Investor Briefing. Sandler O Neill Global Exchange and Brokerage Conference. Elmer Funke Kupper, CEO. 4 June 2014

Transcription

1 Investor Briefing Sandler O Neill Global Exchange and Brokerage Conference 4 June 2014 Elmer Funke Kupper, CEO 1

2 Disclaimer The material contained in this document is a presentation of general information about the activities of the ASX Group current as at the date of this presentation (4 June 2014). It is provided in summary and does not purport to be complete. You should not rely upon it as advice for investment purposes as it does not take into account your investment objectives, financial position or needs. These factors should be considered, with or without professional advice, when deciding if an investment is appropriate. To the extent permitted by law, no responsibility for any loss arising in any way (including by way of negligence) from anyone acting or refraining from acting as a result of this material is accepted by the ASX Group, including any of its related bodies corporate. 2

3 ASX Limited Strong business anchored in attractive financial market Strong market fundamentals Attractive business mix as multi-asset class, vertically integrated exchange World-class regulation equities, financial market infrastructure Positive financial performance for nine months to 31 March 2014 Profit after tax A$286.9 million, up 10% Revenue growth in all major revenue categories Expense and capex discipline maintained in period of investment Strong balance sheet, AA- credit rating from Standard & Poors Good progress in implementation of investment program Be global leader in A$ and NZ$ markets Provide world-class, globally connected financial infrastructure Deliver an outstanding customer experience Advocate regulatory settings that support investors and growth Financial results to 31 March 2014 are unaudited. Comparisons are to prior comparative period (pcp) 3

4 Australia is a leading financial market Australia ranks between 3 rd and 8 th in the world in the markets it operates Australia s financial markets Investable assets Capital formation 3 rd largest pool of investable assets in the world at A$1.7 trillion 96 new listings year to end of May; 575 listings since GFC Raised almost A$400 billion during the Global Financial Crisis, ranking Australia 4 th in the world over that period Equity markets 2,182 listed entities Total market capitalisation of A$1.6 trillion Australia ranks 8 th in the world in free-float market capitalisation Derivative markets Largest interest rate derivatives market in Asia and top 5 globally Exchange traded and OTC markets Notional turnover of exchange traded derivatives A$47 trillion Foreign exchange A$ is 5 th most traded currency in the world 4

5 Attractive business mix Revenue mix for nine months to end of March 2014 (100% = A$488 million) Austraclear 1 6% Technical Services 8% Other 3% Listings and Issuer Services 23% Domestic leader in all segments, Asian leader in A$ derivatives Cash markets 18% of total revenues (trading, clearing and settlement) Information Services 11% Derivatives 31% Cash Market Settlement 6% Cash Market Trading 5% Cash Market Clearing 7% Cash market clearing and settlement function undertaken for entire Australian market Derivatives include interest rate, equity index, electricity and commodities futures, and single stock options Depositories (equities, fixed income) hold A$3.0 trillion 1. Austraclear is Australia s fixed income depository, holding assets valued at A$1.5 trillion 5

6 Business mix similar to exchanges in Asian time zone CME 84% 11% 3% 3% ICE 12% 10% 48% 14% 12% 4% HKEX 14% 28% 28% 15% 9% 4% 2% SGX 9% 8% 51% 20% 5% 7% 0% ASX 23% 5% 19% 32% 10% 8% 3% BM&F 2% 9% 40% 38% 3% 2% 6% DB 2% 5% 33% 39% 16% 3% 3% TMX 27% 13% 30% 26% 4% LSE 7% 12% 32% 2% 32% 6% 9% NASDAQ 12% 10% 15% 23% 37% 2% Listings & issuer services Trade execution Clearing & Settlement Derivatives Information Services Technical Services Other Source: Company annual reports. ICE includes NYSE Euronext 6

7 World-class regulatory environment Equity markets and High Frequency Trading Regulatory settings support end investors Maker-taker pricing not permitted Regulatory fee model limits order proliferation Minimum tick sizes have not been narrowed Price improvement must be meaningful Structural differences with USA Best execution is broker obligation No consolidated tape revenue model Financial Market Infrastructure Financial Stability Standards Derivatives clearing house meets global standards CFTC no action relief ESMA transitional relief Financial Market Infrastructure Offshoring restrictions for infrastructures that operate systemically important markets Mandate for A$ OTC interest rate swaps Recommended by Australian regulators 7

