3q08 earnings conference call presentation

7/30/2019 3Q08 Earnings Conference Call Presentation

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BM&F BOVESPA

3Q08 Earnings Conference Call

November 12th


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Forward Looking Statements

This presentation may contain certain statements that express the managements expectations, beliefsand assumptions about future events or results. Such statements are not historical fact, being based oncurrently available competitive, financial and economic data, and on current projections about theindustries BM&F Bovespa works in.The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, targetand other similar verbs are intended to identify these forward-looking statements, which involve risksand uncertainties that could cause actual results to differ materially from those projected in thispresentation and do not guarantee any future BM&F Bovespa performance.

The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&Fservices; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive industries BM&F Bovespa operates in; (iii) changes in (a) domestic and foreign legislationand taxation and (b) government policies related to the financial and securities markets; (iv) increasingcompetition from new entrants to the Brazilian markets; (v) ability to keep up with rapid changes intechnological environment, including the implementation of enhanced functionality demanded by BM&Fcustomers; (vi) ability to maintain an ongoing process for introducing competitive new products andservices, while maintaining the competitiveness of existing ones; (vii) ability to attract new customers indomestic and foreign jurisdictions; (viii) ability to expand the offer of BM&F Bovespa products in foreign

jurisdictions.All forward-looking statements in this presentation are based on information and data available as of thedate they were made, and BM&F Bovespa undertakes no obligation to update them in light of newinformation or future development.This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities,nor shall there be any sale of securities where such offer or sale would be unlawful prior to registrationor qualification under the securities law. No offering shall be made except by means of a prospectusmeeting the requirements of the Brazilian Securities Commission CVM Instruction 400 of 2003, asamended.


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Consolidated Corporate Earnings

Minority Interested

Net Income Before Tax

Operating Result

Income Tax and Social Cont.

Non Operating Result

Financial Result

Goodwill Amortization

EBITDA Margin

EBITDA

Operational Margin

Operating Expenses

Net Revenues

R$ Millions

Net Margin

Net Income

Deferred Income and Soc Cont.

(354)

3Q08

215,033

223,063

55.1%

(46,935)

4,080

67,956

(121,658)

(189,642)

404,675

53.1%

165,411

49.7%

200,970

82,848

(961)

9M08

672,277

696,007

56.5%

(262,438)

14,922

222,993

(202,763)

(559,298)

1,231,574

54.6%

707,428

43.1%

530,206

86,177

1H08

(607)

457,243

472,944

57.19%

(215,503)*

10,842

155,037

(81,105)

(369,656)

826,899

55.3%

542,017

39.8%

329,236

3,329

The amount of deferred tax credits ,by the end of 1H08, was aggregated inthe Income Taxes payable


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Financial Highlights2008 Adjusted and 2007 Pro Forma

Net Revenues (R$ Millions)

360.8

434.2404.7

3Q07 2Q08 3Q08

962.4

1,231.6

9M07 9M08

12.2%

28.0%

EBITDA Margin (%)

8.5 bp

62.0%

68.0% 68.1%

3Q07 2Q08 3Q08

59.6%

9M07 9M08

6.1 bp

Adjusted Net Income (R$ Millions)Excludes goodwill amortization and non-recurring expenses

44.8%

54.6%

204.3

218.7

315.9

3Q07 2Q08 3Q08

528.3

764.9

9M07 9M08

68.1%

Net Income (R$ Millions)Excludes non-recurring expenses

19.5%

15.3%

204.3165.2

3Q07 2Q08 3Q08

528.3

631.1

9M07 9M08

235.6


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Pro Forma Income Statements

(In thousands of reais) 3Q07 2Q08 3Q08 9M07 9M08

Gross Operating Revenues 402,008 483,625 450,833 1,071,551 1,372,066

Revenues from trading and/or settlement

systems - BM&F segment 157,388 161,321 170,386 458,373 486,645

Revenues from trading and/or settlement

systems - Bovespa segment 232,541 309,329 264,601 577,361 844,457

Other operating revenues 12,079 12,975 15,846 35,817 40,964

Deductions from revenues (41,219) (49,446) (46,158) (109,180) (140,492)

Net operating revenues 360,789 434,179 404,675 962,371 1,231,574

Operating expenses (145,572) (146,700) (137,158) (414,242) (416,408)

Operating income 215,217 287,479 267,517 548,129 815,167

Goodwill amortization - (81,105) (121,658) - (202,763)

