Deutsche Boerse AG concluded financial year 2007 with new records forrevenues and earnings.
According to the preliminary figures published by the company on Tuesday, sales revenue climbed by 18% to 2,185.2 million in 2007. The company earned a further 230.8 million in net interest income from banking business.
Costs of 1,323.5 million were “in-line” with the companies guidance and include exceptional items such as provisions for the restructuring and efficiency program targeting 100 million in cost savings per annum as well as provisions for stock based compensation against the background of a 95% share price increase in 2007.
Earnings before interest, tax and goodwill impairment (EBITA) increased31% to 1,345.9 million and includes a non-taxable book gain of some 120 million from the sale of property in Luxembourg in the fourth quarter. The net income for 2007 reached 911.7 million, as against 668.7 million in the previous year.
Basic earnings per share, calculated on the basis of a weighted average number of 194.1 million shares outstanding, increased by 40% to 4.70
Strong performance in the fourth quarter made a significant contribution to the record results for financial year 2007: sales revenue increased by 15% to 537.7 million.
At 423.8 million, costs include the exceptional items previously communicated and are “in-line” with the recent cost guidance of the group. EBITA for the fourth quarter thus amounted to 355.5 million an increase of 58%.
“The preliminary figures show that 2007 was by far the most successful year for Deutsche Boerse. The addition of ISE marked an important step in further strengthening our derivatives business. The strong start to the year for Deutsche Boerse Group paired with the cost guidance in place for 2008 support our expectation that we will be able to achieve a new record result in 2008,” says Reto Francioni, CE0, Deutsche Boerse.
The executive board of Deutsche Boerse proposes to increase the dividendfrom 1.70 to 2.10 per share. This would correspond to a dividend distribution ratio of 51%, adjusted to exclude the gain on the sale of property.
Together with the 395 million in share buybacks throughout financial year2007, distributions would reach 798 million or 100% of profitsattributable to shareholders of Deutsche Boerse AG in 2007.
The company wants to cancel 5 million shares from the shares heldin treasury prior to the Annual General Meeting in May 2008. This measurewill reduce the number of shares in the company from 200 million to 195 million.
The executive board has completed a review of potential options to furtherincrease the financial flexibility of the group. In its discussions withthe rating agencies, the company identified several options that could enhance Deutsche Boerse’s debt capacity by several hundred million euros, while maintaining Clearstream’s AA credit rating. The executive board willdiscuss these options with the Supervisory Board in its next meeting in March.
“Based on our excellent financial performance in 2007 the Executive Board proposes a dividend of 2.10 per share. With this proposal we continue our successful track record for double digit dividend growth since the IPO of Deutsche Boerse. Like last year, we aim for a full distribution of profits to shareholders in 2008 through dividends and share buybacks, of course subject to rating requirements and financing needs for investment projects,” says Thomas Eichelmann, CFO, Deutsche Boerse.
In the Xetra segment, sales revenue rose by 38% to 435.0 million, as aresult of increased trading activity both on the Xetra trading system andin floor trading. On Xetra the order book turnover has increased by 53% to 2,443 billion, equity trading on the Frankfurt trading floor was up 7% to 110 billion and activity on the platforms of the structured product joint venture with SWX Scoach increased by 50% to 99 billion. EBITA in the segment grew by 40% to 250.1 million.
Trading activity in the Eurex segment increased by 24% against the previous year and reached a new record of 1,900 million contracts traded. The equity index products again made the largest contributionto this growth, increasing by 55% in the year under review.
As a result of the strong growth in contracts traded, the Eurex segment’s sales revenue increased by 19% to 713.9 million. EBITA grew 13% to 443.2 million. On 19 December 2007 the ISE transaction was closed. ISE will be reflected in the income statement of Deutsche Boerse Group from the first quarter 2008 onwards.
Clearstream’s business was characterised by an increase in the volume ofsecurities held in custody and a rise in the number of settlementtransactions. In the custody business, the average value of securities held in custody at Clearstream, the figure used to calculate custody fees, increased by 14% to 10.5 trillion.
In Clearstream’s settlement business, the number of settlement transactions increased by a total of 18% to total 123.1 million. Sales revenue in the Clearstream segment increased by 10% to 768.2 million,while net interest income from banking business grew by 53% to 230.8million. EBITA in the segment grew by 17% to 379.4 million.
In 2007, Market Data & Analytics generated sales revenue of 168.3 million, which corresponds to an increase of 14% as against the previous year. This increase was due, in particular, to new clients and the sale of higher value products and trading data packages for the cash and derivatives markets, as well as growth in the group’s index products.
EBITA in the segment grew by 50% to 88.3 million. Despite a slight rise in costs mainly due to investments in new products and services, the increased revenues prompted a significant improvement in the segment’s result as against the prior year.
In the Information Technology segment external revenues increased by 6percent to 99.8 million. The rise in external revenues is attributable primarily to US Futures Exchange, whose trading platform and infrastructure is operated as external business by Deutsche Boerse’s ITsegment following the sale of the majority interest in mid 2006. Higher transaction volumes on the platforms which Information Technology operates also increased external sales revenue.
The internal revenue generated with other segments within Deutsche Brse Group increased 16% to 397.9 million due to higher project activity. EBITA in the Information Technology segment grew by 7% to 100.2 million in 2007.