8 Solid performance during subdued GFC conditions Revenues A$m CAGR 3.5% Expenses A$m CAGR 1.4% FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Profit after tax A$m CAGR 2.6% EBITDA Margin % 77% 78% 77% 76% FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 Profit after tax refers to underlying earnings 8

9 Positive performance to end of March 2014 Income statement for nine months to end of March 2014 YTD Mar 2013 A$m YTD Mar 2014 A$m % Variance Operating Revenues % Operating Expenses (6.9%) EBITDA % Depreciation and Amortisation (6.5%) EBIT % Interest and Dividends % Profit Before Tax % Income Tax Expense (108.5) (118.4) (9.2%) Profit After Tax % Financial results to 31 March 2014 are unaudited. Variances expressed favourable/(unfavourable). Comparisons are to prior comparative period (pcp) 9

10 Revenue growth in all major revenue categories Revenue growth nine months to end of March 2014 (A$m) Up 7.7% Up 4.3% Up 13.7% Up 6.8% Up 5.5% Up 7.9% Up 4.1% Operating Revenues Up 6.8% July to March 13 Listings and Issuer Services Cash Market Information Services Technical Services Derivatives and OTC Markets Austraclear Other Revenue July to March 14 All comparisons are to prior comparative period (pcp) 10

11 Business priorities Leading multi-asset class exchange group in Asia Pacific Be global leader in A$ and NZ$ markets Develop investment supermarket Expand derivatives products and asset classes Continue to innovate in trade execution Expand Technical Services, re-engineer Information Services Provide world-class, globally connected financial infrastructure Grow new post-trade services - OTC clearing, client clearing, collateral management Leverage ASX Net Global to grow international client base Develop multi-currency capabilities Deliver an outstanding customer experience Invest in platforms - trading, clearing, settlement, risk management Deepen relationships, including revenue sharing Build 24/6 customer Command Centre Advocate regulatory settings that support investors and growth Maintain settings in equity markets; limit fragmentation Ensure Australia maintains world-class market infrastructure Meet domestic and international financial stability standards 11

12 Listings and Issuer Services Highlights nine months to end of March 2014 Areas of focus Revenue A$113.6 million, up 7.7% Listings and Issuer Services 79 IPOs (62 pcp) Improved capital raising flexibility and timing IPO capital A$18.5 billion, up 330.9% Secondary capital A$25.9 billion, down 11.5% Equity Research Scheme ASX Bookbuild Number of holding statements up 6% Investment Supermarket Domestic equities $ Billion Total Capital Raised International equities Government bonds Corporate bonds ETFs Managed funds Distribution/Market Efficiency Managed fund service (mfund) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 12

13 Cash Market (trading, clearing, settlement) Highlights nine months to end of March 2014 Revenue A$87.8 million, up 4.3% Total on-market value traded per day up 10.9% Areas of focus Trading Innovation in Centre Point execution service ASX on-market trading up 5.4% per day On-market trading market share approx 90% Centre Point was 17.7% of trading revenue in March quarter Clearing and Settlement 6 5 Daily Average Value Traded Cash market margining Code of Practice to support single national platform Value $ Billion Transparent and non-discriminatory pricing Access to clearing and settlement services Stakeholder Forum 1 0 Customer Alignment 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Revenue sharing arrangements ASX on market (incl CP) Chi-X on market Trade Reporting 13

14 Cash Market trading innovation Choice of ASX Venue Best ASX Venue TradeMatch 0.15bp 1 Centre Point Preferencing 0.25bp or 0.40bp 2 Centre Point 0.20bp or 0.50bp 2 Centre Point/ Centre Point Block 0.50bp Dual Post TradeMatch 0.12bp or 0.15bp 2 1. Auctions attract fee of 0.28bp 2. Lower fees available to participants with an average daily value in Centre Point below $10 million 14

15 Derivatives and OTC Markets Highlights nine months to end of March 2014 Areas of focus Revenue A$152.2 million, up 5.5% Product Development Futures contracts traded up 10.5% VIX and equity sectoral futures contracts Equity options contracts traded down 19.8% New electricity futures contracts Regulatory Standards ASX Clear (Futures) Cover 2 capital standard 40 ASX 24 Derivatives (Futures) Volume AA- long-term credit rating from S&P CFTC no action relief, ESMA transitional relief Contracts Million Risk Management Services OTC clearing solution launched OTC client clearing solution technically ready Futures client clearing July 2014 Futurisation next phase Exchange Traded Options 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Initiatives to stabilise and return to growth 15