Interest income, net 77,989 77,244 67,957 232,485 222,993

Non-operating income 9,742 7,531 4,080 16,627 14,922

Net income before taxes 302,948 291,149 217,897 797,241 850,319

Income and social contribution taxes (97,922) (124,973) (68,109) (266,919) (304,445)

e erre ncome an soc a con r u on

taxes - - 86,177 - 86,177

Minority interest (690) (970) (354) (2,056) (961)

Net income 204,336 165,206 235,611 528,266 631,090


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Total amount of shares FullyDiluted (thousands)

Earnings per Share Calculation Pro Forma

Earnings per share (R$)

3Q08

0.116

9M08

0.310

Adjusted earnings per share (R$)

Total amount of shares (thousands)

2,044,014 2,044,014

Earnings per share (R$) 0.115 0.309

Adjusted earnings per share (R$)

0.155 0.375

0.154 0.374

2,038,073 2,038,073


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Reconciliation of 9M08 ConsolidatedAdjusted Results

Minority Interest (961)(961)

Reported

Income Before Taxes

Operating Result

Adjusted Net Margin by Goodwill

Adjusted Net Income by Goodwill

Income Tax and Social Contribution

Non-Operating Income

Financial Income, net

Goodwill Amortization

EBITDA Margin

EBITDA

Operating Margin

Operating Expenses

Net Revenues

815,167672,277

838,897696,007

68.1%56.5%

(304,445)(262,438)

14,92214,922

222,993222,993

(202,763)

(416,408)(559,298)

1,231,5741,231,574

R$ Thousands

54.6% 66.2%

(202,763)

707,428 850,318

Non Recur. Adjusted

Net Margin

Net Income

51.2%43.1%

631,090530,206 66,243

90,405

66,243

(24,162)

90,405

90,405

90,405

90,405

90,405

90,405

(24,162)

66,243

147,348

Deferred Tax Credits (86,177)(86,177) (24,162)(24,162)

142,890

142,890

142,890

(42,007)

100,884

100,884664.030 764.914

53.9% 62.1%


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Balance Sheet as of 09/30/2008

573,722

1,110,3512,408,035

2,055,229

20,753,426

20,753,426

Other Credits

Total Assets

Permanent

Cash and Cash Equivalent

Long Term Assets

Current

17,759,920

585,471

352,806

Fixed

Investments

242,406

1,317,372

Intangible 16,182,148

Deferred 17,994

Assets (R$ Thousands)

Short Term Debt

Total Liabilities and Equity

Long Term Liabilities

Cash Collateral

Others

Current

95,923

388,389

148,240

Stockholders Equity

Minority Interest

19,531,880

15,272

Liabilities and Stockholders Equity(R$ Thousands)


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REVENUES


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Revenues Breakdown

Bovespa Segment (R$ Thousands)

232.5

309.3264.6

3Q07 2Q08 3Q08

577.4

844.4

9M07 9M08

13.8%

6.2%

Other Revenues (R$ Thousands)

14.4%31.2%

12.1

12.9

15.8

3Q07 2Q08 3Q08

35.8

40.9

9M07 9M08

BM&F Segment (R$ Thousands)

19.5%

8.3%

157.4

161.3

3Q07 2Q08 3Q08

528.3

631.1

9M07 9M08

170.4


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Trading Activity Bovespa segment

Average Daily Number of Trades(Thousands)

Annualized Turnover*

Average Daily Trading Value(R$ Billions)

51.5%

61.5%

62.0%

55.2%

62.8%

3Q07 2Q08 3Q08 10M07 10M08

4.9

6.5 5.3

4.6

5.8

3Q07 2Q08 3Q08 10M07 10M08

160

230

254

144.4

239.8

3Q07 2Q08 3Q08 10M07 10M08

6.5%

27.0%

58.7%

66.1%

10.5 p.p.

7.6 p.p

Average IBOVESPA (Thousands)

54,8

67,5

64,8%

51,4

58,6

3Q07 2Q08 3Q08 10M07 10M08

1%

14.1%55,3

* Relation with the trading value of the cash market and the market cap of the exchange


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Market Data and Number of InvestorsAccounts Bovespa segment

Number of Investors Accounts (thousands)

301.3

550.5

328.4

565.1

3Q07 2Q08 Oct 07 Oct 08

72.1%

3Q08

539.8

82.7%

Market Data

Home Broker Number of Clients(thousands)

168.1

296.0

3Q07 3Q08

76.9%

Vendors Number of Users(thousands)

