BM&F BOVESPA 2Q08 Earnings Conference Call August 15th 1
Forward Looking Statements This presentation may contain certain statements that express the management s expectations, beliefs and assumptions about future events or results. Such statements are not historical fact, being based on currently available competitive, financial and economic data, and on current projections about the industries BM&F Bovespa works in. The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, target and other similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those projected in this presentation 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&F services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highlycompetitive industries BM&F Bovespa operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b) government policies related to the financial and securities markets; (iv) increasing competition from new entrants to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the implementation of enhanced functionality demanded by BM&F customers; (vi) ability to maintain an ongoing process for introducing competitive new products and services, while maintaining the competitiveness of existing ones; (vii) ability to attract new customers in domestic 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 the date they were made, and BM&F Bovespa undertakes no obligation to update them in light of new information 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 registration or qualification under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended. 2
Agenda Operating Results Financial Results Integration Update Milestones and New Initiatives 3
Agenda Operating Results Financial Results Milestones and New Initiatives Integration Update 4
Trading Activity - Bovespa Average Daily Trading Value (R$ Billions) Average Daily Number of Trades (Thousands) 5.9 6.5 48.3% 6.1 205.3 230.5 67.2% 219.8 4.5 45.8% 4.1 132.3 74.2% 131.4 2Q07 1Q08 2Q08 7M07 7M08 2Q07 1Q08 2Q08 7M07 7M08 Annualized Turnover 55.6% 58.7% 61.5% 5.9 p.p. 6.8 p.p 53.5% 60.3% 2Q07 1Q08 2Q08 7M07 7M08 5
Securities Lending and Number of Investors - Bovespa Securities Lending Open Interest (R$ billions) 18.8 21.5 25.0% 23.5 22.9-21.2% 18.1 2Q07 1Q08 2Q08 Jul 07 Jul 08 Number of Investor Accounts (thousands) 507.7 539.8 87.1% 551.9 271.4 98.9% 295.1 2Q07 1Q08 2Q08 Jul 07 Jul 08 6
Listing and Market Data - Bovespa 419 667 Number of Issuers 713 715 451 446 Market Data Home Broker Number of Clients (thousands) 108.9 286.6 196.3% 322.7 248 262 269 2Q07 1Q08 2Q08 Vendors Number of Users (thousands) 85.6 136.3 2Q07 1Q08 2Q08 57.3 137.9% Companies listed on Stock Exchange Market Investment Funds and organized OTC issuers Total 2Q07 1Q08 2Q08 7
Revenue Margin* by Asset Class - Bovespa 1Q08 Margin 2Q08 Margin Basis Points Basis Points 14.068 14.478 5.950 6.501 6.050 6.666 Cash Derivatives Total Cash Derivatives Total * Trading, clearing and settlement fees divide by traded value 8
ADTV of Major Derivatives Contracts BM&F Interest Rates in BRL (Thousands) FX Rates (Thousands) 1,192-20.1% -12.1% 1,070 931 952 940 480 571 564 17.4% 25.3% 443 555 2Q07 1Q08 2Q08 7M07 7M08 2Q07 1Q08 2Q08 7M07 7M08 Interest Rates in USD (Thousands) Indices (Thousands) 103-9.6% 1.6% 120 93 93 90 91-26.5% 92 88 109-15.9% 92 2Q07 1Q08 2Q08 7M07 7M08 2Q07 1Q08 2Q08 7M07 7M08 9
