Quarterly Report • May 16, 2013
Quarterly Report
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Quarter 1/2013
| Quarter ended 31 March 2013 31 March 2012 |
|||
|---|---|---|---|
| Consolidated income statement | |||
| Net revenue (total revenue less volume-related costs) | €m | 484.3 | 506.9 |
| Net interest income from banking business | €m | 8.2 | 18.5 |
| Operating costs | €m | –295.3 | –248.6 |
| Earnings before interest and tax (EBIT) | €m | 192.0 | 260.0 |
| Net income for the period | €m | 121.2 | 146.2 |
| Earnings per share (basic) | € | 0.66 | 0.77 |
| Consolidated cash flow statement | |||
| Cash flows from operating activities excluding CCP positions | €m | 146.3 | 158.8 |
| Consolidated balance sheet (as at 31 March) | |||
| Non-current assets | €m | 5,082.0 | 5,024.3 |
| Equity | €m | 3,312.8 | 3,524.4 |
| Non-current interest-bearing liabilities | €m | 1,545.3 | 1,447.4 |
| Performance indicators | |||
| Employees (average annual FTEs) | 3,495 | 3,377 | |
| EBIT margin, based on net revenue | % | 40 | 51 |
| Tax rate | % | 26.0 | 26.01) |
| Gross debt / EBITDA2) | 1.43) | 1.3 | |
| Interest coverage ratio2) | % | 15.8 | 17.5 |
| The shares | |||
| Opening price | € | 46.21 | 51.80 |
| High | € | 52.30 | 52.10 |
| Low | € | 46.01 | 38.73 |
| Closing price | € | 47.25 | 50.48 |
| Market indicators | |||
| Xetra and Xetra Frankfurt Specialist Trading4) | |||
| Trading volume (single-counted)5) | €bn | 260.3 | 305.7 |
| Eurex | |||
| Number of contracts | m | 558.4 | 575.5 |
| Clearstream | |||
| Value of securities deposited (average for the period) | €bn | 11,411 | 11,027 |
| Number of transactions | m | 30.3 | 30.7 |
| Global Securities Financing (average outstanding volume for the period) | €bn | 562.8 | 588.5 |
| Transparency and safety key figures | |||
| Proportion of companies listed in the Prime Standard (for shares) as a percentage of all listed companies6) |
% | 83 | 80 |
| Number of calculated indices | 12,111 | 8,750 | |
| System availability of trading systems (Xetra®/Eurex®) | % | 99.983 | 100.000 |
| Market risk cleared via Eurex Clearing (gross monthly average) | €bn | 8,689 | 7,586 |
1) Adjusted for the non-taxable expense related to the revaluation of the share component of the purchase price paid for the acquisition of the shares in Eurex Zürich AG held by SIX Group 2) Adjusted by non-recurring effects for mergers and acquisitions as well as by costs for efficiency programmes 3) Interest-bearing gross debt adjusted for bonds maturing in the second quarter of 2013 4) Xetra Frankfurt Specialist Trading (prior to 23 May 2011: floor trading) 5) Excluding certificates and warrants 6) Market capitalisation of companies listed in the Prime Standard (shares) in relation to the market capitalisation of all companies listed on the Frankfurt Stock Exchange (FWB®, Frankfurter Wertpapierbörse)
Earnings before interest and tax (EBIT) declined to €192.0 million (Q1/2012: €260.0 million).
Basic earnings per share amounted to €0.66 for an average of 184.1 million shares (Q1/2012: €0.77 for 188.7 million shares). Adjusted for nonrecurring effects, basic earnings per share amounted to €0.92 (Q1/2012: €1.01).
DAX® performance1)
1) Index-linked, closing price on 28 December 2012
As from 1 January 2013, Deutsche Börse Group's organisational structure changed as follows:
Moreover, since 1 January 2013, the Group reports under the net revenue item not only revenue generated with external customers but also intragroup revenue, such as fees for DAX® licences that the Eurex segment provides to the Market Data + Services (MD+S) segment. The MD+S segment reports these fees as revenue, while the Eurex segment recognises them under volume-related costs. At Group level, there is no effect on consolidated net revenue. The effects resulting from this change are reflected in the respective segment chapters (see also chart on the right).
The prior-year figures have been adjusted accordingly in the 2013 segment reporting.
The European debt crisis, the central banks' persistent low interest rate policy and continuing very low volatility on the stock market shaped the market
environment in the first three months of 2013. Furthermore, the uncertainty about the future regulation can also be added to these shaping factors.
Impacts on market structures and market participants' business models are difficult to gauge accurately at present. Against this background, institutional and private investors were cautious in their trading decisions in the first quarter of 2013. Although trading activity on Deutsche Börse Group's derivatives exchanges was only slightly down on the prior-year quarter, trading in the cash market fell more significantly. While net revenue in the Eurex segment remained stable year-on-year, it declined in the Xetra cash market segment. In the Clearstream segment, which provides post-trade services, the assets under custody increased; however, growth in Clearstream's core business was unable to offset the decline in net interest income from banking business. The new Market Data + Services segment accounts for approximately 19 per cent of Deutsche Börse Group's net revenue.
1) New segment structure and net revenue adjustment
Deutsche Börse Group generated net revenue of €484.3 million in the first quarter of 2013, a 4 per cent decrease year-on-year (Q1/2012: €506.9 million). Net revenue is composed of sales revenue plus net interest income from banking business and other operating income less volume-related costs. Because of the lower interest rates, net interest income from banking business generated in the Clearstream segment declined by 56 per cent to €8.2 million (Q1/2012: €18.5 million). Volume-related costs amounted to €70.3 million in the reporting period (Q1/2012: €66.8 million). These costs are above all influenced by Clearstream's business activities in international settlement and custody.
Operating costs increased by 19 per cent to €295.3 million (Q1/2012: €248.6 million). The development of operating costs was driven by two factors, which are also reflected in the costs of the individual operating segments:
Non-recurring costs amounted to €65.8 million in the first quarter of 2013 (Q1/2012: €22.9 million). They are mainly composed of costs for efficiency programmes (see page 4 for details) of €65.6 million (Q1/2012: €6.3 million).
Within the company's strategic directions, the Executive Board decided on the increase in investments in growth projects and infrastructure of some €40 million already announced. In the first quarter of 2013, costs for these projects were around €7 million higher than in the prior-year quarter. The amount is especially accounted for Eurex's and Clearstream's growth initiatives in the area of risk and collateral management.
At €3.0 million, the result from equity investments was up year-on-year (Q1/2012: €1.7 million). It is generated primarily by Scoach Holding S.A., Direct Edge Holdings, LLC and European Energy Exchange AG (EEX).
EBIT declined by 26 per cent to €192.0 million (Q1/2012: €260.0 million) as a result of the increase in operating costs.
The Group's financial result for the first quarter of 2013 was €–23.2 million (Q1/2012: €–47.2 million). In the prior-year period, the financial result had been impacted to a significant extent by the final valuation of the purchase price liability relating to the acquisition of all of the shares of Eurex Zürich AG. After adjustment, the financial result of the prior-year quarter amounted to €–19.8 million.
EBIT
In March 2013, Deutsche Börse AG successfully placed a corporate bond with a volume of €600 million on the market. The individual bonds have a maturity of five years and an annual coupon rate of 1.125 per cent. In combination with the bonds issued in October 2012, this allowed Deutsche Börse to successfully refinance its outstanding non-current liabilities on favourable terms, which mature in 2013.
The effective Group tax rate for the first quarter of 2013, determined on a detailed estimation approach, was 26.0 per cent, in line with the company's forecast (Q1/2012: 29.4 per cent; 26.0 per cent adjusted for special factors).
Consolidated net income for the first quarter of 2013 amounted to €121.2 million and thus decreased by 17 per cent (Q1/2012: €146.2 million). After adjustment, consolidated net income amounted to €169.9 million, an 11 per cent decline year-on-year (Q1/2012: €190.5 million).
Basic earnings per share, based on a weighted average of 184.1 million shares outstanding, declined to €0.66 in the first quarter of 2013 (Q1/2012: €0.77 for 188.7 million shares outstanding). Adjusted by non-recurring effects the earnings per share amounted to €0.92 (Q1/2012: €1.01).
To further increase operational efficiency, Deutsche Börse Group has launched an efficiency programme, under which the company will implement additional staff and non-staff cost savings of €70 million per annum. The goal is to enable the company to compensate the inflation-driven cost increase expected in the coming years. Furthermore, this ensures the necessary flexibility to continue the growth and infrastructure investments, which will allow the company to seize opportunities relating to structural and regulatory changes in financial markets and potential in markets like Asia. At the same time, the company is continuing to adapt to evolving customer needs. The full effect of the efficiency improvements is expected to be felt from 2016 onwards. To achieve the efficiency improvements, the company is expecting implementation costs in a magnitude of €90 to €120 million. The majority of this amount is expected to be recognised in income in 2013 in the form of provisions. In the first quarter of 2013, special items, particularly relating to efficiency measures, amounted to €65.8 million.
As part of the changes to the reporting structure, connectivity income as well as income from cooperation with partner exchanges is no longer reported in the Eurex segment but in the Market Data + Services segment, and income from Eurex Bonds® is reported in the Xetra segment.
