BCP Shares on the Stock Market

Transcription

1 Evolution of the Equity Market During 2004 the market recovered sharply throughout the first half, following which its significant correction began that led to the year's lows on the leading stock market's during the summer.this was due to a number of adverse conditions that appeared at the time, with particular emphasis on the prolonged increase of oil prices, political and military instability in the Middle East, several macroeconomic indicators suggesting the slowdown of economic growth in the leading Western economies, and the prospect of rising interest rates. During the last quarter of the year, and in the wake of the clarification of several of these factors, there was a widespread recovery of prices, particularly insofar as the European bourses were concerned. The leading stock market indices closed up, such as the EuroStoxx50 (+6.9%), the DAX (+7.3%), the CAC40 (+7.4%) and the IBEX (+17.4%). Against this background, the Portuguese stock market was outstanding, the PSI 20 index having closed the year up 12.6%. Stock Market Performance of the BCP Shares The Banco Comercial Português shares appreciated 6.8% in 2004.Taking into account the gross dividends distributed during the year, total return provided by BCP shares amounted to 11.8%. During the same period, the gain returned by the BEBANKS European banks index ("Bloomberg Europe Banks and Financial Services Index"), excluding dividends, amounted to 10.9%. The evolution of the Bank's share price during the year was generally in step with that of the international markets, with the minimum price of 1.66 euros being set right at the beginning of the year followed by a significant appreciation that led to the year's maximum of 2.19 euros in March. During the second and third quarters the share price fell during a considerable period, in line with the markets as a whole, having fallen to a new low of 1.68 euros on August 3 following the placement in "accelerated book building" of about 3% of the Bank's share capital held by a qualified Shareholder. This transaction was carried out within the scope of the agreement to sell the insurance businesses announced in July.The following table summarises the performance of BCP shares in BCP share price performance in 2004 Source: Bloomberg Share price at 31 Dec euros Share price at 31 Dec euros Average share price 1.87 euros Low 1.66 euros 12 Jan. 04 High 2.19 euros 9 Mar. 04 Share price performance from 31 Dec. 03 to 31 Dec % Market capitalisation at 31 Dec. 04 Ordinary shares 6.1 billion euros Mandatorily convertible securities 0.7 billion euros Total 6.8 billion euros 44 Annual Report Millennium bcp Millennium bcp co-financed the purchase of Álvaro Pires de Évora s painting "A Virgem e o Menino". Évora s National Museum.

2 BCP's market capitalisation, including the "Capital BCP 2005" Mandatorily Convertible Securities, stood at 6,831 million euros at December 31, 2004, an overall appreciation of 367 million euros compared to the end of the previous year, standing third in the ranking of the biggest capitalisations on the Portuguese market. The following table details the main events related with BCP that occurred in 2004 and the performance of the share price that followed. Price Price Event Date change change next day next 5 days 2003 earnings announcement 20 Jan % +3.6% Dividend payment in respect of 2003 (gross dividend per share 0.06 euros) 13 Apr % -2.4% 1st quarter 2004 earnings announcement 20 Apr % -6.3% 2nd quarter 2004 earnings announcement and announcement of the agreement for the sale of Seguros e Pensões and of the accelerated book building placement of 3% of the Bank s share capital 19 Jul % -1.7% 3rd quarter 2004 earnings announcement and announcement of an interim dividend payment 19 Oct % -1.1% Interim dividend payment 8 Nov % -0.5% The chart below illustrates BCP share price performance during 2004: BCP share price performance during 2004 Source: Bloomberg, Euronext Lisbon Annual Return Share price perfomance: + 6.8% Total return including gross dividend: % Portuguese Insurance Institute approves sale of Seguros e Pensões Terrorist attack in Madrid 1 st Quarter earnings announcement Portuguese Competition Authority comments on sale of Seguros e Pensões Jan Feb 1 st Half earnings announcement Announcement of sale of Seguros e Pensões and placement ofshares held by CGD FY 2003 earnings announcement Mar Apr May Jun Jul Aug Sep Oct Announcement of early parliamentary elections rd Quarter earnings and announcement of interim dividend Nov Dec Annual Report Millennium bcp 45

