Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — FY2003 Earnings Presentation
25 slides from Singapore Exchange's earnings presentation, Sep 11, 2003
Slide 1: Singapore Exchange Limited FY2003 Annual Results
Singapore Exchange Limited FY2003 Annual Results Hsieh Fu Hua, CEO Seck Wai Kwong, CFO Singapore Exchange 11 September 2003 1
Slide 2: Agenda
Agenda • CEO’s Message & Results Overview • Financial Results for 12 months ended 30 June 2003 • Market Outlook • Defend & Grow Strategy 2
Slide 3: CEO's Message
CEO’s Message • Run the business as a business • The basics: team, customers & market integrity • Defend and grow from the core • Emphasis on efficiency, cost and capital management • Going forward – tough year but market is looking up 3
Slide 4: Results Overview
Results Overview • Net profit after tax & MI up 8.1% to $66.0MM before writedown of properties • Net profit after tax & MI down 73.7% to $16.0MM after writedown of properties • Operating revenues $218MM (down 5%) • Operating costs $154MM (down 7%) • Final dividend plus special dividend * Operating c
Slide 5: Financial Results for 12 months ended 30 June 2003
Financial Results for 12 months ended 30 June 2003 5
Slide 6: Income Statement
Income Statement 1. Securities clearing fees 2. Account maintenance & (in S$MM) FY 2003 FY 2002 Variance processing fees 3. Derivatives clearing fees & related income Operating Revenue 218 229 5% 1. Staff costs 2. Occupancy costs Operating Expenses (154) (165) 7% 3. Depreciation Operating Profit 64
Slide 7: Breakdown of Operating Revenue
Breakdown of Operating Revenue Increasing importance of derivatives and stable income 250 200 114 100 108 (in S$MM) 150 100 39 43 36 50 73 76 75 0 FY 2001 FY 2002 FY 2003 Stable Derivatives Clearing Rev Securities Mkt Rev * Securities market revenue includes clearing fees and account maintenance & p
Slide 8: Operating Expenses
Operating Expenses 1. Headcount down from 761 to 741; now 651 (in S$MM) FY 2003 FY 2002 Variance 2. Bonuses Staff Costs 65 75 12% Property tax • Lower in FY2003 Occupancy Costs 17 18 5% • Overprovision of prior years System Maintenance & 21 19 11% Rental of computer Rental equipment and system maint
Slide 9: Operating Expenses: Moderating cost base over the year
Operating Expenses Moderating cost base over the year 45 40 7 35 7 9 7 30 6 6 5 5 5 (in S$MM) 25 6 4 5 5 20 4 4 4 15 10 19 16 15 15 5 0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Staff costs Premises System maintenance & rental Depreciation Other operating expenses Excludes non-recurring items & exceptional it
Slide 10: Biting the Bullet
Biting the Bullet • Closure of SGX America $0.7MM • Closure of Asia Converge $0.7MM • Redundancy Costs $4.1MM • Provision for leased premises $3.0MM • Properties writedown $50.0MM • Liquidation of $340.5MM Managed Portfolio in July 03 $3.0MM • Reduction of capital base (proposed total dividend) $300
Slide 11: FY 2003 Total Dividend
FY 2003 Total Dividend A good year for shareholders Proposed (Cents Per Share) Interim Total Final Special Gross Dividend 3.00 3.50 34.00 40.50 Tax @ 22% 0.66 0.77 7.48 8.91 Net Dividend 2.34 2.73 26.52 31.59 Book Closure Date 30 Oct 03 30 Oct 03 Payment Date 12 Nov 03 12 Nov 03 * Subject to shareho
Slide 12: Proposed Special Dividend
Proposed Special Dividend Aggregate of S$270.6MM to be returned, after considering … • Prudential Risk Capital • Capital Investments • FY 2003 Proposed Final Dividend • Ability to pass S44 tax credit to shareholders 12