The market environment in the first quarter of 2013 was dominated by the European debt crisis, the central banks' ongoing low interest rate policy and a stock market with sustained, very low volatility. Additional factors include the regulatory projects in the financial industry, whose impact on market structures and market participants' business models is difficult to gauge accurately at present. These conditions led market participants to be more cautious in their trading activities, especially in equity-based derivatives, and the overall number of traded contracts to remain more or less steady compared with the prior-year quarter. Trading volumes for European futures and options were down 2 per cent on the previous year to a total of 401.3 million contracts (Q1/2012: 409.2 million). The average daily volume increased by 3 per cent due to the lower number of trading days to 6.5 million contracts traded each day (Q1/2012: 6.3 million). Trading volumes on the International Securities Exchange (ISE) were 6 per cent lower than in the prior-year quarter at 157.1 million contracts (Q1/2012: 166.3 million). Overall, 558.4 million contracts were traded on Deutsche Börse Group's derivatives exchanges, a year-on-year decline of 3 per cent (Q1/2012: 575.5 million).
European index derivatives were the highest-volume product group. Trading volumes declined in particular due to weak volatility – which was at its lowest level for five years during the reporting period – and dropped by 14 per cent to 171.9 million contracts (Q1/2012: 199.0 million). The highest-volume products in this segment were derivatives on the EURO STOXX 50® index, with 132.9 million traded contracts (Q1/2012: 152.6 million).
The European equity derivatives contracts product group fell by 6 per cent in comparison with the first quarter of 2012, to 82.9 million contracts (Q1/2012: 87.8 million). Trading in equity options declined by 8 per cent to 56.6 million contracts (Q1/2012: 61.2 million); single-stock futures decreased by 1 per cent to 26.3 million contracts (Q1/2012: 26.6 million).
Trading in European interest rate derivatives rose by 19 per cent to 143.8 million contracts (Q1/2012: 121.3 million). This is primarily attributable to market participants' expectations at the beginning of the year that the European Central Bank would continue to cut key interest rates. However, this has not happened in the first quarter.
Dividend derivatives continue to enjoy growth: the figure of 1.9 million traded contracts in the first quarter of 2013 represents a year-on-year increase of 6 per cent (Q1/2012: 1.8 million). The net revenue generated by dividend derivatives is recognised partly as index derivatives net revenue and partly as equity derivatives net revenue. Volatility index derivatives again grew at an even faster rate, rising by 167 per cent to 2.4 million contracts in the first quarter of 2013 (Q1/2012: 0.9 million contracts).
New products in existing asset classes can also help market participants to implement their trading strategies more effectively. For example, long-term futures on French government bonds (OAT futures, launched in 2012) and on Italian government bonds (BTP futures, launched in 2009), at 5.0 million contracts, already accounted for a market share in excess of 4 per cent in the interest rate futures product segment on Eurex®. In the first quarter of 2013, Eurex also launched a medium-term interest rate futures contract on French government bonds, which supports trading
strategies in the mid-term maturities range on the French yield curve.
US options exchange ISE increased its market share of US equity options in the first quarter of 2013 to 17.3 per cent (Q1/2012: 16.8 per cent). Adjusted by dividend transactions, ISE had a market share of 17.9 per cent in the first quarter of 2013, and consequently, it was the largest US options exchange. In the second quarter of 2013, the ISE is planning to launch an additional marketplace for US options based on the existing trading architecture and using existing member connections. This offering, which is subject to approval by the U.S. Securities and Exchange Commission (SEC), primarily targets private investors.
| Q1/2013 | Q1/2012 | Change % |
|---|---|---|
| 171.9 | 199.0 | – 14 |
| 82.9 | 87.8 | – 6 |
| 143.8 | 121.3 | 19 |
| 401.3 | 409.2 | – 2 |
| 157.1 | 166.3 | – 6 |
| 558.4 | 575.5 | – 3 |
| m contracts m contracts |
1) Dividend derivatives have been allocated to the equity index and equity derivatives.
Eurex Repo®, the marketplace for collateralised money market trading in Swiss francs and euros as well as for the GC Pooling® offering, reported average outstandings of €207.1 billion in the first quarter of 2013 (Q1/2012: €234.0 billion, single-counted for both years). The average outstanding volume on the repo market in Swiss francs declined to CHF39.5 billion (Q1/2012: CHF92.1 billion; singlecounted for both periods). This was mainly because of the interest policy measures taken by the Swiss National Bank (SNB) to devalue the Swiss franc and the discontinuation of issues of a number of SNB bills. The euro market recorded a 13 per cent decline
2) The total shown does not equal the sum of the individual figures as it includes other traded derivatives such as ETF, volatility, agricultural, precious metals, power and emission derivatives. Contract volumes from power product trading under the cooperation of Eurex and EEX are also included as from the first quarter of 2012.
to €28.6 billion (Q1/2012: €33.0 billion; singlecounted for both periods). GC Pooling, the collateralised money market that Eurex Repo operates jointly with Eurex Clearing and Clearstream and that has proven to be a reliable liquidity pool for market participants, continued its successful development. Average outstanding volumes reached €145.6 billion in the first quarter, a year-on-year increase of 17 per cent (Q1/2012: €124.2 billion). GC Pooling enables collateralised, anonymous money market trading in which standardised collateral baskets (a group of securities with similar quality features, such as their issuer credit rating) are traded and cleared via a central counterparty (Eurex Clearing).
Besides derivatives trading, Eurex also operates Eurex Clearing, Europe's leading clearing house. Eurex Clearing acts as a central counterparty for the clearing and risk management of products of connected trading platforms and offers services for OTC-traded futures and options on equities and interest rate products with contract specifications similar to Eurex contracts. EurexOTC Clear, the new clearing offering for over-thecounter (OTC) interest rate swaps launched in November 2012 has already won twelve clearing members as well as an additional five "registered customers". EurexOTC Clear provides a basis for investors to connect to Eurex Clearing's clearing platform ahead of the entry into force of the central clearing obligation for certain OTC derivatives prescribed by the European Market Infrastructure Regulation (EMIR) at EU level. This is expected to take place in 2014.
Deutsche Börse Group's expansion strategy focuses among other things on cooperation with local institutions. For example, Eurex agreed on a strategic alliance with Taiwan Futures Exchange, TAIFEX, in the area of derivatives trading. The Letter of Intent provides for a link to be established between the two marketplaces. In a first step, the cooperation partners are planning to list options and futures on Taiwan's benchmark index TAIEX that expire and mature daily in the fourth quarter of 2013.
The Group's cooperation with the Singapore Exchange (SGX) is already bearing fruit. The data centres of the two exchanges have been linked since January 2013, allowing their respective participants to more easily access the other exchange's markets.
The first directly connected market participant domiciled in Japan, Nissan Century Securities Co., Ltd., was admitted to trading in February 2013.
On 12 March 2013, Eurex and the Bombay Stock Exchange (BSE) announced a long-term technology alliance. Under it, BSE will join Eurex's technology roadmap and, in a first step, will replace its previous derivatives trading system by Eurex's global trading architecture in the course of the year.
Participants on the derivatives market in South Korea have also been able to directly access Eurex's global network since the first quarter of 2013. The South Korean Financial Services Commission has authorised Eurex to offer its entire product range in South Korea. Eurex's cooperation with the Korea Exchange for derivatives trading on Korea's benchmark KOSPI index has already been very successful.
As part of the changes to the internal reporting structure, connectivity income, income from cooperation with partner exchanges and external IT revenue are no longer reported in the Xetra segment but in the new Market Data + Services segment. In addition, the net revenue generated by Eurex Bonds® will be reported in the Xetra segment starting on 1 January 2013. Eurex Bonds is an electronic trading platform for interbank bond trading, trades are executed on the Xetra® system.
Trading activity on the cash market was down on the prior-year figure in the first quarter of 2013. The renewed flare-up of the euro crisis with the temporary threat of insolvency in Cyprus fuelled investor uncertainty. Uncertainty with respect to future regulatory developments is also dampening business. Accordingly, the trading volumes by institutional and private investors on Xetra and on Xetra Frankfurt Specialist Trading declined year-on-year. The trading volume in the open electronic order book for Xetra trading (measured in terms of order book turnover, single-counted) decreased by 15 per cent in the first quarter of 2013 to €260.3 billion (Q1/2012: €305.7 billion). The number of transactions declined by 19 per cent compared with the prior-year period to 46.2 million (Q1/2012: 57.2 million), while the average value of a Xetra transaction in the first quarter of 2013 was €11.3 thousand (Q1/2012: €10.7 thousand).
| Trading volume (order book turnover, single-counted) |
Q1/2013 €bn |
Q1/2012 €bn |
Change % |
|---|---|---|---|
| Xetra® | 260.3 | 305.7 | – 15 |
| Xetra Frankfurt Specialist Trading1) |
10.1 | 12.3 | – 18 |
| Tradegate | 10.5 | 10.4 | 1 |
1) Excluding certificates and warrants
The trading volume in Xetra Frankfurt Specialist Trading – a trading model that primarily targets private investors – also declined by 18 per cent year-on-year to €10.1 billion in the first quarter of 2013 (Q1/2012: €12.3 billion).
Stable trading volumes were recorded at Tradegate Exchange, the Berlin-based trading venue operated by a company in which Deutsche Börse holds a majority interest. In the first quarter of 2013, Tradegate Exchange generated a trading volume of €10.5 billion (Q1/2012: €10.4 billion).
