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4Q11 Earnings
February 15, 2012
1
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4Q11 Highlights
Focus on cost control and return to shareholders
FINANCIAL AND OPERATIONAL HIGHLIGHTS
BM&F Seg: second sequential alltime high record with a ADTV of 2.7 million
t
t i 2011
Net Revenues: R$471MM (4Q10: R$473MM)
(down 0.4%)
contracts in 2011
Adjusted OpEx and CapEx within the budget; 2012 operating expenses budget
range is the same of 2011 ­ (from R$580 to 590MM)
Revenues diversification (4Q11 vs 4Q10):
Adj Expenses
1
: R$164MM (4Q10: R$159MM)
(up 3.1%)
Revenues diversification (4Q11 vs. 4Q10):
Growth of ETFs ADTV (+107.1%), assets under custody of Tesouro Direto
(+61.1%) and in the open interest of Securities Lending (+56%)
Increase of stock index contracts ADTV (+79.8%) and minisized contracts
ADTV (+69 0%)
Adj EPS.: R$0.183(4Q10: R$0.185)
(down 1.0%)
Adj Net Income
2
: R$353MM (4Q10: R$368MM)
ADTV (+69.0%)
Extraordinary expenses: a onetime transfer of funds (R$92.3 million) to
strengthen BM&FBovespa Market Surveillance (BSM)
Shareholder return (payout + buybacks): R$1.5 bn in 2011 (~R$0.79 per share),
Adj Net Income : R$353MM (4Q10: R$368MM)
(down 4.2%)
Adj EBITDA.
3
: R$307MM (4Q10: R$315MM)
(p y
y
)
(
p
),
including payout distribution of R$226.7 million related to 4Q11 earnings
STRATEGIC PROJECTS
PUMA Trading System: equities module development to be concluded in 4Q12
(down 2.5%)
Adj EBITDA Margin.: 65.2% (4Q10: 66.5%)
Clearing Integration: technological development to be implemented in 4Q12
OTC Platform: first module to be operational in 2H12
2
1
Excludes stock options plan, depreciation, provisions, tax on dividends from CME Group and the guarantee fund transferred to BSM.
2
Excludes deferred liability recognized
in correlation with temporary differences from amortization of goodwill for tax purposes, the impact of the stock options plan, the investment in associate (CME Group)
accounted for under the equity method of accounting, net of taxes related to dividends, taxes paid overseas to be compensated, the guarantee fund transferred to BSM
and taxes paid overseas to be compensated .
3
Excludes stock option plans costs and the guarantee fund transferred to BSM.
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BOVESPA Segment Performance
Increased HFT activity and growth of turnover velocity
6.1
6.0
5.9
5.7
5.6
5
5
5
6
6
7
8,0
9,0
10,0
6 7
6 8
6 6
6 4
4Q11 vs. 4Q10 Volumes
Market volatility positively impacted
turnover
ADTV evolution by type of investors and Margin
2.2
2.3
2.1
2.2
2.1
2.3
2.3
2.1
2.3
2.4
0.8
0.7
0.7
0.7
0.7
0
1
1
1
2
2
3
3
3
4
4
5
2 0
3,0
4,0
5,0
6,0
7,0
6.7
6.2
6.8
6.6
6.4
turnover
Volume decreased, mainly because of
market capitalization and retail investors
slowdown in ADTV
d b
l
(
in

R$

billions)
1.5
1.5
1.3
1.5
1.3
(
(
(
0
0
0,0
1,0
2,0
4Q10
1Q11
2Q11
3Q11
4Q11
Individuals
Institutional Investors
Foreign Investors
Others
Margin in bps
Decrease in margin impacted by volume
growth in HFT
(
Average market capitalization and Turnover Velocity
HFT: ADTV and share of trading volume
+146%
835 1
4.3%
6.1%
7.4%
10.3%
10.3%
814 5
898.6
1,329.1
1,311.9
120,0%
140,0%
160,0%
9.8%
61.8%
61.8%
59.5%
69.3%
66.6%
52,
72,
2,5
3,0
3,5
191 4
290.8
267.2
319.3
249.2
181.5
205.0
184.1
174.6
146.0
160.0
318.6
447.3
835.1
916.7
4.3%
532.9
814.5
20,0%
40,0%
60,0%
80,0%
100,0%
2.5
2.5
2.5
2.2