Slide 13: Financial ratios
Financial ratios FY 2003 FY 2002 Operating Profit Margin (1) 31.7% 28.9% Cost-to-Income (2) 68.3% 71.1% Return on Equity (3) 9.2% 8.0% Net Dividend Payout (4) 77% 93% Dividend Per Share • Gross 6.5 cents 7.3 cents • Net 5.07 cents 5.69 cents (1) Excludes non-recurring items (2) Operating costs / Ope
Slide 14: Market Outlook
INGAPORE EXCHANGE Market Outlook SGX. Tomorrow's Market, Today
Slide 15: Securities trading is recovering
Securities trading is recovering Despite challenging market conditions, revenues remain intact 120 160 140 100 4% 120 Value (S$bn) 80 Volume (bn) 17% 100 60 113.8 80 109.6 93.8 60 40 40 20 20 0 0 FY2001 FY2002 FY2003 Securities Trading Volume Securities Trading Value 15
Slide 16: And derivatives trading volume continues to trend upwards
And derivatives trading volume Continues to trend upwards … 40 34.9 35 31.5 30 28.0 25 +11% 12% (in MM) 20 15 10 5 0 FY 2001 FY 2002 FY 2003 16
Slide 17: IPO market: a pick up in primary market activity
IPO market … A pick up in primary market activity 4.5 80 3.9 4.0 70 68 3.5 No. of new listings 3.5 60 3.0 45 50 (S$Bn) 2.3 2.5 1.9 40 2.0 1.7 30 1.5 26 1.0 20 0.5 0.3 10 0.0 0 FY2001 FY2002 FY2003 Amt of IPO Funds Raised Total Amt of Funds Raised No. of new listings 17
Slide 18: Quarterly Revenue and things are looking up
Quarterly Revenue and things are looking up FY2003 60 70 60 Trading Volume / Trading Value 50 50 Operating Revenue 40 40 30 30 20 20 10 10 - - 1Q 2Q 3Q 4Q Derivatives Trading Volume (MM) Securities Trading Value ($Bil) Securities Trading Volume (Bil) Operating Revenue ($MM) 18
Slide 19: Defend & Grow Strategy
INGAPORE EXCHANGE Defend & Grow Strategy SGX. Tomorrow's Market, Today
Slide 20: Our strategic direction
Our strategic direction Solid Regulatory Framework Grow from the Defend the business Going forward core Time Horizon Align economics Product Innovation Strategic alliances • Cost focus • Market data services • CME • Capital management - ROE • New Product Development • ASX Infrastructural Development
Slide 21: Building the SGX team
Building the SGX team CEO Hsieh Fu Hua Internal Audit President Ang Swee Tian Markets SBU Operations SBU Support Oversight Customer & revenue driven Cost management and efficiency driven Markets Markets Products Products & & Strategy Strategy & & Operations Operations Technology Technology Corporate
Slide 22: Creating a Customer-focused organisation
Creating a Customer-focused organisation Customers x Institutions/Traders x Intermediaries x Issuers x Retail Markets Products and Services Strategy and Business Development SGX Operations Technology Corporate Services Risk Management and Regulation 22
Slide 23: Our market integrity role
Our market integrity role • Disclosure-based regime • Close collaboration with MAS • Continue to preserve market integrity 23
Slide 24: Our Investment Story
Our Investment Story • Emerging business with potential • Defend and grow from the core • Boost efficiency & manage costs • Grow stable revenues and benefit from core revenues geared to market recovery • Capital management with ROE as key measure • Maintain attractive dividend policy 24
Slide 25: SGX share price performance
SGX share price performance 180 160 140 120 Relative prices / Index 100 80 60 as at 10 Sept 2003 40 20 0 22/11/00 22/02/01 22/05/01 22/08/01 22/11/01 22/02/02 22/05/02 22/08/02 22/11/02 22/02/03 22/05/03 22/08/03 SGX Share Price STI Index 25