As at 31 March 2013, 1,030 exchange-traded funds (ETFs) were listed on Deutsche Börse (Q1/2012: 952 ETFs). The assets under management held by ETFs rose to €208.0 billion (Q1/2012: €172.4 billion). Due to the general market development, however, the trading volume in Deutsche Börse's XTF® segment decreased by 15 per cent to €31.2 billion in the first quarter of 2013 (Q1/2012: €36.7 billion). Nevertheless, Deutsche Börse maintained its position as market leader in Europe with a market share of 33 per cent, thanks to the fact that it offers the largest number of products and high liquidity in ETF trading (Q1/2012: 35 per cent).
In addition to its ETF activities, Deutsche Börse also operates a segment for exchange-traded commodities (ETCs). Xetra-Gold®, a physically backed bearer bond issued by Deutsche Börse Commodities GmbH, is the most successful ETC product. As at 31 March 2013, Deutsche Börse Group held 53.7 tonnes of gold in custody (31 March 2012: 52.5 tonnes). The value of the gold was equivalent to around €2.2 billion, an increase of 5 per cent compared with the prior-year quarter (Q1/2012: €2.1 billion).
In the listing business, Deutsche Börse recorded nine listings in the reporting period: one listing in the Entry Standard, three transfers from other segments to the Entry Standard, three transfers to the General Standard as well as one IPO on and one transfer to the Prime Standard. The total issue volume stood at around €1,165 million in the first quarter of 2013. The companies listed on the Frankfurt Stock Exchange continue to be active: 31 companies implemented
capital increases in the reporting period, with the total volume amounting to €863 million. In addition, five companies made use of the option to issue corporate bonds. The issue volume as given in the prospectuses amounted to a total of €765 million, of which €700 million related to the Prime Standard for bonds launched in 2012 (including a transfer of €100 million from the Entry Standard) and €65 million related to the Entry Standard for bonds.
Breakdown of net revenue in the Xetra segment
1) Incl. revenue from listing and Eurex Bonds
2) The position "Trading" includes Xetra Frankfurt Specialist Trading as well as the Xetra® electronic trading system.
Following the changes in the segment reporting structure as of 1 January 2013, external IT net revenue is no longer reported in the Clearstream segment but in the Market Data + Services segment.
In the custody business, the average value of assets under custody in the first quarter of 2013 increased by 3 per cent year-on-year to a new record volume of €11.4 trillion (Q1/2012: €11.0 trillion). The average value of domestic securities under custody went
up to €5.4 trillion (Q1/2012: €5.1 trillion), and the average value of assets under custody for the international market increased to €6.0 trillion (Q1/2012: €5.9 trillion). The growth in overall custody volume is a result of new customers wins on the international side as well as the higher market value of shares, funds and structured products. As a result, net revenue in the custody business in the first quarter 2013 was slightly higher at €83.8 million (Q1/2012: €83.2 million).
In the first quarter of 2013, the number of settlement transactions processed by Clearstream saw a slight overall decrease year-on-year by 1 per cent to 30.3 million (Q1/2012: 30.7 million). This decrease is due to reduced trading activity by market participants in the first quarter of 2013. International transactions rose by 2 per cent to 10.3 million (Q1/2012: 10.1 million). While the number of settled transactions in the OTC business, which accounts for 83 per cent of the transactions, increased by 7 per cent year-on-year, it decreased sharply in the stock-exchange business (minus 14 per cent year-on-year), which accounts for 17 per cent of the transactions. In the domestic German market, settlement transactions decreased by 3 per cent to 20.0 million (Q1/2012: 20.7 million). Here, the distribution of stock-exchange and OTC business is the other way around: 65 per cent were stock-exchange transactions and 35 per cent OTC transactions. In the domestic business, stockexchange transactions decreased by 5 per cent yearon-year while OTC transactions increased slightly (plus 1 per cent) in the period under review. Net revenue in the overall settlement business decreased by 4 per cent to €25.8 million (Q1/2012: €26.8 million) in the first quarter of 2013.
The Investment Funds Services grew in the first quarter of 2013 compared to the prior-year period. In the period under review, Clearstream processed 1.9 million transactions (Q1/2012: 1.6 million), a 19 per cent increase. The assets held under custody in Investment Funds Services increased by 15 per cent to €250.9 billion in the first quarter of 2013 (Q1/2012: €219.1 billion).
The Global Securities Financing (GSF) business registered a year-on-year decrease in monthly average outstandings. In Q1/2013, they amounted to €562.8 billion (Q1/2012: €588.5 billion), a minus of 4 per cent compared with the average outstandings of the previous year's first quarter. While this drop is primarily driven by macro-economic developments, e.g. the long-term repurchase operations introduced by the European Central Bank, the GC Pooling service continues to grow (see "Eurex segment" section). In addition to the overall volume decline, the long-term refinancing programmes initiated by the European Central Bank had a negative impact on the margin relating to outstanding volume. In total, this led to a decrease of net revenue in the GSF business by 14 per cent to €13.2 million in the period under review (Q1/2012: €15.3 million).
Average overnight customer cash deposits yearon-year went down by 3 per cent to €10.8 billion (Q1/2012: €11.1 billion). Adjusted for assets restricted by relevant EU and US sanction programmes, customer cash deposits increased to €9.5 billion in the first quarter of 2013 (Q1/2012: €8.5 billion). Nevertheless, net interest income from Clearstream's banking business dropped sharply to €8.2 million (Q1/2012: €18.5 million). This is due to the fact that the European Central Bank again lowered its key interest rate on 11 July 2012 by 25 basis points to 0.75 per cent, reaching its lowest historical level, whereas the key interest rate had been at 1 per cent at the end of 2011. In addition, on 11 July 2012, the European Central Bank reduced the rate for the deposit facility from 0.25 to 0 per cent.
During the first quarter of 2013, Clearstream announced a number of strategic partnerships to complement the growing Liquidity Hub. Clearstream signed a Letter of Intent with Citibank N.A., one of the leading global banks, for a customised triparty collateral management solution as part of Liquidity Hub Connect. This service will enable Citibank customers
to consolidate their collateral holdings for use within the Global Liquidity Hub in order to gain efficient coverage of their global exposures from a single optimised collateral pool. A new partnership with the Belgian bank and insurance company Belfius Banque SA to develop an exclusive new collateral management activity for bilateral trades, focusing on over-thecounter (OTC) derivatives and aimed primarily at corporates and medium-sized banks was also announced.
| Q1/2013 | Q1/2012 | Change | |
|---|---|---|---|
| Custody | €bn | €bn | % |
| Value of securities deposited (average value during the |
|||
| period) | 11,411 | 11,027 | 3 |
| international | 6,049 | 5,893 | 3 |
| domestic | 5,362 | 5,134 | 4 |
| Settlement | m | m | % |
| Securities transactions | 30.3 | 30.7 | – 1 |
| international – OTC | 8.5 | 8.0 | 6 |
| international – on exchange |
1.8 | 2.1 | – 14 |
| domestic – OTC | 6.9 | 6.9 | 0 |
| domestic – on-exchange | 13.1 | 13.8 | – 5 |
| Global Securities Financing | €bn | €bn | % |
| Outstanding volume (average value) |
562.8 | 588.5 | – 4 |
| Average daily cash balances | €m | €m | % |
| Total | 10,8491) | 11,1462) | – 3 |
| euros | 4,274 | 4,038 | 6 |
| US dollars | 4,656 | 5,183 | – 10 |
| other currencies | 1,919 | 1,924 | 0 |
1) Includes some €1.3 billion previously or currently restricted by EU and US sanctions
2) Includes some €2.6 billion previously or currently restricted by EU and US sanctions
Other notable additions to the Liquidity Hub demonstrate the success of its open architecture model; as part of Liquidity Hub Collect, which is designed for trading venues and electronic platforms, co-operation with 360 Treasury Systems AG to launch a triparty repo service was announced. Furthermore, collaboration with Bloomberg LP announced in January 2013 will provide clients an automated order routing service that delivers an additional means of accessing the Liquidity Hub.
January 2013 also saw the announcement of the Liquidity Alliance. This dynamic forum has been established jointly by five initial members – ASX (Australia), Cetip (Brazil), Clearstream (Frankfurt/ Luxembourg), Iberclear (Spain) and Strate (South Africa) – to exchange information and to partner on solutions to meet the global collateral challenge. The alliance is an open forum and hopes to attract additional members in the near future.
In February 2013, Clearstream improved its link to the Russian market by opening a direct account at the National Settlement Depository (NSD), the new Russian CSD. The NSD forms an important part of the reform of the local market infrastructure and Clearstream will maintain its longstanding link to Russia by offering a robust multi-channel access to the NSD via both its central securities depository (CSD) and its international central securities depository (ICSD).
On 25 March, Clearstream also strengthened its access to the Czech market by opening a direct account at the local CSD to provide even better protection of assets and deliver service upgrades such as improved settlement and cash deadlines. Similar operational improvements were conducted across a number of markets.
Clearstream continued to improve its asset servicing offering which forms an important part of its strategy in the lead-up to TARGET2-Securities. In January 2013, proxy voting services were significantly upgraded.
1) Incl. Connectivity and Reporting
The new Market Data + Services reporting segment comprises the former Market Data & Analytics segment as well as selected IT services that were reported previously in the Xetra, Eurex and Clearstream segments. The new segment's net revenue is composed of trading signals, indices, technology solutions, connectivity and other revenue.