2.2
12,
32,
0,5
1,0
1,5
2,0
3
191.4
267.2
249.2
0,0%
NovDec/10
1Q11
2Q11
3Q11
4Q11
retail day trading (BRL millions)
local institutions day trading (BRL millions)
fgn inv day trading (BRL millions)
% of overall market
8,
4Q10
1Q11
2Q11
3Q11
4Q11
Average Market Capitalization (BRL trillions)
Turnover Velocity
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BM&F Segment Performance
High growth of stock index and minisized contracts
1.10
1.04
1.13
1.11
1.16
1,10
1,20
ADTV in (thds of contracts) and RPC (in R$)
4Q11 vs. 4Q10 Volumes
Volume of mini sized and stock indices contracts
489
525
543
422
491
434
469
407
317
293
0,70
0,80
0,90
1,00
soared 69% and 80%, respectively
Greater HFTs volumes (up 34%)
6.1% ADTV decrease impacted by 16.4% reduction
in ADTV of interest rates in BRL
2.616
2.866
2.670
2.805
2.456
1,532
1,810
1,720
2,127
1,833
489
0,40
0,50
0,60
4Q11
3Q11
2Q11
1Q11
4Q10
in ADTV of interest rates in BRL
Higher RPC explained by higher participation of
longer term contracts
Interest Rates in BRL
FX Rates
Stock Indices
RPC
ADTV : Minisized and stock index (in thds of contracts)
HFT: ADTV (thds of contracts) and share of ADTV (%)
24.4
5 0%
5.0%
7.8%
7.2%
335.2
350 0
400,0
450,0
+34%
419.5
77 3
67 0
101.1
148.3
119.9
93.4
83.6
94.8
178.7
139.6
42.5
17.1
9.8
24.8
5.0%
3.9%
250.9
211.2
251.0
100,0
150,0
200,0
250,0
300,0
350,0
78
77
91
156
132
89
88
101
143
160
4
37.7
43.5
45.3
68.2
50.9
77.3
67.0
50,0
4Q10
1Q11
2Q11
3Q11
4Q11
Equities
FX
Mini contracts
Interest Rates
% in Overall Volume
4Q10
1Q11
2Q11
3Q11
4Q11
Mini Contracts
Stock Indices
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4Q11 revenues breakdown
Diversification of revenues is clear after revenues rebalancing
Revenues Diversification
4Q11 revenues: BRL522 million
High diversification between trading and post
trading
Diversification inside BM&F and Bovespa
d
d
k
8%
23%
Segments products and markets
Stocks and Derivatives Trading and Post
trading are the main revenues lines, but there
is consistent growth in other lines
27%
6%
is consistent growth in other lines
2%
5%
17%
11%
4Q11 shows the revenues breakdown after the
fees rebalancing (implemented in the Bovespa
Trading and Posttrading rebalancing
1%
Cash Market Trading
Cash Market PostTrading
g (
p
p
segment on 08.26.2011)
This change reflects better the cost structure of
the Company and eliminates some cross
b idi
Cash Market Post Trading
Equities Derivatives Trading
Equities Derivatives PostTrading
Other Revenues BOVESPA Seg.
Interest Rates in BRL Derivatives
5
subsidies
Interest Rates in BRL Derivatives
Fx Derivatives
Other Financial and Commodities Derivatives
Others Revenues
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Revenues and Expenses Details
Growth of "other revenues" and focus on costs controls
Revenues Breakdown ­ 4Q11
Expenses Breakdown ­ 4Q11
Other
29%
32%
Personnel
Bovespa
Trad. / Sttmnt
revenues
23%
43%
Transfer to BSM
11%
8%
6%
3%
11%
Others
Data Processing
BM&F Trd. /
S
34%
Adjusted Expenses
1
Depr./Am.
Third Party Serv.
Marketing
Sttmnt
R$ millions
4Q11
4Q10
Var. %
4Q11 x 4Q10
+3.1%
(In R$ millions)
Gross Operating Revenues
522.0
526.4
0.8%
Seg. BOVESPA (trd. and sttmnt.)
223.8
258.7
13.5%
Fees from trading and sttmnt.
218.7
253.2
13.6%
Others (including public offering sttmnt.)
5.0
5.5
8.1%
Seg BM&F (trd and sttmnt )
177 2
180 9
2 1%
1
45.8
159.0
140.6
143.7
136.3
163.9
Seg. BM&F (trd. and sttmnt.)
