Deutsche Börse AG releases preliminary results for 2011

Deutsche Börse Group achieved its best sales revenue performance since record year 2008 based on preliminary 2011 numbers released on Monday. Sales revenue increased 6 percent to €2,233 million, while net interest income increased 26 percent to €75 million. Total costs amounted to €1,217 million, including around €83 million merger related and restructuring costs. Adjusted for these items, total costs fell by 1 percent to €1,134 million. Adjusted net income grew 15 percent to €833 million in 2011. Adjusted earnings per share grew 16 percent to €4.49. Reported earnings per share more than doubled to €4.57.

In 2012 Deutsche Börse Group will increase investments in growth initiatives and infrastructure from €120 million to around €160 million. This accelerates Deutsche Börse Group’s growth strategy which is focused on 1) extending its products and services to currently unregulated and uncollateralised markets, 2) expanding its technological leadership and market data expertise, and 3) increasing its reach into new customer segments and growth regions. This strategic direction addresses changing client needs and supports the regulatory agenda pursued by the EU as a result of the global financial crisis.

Among global market infrastructure providers, Deutsche Börse Group is uniquely positioned to successfully implement this strategy due to its existing strength and leadership position in derivatives trading and clearing, risk and collateral management, as well as market data and technology. Deutsche Börse Group expects to continue its growth trajectory in 2012 as key decisions to underpin future growth were already taken in 2011: The binding agreement to acquire full control over Eurex in 2012 and the majority stake built in the European Energy Exchange (EEX) will be reflected in the Group’s accounts for the first time in 2012. In addition, Deutsche Börse expects a positive development of its underlying business and further contributions from new products and partnerships.

Based on the strong business performance in 2011 and the Group’s sound capital and liquidity position the Executive Board of Deutsche Börse AG proposes to increase the regular dividend by 10 percent to €2.30 and to pay a special dividend of €1.00 in May 2012. These measures are subject to the formal approval of the Supervisory Board of Deutsche Börse AG, which today already expressed its support, and shareholders of Deutsche Börse AG at the Annual General Meeting on 16 May 2012. In addition, the Executive Board plans for share buybacks of up to €200 million in the second half of 2012, in-line with its capital management policy to distribute excess cash to its shareholders, subject to the development of its operating performance, investment, liquidity and rating considerations.

Reto Francioni, Chief Executive Officer of Deutsche Börse AG, said: “In 2011 we achieved our strongest sales performance since record year 2008. The results display growth across the business and the continuation of effective cost management. After the EU Commission’s decision, our view is exclusively forward. We will now accelerate our growth strategy with an offensive on unregulated and unsecured markets, an extension of our leadership role in technology and market data, and by partnering further with infrastructures and customers in growth areas and regions. We are uniquely positioned to execute on these strategic objectives and our strategy is in-line with changing client needs and the EU’s regulatory agenda. Our outlook for 2012 is positive.”

Cost management also remains a key priority of Deutsche Börse Group. With the successful implementation of several efficiency measures over the last years, the company was able to reduce its operating costs by more than 10 percent since 2007. In 2011, Deutsche Börse announced to accelerate its current efficiency program with the full run rate of €150 million to be achieved already in 2012, one year ahead of the initial plan. For 2012, Deutsche Börse Group plans with costs of around €1,200 million, excluding expected merger related and restructuring expenses of around €30 million. The increase in total costs compared to 2011 is solely attributable to consolidation effects from the envisaged consolidation of EEX as of July 2012, higher anticipated volume related costs and moderate inflation expectations. The increased investments are anticipated to be offset by efficiency gains, continuing the strong track record for effective cost management of Deutsche Börse Group in 2012.

Gregor Pottmeyer, Chief Financial Officer of Deutsche Börse AG, said: “The earnings power of our scalable business model, strong balance sheet and cash position allow us to combine an acceleration of our growth strategy with an attractive distribution policy. We regard the increase of our regular dividend as sustainable and will consider complementary distributions also in the future, subject to operating performance, investment, liquidity and rating considerations.”

