Ordinary General Shareholders´Meeting of BME
BME’s General Shareholders Meeting, which was held today in Madrid, approved the annual accounts and proposal for application of the financial result of the year ended on 31 December 2017.
The General Shareholders' Meeting has decided to distribute a final dividend of €0.78 gross per share, to be paid on May 11. During his address to the Meeting, Antonio Zoido stated that "the Company's 2017 total gross dividend will be €1.78 per share and the pay-out will be 96%, still one of the highest among listed companies."
In his speech to the Shareholders’ Meeting, Antonio Zoido gave a detailed address about the Company’s activities in 2017, in which it has been confronted by a complex market environment, one of marked uncertainty on account of the many question marks hanging over the international scenario.
The Company’s business model has shown its strength and sustainability "as the diversification in the Company's revenue proves”, the Chairman stated. “Our solid financial position and experience of the model allows us to support and face investments, tasks and opportunities that may arise and that contribute development and value to the Company”
The coverage ratio of the cost base with revenues not linked to volumes ended the year with a value of 129% for the year as a whole, which was an increase of 10 points. The result supports the Company's management approach towards increased revenue differentiation.
“Our strategic effort seeks to strengthen the relationship with clients and always guarantee that the best option in each of the services offered is with BME. In this context, technology can be key to developing our full potential, and this is where most of our focus is right now”, added Zoido.
Reviewing the Company’s results, Antonio Zoido highlighted that “2017 was an intense and challenging year for BME, in which we had to adapt to European regulations and technological development without leaving our traditional activity behind. This was done in a time that was difficult for markets in general, with a clear moderation in trading volumes. BME's net profit for 2017 was €153.3 million, which is a 4.3% drop. However, this figure is in line with that registered over the last four years”.
It was an excellent year for IPOs. The new additions to the different markets and segments of BME (a total of 27 companies) raised funds amounting to almost €4.3 billion, three times as much as in 2016. For the Chairman of BME these figures “confirm market confidence and companies' interest in additional sources of financing”.
Turning to the area of settlement the most relevant aspect for Iberclear in 2017 was the migration to Target2 Securities (T2S), the European settlement platform, which was successfully completed in September. This operation has made it possible to standardise the post-trade systems of the Spanish market with the other main European countries, increasing efficiency, optimising costs and improving competitiveness.
Concluding his address, Antonio Zoido stated that the effort made in 2017 has been worthwhile, since it has provided the Company and all its participants with large profits and has given it the ability to exceed these profits in the future. “We continue working to be the most competitive Group for our clients, members and investors, and profitable for shareholders”.
The General Shareholders' Meeting has also approved the re-election of Ignacio Garralda Ruiz de Velasco, as a member of the Board of Directors, and the appointment of Ana Isabel Fernández, David Jiménez-Blanco, Isabel Martín and Juan Carlos Ureta as new independent[i] directors. With these additions, the independent directors represent 55% of the Company’s Board. The new directors have extensive experience in the financial sector and hold or have held positions of responsibility at the highest level in different university and corporate spheres.
SPEECH BY THE CHIEF EXECUTIVE OFFICER
In his speech, BME’s Chief Executive Officer, Javier Hernani, stressed how BME remains a benchmark for the sector in terms of efficiency and profitability in its management and focused on this year’s first quarter results and the strategic challenges facing the Company in the coming months. “Net profit in 2017 puts ROE at 36.1%, 16 points above our sectoral benchmark group. The efficiency ratio, which indicates the cost units required to secure the Company's total revenue, stands at 34.4%, outstripping our benchmark group by 10 points”, he stated.
As regards the Company’s goodwill, Hernani stressed that “once more it comfortably passed the mandatory impairment test valuation conducted by an independent expert. In the worst-case scenario, the fund's implicit value exceeds the book-value by over 300%”
Turning to this year’s first quarter results, Hernani stated that BME posted €37.9 million of net profit, down by 3.6% against the previous year, with revenue, operating costs and EBITDA remaining at levels very similar to those attained during the previous quarter. “Profit improved for the second consecutive quarter, exceeding the third and fourth quarter of 2017 by 5.3% and 2.3% respectively”.
During his address to shareholders, Javier Hernani pinpointed four objectives which BME regards as strategic for it business: organic and inorganic growth, strengthening the business model, geographic diversification, and making the customer the focus of all our actions.
The Company is hard at work generating new initiatives for organic and inorganic growth to drive it forward in the years ahead. Hernani added: “Diversification not linked to volumes has reached record levels (129%), an intensive and steady task which gives the Company great solidity and has become all the more important in an environment of low volumes”.
The robustness of the model have been enhanced by overcoming two strategic and very demanding regulatory challenges: migration to T2S and adaptation to MiFID II, which have created a major milestone in the Company's future. “A genuine transformation which has produced steady economic results in an environment of low market volumes. BME carried out this task successfully, and also at very moderate cost, mostly availing itself of internal funds”, he added.
In this difficult context, BME maintained its solidity in terms of capital ratios and returns for shareholders, and thus the Company is well placed to undertake growth initiatives and monetise a possible improvement in the market environment.
To conclude, the CEO of BME made a clear bet for the future:” The strategic scenario contains many challenges, and also has its fair share of threats. Regulatory change in itself is an ambivalent variable: it brings in business opportunities which home in on our very nature, but also the threat of greater competition throughout the value chain. At BME we must secure a proper reading of their new needs to enable us to focus our offering and future technological development efficiently, innovating, tabling proposals and investing in business lines that generate value for both customers and our shareholders”.
[i]Ana Isabel Fernández is a Professor of Financial Economics at the University of Oviedo and member of Mapfre’s Board of Directors. Between 2010 and 2014 she was a director at the Spanish stock market regulator - CNMV.
David Jiménez-Blanco has a degree in Economic and Business Sciences from CUNEF. He was Chairman and CEO of Merrill Lynch, founding partner of BK Partners and is currently the general manager of Abengoa’s Strategy and Restructuring division.
Isabel Martín, Commercial and Economic Adviser to the State, she has been a board member of companies of the INI Group (now SEPI). She is currently a member of the Board and President of some of its committees in Sacyr, Unicaja Banco and the venture capital manager GED. She is also a member of the Supervisory Board of ING.
Juan Carlos Ureta, State Attorney, he is the Chairman of Renta 4 Banco and a member of the Advisory Board of ING Direct.