59.936.7%

81.9322.7

108.9

2Q08 3Q07 3Q082Q08


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Revenue Margin* by Asset Class - Bovespa

* Trading, clearing and settlement fees divide by traded value

6.006

13.673

6.510

Cash Derivatives Total

Basis Points

3Q08 Margin

6.050

14.478

6.666

Cash Derivatives Total

Basis Points

2Q08 Margin


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Overall ADTV BM&F segment

Overall ADTV (Thousands)

1.765

3Q07 2Q08

1.543

3Q08

1.808 -14.7%

1.662

1.797

10M07 10M08

-7,5%


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Rate per Contract BM&F Segment

R$

Includes trading fess, clearing fees, clearing fees at maturity and permanence fees

On August 25, 2008, the discount policy applied to investors that held at least 10.000 stocks BMEF3 was

terminated.

FX Rates

Indices

Commodities

OTC

Web Trading

Total

Interest Rates in BRL

2Q08

1.064

1.785

2.460

3.890

2.322

0.160

1.381

R$

Total

3Q07

1.049

1.937

1.668

3.590

1.904

0.069

1.320

3Q08

1.268

2.057

2.157

3.814

2.587

0.160

1.598


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Overall ADTV (Thousands)

1.320

1.381

1.598

3Q07 2Q08 3Q08

* Includes Trading Fees, Clearing Fees, Permanence

Fees and Clearing Fees at the Maturity

Volumes Slowdown was partially offsetby the RPC Increase BM&F segment

1,765

3Q07 2Q08

1,543

3Q08

1,808+ 21%-14.7%

Overall RPC (R$)


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EXPENSES


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20-6.5%

39.7%

-37.3%

-22.7%

9.5%

Board Compensation

Taxes

Marketing

Supplies

Communication

Maintenance

Third Party Services

Depreciation & Amortization

Data Processing

Personnel

Leases

2Q08

Var%

3Q08x2Q08

Others

Total

56,966

1,685

3,270

2,020

7,824

1,200

4,984

9,962

41,618

1,096

8,152

146,700

7,923

-14.0%

-9.1%

15.1%

1.3%

-12.0%

-2.8%

-213.7%

-32.0%

Expenses Pro Forma

BRL thousands

1,200

3Q08

11,389

137,158

55,364

36,843

11,470

2,972

4,287

928

5,324

(1,916)

1,267

8,030

Var%

3Q08x3Q07

-5.8%

18.5%

-

-19.4%

30.0%

21.2%

-17.0%

-5.3%

-6.4%

1.1%

-4.4%

-176.2%

-42.2%

2,513

9,216

1,151

3,538

3,580

12,111

8,580

36,456

57,895

3Q07

-

9,609

923

145,572


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Operating Expenses Breakdown

Total (BRL Thousands)

145.6146.7

137.2

3Q07 2Q08 3Q08

414.2416.4

9M07 9M08

-5.8%

0.5%

Third Party Services (BRL Thousands)

5.7%12.1

1011.5

3Q07 2Q08 3Q08

29

9M07 9M08

-5.3%

Data Processing (BRL Thousands)

10.6%

1.1%

36.5

41.6

36.8

3Q07 2Q08 3Q08

103.1

114

9M07 9M08

30.7

Personnel (BRL Thousands)

2.4%-4.4%57.9

57

3Q07 2Q08 3Q08

163.4

167.3

9M07 9M08

55.4

Main IT projects regarding the


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Main IT projects regarding theenhancement of trading capacity

Until September 30th, 2008, the IT expenses regarding the projects of increasingthe capacity of trades and reducing the latency amounted R$ 24.3 million:

BM&F Segment

Expenditures: R$ 13.6 million and Main Projects: New GTS, Direct Market Access, CMEGlobex

BOVESPA Segment

Expenditures: R$ 10.7 million and Main Project: Megabolsa

2007 2008 2009

BM&F Segment

Orders per second 25 3,750 8,000

Trades per day (thousands) 50 200 400

Bovespa Segment

Offers per day (millions) 2.4 7.0 15.0

Trades per day (thousands) 300 770 1,500

Capacity Evolution


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Main Impacts on the Income Taxes

(1) Refers to the tax loss used to compensate the taxable income obtained in September2008