Rate per Contract BM&F R$ 2Q08 1Q08 2Q07 Interest Rates in BRL 1.064 1.102 0.988 FX Rates 1.785 1.850 2.071 Indices 2.460 2.132 1.521 Interest Rates in USD 1.057 1.078 0.964 Commodities 3.890 3.283 3.266 OTC 2.322 2.057 2.239 Web Trading 0.160 0.155 0.054 Total 1.381 1.401 1.274 * Includes trading fess, clearing fees, clearing fees at maturity and permanence fees For comparison purposes, gross-up of taxes on revenues was applied to average fee per contract on 2Q07, in order to reflect change in tax system after demutualization 10
Volumes Slowdown was Partially offset by the RPC Increase BM&F Overall ADTV (Thousands) Overall RPC (R$) 1,969 1.401-10.4% 1.381 1,756 1,765 + 8.4% 1.274 2Q07 1Q08 2Q08 2Q07 1Q08 2Q08 * Includes Trading Fees, Clearing Fees, Permanence Fees and Clearing Fees at the Maturity 11
Agenda Operating Results Financial Results Milestones and New Initiatives Integration Update 12
R$ Thousands Net Revenues Operating Expenses Operating Result EBITDA Operating Margin EBITDA Margin Goodwill Amortization Financial Income, net Non-Operating Income Income Before Taxes Reconciliation of 1H08 Adjusted Results Income Tax and Social Contribution Reported 826,899 (369,655) 457,244 472,944 57.2% (81,105) 155,036 10,842 (212,174) Non Recurring 90,405 90,405 826,899 (279,250) 547,649 55.3% 66.2% 90,405 Adjusted 563,349 68.1% (81,105) 155,036 10,842 542,017 90,405 632,422 (24,162) (236,336) Minority Interest (607) (607) Net Income Net Margin 329,236 66,243 39.8% 395,479 47.8% Adjusted Net Income by Goodwill 329,236 147,348 66,243 476.584 Adjusted Net Margin by Goodwill 39.8% 57.6% 13
Highlights of Adjusted Income Statements R$ Thousands 2Q08 1Q08 2Q07 1H08 1H07 Net Revenues 434,179 392,720 333,457 826,899 601,583 Operating Expenses (146,700)(132,550) (140,721) (279,250) (268,670) Operating Result 287,479 260,170 192,735 547,649 332,912 Operating Margin 66.2% 66.2% 57.8% 66.2% 55.3% EBITDA 295,402 267,947 201,396 563,349 349,816 EBITDA Margin 68.0% 68.2% 60.4% 68.1% 58.1% Goodwill Amortization (81,105) - - (81,105) - Income Before Taxes 291,149 341,273 277,095 713,527 494,293 Income Tax and Social Contribution (124,973)(111,363) (99,967) (236,336) (168,997) Net Income 165,206 230,273 175,947 476,584 323,931 Net Margin 38.1% 58.6% 52.8% 47.8% 53.8% Adjusted Net Income by Goodwill 246,311 230,273 175,947 476,584 Adjusted Net Margin by Goodwill 56.7% 58.6% 52.8% 57.6% 323,931 53.8% 14
Operating Expenses Breakdown R$ Thousands 2Q08 1Q08 QtQ% 1H08 1H07 HtH% Personnel 56,966 54,968 3.6% 111,934 111,934 6.0% Data Processing 41,618 35,567 17.0% 77,185 66,614 15.9% Depreciation & Amortization 7,923 7,777 1.9% 15,700 16,904-7.1% Third Party Services 9,962 9,228 8.0% 19,190 16,906 13.5% Maintenance 3,270 3,243 0.8% 6,513 6,919-5.9% Communications 4,984 4,224 18.0% 9,208 6,284 46.5% Leases 1,096 972 12.8% 2,068 1,568 31.9% Supplies 1,200 516 132.6% 1,716 1,838-6.6% Marketing 7,824 7,153 9.4% 14,977 17,595-14.9% Taxes 1,685 1,513 11.4% 3,198 4,722-32.3% Board Compensation 2,020 2,036-0.8% 4,056 - - Others 8,152 5,353 52.3% 13,505 23,766-43.2% Total 146,700 132,550 10.7% 279,250 268,670 5.7% 15
Operating Expenses Breakdown 2Q08 1Q08 38.8% Personnel 41.5% Data Processing 28.4% Data Processing 26.8% R$ 146.7 Million R$ 151.5 Million R$ 132.6 Million R$ 136.6 Million Others 20.6% Third Party Services 6.8% Depreciation and Amortization 5.4% Others 18.8% Third Party Services 7.0% Depreciation and Amortization 5.9% 16
