Investor Presentation Sandler O Neill Global Exchange and Brokerage Conference Peter Hiom June 2015
Disclaimer The material contained in this document is a presentation of general information about the ASX Group s activities current as at the date of this presentation (3 June 2015). 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
ASX Limited Strong business anchored in attractive financial market Strong market fundamentals Diversified business, multi-asset class and vertically integrated exchange World-class regulations trading, clearing, financial market infrastructure Strong balance sheet, AA- credit rating from Standard & Poor s Positive financial performance for 9 months to 31 March 2015 Underlying profit after tax A$299.8 million, up 4.5% Revenue growth 5.8%, after fee reductions in interest rate and electricity futures Expense and capex in line with guidance Significant investment in long-term strategic position Customer engagement and service delivery Products and services that give investors flexibility and choice World-class trading and post-trade infrastructure People and skills Unaudited results Revenues and expenses as per the Group segment reporting All comparisons are to the prior comparable period. 3
Attractive Market and Business Model Australia s Financial Markets Position YTD Mar 2015 ASX Revenues 100% = A$517m Investable assets Capital formation 3 rd largest pool at A$1.9 trillion 2,200 listed entities, 92 IPOs YTD Market capitalisation A$1.7 trillion Technical Services Austraclear 8% Other 7% 2% 24% Listings and Issuer Services Equities 8 th in free-float market capitalisation Derivatives Foreign exchange Largest interest rate derivatives market in Asia and top 5 globally Notional turnover A$47 trillion 5 th most traded currency Information Services 11% Derivatives and OTC Markets 30% Cash 5% Market Trading 7% Cash 6% Market Clearing Cash Market Settlement 4
Solid Performance since the GFC Revenues A$m FY09 to FY14 CAGR 4.1% Expenses A$m FY09 to FY14 CAGR 2.1% 538.4 588.2 617.6 610.4 617.4 658.3 138.3 134.2 135.5 141.1 146.2 153.6 FY09 FY10 FY11 FY12 FY13 FY14 FY09 FY10 FY11 FY12 FY13 FY14 Profit after tax A$m FY09 to FY14 CAGR 4.1% 74% EBITDA Margin 77% 78% 77% 76% 77% 313.6 332.6 356.6 346.2 348.2 383.2 FY09 FY10 FY11 FY12 FY13 FY14 FY09 FY10 FY11 FY12 FY13 FY14 5
Income Statement YTD March 2015 YTD Mar 2015 A$ Million YTD Mar 2014 A$ Million % Variance Operating Revenues 516.8 488.4 5.8% Operating Expenses 120.2 115.0 (4.6%) EBITDA 396.6 373.4 6.2% Depreciation and Amortisation 28.2 24.4 (15.2%) EBIT 368.4 349.0 5.6% Interest and Dividend income 57.9 56.3 2.8% Underlying Profit Before Tax 426.3 405.3 5.2% Income Tax Expense (126.5) (118.4) (6.8%) Underlying Profit After Tax 299.8 286.9 4.5% Significant Items after tax 1 (1.1) (0.0) n/a Statutory Profit After Tax 298.7 286.9 4.1% 1 One-off restructure costs of approximately $7m pre-tax in FY15 Unaudited results Revenues and expenses as per the Group segment reporting Variances expressed favourable/(unfavourable) 6
Revenue Movement YTD March 2015 (A$M) 5.3 Impacted by interest rate and electricity futures fee cuts 1.6 2.8 3.5 3.0 0.1 516.8 12.1 488.4 Up 10.6% Up 6.0% Up 1.0% Up 5.5% Up 8.8% Up 9.8% Up 1.4% Operating Revenues Up 5.8% July to March 14 Listings and Issuer Services Cash Market Derivatives and OTC Markets Information Services Technical Services Austraclear Other Revenue July to March 15 A$125.7 A$93.1 A$153.8 A$55.2 A$42.9 A$34.0 A$12.1 Unaudited results Revenues as per the Group segment reporting Variances expressed favourable/(unfavourable) 7
Revenue Movement Futures (A$M) 1 8.8 (12.8) Attractive fee reductions in electricity futures (1 July 2014) and interest rate futures (1 October 2014) 136.2 (5.4) 7.9 134.7 Growth in futures and OTC clearing volumes during FY15 means that more customers have reached higher thresholds Updated estimate of impact FY15 YTD: A$12.8m FY15: A$19m YTD Mar14 Volume & Product Mix Fee Cuts Prop Trader Rebates Removal Other Rebates YTD Mar15 1. FY15 year-to-date: Derivatives and OTC Markets revenue A$153.8 million, consisting of futures (futures and options on futures) A$134.7 million and equity options A$19.1 million 8
Activity Levels YTD March 2015 Listings Total Capital Raised A$ Billion 44.4 50.2 ASX Cash Market Daily Average On-Market Value Traded A$ Billion 3.7 3.3 +13.0% +11.6% FY14 FY15 FY14 FY15 Futures 1 Daily Average Contracts ( 000) Equity Options Daily Average Contracts ( 000) 464 482 500 491 +3.7% (1.7%) FY14 FY15 FY14 FY15 1. Consists of futures and options on futures 9
Key Themes Global Leader in A$ and NZ$ Financial Markets Innovate in fragmented equity market Build on leadership in A$ and NZ$ derivatives markets Investment Supermarket Grow listings franchise Extend suite of investment options equities, debt, funds World-Class Infrastructure, Globally Connected Deliver competitive trading and post-trade services Upgrade technology infrastructure multi-currency Build global connectivity Outstanding Customer Experience Deepen customer engagement across all services Deliver 24hr service to local and global clients Strengthen alignment through fee reductions and rebates Regulatory Settings Employer of Choice 10