R$ Millions

3Q08 9M08

Income Before Tax 217,9 850,3Theoretical Tax (34%) 74,1 289,1

Additions and exclusions in the

Tax Re ort Book-6,0 15,3

Interest on Capital -52,7 -61,2Tax Loss - Bovespa Holding

(1) -5,4 -5,4

Goodwill Amortizaton 41,4 69,0

Others 10,7 12,9

Total 68,1 304,4


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Deferred Asset

(1) There will be additional deferred tax credits, to be registered considering the goodwillamortization for Bovespa Holding for the period of October and November/08, of R$ 27.9 million

(2) Related to the 30% of the forecasted pre tax income of BVSP (former Bovespa Holding) forOctober and November/08

(3) Due to provisions created for employees compensation and third party expenditures

(4) Credits generated during the fiscal year of 2007

R$ Millions

Event Deferred Asset

Goodwill Amortization(1) 202.8 68.9

Tax Loss carry forward - Bovespa

Holding(2)

33.5 11.4

Temporary Provisions(3) 17.1 5.8

Impact on 2008 earnings 253.4 86.2

Others(4) 10.6 3.6

Total Deferred Tax Assets 264.0 89.8


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Interest Income Breakdown

NOTE: The loan obtained with Bradesco Bank was entirely paid in November 11th, 2008.

(1) Composed mainly of the remuneration of BM&FBOVESPAs total cash, including both proper and collateralsdeposited in cash.

(2) Payment of taxes regarding Interest on Capital received by BM&FBOVESPA from BOVESPA HOLDING

(3) Payment of taxes regarding Interest on Capital received by BOVESPA HOLDING from BVSP and CBLC

R$ Million

Description 3Q08 9M08

Financial revenues(1)

93,7 269,0

Financial expenses 25,7 46,0

Interests regarding the loan 13,8 16,6

IOF (Tax on financial transactions) 1,0 5,0

PIS and COFINS contingencies - Interest on Capital - BM&FBOVESPA

(2)

2,9 2,9Settlement and Custody services hired by BM&F Bank 2,7 8,0

FX variations 1,6 6,4

PIS and COFINS contingencies - Interest on Capital - BOVESPA HOLDING(3)

1,6 2,6

Banking expenses 0,5 1,0

Other 1,6 3,5

NET INTEREST INCOME 68,0 223,0


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Synergy of Headcount

Full employees

Outsourced

Total

-13.1%

May/08

1,386

440

1,826

387

1,427

1,814

303

1,204

1,507

Sep/08Jul/08 %

-31.1%

-17.5%

319 already dismissed by 09/30/2008

46 will leave the company until 04/04/2009

182

319

Layoffs

137


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Synergies Update

Preliminary Estimates (April)

Current Estimates (August)

2008E 2009E 2010E

50

R$ Millions

10%

18%

25%90

125

95*

19%

24%

120

26%

131

*Annualized


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Synergies

32%38%

34%

28%

31%34%

22%

16% 16%

18%15% 15%

2008 2009 2010

Processes - Others Processes - Marketing Processes - IT Personnel

68% 62% 66%

BRL 95 MM BRL 120 MM BRL 131 MM

BRL 65 MM

BRL 30 MM

BRL 75 MM

BRL 45 MM BRL 45 MM

BRL 86 MM


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Buy Back Program

The Board approved the buy back program on September, 24th

The Company is able to buy 3.5% of the free-float that represents

71.2 million shares, to be cancelled afterwards.

5.941.200 shares were bought between September, 29th and

October, 17th .

The program will continue on November 13th.


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Merger of BVSP and CBLC

Approval will happen through an Extraordinary General Meeting,scheduled for Nov 28th ,2008.

The goodwill amortization expense will be deductible after the mergerof BVSP and CBLC in BM&FBOVESPA

CBLCBVSP

Ex-Bov.Holding

CME Order Routing Agreement and


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CME Order Routing Agreement andDMA Timeline

Aug

3Q08

Sep

traditional DMA

IMPLEMENTED

29th

CME Order Routingagreement implementation(Order flow)

Globex GTS Globex GTS

4Q08

Oct Nov Dec

DMA via directconnection

Q109

2009

DMA viaa provider

FIRST PHASE

SECOND PHASETHIRD PHASE

FOURTH PHASE

For both Cash andDerivatives Markets

Co-location

30th

Traditional DMA figures until Oct 31th/08:

(i) 2,200 trades per day (6% from total)(ii) 20,000 contracts per day (1% from total)(iii) Around 30 brokers certified


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BM&F Bovespa Investor Relations

Web page: www.bmfbovespa.com.br/ri

Phone numbers: 55 11 3233 2490/ 2847

E-mail: [email protected]

3q08 earnings conference call presentation

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