The trading signals business includes revenue from the distribution of licences for real-time trading and market signals. Data and key indicators are increasingly used by market participants in automated trading applications. User numbers in the trading departments of banks and financial institutions are declining due to the economy and to consolidation. In line with this, net revenue in the first quarter of 2013 was down slightly to €36.0 million (Q1/2012: €37.6 million) compared with the prior-year quarter.
Deutsche Börse primarily operates its index business via its subsidiary, STOXX Ltd. Its revenue is generated from calculating and marketing indices and benchmarks that are mainly used by banks and fund management companies as underlyings for financial instruments. The index business decreased slightly to €19.4 million in the first quarter of 2013 (Q1/2012: €19.9 million), mainly due to the lower licensing revenue for exchange-traded derivatives. By contrast, other licensing revenue, i.e. for ETFs, increased further. Amongst others, this was due to the sustained growth in the ETF market, where both the number of exchange-traded index funds and their volume of assets under management continued to rise. Overall, assets under management in STOXX ETFs were 20 per cent higher than in the prior-year quarter. In addition, STOXX granted a licence to a Chinese issuer in the first quarter, which will allow investors in China to also invest in the EURO STOXX 50 in the near future. Already in September 2012, the DAX® index was licenced to a Chinese fund management company. Another driver is the unbroken demand for new and innovative indices, which are used by issuers for structured products to enable investors to implement a variety of investment strategies.
The business for technology solutions consists primarily of development and operation services for external customers, for example for the German regional exchanges or for the European Energy Exchange. Income generated by cooperation with partner exchanges, including the Vienna Stock Exchange and the Irish Stock Exchange, from application development consulting, or from data centre services is also part of the Group's external IT business. Net revenue from the external technology services business in the first quarter of 2013 was €15.2 million (Q1/2012: €16.4 million).
The Market Data + Services segment generates connectivity income from connecting trading participants on the cash and the derivatives markets. This income is comparatively stable and more or less independent of trading activity on the market. Income from connectivity amounted to €16.5 million in the first quarter (Q1/2012: €16.3 million).
Other revenue comprises the provision of data to the back offices of financial services providers (e.g. the TRICE® reporting service), among other things. This item amounted to €4.4 million in the first quarter of 2013 (Q1/2012: €5.0 million).
€ millions
Deutsche Börse Group generated cash flow from operating activities before changes in reporting-daterelated CCP positions of €146.3 million in the first quarter of 2013 (Q1/2012: €158.8 million). Including the changes in the CCP positions, there was cash flow from operating activities of €41.4 million (Q1/2012: €–54.3 million). Deutsche Börse Group calculates its cash flow on the basis of net income. Net income is adjusted for non-cash changes; in addition, cash flows derived from changes in balance sheet items are taken into account. The change in the cash flow from operating activities before changes in reporting-date-related CCP positions is calculated as follows:
Cash outflows from investing activities amounted to €32.8 million (Q1/2012: cash outflows of €419.4 million), primarily because of payments to acquire intangible assets. In the first quarter of 2012, the cash outflows resulted in particular from the €351.6 million net increase in current receivables and securities from banking business with an original term of longer than three months.
Cash flows from financing activities amounted to €593.3 million in the first quarter of 2013 (Q1/2012: €–3.7 million) due to the issue of a five-year euro bond with a principal amount of €600.0 million.
Cash and cash equivalents as at 31 March 2013 thus amounted to €1,147.7 million (31 March 2012: €176.8 million). For details see page 4.
Generally, Deutsche Börse Group's policy to optimise its capital structure remains unchanged: the Group aims to achieve a dividend distribution ratio of 40 to 60 per cent of consolidated net income for the year and executes share buy-backs in order to distribute funds not required for the Group's operating business and its further development to its shareholders. The policy takes into account capital requirements, which are derived from the Group's capital and liquidity needs from legal, regulatory, credit rating and economic capital perspectives. To ensure the continued success of the Clearstream segment, which is active in securities custody and settlement, the company
aims to retain Clearstream Banking S.A.'s strong "AA" credit rating. Deutsche Börse AG also needs to maintain a strong credit profile for the benefit of the activities at its subsidiary Eurex Clearing AG.
Customers expect their service providers to maintain conservative interest coverage and debt/equity ratios and thus maintain strong credit ratings. Deutsche Börse Group is pursuing its objective of achieving an interest coverage ratio (ratio of EBITDA to interest expenses from financing activities) of at least 16 and a ratio of interest-bearing gross debt to EBITDA of 1.5 maximum at Group level. Deutsche Börse Group achieved an interest coverage ratio of 15.8 in the first quarter of 2013. The interest coverage ratio is based on a relevant interest expense of €18.0 million and EBITDA of €285.2 million, adjusted by non-recurring effects for mergers and acquisitions as well as by costs for efficiency programmes. In the first quarter of 2013, the targeted ratio of interest-bearing gross debt to EBITDA was achieved with an annualised ratio of 1.4. This ratio is based on interest-bearing gross debt of €1,545.3 million, adjusted for bonds maturing in the second quarter of 2013 and adjusted EBITDA of €285.2 million.
For financial year 2012, Deutsche Börse AG will propose to the Annual General Meeting that a dividend of €2.10 per share should be paid (2011: €2.30). This proposal represents a distribution ratio of 58 per cent, adjusted for merger and acquisition costs, efficiency programme costs and the income arising from the remeasurement of the equity component of the purchase price for the announced acquisition of the shares in Eurex Zürich AG held by SIX Group AG (2011: 52 per cent, adjusted for merger and acquisition costs, efficiency programme costs and the income arising from the remeasurement of the equity component of the purchase price for the announced acquisition of the shares in Eurex Zürich AG held by SIX Group AG). Given 184.1 million dividend-bearing no-par value shares, this would result in a total dividend of €386.5 million (2011: €434.1 million).
Deutsche Börse Group's non-current assets amounted to €5,082.0 million as at 31 March 2013 (31 March 2012: €5,024.3 million). They consisted primarily of intangible assets and financial assets. Intangible assets included goodwill of €2,106.8 million (31 March 2012: €2,062.8 million) and other intangible assets of €890.7 million (31 March 2012: €891.5 million). Non-current receivables and securities from banking business of €1,418.3 million (31 March 2012: €1,468.9 million) accounted for the largest part of financial assets, which amounted to €1,678.0 million as at the balance sheet date (31 March 2012: €1,757.5 million).
Overall, Deutsche Börse Group invested €22.4 million (Q1/2012: €21.3 million) in intangible assets and property, plant and equipment in the first quarter, and thus more than in the prior-year quarter. The investments were made in the Eurex and Clearstream segments in particular.
Non-current assets were financed by equity in the amount of €3,312.8 million (31 March 2012: €3,524.4 million) and non-current liabilities in the amount of €2,052.0 million (31 March 2012: €1,876.2 million). Non-current liabilities mainly related to interest-bearing liabilities of €1,545.3 million (31 March 2012: €1,447.4 million) and deferred taxes of €297.1 million (31 March 2012: €295.4 million).
Changes in current liabilities were the result of, among other things, the rise in cash deposits of market participants, which reached €16,655.2 million (31 March 2012: €13,418.9 million). This is because the current market uncertainty and low interest rates mean that clearing members are increasingly providing cash rather than securities as collateral to Eurex Clearing.
There have been no material events after the balance sheet date.
Deutsche Börse Group provides detailed information on its risk management strategy, organisation, processes, methods and concepts in its corporate report.
Non-availability of its trading, clearing and settlement systems (availability risk), incorrect processing of customer instructions in the custody business (service deficiency) and legal risks constitute substantial operational risks for Deutsche Börse Group. The Group manages availability risk through intensive activitites in the field of business continuity management. The risk of service deficiencies is mitigated through continuous enhancement of its systems and processes.
In its 2012 corporate report, Deutsche Börse Group informed about enforcement proceedings by means of a class action which have resulted in certain customer positions in Clearstream Banking S.A.'s (Clearstream) securities omnibus account with its US depository bank being restrained. Should the lawsuit lead to turnover, Clearstream will defend itself against the charges in accordance with its obligation as a custodian. An amended complaint was received by Clearstream on 7 January 2011. This includes a cause of action directly against Clearstream amounting to damages of US\$250 million in connection with purportedly fraudulent conveyances related to the restrained positions. In summer 2011, Citibank NA included other potential judgment creditors of Iran in the litigation. At the direction of the court, Clearstream renewed its motion to vacate the restraints. This renewed motion remains pending before the court. On 7 December 2011, the plaintiffs filed a second amended complaint, adding claims for damages against Clearstream and others of US\$2 billion, plus punitive damages to be determined at trial and attorney's fees. Clearstream considers the plaintiffs' claims against it to be legally and factually without merit, as Clearstream will establish in the course of litigation. Should the case proceed, Clearstream intends to defend itself vigorously to the fullest extent,
in line with its custodial obligations. The U.S. Treasury Department Office of Foreign Assets Control (OFAC) is investigating certain securities transfers in 2008 within Clearstream's settlement systems regarding US Iran sanctions regulations. These transfers implemented the decision taken by Clearstream in 2007 to close its Iranian customer's accounts. OFAC had been informed of the closing of the accounts in advance. On 9 January 2013, Deutsche Börse AG reported in an ad-hoc announcement that, following OFAC's proposal, Clearstream decided to enter into settlement talks with OFAC. OFAC has communicated to Clearstream its preliminary views on the investigation. OFAC's preliminary views are that (1) apparent violations of US sanctions may have occurred in 2008 in connection with the aforementioned securities transfers, and (2) if OFAC were to issue a civil pre-penalty notice based only on information currently available to it, such a pre-penalty notice would indicate an amount of approximately US\$340 million. These views were shared for discussion purposes only. Clearstream continues to believe that its actions were in compliance with any applicable US sanctions regulations and considers OFAC's preliminary figure to be unwarranted and excessive.