Preliminary results for 2011

Sales revenue increased by 6 percent to €2,233.3 million (2010: €2,106.3 million). In addition, the Company earned €75.1 million in net interest income from its banking business (2010: €59.4 million). The 26 percent increase can be attributed to the on average 15 percent higher average overnight customer cash balances in 2011 combined with the two 0.25 percentage point increases in the key interest rate by the ECB in April and July 2011. However, these increases have been reversed until December 2011. Other operating income was €57.0 million in 2011 compared with €61.0 million in 2010. The figure for 2010 included an extraordinary gain of €10.7 million from the sale of the interest in Avox Ltd. while 2011 include the sale of a minority stake in another exchange.

At €1,217.3 million, total costs were down 29 percent year-on-year (2010: €1,711.1 million). Total costs in 2011 include costs for efficiency measures of €1.3 million and costs of €82.2 million in relation to the prohibited business combination with NYSE Euronext. The decline in total costs is mainly due to the non-cash impairment loss of €453.3 million on intangible assets in relation to the International Securities Exchange in 2010 and costs of efficiency measures amounting to €110.7 million in 2010. Adjusted for exceptional items, total costs in 2011 were €1,133.8 million, a decline of 1 percent compared with adjusted 2010 costs. Total costs were in line with the lowered guidance issued in the fourth quarter of 2011. Volume-related costs in the period under review were €244.0 million, while operating costs stood at €973.3 million. Excluding the costs related to the prohibited merger with NYSE Euronext and costs for efficiency measures, operating costs were €889.8 million. 

The result from equity investments decreased to €3.6 million (2010: €12.2 million). The decline is attributable to an impairment charge related to the 5 percent stake in the Bombay Stock Exchange,acquired prior to the global financial crisis. The impairment amounted to €17.2 million, which more than offset higher contributions from Scoach Holding S.A., Direct Edge Holdings, LLC and European Energy Exchange AG.

Overall, Deutsche Börse Group generated earnings before interest and taxes (EBIT) of €1,151.7 million, a year-on-year rise of 118 percent (2010: €527.8 million). Adjusted for costs related to the prohibited merger with NYSE Euronext and costs for efficiency measures, EBIT stood at €1.235.0 million, representing an increase of 13 percent over the adjusted 2010 number. 

The financial result in 2011 was €−1.3 million reflecting, in particular, interest payments on debt outstanding and a non-cash and non-taxable gain of €77.4 million relating to the revaluation of the share component of the agreement with SIX Group to fully acquire Eurex. This gain could reverse in the first quarter 2012 if the share price of Deutsche Börse AG at the end of the first quarter 2012 is higher than at the end of 2011. The interest coverage ratio, adjusted for costs related to the prohibited merger with NYSE Euronext and costs for efficiency measures, stood in 2011 at 19.0 times. The Group’s effective tax rate, adjusted for the non-taxable financial income mentioned above decreased to 26.0 percent in 2011 (2010: 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 €22.7 million in 2010 to €−22.6. The fall is largely attributable to the ISE impairment in 2010. The Group's net income in 2011 more than doubled to €848.8 million from €417.8 million in the previous year. When excluding extraordinary items, net income was €833.0 million, up 15 percent on the previous year. Basic earnings per share in 2011, based on a weighted average of 185.8 million shares outstanding increased by 103 percent to €4.57 (2010: €2.25). Adjusted for extraordinary items, basic earnings per share were €4.49, an increase of 16 percent over 2010.

Preliminary results for Q4/2011

In the fourth quarter of 2011, Deutsche Börse generated sales revenue of €541.4 million (Q4/2010: €518.4 million), up 4 percent year-on-year. In addition, the Company earned €19.3 million in net interest income from its banking business (2010: €16.9 million). At €339.0 million, total costs were down 56 percent year-on-year (Q4/2010: €769.3 million). The decline is mainly attributable to the ISE impairment in Q4/2010. Excluding costs related to the prohibited merger with NYSE Euronext and costs for efficiency measures in 2011 and the ISE impairment and costs for efficiency measures in 2010, costs fell by 5 percent to €310.8 million. Volume-related costs amounted to €67.1 million and operating costs to €271.9 million in Q4/2011. EBIT in the fourth quarter of 2011 was €228.0 million, compared to €−219.3 million in Q4/2010. Excluding extraordinary items, EBIT increased by 16 percent to €256.2 million. The basic earnings per share in the fourth quarter of 2011 were €0.78 compared with €−0.33 in Q4/2010. Adjusted basic earnings per share rose by 11 percent to €0.91 in Q4/2011.

The attached PDF contains tables with the most important figures, the income statement and segment reporting.