Global Leader in A$ and NZ$ Financial Markets Equities Centre Point Value Traded (A$ Billion) 40 35 Derivatives OTC Notional Value Cleared (A$ Billion) 137 136 140 30 25 20 71 15 10 5 0 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 Standard Block Sweep Preference Single Fill Dark Limit 2 5 Jul-14 Aug-14 16 15 Sep-14 Oct-14 20 Nov-14 43 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 Strong innovation track record Focus on end-investors On-market trading market share 90% YTD Leading A$ and NZ$ futures business Fees support growth in futures and OTC clearing Further innovation deliverable swap futures Investment in Yieldbroker 11
Investment Supermarket Grow Listings Franchise (FY14/15 Listings) Areas of Focus Grow listings franchise Attractive and flexible capital market Specific areas of focus New Zealand simplify dual listings process Tech sector 27 listings 1 YTD, 128 entities listed ETFs 110 ETFs listed totalling A$17.8 billion ASX Evolve program for listed entities Expand Investment Supermarket Domestic equities International equities Government bonds Corporate bonds ETFs and Listed Investment Companies Unlisted managed funds through mfund service 1. Includes IPOs and backdoor listings 12
World-Class Infrastructure ASX 24 Derivatives Trading Trading platforms Cash Market Trading Market Monitoring Phase I (Feb 15 Dec 16) Market integrity and risk platforms Risk Management ASX Derivatives Clearing Clearing/ settlement platforms Phase II Cash Clearing & Settlement (CHESS) 1 Customer Objectives Financials Innovation and speed to market Global standards for connectivity Fewer platforms with lower client costs to connect and comply Managed within Group capex envelope of A$40-50 million pa Phase I capex approximately A$35 million over two years 1. Decision expected in FY16 when there is clarity on cash equities clearing market structure 13
Capital Expenditure (A$M) 50.2 40-50 39.1 38.9 43.2 40-45 26.0 (YTD) FY11 FY12 FY13 FY14 FY15 FY16 Normal (A$107.9m) Data Centre (A$36.0m) Post-Trade (A$53.6m) 1 Highlights Average total capital expenditure since 2011: A$41 million per annum Capital expenditure guidance for FY15 and FY16 unchanged 1. Post-trade A$53.6 million, including new post-trade services A$36.0 million and upgrades of existing platforms A$17.6 million 14
Outstanding Customer Experience Products and Services Forums for all Asset classes 24hr Service Delivery Competitive Fees ASX Customer Support Centre Opened April 2015 15
Regulatory Environment Developments Last Three Years Investors Equity market regulations supporting end-investors Systemic risk Location requirements Global regulatory and capital standards adopted A$ OTC interest rate swap central clearing mandate recommended along with G4 currencies Global competitiveness Post-trade solutions in place ESMA recognition received, CFTC no-action relief AA- long-term credit rating from S&P Growth and productivity Faster product approval processes Red tape reduction Outstanding Clearing Market Structure Compelling case for single clearing facility Total cost (under new fee schedule) A$38 million pa Most efficient model for market the size of Australia No other major single market has multiple facilities Positive client engagement, with tangible outcomes Effective governance through Code of Practice Commitment to upgrade infrastructure Lower fees with initial 14% reduction 1 Proposed Equities Clearing Fees 2 Basis Points all value up to A$3bn per day 0.225 any value between A$3bn and A$4bn 0.175 any value between A$4bn and A$5bn 0.125 any value over A$5bn 0.100 1. Subject to extension of moratorium and Code of Practice 2. Current fee is 0.25bp. Bands refer to total market value cleared per day 16
ASX Limited Strong business anchored in attractive financial market Strong market fundamentals Diversified business, multi-asset class and vertically integrated exchange World-class regulations trading, clearing, financial market infrastructure Strong balance sheet, AA- credit rating from Standard & Poor s Positive financial performance for 9 months to 31 March 2015 Underlying profit after tax A$299.8 million, up 4.5% Revenue growth 5.8%, after fee reductions in interest rate and electricity futures Expense and capex in line with guidance Significant investment in long-term strategic position Customer engagement and service delivery Products and services that give investors flexibility and choice World-class trading and post-trade infrastructure People and skills Unaudited results Revenues and expenses as per the Group segment reporting All comparisons are to the prior comparable period. 17
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