On 26 November 2012, the insolvency administrator of Lehman Brothers Bankhaus AG (LBB AG) brought an action against Eurex Clearing AG. On the basis of German insolvency law, the insolvency administrator is demanding from Eurex Clearing AG the repayment of €113.5 million and payment of another amount of around €1.0 million plus interest. Eurex Clearing AG considers the claim unfounded and is defending itself against the insolvency administrator's action. The action is against the background of payments in the amount of €113.5 million that Lehman Brothers International (Europe) had made to Eurex Clearing AG as collateral on 15 September 2008 and which had been processed through an account of LBB AG.
In addition, on 12 November 2012, the Chicago Board Options Exchange (CBOE) brought an action against the International Securities Exchange (ISE) for patent infringements in which CBOE is claiming damages of US\$525 million for an alleged infringement of three patents on procedures to limit market makerspecific risks. ISE believes that the claim for damages made by CBOE is unfounded, as it has no factual or legal basis. ISE intends to defend itself in these court proceedings by all available means. ISE itself brought an action against the CBOE for patent infringements in November 2006.
Business risk reflects the sensitivity of the Group to macroeconomic developments and its vulnerability to event risk, such as regulatory initiatives or changes in the competitive environment. In addition, it includes the Group's strategic risk, which relates to the impact of risk on the business strategy and any resulting adjustment to the strategy. In addition, external factors such as the performance and volatility of the capital markets or a lack of investor confidence in the financial markets may impact financial performance. In light of the ongoing sovereign debt crisis and the deterioration in the economic environment this might entail, there is the possibility that the Group's financial performance could develop negatively. In addition, regulatory initiatives could exacerbate the Group's competitive environment, thus negatively influencing its earnings.
Deutsche Börse Group is exposed to financial risks mainly in the form of credit risk and liquidity risk at the Clearstream and Eurex segments. In addition, the Group's cash investments and receivables are subject to credit risk. The majority of cash investments involve short-term transactions that are collateralised, thus minimising liquidity as well as market risk from cash investments. Financial risks are immaterial for for the segments Xetra and Market Data + Services. Market risk is immaterial for the entire Group.
Currently, the Group is pursuing several larger projects. These are constantly monitored to identify risks at an early stage and enable appropriate countermeasures.
The Group evaluates its risk situation on an ongoing basis. The Executive Board of Deutsche Börse AG firmly believes in the effectiveness of its risk management system. A significant change of the Group's risk profile cannot be identified at present.
Deutsche Börse Group's management of opportunities aims to identify and assess opportunities as early as possible and to initiate appropriate measures in order to take advantage of opportunities and transform them into business success. At present the Executive Board cannot identify a significant change of the Group's opportunities that have been described in detail in the corporate report 2012.
The report on expected developments describes how Deutsche Börse Group is expected to perform in financial year 2013. It contains statements and information on events in the future. These forward-looking statements and information are based on the company's expectations and assumptions at the time of publication of this report. In turn, these are subject to known and unknown opportunities, risks and uncertainties. Numerous factors influence the Group's success, its business strategy and financial results. Many of these factors are outside the company's control. Should opportunities, risks, or uncertainties materialise or one of the assumptions made turn out to be incorrect, the actual development of the Group could deviate either positively or negatively from the expectations and assumptions contained in the forwardlooking statements and information contained in this report on expected developments.
For the remainder of financial year 2013, Deutsche Börse Group expects no significant deviations from the forecasts for its operating environment that were made in its 2012 consolidated financial statements.
The uncertainty about the future behaviour of capital market participants continues to make specific forecasts of the results of operations difficult. As part of its budget planning process, the company has therefore developed different possible scenarios for its results of operations in 2013. If the capital market environment and investor confidence fail to improve and the markets continue to be impacted by uncertainty regarding global economic performance and the future situation in the euro zone, business activity would be on a level comparable to the second half of 2012. For full-year 2013, this would mean net revenue of around €1.8 billion, a potential decline of around 7 per cent compared with 2012. Should the capital market environment, investor confidence and the situation in the southern EU member states improve significantly in 2013, the company would expect net revenue to increase moderately year-on-year to more than €2.0 billion. The scenario used to forecast net revenue is to a significant extent determined by the dominant short- to medium-term cyclical factors, whose impact on business activity the company is unable to control.
In February 2013, the Group announced that it aims to increase operating efficiency further by cutting staff and non-staff costs by €70 million a year (see page 4 for details). The company expects implementation costs associated with the measures to be in a range of between €90 million and €120 million, most of which will be reflected in earnings in 2013 in the form of provisions. In the first quarter of 2013, expenses for efficiency programmes amounted to €65.6 million. Primarily as a result of increased investments, the company expects operating costs (adjusted for special factors such as efficiency programmes) to increase moderately overall in the forecast period and beyond.
In terms of operating profit, the declining net revenue scenario would generate EBIT of around €0.8 billion, adjusted for special factors. In the scenario with a moderate rise in net revenue, adjusted EBIT would be approximately €1.0 billion (and hence similar to 2012) because of the slight rise in operating costs.
Consolidated net income for the period would amount to around €0.5 billion in the declining net revenue scenario and to around €0.7 billion in the scenario with moderately rising net revenue, adjusted for special factors in both cases. The refinancing of longterm financial liabilities, which was completed in March 2013, will positively impact net income because lower interest rates have led to a reduction in the interest expense.
The company expects operating cash flow to remain clearly positive in the future. With respect to its cash flow from investing activities, Deutsche Börse plans to invest around €150 million per year in intangible
assets and property, plant and equipment during the forecast period on a consolidated basis. These investments will serve primarily to develop new products and services in the Eurex and Clearstream segments and enhance existing ones. The total mainly comprises investments in the trading infrastructure and risk management functionalities.
Under its capital management programme, Deutsche Börse will react flexibly to a changing market environment in the forecast period. Deutsche Börse Group continues to pursue the objective of achieving an interest coverage ratio of at least 16 and a ratio of interest-bearing gross debt to adjusted EBITDA of no more than 1.5 at Group level. Depending on the possible development of net revenue, the Group expects the gross debt to EBITDA ratio may slightly exceed the target of 1.5 in 2013. Both the general target dividend distribution ratio of 40 to 60 per cent of consolidated net income for the year and any share buy-backs are subject to capital requirements, investment needs and general liquidity considerations.
for the period 1 January to 31 March 2013
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Sales revenue | 541.2 | 552.4 |
| Net interest income from banking business | 8.2 | 18.5 |
| Other operating income | 5.2 | 2.8 |
| Total revenue | 554.6 | 573.7 |
| Volume-related costs | –70.3 | –66.8 |
| Net revenue (total revenue less volume-related costs) | 484.3 | 506.9 |
| Staff costs | –165.9 | –106.5 |
| Depreciation, amortisation and impairment losses | –28.3 | –24.7 |
| Other operating expenses | –101.1 | –117.4 |
| Operating costs | –295.3 | –248.6 |
| Result from equity investments | 3.0 | 1.7 |
| Earnings before interest and tax (EBIT) | 192.0 | 260.0 |
| Financial income | 1.1 | 6.2 |
| Financial expense | –24.3 | –53.4 |
| Earnings before tax (EBT) | 168.8 | 212.8 |
| Income tax expense | –43.9 | –62.5 |
| Net profit for the period | 124.9 | 150.3 |
| thereof shareholders of parent company (net income for the period) | 121.2 | 146.2 |
| thereof non-controlling interests | 3.7 | 4.1 |
| Earnings per share (basic and diluted) (€) | 0.66 | 0.77 |
for the period 1 January to 31 March 2013
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Net profit for the period reported in consolidated income statement | 124.9 | 150.3 |
| Items that will not be reclassified to profit or loss: | ||
| Changes from defined benefit obligations | 11.8 | 4.2 |
| Deferred taxes | –3.1 | –0.7 |
| 8.7 | 3.5 | |
| Items that may be reclassified subsequently to profit or loss: | ||
| Exchange rate differences1) | 27.4 | –33.7 |
| Remeasurement of cash flow hedges | –0.4 | –1.6 |
| Remeasurement of other financial instruments | 0.8 | 18.9 |
| Deferred taxes | –15.7 | 12.1 |
| 12.1 | –4.3 | |
| Other comprehensive income after tax | 20.8 | –0.8 |
| Total comprehensive income | 145.7 | 149.5 |
| thereof shareholders of parent company | 142.0 | 145.4 |
| thereof non-controlling interests | 3.7 | 4.1 |
1) Exchange rate differences include €1.6 million (2012: €–2.7 million) that was taken directly to accumulated profit as part of the result from equity investments.