16 World class post-trade infrastructure EQUITIES FUTURES TRADING ASX OTC MARKETS ASX 24 CLEARING OTC CLEARING CLIENT CLEARING ASX CLEAR ASX CLEAR (FUTURES) COLLATERAL OPTIMISATION ASX COLLATERAL DEPOSITORIES CHESS AUSTRACLEAR 16

17 Information and Technical Services Highlights nine months to end of March 2014 Information Services A$52.4 million, up 13.7% Pricing changes implemented 1 July 2013 Technical Services A$39.4 million, up 6.8% Growth in hosting -137 cabinets and 85 customers Growth in community and connectivity Revenue Mix Technical Services Hosting $4.3m (+14.7%) Areas of focus Information Services Fee alignment to changing user profiles Technical Services ASX Net Global launched, connecting to Singapore, London, Chicago Continued sales growth in data centre services Enhanced ASX 24 real-time price information (ITCH) Community & Connectivity $15.3m (+32.5%) Liquidity Access $18.1m (-8.7%) Application Services $1.8m (-5%) 17

18 Austraclear Highlights nine months to end of March 2014 Revenue A$31.0 million, up 7.9% Transaction volume up 4.6% Average balances up 6.2% to A$1.5 trillion Transactions and Holdings Areas of focus ASX Collateral Service Reduces collateral costs for ASX clients Phase 1 connects service to Austraclear fixed income securities Future phases (CHESS connectivity, international linkages) to be determined following initial launch 450 1,600 Tranactions 000s ,400 1,200 1, Holdings Balance $ Billion Multi-currency Capabilities Renminbi cash transfer service July Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Transactions (LHS) Holdings Balance (period end) (RHS) 18

19 Expense growth to support initiatives Expenses A$m Comments Expense discipline in period of investment (particularly in posttrade services) Average staff numbers year-todate FY14 up 4.1% to 534 FTEs Guidance FY14 expense growth approximately 5% EBITDA ratio maintained at 76% FY09 FY10 FY11 FY12 FY13 Staff All other 19

20 Capital Expenditure (A$M) H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 Normal Data Centre Post Trade Comments YTD March FY14 capital expenditure A$28.3 million including A$17.0 million post trade Guidance FY14 capital expenditure A$40 to A$45 million Strong balance sheet, no debt Dividend payout ratio 90% 20 20

21 Summary Strong business anchored in attractive financial market Strong market fundamentals Attractive business mix as multi-asset class, vertically integrated exchange World-class regulation equities, financial market infrastructure Positive financial performance for nine months to 31 March 2014 Profit after tax A$286.9 million, up 10% Revenue growth in all major revenue categories Expense and capex discipline maintained in period of investment Strong balance sheet, AA- credit rating from Standard & Poors Good progress in implementation of investment program Be global leader in A$ and NZ$ markets Provide world-class, globally connected financial infrastructure Deliver an outstanding customer experience Advocate regulatory settings that support investors and growth Financial results to 31 March 2014 are unaudited. Comparisons are to prior comparative period (pcp) 21

22 Appendices 22

23 Income Statement (A$m) FY09 FY10 FY11 FY12 FY13 YTD Mar 14 REVENUE Listings and Issuer Services Cash Market Trading Clearing Settlement Information Services Technical Services Derivatives ASX 24 Derivatives ASX Derivatives Austraclear Services Other Revenue Operating Revenue EXPENSES Staff Occupancy Equipment Administration Variable ASIC Supervision Levy Operating Expenses EBITDA

24 Income Statement (A$m, Continued) FY09 FY10 FY11 FY12 FY13 YTD Mar 14 Depreciation and Amortisation EBIT Net Interest Income Net Interest on Participants Balances Dividend Revenue Interest and Dividend Income Underlying Profit Before Tax Income Tax Expense (131.1) (139.9) (149.6) (145.3) (146.1) (118.4) Underlying Profit After Tax Less Significant Items - (4.5) (4.3) (7.0) - - Statutory Profit After Tax

25 Balance Sheet (A$m) Assets Cash and Available-For-Sale Financial Assets 30 Jun Jun Jun Jun Jun Dec 13 4, , , , , ,071.7 Goodwill 2, , , , , ,317.6 Investments Other Assets Total Assets 6, , , , , ,996.8 Liabilities Amounts Owing to Participants 3, , , , , ,033.4 Borrowings Other Liabilities Total Liabilities 4, , , , , ,320.6 Equity Capital 2, , , , , ,027.2 Retained Earnings Reserves Total Equity 2, , , , , ,

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