Borsa Italiana Group: '05 consolidated financial statements

BORSA ITALIANA GROUP: 2005 CONSOLIDATED FINANCIAL STATEMENTS
Net profit: 52 million euros (36.2 in 2004, +44%)
Revenues: 228.3 million euros (195.2 in 2004, +17%)

BORSA ITALIANA SPA: 2005 FINANCIAL STATEMENTS
Net profit: 42.9 million euros (31.9 in 2004, +34%)
Revenues: 133.4 million euros (117.5 in 2004, +14%)

Dividend proposal of 2.00 euros per share

In a meeting held today, the Board of Directors of Borsa Italiana Spa approved the consolidated and separate financial statements for 2005.

The 2005 consolidated financial statements closed with profits of 52 million euros (36.2 in 2004, +44%) and revenues of 228.3 million euros (195.2 million euros in 2004, +17%).

The financial statements of Borsa Italiana Spa closed with a net profit of 42.9 million euros (31.9 million euros in 2004, +34%) and revenues of 133.4 million euros (117.5 million euros in 2004, +14%).

The Group adopted the international accounting standards (IFRS) from 1 January 2005, consequently recalculating the final 2004 results.

The scope of consolidation changed as a result of the acquisition of MTS Group, which took place during the second half of November 2005. Consequently, the consolidated income statement contains the relative data for the month of December only.  

The draft separate and consolidated financial statements will be submitted for the approval of the ordinary Shareholders’ Meeting to be convened on 20 April 2006 and then on 21 April 2006, with the proposal for a dividend distribution of 2.00 euros per share, equal to a pay-out of 75.6% of Borsa Italiana S.p.A. profit. 

Borsa Italiana Group

During 2005, revenues of Borsa Italiana Group amounted to 228.3 million euros (195.2 in 2004, +17%), while net profit equalled 52 million euros (36.2 in 2004, +44%).

Thanks to growth in total revenues, EBITDA amounted to 96.2 million euros (73.0 in 2004, +32%), with EBIT at 86.7 million euros (61.8 in 2004, +40%).

In terms of distribution of revenues by business type, cash trading amounted to 47.2 million euros in 2005, info services 36 million euros, custody 35.4 million euros and revenues from clearing reached 31.7 million euros. These were followed by listing, with 27.3 million euros in revenues, settlement with 23.3 million euros, derivatives trading with 19.2 million euros and other revenues for 8.2 million euros.

In percentage terms, cash trading represented 22% of revenues, info services 16%, custody 15%, clearing 14%, listing 12%, settlement 10%, cash derivatives 8% and other revenues 3%.

The net worth of the Group, equal to 252.3 million euros, in addition to Group profit for the period of 50 million euros, consists of 8.4 million euros in share capital, 1.7 million euros in legal reserves, 142.4 million euros in share premium reserves, 1.5 million euros in IFRS transition reserves and 48.3 million euros in other reserves. 

Borsa Italiana Spa

The financial statements of Borsa Italiana Spa closed with a net profit of 42.9 million euros (31.9 million euros in 2004, +34%) and revenues of 133.4 million euros (117.5 million euros in 2004, +14%).

At the end of 2005, following 19 new listings and 15 delistings, a total of 282 companies were listed on Borsa Italiana markets (+4 compared to the end of 2004), of which 89 in the Blue Chip segment (+4), 71 in the Star segment (-1), 104 in the Standard segment (-4) and 18 in the Expandi Market (+5).

The positive trend in prices and in new listings resulted in growth of total capitalisation of domestic listed companies for the third consecutive year, reaching 677 billion euros (581 at the end of 2004), equal to 47.7% of Gross Domestic Product (41.9% at the end of 2004). This represents the highest value since June 2001, placing it in seventh place alongside OMX (680) and behind LSE (2,593), Euronext (2,295), Deutsche Börse (1,035), BME (814) and Swiss Exchange (793).

Average daily trading of all cash instruments on the stock trading platforms and of securitised derivatives was equal to 207,761 contracts (153,404 in 2004, +35.4%) and 4 billion euros in turnover (2.9 in 2004, +35.3%), a new all-time record for the Italian market. The number of contracts and total turnover amounted to 53.2 million contracts (42.4 in 2004, +25.5%) and 1,016 billion euros (754 in 2004, +34.7%), respectively.