as at 31 March 2013
| 31 March 2013 €m |
€m | 31 Dec 2012 31 March 2012 €m |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 3,222.3 | 3,178.8 | 3,117.4 |
| Property, plant and equipment | 120.4 | 128.2 | 125.7 |
| Financial assets | 1,678.0 | 1,738.1 | 1,757.5 |
| Other non-current assets | 61.3 | 68.8 | 23.7 |
| 5,082.0 | 5,113.9 | 5,024.3 | |
| Current assets | |||
| Financial instruments of Eurex Clearing AG | 224,708.3 | 178,056.5 | 196,752.1 |
| Current receivables and securities from banking business | 13,653.7 | 12,808.2 | 11,097.5 |
| Other receivables and other assets1) | 560.3 | 457.1 | 664.1 |
| Restricted bank balances | 16,655.2 | 19,450.6 | 13,418.9 |
| Other cash and bank balances | 1,270.1 | 641.6 | 935.8 |
| 256,847.6 | 211,414.0 | 222,868.4 | |
| Total assets | 261,929.6 | 216,527.9 | 227,892.7 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Shareholders' equity | 3,086.2 | 2,946.6 | 3,307.5 |
| Non-controlling interests | 226.6 | 223.0 | 216.9 |
| Total equity | 3,312.8 | 3,169.6 | 3,524.4 |
| Non-current liabilities | |||
| Provisions for pensions and other employee benefits | 88.0 | 95.4 | 48.2 |
| Other non-current provisions | 115.9 | 80.3 | 72.8 |
| Deferred tax liabilities | 297.1 | 274.7 | 295.4 |
| Interest-bearing liabilities | 1,545.3 | 1,160.0 | 1,447.4 |
| Other non-current liabilities | 5.7 | 6.0 | 12.4 |
| 2,052.0 | 1,616.4 | 1,876.2 | |
| Current liabilities | |||
| Tax provisions | 220.5 | 252.2 | 224.0 |
| Other current provisions | 111.6 | 88.9 | 102.5 |
| Financial instruments of Eurex Clearing AG | 224,208.3 | 178,056.5 | 196,252.1 |
| Liabilities from banking business | 14,175.2 | 12,880.3 | 11,762.7 |
| Cash deposits by market participants | 16,655.2 | 19,450.6 | 13,418.9 |
| Other current liabilities | 1,194.0 | 1,013.4 | 731.9 |
| 256,564.8 | 211,741.9 | 222,492.1 | |
| Total liabilities | 258,616.8 | 213,358.3 | 224,368.3 |
| Total equity and liabilities | 261,929.6 | 216,527.9 | 227,892.7 |
1) Thereof €10.6 million (31 December 2012: €10.6 million and 31 March 2012: €12.4 million) with a remaining maturity of more than one year from corporation tax credits in accordance with section 37 (5) of the Körperschaftsteuergesetz (KStG, the German Corporation Tax Act)
for the period 1 January to 31 March 2013
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Net profit for the period | 124.9 | 150.3 |
| Depreciation, amortisation and impairment losses | 28.3 | 24.7 |
| Increase in non-current provisions | 39.7 | 1.9 |
| Deferred tax expense/(income) | 5.8 | –0.3 |
| Other non-cash (income)/expense | –18.8 | 28.8 |
| Changes in working capital, net of non-cash items: | –33.6 | –46.7 |
| Increase in receivables and other assets | –28.1 | –64.6 |
| (Decrease)/increase in current liabilities | –5.2 | 17.8 |
| (Decrease)/increase in non-current liabilities | –0.3 | 0.1 |
| Net loss on disposal of non-current assets | 0 | 0.1 |
| Cash flows from operating activities excluding CCP positions | 146.3 | 158.8 |
| Net change in CCP positions | –104.9 | –213.1 |
| Cash flows from operating activities | 41.4 | –54.3 |
| Payments to acquire intangible assets and property, plant and equipment | –22.4 | –21.3 |
| Payments to acquire non-current financial instruments | –12.7 | –45.5 |
| Payments to acquire investments in associates | 0 | –1.1 |
| (Net increase)/net decrease in current receivables and securities from banking business with an original term greater than three months |
0 | –351.6 |
| Proceeds from disposals of available-for-sale non-current financial instruments | 2.3 | 0.1 |
| Cash flows from investing activities | –32.8 | –419.4 |
| Purchase of treasury shares | –1.2 | 0 |
| Proceeds from long-term financing | 594.5 | 0 |
| Repayment of short-term financing | 0 | –3.7 |
| Cash flows from financing activities | 593.3 | –3.7 |
| Net change in cash and cash equivalents | 601.9 | –477.4 |
| Effect of exchange rate differences1) | 1.8 | –3.0 |
| Cash and cash equivalents as at beginning of period2) | 544.0 | 657.2 |
| Cash and cash equivalents as at end of period2) | 1,147.7 | 176.8 |
| Interest income and other similar income3) | 0.6 | 6.5 |
| Dividends received from investments in associates and other equity investments3) | 0.6 | 1.1 |
| Interest paid3) | –3.0 | –3.9 |
| Income tax paid | –49.8 | –103.3 |
1) Primarily includes the exchange rate differences arising on translation of the ISE subgroup
2) Excluding cash deposits by market participants
3) Interest and dividend payments are allocated to cashflows from operating activities.
for the period 1 January to 31 March 2013
| thereof included in total comprehensive income |
|||||
|---|---|---|---|---|---|
| €m | Quarter ended 31 March 2013 31 March 2012 31 March 2013 31 March 2012 €m |
€m | Quarter ended €m |
||
| Subscribed capital | |||||
| Balance as at 1 January | 193.0 | 195.0 | |||
| Retirement of treasury shares | 0 | –2.0 | |||
| Balance as at 31 March | 193.0 | 193.0 | |||
| Share premium | |||||
| Balance as at 1 January | 1,249.0 | 1,247.0 | |||
| Retirement of treasury shares | 0 | 2.0 | |||
| Balance as at 31 March | 1,249.0 | 1,249.0 | |||
| Treasury shares | |||||
| Balance as at 1 January | –448.6 | –691.7 | |||
| Purchase of treasury shares | –1.2 | 0 | |||
| Retirement of treasury shares | 0 | 119.3 | |||
| Sales within the Group Share Plan | 0 | 4.0 | |||
| Balance as at 31 March | –449.8 | –568.4 | |||
| Revaluation surplus | |||||
| Balance as at 1 January | 14.3 | 48.1 | |||
| Changes from defined benefit obligations | 11.8 | 4.2 | 11.8 | 4.2 | |
| Remeasurement of other financial instruments | 0.8 | 18.9 | 0.8 | 18.9 | |
| Remeasurement of cash flow hedges | –0.4 | –1.6 | –0.4 | –1.6 | |
| Increase in share-based payments | 0 | –2.4 | 0 | 0 | |
| Deferred taxes | –3.1 | –6.1 | –3.1 | –6.1 | |
| Balance as at 31 March | 23.4 | 61.1 | |||
| Accumulated profit | |||||
| Balance as at 1 January | 1,938.9 | 2,122.5 | |||
| Retirement of treasury shares | 0 | –119.3 | 0 | 0 | |
| Net income for the period | 121.2 | 146.2 | 121.2 | 146.2 | |
| Exchange rate differences and other adjustments | 26.2 | –34.5 | 27.4 | –33.7 | |
| Deferred taxes | –15.7 | 17.5 | –15.7 | 17.5 | |
| Acquisition of the interest of non-controlling shareholders in Eurex Zürich AG |
0 | 240.4 | 0 | 0 | |
| Balance as at 31 March | 2,070.6 | 2,372.8 | |||
| Shareholders' equity as at 31 March | 3,086.2 | 3,307.5 | 142.0 | 145.4 | |
| Non-controlling interests | |||||
| Balance as at 1 January | 223.0 | 212.7 | |||
| Changes due to share in net income of subsidiaries for the period | 3.7 | 4.1 | 3.7 | 4.1 | |
| Exchange rate differences and other adjustments | –0.1 | 0.1 | 0 | 0 | |
| Total non-controlling interests as at 31 March | 226.6 | 216.9 | 3.7 | 4.1 | |
| Total equity as at 31 March | 3,312.8 | 3,524.4 | 145.7 | 149.5 |
The interim financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRSs) and the related interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union in accordance with Regulation No. 1606/2002 of the European Parliament and of the Council on the application of International Accounting Standards. As at 31 March 2012, there were no effective standards or interpretations not yet adopted by the European Union impacting the interim financial statements. Accordingly, the financial statements also comply with the IFRSs as issued by the IASB. The accounting policies applied by the company to the consolidated financial statements for the year ended 31 December 2012 were also applied to the interim financial statements.
In addition to the standards and interpretations applied as at 31 December 2012, the following standards were applied for the first time:
The change in the disclosures on fair value hierarchies resulting from IFRS 13 comprises additional disclosures; these are presented in note 7.
The application of IAS 1 mainly affects the presentation of comprehensive income.
IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 have been early adopted. Their initial application has no material effect on the basis of consolidation.
In addition, IAS 34 ("Interim Financial Reporting") was applied. Following the new management structure, the reporting segments were changed and prior-year figures have been adjusted accordingly (see note 5).
In accordance with the provisions of the Wertpapierhandelsgesetz (WpHG, German Securities Trading Act), these interim financial statements are supplemented by a Group interim management report.