177.2
180.9
2.1%
Other operating revenues:
121.1
86.8
39.5%
Depository and custody
23.5
23.7
0.8%
Securities Lending
21.6
13.9
55.7%
Market data sales
16.3
15.8
3.0%
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
6
1
Excludes stock options plan, depreciation, provisions, tax on dividends from CME Group and the guarantee fund transferred to BSM
Listings
10.7
11.2
4.2%
Other
49.0
22.3
120.1%
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Personnel expenses:
Focus on expenses controls and processes improvements
Adjusted Expenses
(in R$ millions)
590
0%
584 5
580 0
2011 vs. 2010: 7.5% growth
Small real growth between 2010x2011 and fall for 2012
2011
R$584 5
illi
i hi b d
580
543.9
584.5
580.0
2011 expenses: R$584.5 million, within budget
Same interval for 2012:
R$580590 million
2010
2011
2012e
Adjusted personnel expenses
(in R$ millions)
4Q11 vs 4Q10: 7.8% lower
7.8%
(in R$ millions)
Annual bargain of around 7%
Reduction is due to additional bonuses for employees
in 2010
80.9
72.9
78.0
72.4
74.6
7
4Q10
1Q11
2Q11
3Q11
4Q11
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Expenses
Extraordinary expenses in 4Q11
Data Processing
Third Party Services
(in R$ millions)
(in R$ millions)
27.4
28.4
25.3
32.5
12 3
16.0
19.0
25.3
3Q10
4Q10
3Q11
4Q11
12.3
11.7
3Q10
4Q10
3Q11
4Q11
Oneoff expenses impacting third party services and data processing lines
Consulting firms to some projects, including the PQO ­ Operational Qualification Program for Brokers
Data processing expenses related to a security information project and some evolutive maintenance of systems
Data processing expenses related to a security information project and some evolutive maintenance of systems
Others
BSM ­ extraordinary transfer: R$ 92.3 million
Segregated cash and restricted to MRP managed by BSM
d
$
ll
h h
h
Segregated cash and restricted to MRP, managed by BSM
Strengthening and increasing the independency of self
regulation BSM
BVMF impacts: lost of financial revenues from
hi
h
Amounted to R$19.1 million, 147.1% higher than 4Q10
Mainly related with projects write offs
8
management this cash
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Financial Highlights
Commitment to shareholder returns
1,551
380 270
1,582
4Q11
3,783
R$64.1 million in 4Q11, reduction of 11.3% over 4Q10
Cash and Financial Investments (in R$ millions)
Financial Income
1,270
468
284
1,487
3Q11
Guarantee Fund Transferred
3,508
Financial Income of R$86.3 million 5.4% down, mainly
due to a reduction on average interest rates
Financial Expenses of R$22.2 million increased 17.5%
because of the FX devaluation
Market participants cash collateral and others*
Restricted funds
Subsidiaries**
Available funds
because of the FX devaluation
30 0
260.0
(in R$ millions)
(in R$ millions)
260.0
Investments (CAPEX) 2011: R$204MM
Shareholder Return (Payouts and Buyback Program)
R$0.80 per share
R$0.79 per share
268.4
204 0
230.0
30.0
230.0
434
606
1,579
1,518
p
204.0
2010
2011
2012e
1,144
912
2010
2011
9
CapEx totaled R$88.5 million in 4Q11
88.9% of this investment was destinated to IT projects
*Includes collaterals pledged by participants in the form of cash, receivables and rights in securities under custody , as well as payouts still undisbursed
** Includes third party collaterals (R$119 million in the 3Q11 and R$118 million in the 4Q11) and restricted funds (R$12 million in the 4Q10 and R$12 million in the 4Q11) at Banco BM&F
Dividends
Buybacks
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Equity method accounting
In millions of R$
Tax Book
2011
Fiscal results before earnings from overseas
(a)
53.1
Earnings before taxes from overseas
1
(b)
185.2
Taxable earnings (a + b)
(c)
132.1
Taxes (34% of c)
44.9
Taxes withheld abroad at the rate of 34%
2
(d)
(d)
62.9
Difference for future compensation (dc)
18.0
Equity accounting = R$219.4 million R$156.5 million + R$62.9 million
~ 5.1% of CME Group Net Income
The R$62.9 million fully impacted the equity accounting line in 4Q11
Adjusted to this effects, the equity account would have amounted to R$68.5 million in the quarter, stead of
R$131 5
illi
hil th i
t
d
i l
t ib ti
(
t + d f
d)
ld b R$62 9
illi
l
10
1
Equity accounting from 5.1% share on the earnings before taxes of CME Group
2
Taxes paid abroad to compensate: capped by 34% of the Earnings before taxes of CME Group adjusted to 5.1% BVMF´s participation
R$131.5 million, while the income tax and social contribution (current + deferred) would be R$62.9 million lower
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2011 Highlights
Secular growth of business and results
(in R$)
Adjusted EPS
0 37
0 45
0.61
0.80
0.79
0.37
0.45
2007
2008
2009
2010
2011
Financial Results
(in R$ millions)
1,376
1,602
1,511
1,224
1,899
1,355
1,586
1,905
1,319
1,546
866
756
1,089
909
1,035
,
Net Revenues
Adjusted EBITDA
Adjusted Net Income
2007 (pro forma)
2008 (pro forma)
2009
2010
2011
11
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Records of Average Daily Volumes
Historic record of volumes keeping long term growth
64,7
Average Daily Volume ­BOVESPA Seg.