In particular, with a daily average of 3.7 billion euros (2.9 billion in 2004, +30.8%), Borsa Italiana in 2005 once again achieved fourth position in Europe for electronic trading, after Euronext (6.9 billion euros), LSE (6.1 billion euros) and Deutsche Börse (4.4 billion euros) and ahead of BME (3.3 billion euros), SWX/Virt-x (2.1 billion euros) and OMX (2.1 billion euros).

The position was even better in terms of the number of contracts traded, as the Italian market, with a daily average turnover of 184,500 contracts (+38.7%), recorded the highest growth among the major stock exchanges and surpassed Deutsche Börse, ranking in third place after Euronext and LSE.

In particular, share trading increased considerably during 2005, amounting to 47.2 million contracts (+38%), for a total turnover of 954.8 billion euros (+30%).

On the European stage, the Italian market continues to stand out for the high liquidity of its shares, as demonstrated by the record achieved in terms of turnover velocity, an indicator which, by comparing the electronic trading turnover to capitalisation, provides the annual rate of turnover of shares. In fact, in 2005, Italian turnover velocity was equal to 151.9% (137.1% in 2004), compared to  117.0% by Deutsche Börse, 112.9% by BME, 90.7% by OMX and 88.5% by  Euronext.

Activities in 2005

Activities carried out during 2005 represented a further fine-tuning of the organisational, regulatory and technological structure of the Italian market, which, as a result, proves to be among the best in the world in terms of liquidity.

In 2005, growth rates for share and stock derivatives trading, compared to 2004, were the highest among the major European financial markets.

Idem, the Italian derivatives market, underwent one of the largest growths since its inception. Despite tight competition from the major international derivatives markets, stock futures and stock options traded on Idem enjoyed growth in standard contracts of 244% and 31%, respectively, while open interest grew an average of 37% during the year.

SeDeX – the Italian securitised derivatives market – recorded a 200% increase in turnover, winning first place in Europe in terms of volumes traded, ahead of the German and Swiss markets.

The Etf market is now first in Europe for contracts closed through electronic systems, with a significant increase in liquidity (+170%) and in the number of products listed.

The Electronic Bond and Government Securities Market (MOT) has been subjected to a detailed regulatory and technological reassessment, with full integration of  Mot and EuroMot, both of which now use the same technological trading platform that supports the stock market. 

Growing visibility of the S&P/MIB index, which represents a recognised benchmark, has contributed to the appreciation of our market at the international level, evidenced by the high number of foreign brokers directly accessing our markets (31% of the 125 brokers are international).

Acquisition of MTS in partnership with Euronext will allow the range of products and services available to customers to be expanded and new ones to be launched, as well as increasing internationalisation of the Group. 

Monte Titoli has consolidated its international calling. In fact, starting from last April, contracts traded on EuroMot have been sent to the foreign settlement systems indicated by the individual brokers, via the new X-TRM platform; at the same time, Express II – the clearing and settlement system managed by Monte Titoli – has expanded its activities to the trading platforms of foreign markets as well, the first of which – BrokerTec – is managed by English company ICAP. In terms of value added services offered to its customers, the FIS service (Management of Standardised Information Flows), which allows brokers to provide issuers with the names of those collecting stock dividends, achieved a market share of around 60% as of the end of the period. At 31 December 2005, the number of participants in this service amounted to 68 brokers and 317 issuers.

CC&G has continued with the Group policy of expansion and diversification of the areas of business and added clearing to its collateral services, while it has proceeded with and fostered, on a national and international level, contacts with new markets for its guarantee systems.

BIt Systems, the Information and Communication Technology company of Borsa Italiana Group, has further strengthened the non-captive activity for important customers, also by opening a hub in London, which joins those in Milan and Rome. 

Development also continued with respect to the activities of subsidiary Piazza Affari Gestioni e Servizi, which manages the Congress and Training Center of Palazzo Mezzanotte.

The All Stars, Star and TechStar indices were introduced, along with the total return versions of various Italian indices; in addition, the baskets of shares for Mib, Mibtel and Midex were reassessed. In order to encourage reduction of spreads and facilitate trading by brokers and investors, the trading ticks on shares and stock futures were modified. 

During 2005, a number of measures regarding pricing of trading, clearing and settlement services were implemented, with a view to rationalising the structure and sharing the recovery in efficiency with market participants, giving part of the value created back to them.  

For example, the average trading fee for share trades decreased by 14% compared to 2004, amounting to 0.341 euros, an absolutely competitive figure at the international level.

Work on updating the Code of Conduct for listed companies, which began in 2005, was completed in 2006, with a recent presentation of the new version of the Code to the financial community.