Strong Cash Flow from Operating Activities in 2010 / Growth and Further Improvements in Efficiency in 2011 / ISE Impairment Will be Accounted for in Q4/2010
Deutsche Börse: In the current financial year Deutsche Börse AG generated a strong cash flow from operating activities. The cash flow in the first nine months 2010 increased to €675.5 million and is proof of the strong earnings profile of the Group and underscores the ability to pay a stable dividend. For 2011 Deutsche Börse again plans to increase the expenditures for growth initiatives paired with increased efficiency und continued high cost discipline. In Q4/2010 Deutsche Börse will realize an impairment of intangible assets of its subsidiary International Securities Exchange (ISE) and will transfer shares in Clearstream International S.A. to Clearstream Holding AG at the higher fiscal book value. Both measures have no impact on the cash flow.
The ISE related impairment charge on intangible assets will be in the range of €450 million. The impairment charge will be partially offset by a reduction in deferred tax liabilities relating to ISE. All in all, the Company anticipates that the impairment will lead to a reduction in IFRS consolidated net income for 2010 in the range of €220 million. The figures are subject to preparation and auditing of the annual financial statements 2010. The impairment does not affect key credit metrics, such as the interest coverage ratio or net tangible equity. ISE continues to operate profitably.
In addition, Deutsche Börse AG plans to transfer its remaining shares (49%) in Clearstream International S.A., which it did not yet transfer as part of the implementation of the Clearstream interim holding structure in 2009, to Clearstream Holding AG at fiscal book value by the end of the year. The transfer does not affect consolidated earnings in accordance with IFRS. In the financial statements prepared in accordance with German GAAP (Handelsgesetzbuch – HGB) this step will have a positive impact on earnings of around €440 million. As a consequence, the ISE impairment will be fully covered in the German GAAP financial statements 2010, without constraining the Company’s dividend distribution policy for financial year 2010. The measure has no effect on the strong financial position of the Clearstream subgroup or the integrated business model of Deutsche Börse Group.
In the first nine months of 2010 the Company generated cash flow from operating activities of €675.5 million (Q1-3/2009: €592.8 million). The Company also anticipates a significant positive cash flow from operating activities for the fourth quarter since the impairment in connection with ISE is a non-cash item. The strong liquidity situation underscores Deutsche Börse AG’s ability to pay a stable dividend compared to the previous year (2009: €2.10). Deutsche Börse AG’s Supervisory Board will discuss the dividend proposal for financial year 2010 with the presentation of preliminary results in February 2011.
The Company confirms that costs for 2010 will be considerably lower compared to the original forecast. With operating costs of around €935 million and volume-related costs of approximately €215 million, total costs for the current financial year are expected to be around €1,150 million before costs for efficiency programs and the ISE impairment. In 2011 the Company expects a further improvement of operating costs by around €60 million due to the ongoing efficiency measures. The savings will be partly offset by a cost increase from inflation of around €20 million, along with a further rise in expenditures for organic growth initiatives and infrastructure by around 1/3 (€30 million) to approximately €120 million. The Company expects a rise in volume-related costs, which are considerably influenced by Clearstream, to around €235 to €255 million. This increase is attributable in particular to the anticipated growth at Clearstream. This means that the total cost forecast for 2011 is around €1,160 to €1,180 million, before costs for efficiency programs of approximately €30 million.
CFO of Deutsche Börse AG Gregor Pottmeyer said, “For 2011 the Executive Board of Deutsche Börse AG anticipates growth of the business and plans to further increase expenditures for organic growth initiatives and infrastructure. At the same time operating costs will go down further by systematically implementing the measures presented in our efficiency program.”
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