3 Liquidity BCP Shares Index Weight Euronext PSI Financial Services 48.8% PSI % DJ EuroStoxx Banks 1.1% Bebanks 0.5% Euronext % DJ EuroStoxx 0.2% As usual, BCP shares were among the securities most traded on Euronext Lisbon, with an average daily volume of 7 million shares. The annual turnover in BCP shares amounted to 3,388 million euros, or 55.7% of the average annual market capitalisation of the Bank, providing a liquidity share of 19.6% of the total volume traded on the official market, compared to 11.6% the previous year. This increase in liquidity, seen in the growing accumulated turnover and in the consistently large number of shares traded each day, up from 5.6 million in 2003 to 7 million in 2004, confirms the market s interest in the shares and the growing involvement of institutional investors with active holdings in the Company s shares. BCP Shares in Stock Market Indices BCP shares are included in 66 national and international stock market indices, and its presence in the Euronext PSI Financial Services and PSI 20 national indices, and in the Dow Jones EuroStoxx Banks, insofar as international indices are concerned, is of particular importance. Issue of "Capital BCP 2005" Securities Stock Market Performance The performance of the "Capital BCP 2005" securities generally accompanied the trend of BCP share prices, recording a minimum price of 4.56 euros and a maximum of 5.37 euros, closing the year at a price of 4.82 euros. During the year Shareholders also received the nominal gross annual return of 9%, paid quarterly. Liquidity During 2004, 16.6 million "Capital BCP 2005" securities were traded on the official market of Euronext Lisbon, providing a turnover of 82.4 million euros at an average price of 4.97 euros per security. Early Conversion As established in the offering circular and in accordance with the communications presented to the market at the time, the Bank declared the possibility of early conversion of the "Capital BCP 2005" securities at the initiative of their holders, to be requested during the 14-day period prior quarterly interest payment dates.this right of early conversion at the predetermined price of euros per share was exercised in respect of 0.2% of the total issue, leading to the delivery of 660,929 existing shares. 46 Annual Report Millennium bcp

4 Return Paid The "Capital BCP 2005" securities provide the holders within gross annual return of 9%, paid quarterly.the respective payments of the income to their holders accordingly took place on March 30, June 30, September 30, and December 31, Holders of "Capital BCP 2005" At December 31, 2004, the structure of holders of mandatorily convertible securities was as follows: Number of Percentage of the Number of Securities Number of Percentage of the Type of Holders Holders Value of the Issue per Holder Holders Value of the Issue BCP Custody 93, % BCP Custody 93, % Employees 3, % > 5,000, % Individuals 86, % 500,000 to 4,999, % Companies 3, % 50,000 to 499, % Institutionals % 5,000 to 49,999 2, % < 5,000 90, % Other Financial Inst. Custody 0.6% Other Financial Inst. Custody 0.6% Total 100.0% Total 100.0% Dividend Policy Banco Comercial Português strengthened its dividend policy during 2004, involving an interim dividend in respect of 2004, paid in November, designed to provide Shareholders with adequate remuneration of capital invested, through more frequent distribution of the profits generated by the institution.this interim dividend (since the distribution of which is restricted to the second half of the year under the terms of law, cannot exceed half the profit generated during the previous half-year) amounted to 0.03 euros per share, adding to the sum of 0.06 euros distributed in April in respect of the previous year. This is a frequent, regular practice implemented by many of the leading companies listed on international stock markets, a practice that Banco Comercial Português has pioneered among domestic companies included in the PSI 20 index.the following table summarises the main indicators that characterise policy implemented in recent years. Annual Report Millennium bcp 47

5 Gross dividend Net dividend Payment per share per share (euros) Payout Dividend Financial year year (euros) Residents Non residents ratio (1) yield (2) % 2.72% 2000 (3) n.a. n.a. 62.4% 2.65% % 3.30% % (4) 4.39% % 3.39% 2004 Interim dividend % Final dividend % Total dividend (5) % 3.55% (1) Payout ratio: percentage of net income distributed to Shareholders as dividend; (2) Dividend yield: annual return as a percentage obtained by the division of the gross dividend by the share price at the end of the year to which the dividend refers.the dividend yield for 2004 considers the payment of an interim dividend; (3) Paid under the form of a "scrip dividend" through the issue of new ordinary shares and their proportional distribution to the Bank s Shareholders; (4) Calculated on the basis of the after-tax net income before a non-mandatory provision charge for general banking risks (472,721.1 thousand euros); (5) Proposal to be submitted to the Annual General Shareholders Meeting. Creation of Shareholder Value During the year, Banco Comercial Português implemented a large number of strategic and profitability improvement measures, which led to increased profits in various business areas, to an increase of Shareholders' equity and to a greater focus of the business. In this connection, attention is called the creation of Shareholder value during year, seen in the increase of the market value of the institution and in the income distributed, amounting to million euros. Million euros Market capitalisation at 31 Dec. 03 Ordinary shares 5,765.6 BCP Capital 2005 (Mandatorily convertible securities) Total 6,464.2 Market capitalisation at 31 Dec. 04 Ordinary shares 6,156.5 BCP Capital 2005 (Mandatorily convertible securities) Total 6,831.3 Increase in market capitalisation Dividends 2003 dividend interim dividend 97.7 Total Creation of Shareholder value in 2004 (increase in market capitalisation + dividends) Annual Report Millennium bcp

