.7

Current liabilities

Others

Shareholders equity
Capital stock
Capital reserve

16

Financial Statements
Net income and adjusted expenses reconciliations
ADJUSTED NET INCOME RECONCILIATION
4Q14
GAAP net income*
Stock options plan
Deferred tax liabilities
Equity in income of investees (net of taxes)
Recoverable taxes paid overseas
Adjusted net income

232.4
7.0
138.6
34.7
29.8
373.2

Change
Change
Change
3Q14
2014
2013
4Q14/4Q13
4Q14/3Q14
2014/2013
182.1
27.6%
238.4
-2.5%
977.1 1,081.5
-9.7%
6.8
3.4%
7.3
-4.6%
28.8
28.1
2.4%
138.9
-0.2%
138.6
0.0%
554.6
555.6
-0.2%
3.3
937.5%
43.7
-20.7%
162.7
120.4
35.2%
17.4
71.2%
16.7
78.9%
81.0
64.8
24.9%
341.9
9.2%
357.4
4.4% 1,478.7 1,609.8
-8.1%

4Q13

* Attributable to BM&FBOVESPA shareholders.

ADJUSTED EXPENSES RECONCILIATION

4Q14

Total Expenses
Depreciation
Stock options plan
Tax on dividends from the CME Group
Provisions
Disc. BBM
Adjusted Expenses

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

4Q13

251.8
(31.2)
(6.8)
(36.2)
(10.8)
1.6
168.4

Change
4Q14/4Q13
-0.6%
2.9%
3.4%
-9.3%
-59.4%
3.8%
3.8%

3Q14

192.0
(29.5)
(7.3)
(5.8)
(4.3)
1.7
146.8

Change
4Q14/3Q14
30.4%
9.0%
-4.6%
469.5%
2.7%
19.1%
19.1%

2014

804.1
(119.1)
(28.8)
(49.4)
(19.5)
5.2
592.3

2013

790.8
(119.5)
(28.1)
(51.0)
(22.5)
6.1
575.8

Change
2014/2013
1.7%
-0.3%
2.4%
-3.1%
-13.1%
2.9%
2.9%
17

Financial Statements Summary

SUMMARY OF INCOME STATEMENT (CONSOLIDATED)

(in R$ millions)
Net revenues

4Q14

4Q13

Change
4Q14/4Q13

3Q14

Change
4Q14/3Q14

2014

2013

Change
2014/2013

533.4

474.4

12.4%

544.5

-2.0%

2,030.4

2,126.6

-4.5%

(250.4)

(251.8)

-0.6%

(192.0)

30.4%

(804.1)

(790.8)

1.7%

283.1

222.6

27.2%

352.5

-19.7%

1,226.4

1,335.8

-8.2%

53.1%

46.9%

614 bps

64.7%

-1.167 bps

60.4%

62.8%

-241 bps

Equity in income of investees

67.5

39.5

70.7%

49.5

36.4%

212.2

171.4

23.8%

Financial result

54.1

51.5

5.0%

47.0

14.9%

208.2

180.7

15.2%

Net income*

232.4

182.1

27.6%

238.4

-2.5%

977.1

1,081.5

-9.7%

Adjusted net income

373.2

341.9

9.2%

357.4

4.4%

1,478.7

1,609.8

-8.1%

Adjusted EPS (in R$)

0.204

0.180

13.7%

0.195

4.5%

0.805

0.839

-4.1%

(174.9)

(168.4)

3.8%

(146.8)

19.1%

(592.3)

(575.8)

2.9%

Expenses
Operating income
Operating margin

Adjusted expenses

* Attributable to BM&FBOVESPA shareholders.

18

www.bmfbovespa.com.br/ir

BM&FBOVESPA Investor Relations

+55 (11) 2565-4729 / 4418 / 4834
ri@bmfbovespa.com.br