Deutsche Börse released preliminary figures for 2010 on Tuesday. Sales revenue increased 2 percent year-on-year to €2,106.3 million.
After adjustment for the ISE impairment and the costs of efficiency program, total costs fell by 8 percent to €1,147.1 million. The adjusted earnings before interest and taxes (EBIT) grew year-on-year by 5 percent to €1,091.0 million. The Group's adjusted net income for 2010 was €721.5 million, up 5 percent year-on-year.
The Executive Board of Deutsche Börse AG is proposing a stable dividend of €2.10 per share for 2010 in line with that for the previous year.
Reto Francioni, Chief Executive Officer of Deutsche Börse AG, said: "2010 saw a modest rise in the Group's sales revenue. At the same time, we created the basis for future growth by focusing even more on growth initiatives and measures aimed at improving our operating efficiency. For 2011 we are expecting growth in all business areas and are therefore optimistic about the year ahead."
Gregor Pottmeyer, Chief Financial Officer at Deutsche Börse AG and the board member responsible for Human Resources, said: "Strong cash flow from operating activities of some €940 million in 2010 demonstrates the Group's profitability. The Company's financial position remains strong. The Executive Board of Deutsche Börse AG is therefore proposing a stable dividend of €2.10 per share for the financial year 2010."
Peliminary results for Q4/2010 and 2010 as a whole
Based on the preliminary figures released by the Company on Tuesday, sales revenue increased slightly by 2 percent to €2,106.3 million (2009: €2,061.7 million). The economic climate improved considerably in 2010 compared with the previous year, and consequently the demand for the products and services of Deutsche Börse Group increased as well. In addition, the considerable volatility in equity markets in the second quarter of 2010 resulted in a significant increase in volumes in cash and derivatives markets during this period.
In addition to sales revenue, the Company earned €59.4 million in net interest income from its banking business (2009: €97.4 million). The 39 percent decline can be attributed to the continued low level of short-term interest rates, the expiry of interest rate hedging transactions in 2009 and the maturing of longer-term investments in 2010. Other operating income was €61.0 million in 2010 compared with €130.6 million in 2009. The figure for 2009 included extraordinary income of €66.7 million from the termination of a financial loss liability insurance policy with capital accumulation.
In 2010 a non-cash impairment loss of €453.3 million on intangible assets was booked in relation to the International Securities Exchange (ISE). The impairment loss was compensated to some extent by a reduction in deferred tax liabilities of €190.4 million in relation to ISE. Overall, the impairment reduced the net income for the Group in 2010 by €223.5 million. The impairment does not affect ratios that are important for the Group's credit profile, such as the interest coverage ratio or net tangible equity.
Due to the ISE impairment loss and costs of efficiency program amounting to €110.7 million, total costs rose year-on-year to €1,711.1 million (2009: €1,647.1 million). When those costs are excluded, total costs were €1,147.1 million, representing a decline of 8 percent compared with 2009. Total costs were thus significantly under the original cost guidance of €1,210 million and in line with the level of the adjusted cost guidance issued in the third quarter of 2010. Volume-related costs in the period under review were €210.9 million, while operating costs were €1,500.2 million. Excluding the ISE impairment loss and costs of efficiency program, operating costs were €936.2 million.
The result from equity investments rose to €12.2 million (2009: €-4.8 million). This can be attributed essentially to Scoach Holding S.A., Direct Edge Holdings, LLC and European Energy Exchange AG. The positive contribution of these companies was slightly reduced by depreciation of smaller investments. In 2009, depreciation of the investment in Direct Edge Holdings, LLC by €27.0 million had a negative impact on the result from equity investments.
Overall, Deutsche Börse Group generated earnings before interest and taxes (EBIT) of €527.8 million, a year-on-year fall of 17 percent (2009: €637.8 million). When ISE impairment loss and costs of efficiency program are excluded, EBIT was €1,091.0 million, representing an increase of 5 percent over 2009. The financial result in 2010 was €-108.2 million, which reflects, in particular, interest payments in relation to the financing of the ISE, which was concluded in 2008, and expected interest expenses in relation to tax audits. The interest coverage ratio, adjusted for the costs of efficiency program, was 16.8. The Group's effective tax rate in 2010, adjusted for the tax credit in relation to both the ISE impairment loss and the expected interest expenses in connection with the tax audits, was 26.9 percent (2009: 26.9 percent). The proportion of the annual net income attributable to non-controlling interests, by means of which the profits and losses of subsidiaries are shared with minority shareholders, fell from €24.9 million in 2009 to €22.7 million in 2010. The fall is largely attributable to the STOXX Ltd. profit, which was fully consolidated for the first time. This was only partially offset by the higher ISE impairment loss.