Financial Highlights 2008 Adjusted and 2007 Pro Forma Net Revenues (R$ Millions) EBITDA Margin (%) 333.5 392.7 30.2% 434.2 37.5% 601.6 826.9 68.2% 68.0% 10.0 bp 68.1% 60.4% 7.6 bp 58.1% 2Q07 1Q08 2Q08 1H07 1H08 2Q07 1Q08 2Q08 1H07 1H08 Net Income (R$ Millions) Excludes non-recurring expenses Adjusted Net Income (R$ Millions) Excludes goodwill amortization and non-recurring expenses 175.9 230.3-6.1% 165.2 22.1% 395.5 175.9 230.3 40.0% 246.3 47.1% 476.6 323.9 323.9 2Q07 1Q08 2Q08 1H07 1H08 2Q07 1Q08 2Q08 1H07 1H08 17
Gross Operating Revenues Breakdown 2Q08 1Q08 Trading and Clearing Bovespa 52.6% Trading and Clearing Fees BM&F 34.0% Trading and Clearing Bovespa 55.7% Trading and Clearing Fees BM&F 31.5% R$ 483.6 Million R$ 437.6 Million Others BM&F 1.4% Vendors and Others 2.8% Others Bovespa 9.2% Others BM&F 1.8% Vendors and Others 2.7% Others Bovespa 8.3% 18
Balance Sheet as of 06/30/2008 Assets (R$ Thousands) Liabilities and Stockholders Equity (R$ Thousands) Current 3,093,670 Current 1,517,449 Cash and Cash Equivalent 2,800,265 Cash Collateral 536,068 Other Credits 293,405 Short Term Debt 502,732 Long Term Assets 306,485 Others 478,649 Permanent 17,870,003 Long Term Liabilities 111,776 Investments 1,317,347 Minority Interest 14,918 Fixed 235,600 Stockholders Equity 19,626,015 Intangible 16,303,807 Deferred 13,249 Total Liabilities and Equity 21,270,158 Total Assets 21,270,158 19
Short Term Debt Highlights Amount: R$ 500 million Issuance: 07/13/2008 Maturity: 09/11/2008 Cost: 109.8% of the interbank rate (CDI) 2 month opportunity cost: 33.2% of the CDI (6.6% of the CDI, excluding the IOF tax) 20
BM&FBOVESPA Listing and Remuneration To Shareholders BM&F BOVESPA Listing (BVMF3) will happen on August 20th Dividends + Interest on Equity Capital amounted BRL 292.2 million (BRL 0.14319 per share) BRL 149.2 million as dividends (R$ 0.07311 per share) BRL 143.0 million as Interest on Equity Capital (BRL 0.07008 per share, BRL 0.0621435 per share net of income tax) Shareholders base of August 25th an payment on September 2nd 21
Agenda Operating Results Financial Results Integration Update Milestones and New Initiatives 22
Synergy of Headcount May/08 July/08 Full Employees Outsourced 1.386 440 1.427 387 Total 1.826 1.814 Reduction of 380 employees (302 full employees and 78 outsourced) 21% of total headcount 23
Synergy of Processes Software e hardware (reduction of de data centers and completed port application to distributing environment) Market communication Conferences Communication Post-trading Finance Others 24
Synergies Update 125 132-135 R$ Million 121-124 50 94* 18% 90 18% 24% a 25% 25% 26% a 27% 10% 2008E 2009E 2010E Preliminary Estimates Current Estimates * Annualized 25
Synergies Breakdown 132-135 R$ Million 94* 121-124 47 47 36 68 74-77 85-88 2008E 2009E 2010E Headcount Processes * Annualized 26
Additional Synergies Integration of trading platform Integration of post-trading platform Premises Others (travelling expenses, third party expenses, third party/other than IT, telecom and advisory) 27
Agenda Operating Results Financial Results Integration Update Milestones and New Initiatives 28
CME Order Routing Agreement and DMA Timeline Implementation of traditional DMA CME Order Routing agreement implementation (Order flow) Globex GTS Globex GTS DMA via direct connection DMA via direct connection / co-location 3Q08 4Q08 2009 July August September 26 th 16 th 29 th Octo ber Nove mber Dece mber 1st 2nd Mock tests of traditional DMA DMA via a provider 29
Other Initiatives ETF Global Indices (4Q08) Market makers for derivatives BDR with corporate governance 30
BM&F Bovespa Investor Relations Web pages: www.bmf.com.br/ir www.bovespa holding.com Phone numbers: 55 11 3233 2490/ 2847 E-mail: ri@bmfbovespa.com.br 31