(in R$ billions)
4 9
5 5
5 3
6.5
6.5
6.2
8.5
1.2
1.6
2.4
4.9
5.5
5.3
2004
2005
2006
2007
2008
2009
2010
2011
Jan/12
Feb/12*
Average Daily Volume ­BM&F Seg.
(in millions of contracts)
0.8
0.8
1.2
1.7
1.6
1.5
2.5
2.7
2.6
2.5
12
0.8
0.8
2004
2005
2006
2007
2008
2009
2010
2011
Jan/12
Feb/12*
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Consistent Growth
Historic record of volumes keeping long term growth trend
ADTV
(in R$ millions)
ETFs ­ Exchange Traded Funds
Tesouro Direto
Average Number of Investors ­Retail Investors
(in R$ millions)
77.1
64 4
23.8
27.5
36.3
42.3
64.4
77.1
18.6
28.5
48.7
64.4
2009
2010
2011
Jan/12
2007
2008
2009
2010
2011
Jan/12
Assets under Management
(in R$ millions)
Assets under Custody
(in R$ billions)
3.3
4.7
7.5
7.6
579
1,032
1,140
1.4
2.5
3.3
2007
2008
2009
2010
2011
Jan/12
13
271
579
2009
2010
2011
Jan/12
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Consistent Growth
Historic record of volumes keeping long term growth trend
Average Open interest­ Stock Index Futures Contracts
Options with Market Maker:
OGXP3 and ITUB4 ADTV
(in thousands of contracts)
(in R$ millions)
31.7
528
857
106.1%
15.4
JanAug 2011
Average (Sept Jan´12)
287
290
269
256
528
2007
2008
2009
2010
2011
jan/12
Jan Aug 2011
Average (Sept Jan 12)
2007
2008
2009
2010
2011
jan/12
Securities Lending: open interest (average year)
(in R$ billions)
18.5
16.9
12.7
20.5
30.2
33.3
14
0.8
1.0
1.6
3.8
6.6
12.7
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
jan/12
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Revenues Diversification
4Q11 Revenues
S
i i
l
di
(BTC)
$
Securities lending (BTC):
~R$21.6 million
Stock Indices Fut :
~R$15 0 million derivatives
Stock Indices Fut.:
R$15.0 million derivatives
~R$$7.6 million cash*
Tesouro Direto:
~R$4.5 million
Options on market maker:
~R$2.0 million
Exchange Traded Funds (ETFs):
~R$2.9 million
~R$53 million
~R$53 million
(
(10.3
10.3% of total revenue)
% of total revenue)
15
*Considers just one maturity in the period
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Delivering Strategic Priorities and revenues diversification
· Well placed to capture Brazilian economic potentials
· Products development offers conditions for leveraging growth and
Consistently increasing
and diversifying of
have high indirect benefit s
· Favored from increase in sophistication of Brazilian market
and diversifying of
revenues and net income
· PUMA Trading System: derivatives module implemented
· Increasing capital efficiency by integrating clearing facilities
· New OTC platform: consistent with diversification strategy and
capture of growth opportunities
Strengthening
competitive position
· Strengthening surveillance and market regulation (BSM)
· Products development is materializing in revenues and broadening
market sophistication
i
i
d
d
market sophistication
· Strengthening ties with investors and participants
· New Products: market maker for options, ETFs, HFTs, cross listing
and Tesouro Direto
Investing in products and
partnerships
· Focus on OpEx Control ­ 2011 Opex Budget revised down and
maintenance for 2012 (reduction in real terms for 2012 adjusted
OpEx)
Consistently delivering
d fi
i l
l
OpEx)
· Maximizing shareholders return: high payout
sound financial results
16
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APPENDIX
17
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Income Statement Summary