In the first quarter of 2013, no changes have been made to the consolidation basis in comparison to year-end 2012; for further details see note 2 to the consolidated financial statements in the 2012 corporate report or, respectively, note 37 to the 2012 consolidated financial statements on the cooperation agreement referring to Scoach Holding S.A. which has been terminated with effect from 30 June 2013.
The Group's revenues are influenced more by the volatility and the transaction volume on the capital markets than by seasonal factors. Owing to a concentration of costs for projects only coming to completion in the fourth quarter, costs in the fourth quarter tend to be higher than in the first three quarters of the business year.
The increase in consolidated total assets by €45.4 billion to €261.9 billion as at 31 March 2013 (31 December 2012: €216.5 billion) is determined to a significant extent by the financial instruments of Eurex Clearing AG. Receivables and liabilities from banking business increased slightly. By contrast, cash deposits by market participants and restricted bank balances declined. The level of these items can vary widely on a daily basis according to customers' needs and actions.
| Composition of sales revenue by segment | |||
|---|---|---|---|
| Quarter ended | ||
|---|---|---|
| €m | 31 March 2013 31 March 2012 €m |
|
| External sales revenue | ||
| Eurex | 222.2 | 217.9 |
| Xetra | 40.4 | 46.7 |
| Clearstream | 186.3 | 193.3 |
| Market Data + Services | 92.3 | 94.5 |
| Total external sales revenue | 541.2 | 552.4 |
| Internal sales revenue | ||
| Clearstream | 1.3 | 1.5 |
| Market Data + Services | 7.0 | 7.7 |
| Total internal sales revenue | 8.3 | 9.2 |
| Quarter ended | ||
|---|---|---|
| 31 March 2013 31 March 2012 | ||
| €m | €m | |
| Gross interest income | 11.5 | 34.3 |
| Interest expense | –3.3 | –15.8 |
| Total | 8.2 | 18.5 |
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Eurex | 197.5 | 197.9 |
| Xetra | 36.6 | 41.8 |
| Clearstream | 158.7 | 172.0 |
| Market Data + Services | 91.5 | 95.2 |
| Total | 484.3 | 506.9 |
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Eurex | 94.6 | 104.1 |
| Xetra | 10.4 | 20.3 |
| Clearstream | 49.5 | 87.6 |
| Market Data + Services | 37.5 | 48.0 |
| Total | 192.0 | 260.0 |
| €m | Quarter ended 31 March 2013 31 March 2012 €m |
|
|---|---|---|
| Eurex | 9.9 | 10.5 |
| Xetra | 0.5 | 0.7 |
| Clearstream | 11.4 | 9.0 |
| Market Data + Services | 0.6 | 1.1 |
| Total | 22.4 | 21.3 |
Financial assets and liabilities that are measured at fair value are allocated to the following three hierarchy levels: financial assets and liabilities are allocated to level 1 if there is a quoted price for identical assets and liabilities in an active market. They are allocated to level 2 if the inputs on which fair value measurement is based are observable either directly (as prices) or indirectly (derived from prices). Financial assets and liabilities are allocated to level 3 if the fair value is determined on the basis of unobservable inputs.
As at 31 March 2013, financial assets and liabilities measured at fair value were allocated to the following hierarchy levels:
| Fair value as at | 31 March 2013 thereof attributable to: | |||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | ||
| €m | €m | €m | €m | |
| ASSETS | ||||
| Financial assets held for trading | ||||
| Derivatives | ||||
| Financial instruments of Eurex Clearing AG | 224,708.3 | 224,708.3 | ||
| Current receivables and securities from banking business | 23.6 | 0 | 23.6 | 0 |
| Total | 224,731.9 | 224,708.3 | 23.6 | 0 |
| Available-for-sale financial assets | ||||
| Equity instruments | ||||
| Other equity investments | 5.8 | 0.5 | 5.3 | 0 |
| Total | 5.8 | 0.5 | 5.3 | 0 |
| Debt instruments | ||||
| Other financial instruments | 24.0 | 24.0 | 0 | 0 |
| Current receivables and securities from banking business | 100.9 | 100.9 | 0 | 0 |
| Non-current receivables and securities from banking business | 1,418.3 | 1,418.3 | 0 | 0 |
| Total | 1,543.2 | 1,543.2 | 0 | 0 |
| Total assets | 226,280.9 | 226,252.0 | 28.9 | 0 |
| LIABILITIES | ||||
| Financial liabilities held for trading | ||||
| Derivatives | ||||
| Financial instruments of Eurex Clearing AG | 224,208.3 | 224,208.3 | 0 | 0 |
| Other non-current liabilities | 3.0 | 0 | 0 | 3.0 |
| Other current liabilities | 0.5 | 0 | 0.1 | 0.4 |
| Total liabilities | 224,211.8 | 224,208.3 | 0.1 | 3.4 |
As at 31 March 2012, financial assets and liabilities measured at fair value were allocated to the following hierarchy levels:
| Fair value as at 31 March 2012 thereof attributable to: |
||||
|---|---|---|---|---|
| €m | Level 1 €m |
Level 2 €m |
Level 3 €m |
|
| ASSETS | ||||
| Financial assets held for trading | ||||
| Derivatives | ||||
| Financial instruments of Eurex Clearing AG | 196,752.1 | 196,752.1 | 0 | 0 |
| Current receivables and securities from banking business | 0.2 | 0 | 0.2 | 0 |
| Other non-current assets | 0.4 | 0 | 0.4 | |
| Total | 196,752.7 | 196,752.1 | 0.6 | 0 |
| Available-for-sale financial assets | ||||
| Equity instruments | ||||
| Other equity investments | 6.7 | 2.1 | 4.6 | 0 |
| Total | 6.7 | 2.1 | 4.6 | 0 |
| Debt instruments | ||||
| Other financial instruments | 17.1 | 17.1 | 0 | 0 |
| Current receivables and securities from banking business | 202.6 | 202.6 | 0 | 0 |
| Other current assets | 4.0 | 4.0 | 0 | 0 |
| Non-current receivables and securities from banking business | 1,293.9 | 1,293.9 | 0 | 0 |
| Total | 1,517.6 | 1,517.6 | 0 | 0 |
| Total assets | 198,277.0 | 198,271.8 | 5.2 | 0 |
| LIABILITIES | ||||
| Financial liabilities held for trading | ||||
| Derivatives | ||||
| Financial instruments of Eurex Clearing AG | 196,252.1 | 196,252.1 | 0 | 0 |
| Other non-current liabilities | 6.4 | 0 | 6.4 | 0 |
| Liabilities from banking business | 19.7 | 0 | 19.7 | 0 |
| Total liabilities | 196,278.2 | 196,252.1 | 26.1 | 0 |
In the first quarter of 2013, no reclassifications were made between the individual levels.
Financial assets and financial liabilities listed in levels 2 and 3 as at 31 March 2013 are measured as follows:
The derivatives listed in level 2 comprise forward foreign exchange transactions. The fair value of the forward foreign exchange transactions is determined on the basis of the forward foreign exchange rates for the remaining period to maturity as at the balance sheet date.
The equity investments allocated to level 2 are measured on the basis of current, comparable market transactions.
Puttable instruments with a carrying amount of €3.4 million were allocated to level 3. These were measured using the discounted cash flow method. In the first quarter of 2013, no gains or losses were associated with these instruments.
The fair value of other financial assets and liabilities not measured at fair value is determined as follows:
Bonds reported under interest-bearing liabilities and under other current liabilities have a fair value of €2,426.6 million (31 December 2012: €1,821.9 million). Euro-denominated bonds with a principal amount of €600 million were issued at the end of the first quarter of 2013. The fair value is calculated on the basis of the quoted values of the bonds or as the present value of the cash flows relating to the private placements on the basis of market parameters.
The carrying amounts of the following items represent a reasonable approximation of their fair value:
On 12 November 2012, the Chicago Board Options Exchange (CBOE) filed a patent infringement law suit against the International Securities Exchange (ISE) (the "CBOE Litigation"). In the CBOE Litigation, CBOE alleges US\$525 million in damages for infringement of three patents, which relate to systems and methods for limiting market maker risk. ISE believes that CBOE's damages claim lacks merit because it is unsupported by the facts and the law. ISE intends to vigorously defend itself in this lawsuit. Upon ISE's motion, the case was recently transferred to the competent courts of New York City.
In November 2006, ISE itself filed a patent infringement lawsuit against CBOE (the "ISE Litigation"). In the ISE Litigation, ISE alleges US\$475 million in damages for infringement of ISE's patent which relates to systems and methods for operating an automated exchange. The ISE Litigation was scheduled for trial in March 2013. However, in the course of the pre-trial motions, some of the decisions of the trial judge establishing ISE's burden of proof to succeed in trial, were extremely adverse to ISE. As a result, ISE believed that it could not prove its case of infringement, and therefore determined to move straight to an appeal of those rulings and forego a trial. On 12 April, ISE filed an appeal of the rulings with the Federal Circuit Court of Appeals.
In addition to the matters described above and in prior disclosures, Deutsche Börse Group is from time to time involved in various legal proceedings that arise in the ordinary course of its business. Deutsche Börse Group recognises provisions for litigation and regulatory matters when it has a present obligation from an event in the past, an outflow of resources with economic benefit to settle the obligation is probable and it is possible to reliably estimate the amount.