The Group's net income for 2010 fell by 16 percent to €417.8 million from €496.1 million in the previous year. When the ISE impairment loss and costs of efficiency program are excluded, net income was €721.5 million, up 5 percent on the previous year. Basic earnings per share in 2010, based on a weighted average of 185.9 million shares outstanding, fell by 16 percent to €2.25 (2009: €2.67). When the ISE impairment loss and costs of efficiency program are excluded, basic earnings per share were €3.88, an increase of 5 percent over the previous year. The Group's basic operating cash flow per share amounted to €5.07 compared to €4.31 in the previous year, reflecting the Group's strong earning power.
In the fourth quarter of 2010, Deutsche Börse generated sales revenue of €518.4 million (Q4/2009: €505.4 million), up 3 percent year-on-year. Total costs, most of which were attributable to the ISE impairment loss, were €769.3 million (Q4/2009: €745.4 million). Excluding the ISE impairment loss and costs of efficiency program, costs fell by 1 percent to €328.0 million. EBIT in the fourth quarter of 2010 was €-219.3 million, compared to €-166.3 million in Q4/2009. Excluding the ISE impairment loss and costs of efficiency program, EBIT fell by 11 percent to €221.8 million. This fall is largely attributable to the extraordinary income of €66.7 million from the termination of the financial loss liability insurance policy with capital accumulation in the fourth quarter of 2009. The basic earnings per share in the fourth quarter of 2010 were €-0.33 compared with €-0.18 in Q4/2009. Excluding the ISE impairment loss and costs of efficiency program, basic earnings per share fell by 11 percent to €0.82.
Segment reporting for the 2010 financial year
Order-book trading volume on the Xetra electronic trading system increased by 17 percent in the year under review to €1,236.9 billion (2009: €1,060.6 billion),
and trading volume on the Frankfurt floor increased slightly by 2 percent to €61.4 billion (2009: €60.0 billion). As a result of the deconsolidation of Scoach for the 2010 financial year, the segment's sales revenue fell by 10 percent to €262.3 million (2009: €292.1 million). Excluding this deconsolidation, sales revenue increased by 7 percent. EBIT for the segment fell by 25 percent to €105.1 million (2009: €140.3 million). Excluding the costs of efficiency program, EBIT fell by 8 percent to €128.0 million (2009: €139.8 million). This fall is largely attributable to the extraordinary income from the termination of the financial loss liability insurance policy with capital
accumulation in the fourth quarter of 2009.
As a result of the contrasting trends in trading activities in European products and US options, the trading volume in the Eurex segment in 2010 remained at a similar level
to the previous year with 2,642.1 million contracts (2009: 2,647.4 million). Contract volumes for European products increased by 12 percent, whereas contract volumes for US options traded at ISE fell by 22 percent as a result of the continued highly competitive environment. Sales revenue for the Eurex segment nevertheless increased by 2 percent to €858.7 million (2009: €838.4 million). This is due, in particular, to the positive trend in interest rate products. The number of contracts in this segment increased by 23 percent year-on-year. EBIT in 2010 was €-4.6 million compared to €9.1 million 2009. Excluding the ISE impairment loss and costs of efficiency program, EBIT increased by 13 percent to €480.8 million (2009: €424.1 million).
In the Clearstream segment the average value of assets under custody in 2010 increased by 5 percent to €10.9 billion (2009: €10.3 billion) and reached a new all-time high of €11.3 billion in December 2010. The growth is attributable, above all, to the increase in securities held for international transactions. The number of settlement transactions increased by 14 percent to 116.4 million (2009: 102.0 million), largely due to the higher level of trading activity in the spot markets. In addition, due to the continued high demand for collateralised securities financing services, the average volumes outstanding in global securities financing increased by 8 percent to €521.6 billion (2009: €483.6 billion) in 2010. Overall, sales revenue in the Clearstream segment increased by 2 percent year-on-year to €760.7 million (2009: €742.7 million). In addition to sales revenue, €59.4 million in net interest income from banking business was earned in the Clearstream segment (2009: €97.4 million). EBIT for 2010 was €299.3 million, 19 percent less than in the previous year (2009: €367.9 million). Excluding the costs of efficiency program, EBIT fell by 3 percent to €344.8 million (2009: €355.4 million). This fall is largely attributable to the low net interest income and the extraordinary income from the termination of the financial loss liability insurance policy with capital accumulation in the fourth quarter of 2009.
Sales revenue in the Market Data & Analytics segment increased - largely as a result of the full consolidation of STOXX Ltd. and Need to Know News, LLC in 2010 - by 19 percent to €224.6 million (2009: €188.5 million). Excluding these changes, sales revenue increased by 2 percent as a result of the continued expansion of the product range. EBIT for the segment was €128.0 million, representing a 6 percent increase over the previous year (2009: €120.5 million). Excluding the costs of efficiency program, EBIT increased by 14 percent to €137.4 million (2009: €120.4 million).
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