R$ millions
4Q11
4Q10
Change
4Q11 / 4Q10
3Q11
Change
4Q11/2Q11
Gross Revenues
522.0
526.4
0.8%
547.1
4.6%
Net Revenues
471.2
473.3
0.4%
493.7
4.6%
Expenses
(291.6)
(188.7)
1.2%
(169.6)
72.0%
Operating Income
179.6
284.6
36.9%
324.1
44.6%
Equity accounting
131.5
15.1
771.3%
28.3
364.7%
Financial Income
64.1
72.3
10.3%
70.8
16.7%
Income before Taxes
372 2
419 9
3 6%
82 7
22 5
Income before Taxes
372.2
419.9
3.6%
82.7
22.5
Net Income*
191.1
261.5
26.9%
292.0
34.4%
EBITDA
204.4
305.5
33.1
347.5
41.2%
EBITDA Margin
43 4%
64 5%
2 118 bps
70 4%
2 701 bps
EBITDA Margin
43.4%
64.5%
2,118 bps
70.4%
2,701 bps
Adjusted Net Income
352.7
370.0
4.2%
339.6
11.7%
Adjusted earnings per share (in R$)
0.182885
0.184677
1.0%
0.205459
11.0%
d
d
Adjusted EBITDA
307.1
314.9
2.5
356.0
13.7
Adjusted EBITDA Margin
65.2%
66.5%
136 bps
72.1%
693 bps
Adjusted Expenses
(163.9)
(159.0)
3.1%
(136.3)
20.3%
18
* Attributable to BM&FBOVESPA´s Shareholders
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Balance Sheet
In R$ millions
ASSETS
2011
2010
LIABILITIES AND SH. EQUITY
2011
2010
Current assets
2,401.1
2,547.6
Current liabilities
1,930.0
1,416.2
Cash and cash equivalents
64.6
104.0
Collateral for transactions
1,501.0
954.6
Financial investments
2,128.7
2,264.4 Others
429.0
461.6
Others
207.8
179.2
Noncurrent liabilities
2,402.5
1,798.7
Noncurrent assets
21,188.8
20,086.4
Financing
1,138.6
1,010.1
L
t
i bl
1 767 4
1 216 8
D f
d I
T
d S i l C
ib
1 204 6
732 1
Longterm receivables
1,767.4
1,216.8
Deferred Inc. Tax and Social Contrib.
1,204.6
732.1
Financial investments
1,589.0
1,066.9 Others
59.2
56.6
Others
178.3
149.9
Investments
2,710.1
2,286.5
Shareholders' equity
19,257.5
19,419.0
Property and equipment
357.2
367.1 Capital
2,540.2
2,540.2
Capital reserve
16,033.9
16,662.5
Intangible assets
16,354.1
16,215.9 Others
666.7
200.0
16 5
16 3
Minority interest in subsidiaries
16.5
16.3
TOTAL ASSETS
23,590.0
22,634.0
TOTAL LIAB. AND SHAREHOLDERS'
EQUITY
23,590.0
22,634.0
19
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Reconciliation of GAAP to Adjusted Net Income
4Q11 GAAP and adjusted net income reconciliation
R$ millions
4Q11
4Q10
Change
4Q11 / 4Q10
3Q11
Change
4Q11/2Q11
Gaap net income*
191 066
261 466
26 9%
292 006
34 6%
Gaap net income*
191,066
261,466
26.9%
292,006
34.6%
(+) Stock options program
10,419
9,421
10.6%
8,541
22.0%
(+) Deferred tax liabilities
124,706
110,214
13.1%
124,706
0,0%
() Profit from investment in associate (equity
method investment net of tax on dividends)
128,853
13,123
881.9%
25,659
402,2%
(+) Taxes paid overseas to be compensated
62,987
(+) Contribution to MRP
92,342
Adjusted net income
352,667
367,978
4.2%
399,594
11.7%
20
*Attributable to BM&FBOVESPA shareholders
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Reconciliation of Adjusted Operating Expenses
R$ millions
4Q11
4Q10
Change
4Q11 / 4Q10
3Q11
Change
4Q11/2Q11
Total Expenses
291 630
188 664
54 6%
169 558
72 0%
Total Expenses
291,630
188,664
54.6%
169,558
72,0%
() Stock options programs
10,416
9,421
10.6%
8,541
22.0%
() Depreciation
22,127
18,925
16.9%
20,686
7.0%
() Provisions
180
(688)
126,2%
1,408
87,2%
() Tax on dividends from CME
2,675
1,972
35.7%
2,642
1.3%
() Contribution to MRP
92 342
( ) Contribution to MRP
92,342
Adjusted Expenses
163,887
159,035
3.1%
136,281
20.3%
21
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