6 Relations with Investors and with the Financial Community The Bank actively pursued the development of relations with the financial community within the framework of a policy of increasing approach to national and foreign investors, in keeping with principles of effective, transparent and ongoing communication. To this end, the Bank took part in the major investor conferences on the financial sector and organised a large number of road shows, covering the leading financial markets of Europe (Lisbon, London, Paris, Frankfurt, Amsterdam, Milan) and of the USA (New York and Boston), in addition to more than 140 "oneon-one" meetings. Emphasis is also given to the organisation of the Banco Comercial Português Investors Day for the second consecutive year, in which more than 50 institutional investors and financial analyst took part.the main initiatives were presented in connection with business development, increased profitability and strategic focus. The following table summarises, in addition to the Investors Day, the principal conferences in which BCP took part as guest speaker. April 2004 Morgan Stanley "Southern European Banks Conference 2004" May 2004 June 2004 September 2004 October 2004 UBS Warburg "2004 Global Financial Services Conference" Goldman Sachs "European Financial Conference" 2 nd BCP "Investors Day", attended by the main financial institutions and investors that normally produce research reports on BCP. Santander Central Hispano "Santander Iberian Conference" Merrill Lynch "Banking and Insurance Conference" Recommendations by Financial Analysts During the year the recommendations and price targets published by the financial analysts of the leading investment banks in respect of BCP shares evolved favourably.this can be seen in the 20% increase of the average price target, which rose from 1.70 euros per share in December 2003 to 2.02 euros per share in December This was accompanied by an increase of the number of buy, overweight or outperform recommendations from 2 to 5, while there was no negative recommendation by those investment houses that monitored the shares on a more regular basis. Treasury Shares In accordance with a resolution adopted by the general meeting of BCP Shareholders, the Bank may acquire or sell treasury shares up to a maximum of 10% of its share capital. As at December 31, 2004, the Banco Comercial Português held no treasury shares in its portfolio. Annual Report Millennium bcp 49

7 Shareholder Base At the end of 2004 the number of Banco Comercial Português Shareholders stood at 223,510. Attention is drawn to the reduction of the holdings of several investors who held qualified holdings, which led to the redistribution and increase of holdings in the portfolios of institutional Shareholders. Number of Percentage of Number of shares per Number of Percentage of Type of Shareholder Shareholders Capital Shareholder Shareholders Capital Employees 8, % > 5,000, % Individuals 207, % 500,000 to 4,999, % Companies 6, % 50,000 to 499,999 1, % Institutionals % 5,000 to 49,999 19, % < 5, , % Total 223, % Total 223, % As far as the Shareholder base is concerned, domestic Shareholders accounted for 99.0% of the total number of Shareholders, holding shares representing 61.8% of the Bank's share capital. Foreign Shareholders, in turn, though accounting for just 1.0% of the number of Shareholders, hold shares representing 38.2% of the BCP share capital. Shareholders Number of shares Domestic % of Foreign % of Pension % of Investment % of per Shareholder Shareholders Capital Shareholders Capital Funds Capital Funds Capital > 5,000, % % 6 7.4% 1 0.2% 500,000 to 4,999, % % 2 0.1% % 50,000 to 499,999 1, % % % % 5,000 to 49,999 18, % % % 6 0.0% < , % 1, % % 0 0.0% Total 221, % 2, % % % Institutional investors, both domestic and foreign, include a total of 80 pension funds and 32 investment funds holding shares representing 7.6% and 1.3% respectively of the Banco Comercial Português share capital. 50 Annual Report Millennium bcp

8 The Our Lady of Incarnation Church, in Lisbon, was restored thanks to the support of Millennium bcp, through its Foundation. 51