In such cases, there may be an exposure to loss in excess of the amounts accrued. When these conditions are not met, Deutsche Börse Group does not recognise a provision. As a litigation or regulatory matter develops, Deutsche Börse Group evaluates on an ongoing basis whether the requirements to recognise a provision are met. Deutsche Börse Group may not be able to predict what the eventual loss or range of loss related to such matters will be. Deutsche Börse Group does not believe, based on currently available information, that the results of any of these various proceedings will have a material adverse effect on its financial statements as a whole.
Under IAS 33, earnings per share are calculated by dividing the net profit for the period attributable to shareholders of the parent company (net income for the period) by the weighted average number of shares outstanding.
Diluted earnings per share are determined by adding the number of potentially dilutive ordinary shares that may be acquired under the Stock Bonus Plan (SBP) to the average number of shares. In order to calculate the number of potentially dilutive ordinary shares, the exercise prices were adjusted by the fair value of the services still to be provided.
When determining diluted earnings per share, all SBP tranches for which cash settlement has not been resolved are assumed to be equity-settled – regardless of the actual accounting in accordance with IFRS 2.
There were the following potentially dilutive rights to purchase shares as at 31 March 2013:
| Adjustment | Average | Number of | |||
|---|---|---|---|---|---|
| of the exercise | number of | potentially | |||
| price according | outstanding | Average price | dilutive | ||
| Tranche | Exercise price | to IAS 331) | options | for the period2) | ordinary shares |
| € | € | 31 March 2013 | € | 31 March 2013 | |
| 20113) | 0 | 20.59 | 2,500 | 48.31 | 1,434 |
| 20123) | 0 | 26.93 | 65,162 | 48.31 | 28,838 |
| 20133) | 0 | 39.44 | 50,443 | 48.31 | 9,262 |
1) According to IAS 33.47(a), the issue price and the exercise price for stock options and other share-based payment arrangements must include the fair value of any goods or services to be supplied to the entity in the future under the stock option or other share-based payment arrangement.
2) Volume-weighted average price of Deutsche Börse AG shares on Xetra for the period 1 January to 31 March 2013
3) This relates to rights to shares under the Stock Bonus Plan for senior executives.
As the volume-weighted average share price was higher than the adjusted exercise prices for the 2011, 2012 and 2013 tranches, these options are considered dilutive under IAS 33 as at 31 March 2013.
| Quarter ended 31 March 2013 31 March 2012 |
||
|---|---|---|
| Number of shares outstanding as at beginning of period | 184,078,674 | 188,686,611 |
| Number of shares outstanding as at end of period | 184,051,513 | 188,753,670 |
| Weighted average number of shares outstanding | 184,051,815 | 188,730,826 |
| Number of potentially dilutive ordinary shares | 39,534 | 48,813 |
| Weighted average number of shares used to compute diluted earnings per share | 184,091,349 | 188,779,639 |
| Net income for the period (€m) | 121.2 | 146.2 |
| Earnings per share (basic) (€) | 0.66 | 0.77 |
| Earnings per share (diluted) (€) | 0.66 | 0.77 |
The following two tables show the other material transactions with companies classified as related parties. All transactions were effected on an arm's length basis.
| Amount of the transactions | Outstanding balances | |||
|---|---|---|---|---|
| €m | Quarter ended 31 March 2013 31 March 2012 31 March 2013 31 March 2012 €m |
€m | €m | |
| Loans from Scoach Holding S.A. to Deutsche Börse AG as part of cash pooling |
0 | 0 | –13.1 | –11.8 |
| Loans from Scoach Europa AG to Deutsche Börse AG as part of cash pooling |
0 | 0 | –1.4 | –1.9 |
| Services of Deutsche Börse AG for Scoach Europa AG | 1.0 | 1.3 | 0.5 | 0.2 |
| Loans from Deutsche Börse AG to Indexium AG1) | 0 | 0 | 0 | 0.6 |
| Loans from Deutsche Börse AG to Digital Vega FX Ltd. | 0 | n.a. | 0.1 | n.a. |
| Operation of trading and clearing software by Deutsche Börse AG for European Energy Exchange AG and affiliates |
1.9 | 2.3 | 1.4 | 1.5 |
| IT services and infrastructure by International Securities Exchange, LLC for Direct Edge Holdings, LLC2) |
0.2 | 0.2 | 0.6 | 0.7 |
| Development and operation of the Link Up Converter system by Clearstream Services S.A. for Link Up Capital Markets, S.L. |
0.3 | 0.4 | 0.2 | 0.7 |
| Material transactions within the framework of gold under custody between Deutsche Börse Commodities GmbH and Clearstream Banking AG |
–1.2 | –1.3 | –0.4 | –0.4 |
| Calculation services, provision of software solutions for indices and benchmarks and operation of necessary software for Deutsche Börse AG by Indexium AG |
0 | n.a. | –2.43) | n.a. |
| Calculation services, provision of software solutions for indices and benchmarks and operation of necessary software for STOXX Ltd. by Indexium AG |
–0.6 | n.a. | –1.74) | n.a. |
| Other transactions with associates | – | – | 0 | 0.2 |
1) Outstanding balance after impairment losses of €5.5 million (2011: €3.0 million; 2012: €2.5 million) on the loan granted to Indexium AG by Deutsche Börse AG
2) Direct Edge Holdings, LLC has been classified again as an associate since the restoration of significant influence on 9 February 2012.
3) Thereof provisions for development costs amounting to €2.4 million
4) Thereof provisions for development costs amounting to €1.1 million
| Amount of the transactions | Outstanding balances | |||
|---|---|---|---|---|
| €m | Quarter ended 31 March 2013 31 March 2012 31 March 2013 31 March 2012 €m |
€m | €m | |
| Office and administrative services by Eurex Zürich AG for SIX Swiss Exchange AG1) |
n.a. | 0 | n.a. | 0 |
| Loans from SIX Group AG provided to STOXX Ltd. as part of the acquisition and interest charges thereon1) |
n.a. | 0 | n.a. | –2.5 |
| Office and administrative services by SIX Group AG for STOXX Ltd.1) |
n.a. | 0.3 | n.a. | –1.0 |
| Office and administrative services by SIX Swiss Exchange AG for Eurex Zürich AG1) |
n.a. | –2.3 | n.a. | –1.7 |
| Office and administrative services by SIX Swiss Exchange AG for Eurex Frankfurt AG1) |
n.a. | –1.2 | n.a. | 0 |
| Operation and development of Xontro by Deutsche Börse AG for BrainTrade Gesellschaft für Börsensysteme mbH |
1.4 | 2.7 | 0.4 | 1.1 |
| Operation of the floor trading system by BrainTrade Gesellschaft für Börsensysteme mbH for Deutsche Börse AG |
0.2 | 0.2 | 0 | 0 |
1) On 30 April 2012, SIX Group AG sold its remaining shares in Eurex Zürich AG to Deutsche Börse AG. Since then, SIX Group AG and its affiliates have not been considered as related parties within the meaning of IAS 24.
Key management personnel are persons who directly or indirectly have authority and responsibility for planning, directing and controlling the activities of Deutsche Börse Group. The Group defines the members of the Executive Board and the Supervisory Board as key management personnel for the purposes of IAS 24.
As part of its normal business activities, Deutsche Börse AG maintains relations with certain entities whose key management personnel are, at the same time, members of Deutsche Börse AG's Supervisory Board. Deutsche Börse AG has entered into agreements to source advisory services with Deutsche Bank AG, Frankfurt/Main, Mayer Brown LLP, Washington, Richard Berliand Limited, Ashtead Surrey, and Cohesive Flexible Technologies Corporation, Chicago. Significant elements of these contracts include strategies relating to Deutsche Börse AG's competitive positioning on the market as well as advisory services in connection with major strategic projects. Deutsche Börse Group made total payments to the above-mentioned companies for advisory services of €0.1 million in the first quarter of 2013 (Q1/2012: €1.0 million).
Employees
| Quarter ended 31 March 2013 31 March 2012 |
||
|---|---|---|
| Average number of employees during the period | 3,725 | 3,619 |
| Employed as at the balance sheet date | 3,728 | 3,629 |
There was an average of 3,495 full-time equivalent (FTE) employees during the first quarter of 2013 (Q1/2012: 3,377).
There have been no material events after the balance sheet date.
Frankfurt/Main, 29 April 2013 Deutsche Börse AG The Executive Board
Investor Relations Phone +49-(0) 69-2 11-1 16 70 Fax +49-(0) 69-2 11-1 46 08 E-mail [email protected] www.deutsche-boerse.com/ir_e
The 2012 corporate report may be obtained from the publications service of Deutsche Börse Group:
Phone +49-(0) 69-2 11-1 15 10 Fax +49-(0) 69-2 11-1 15 11
Downloads at www.deutsche-boerse.com/annual_report
Reproduction – in whole or in part – only with the written permission of the publisher
DAX®, Eurex®, Eurex Bonds®, Eurex Repo®, FWB®, GC Pooling®, TRICE®, Xetra®, Xetra-Gold® and XTF® are registered trademarks of Deutsche Börse AG.
EURO STOXX 50® and STOXX® are registered trademarks of STOXX Ltd.
KOSPI is a registered trademark of Korea Exchange, Inc.
Published by
Deutsche Börse AG 60485 Frankfurt/Main Germany www.deutsche-boerse.com
April 2013 Order number 1015-4430
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