Deutsche Boerse Ag · XETR:DB1
Deutsche Boerse — Deutsche Börse Group — Investor Day (May 2018)
55 slides from Deutsche Boerse's investor day presentation, May 30, 2018
Slide 1: Investor Day 2018 'Roadmap 2020'
Deutsche Börse Group 1 Investor Day 2018 “Roadmap 2020” London, 30 May 2018
Slide 2: Deutsche Börse equity story
Investor Day 2018 30 May 2018 Deutsche Börse Group 2 Deutsche Börse equity story ▪ Leading European capital markets infrastructure provider with global growth ambitions ▪ Nine business segments that cover the full capital markets value chain including: – Eurex, the largest European derivatives excha
Slide 3: Agenda
Investor Day 2018 30 May 2018 Deutsche Börse Group 3 Agenda ▪ Point of departure ▪ Roadmap 2020 ▪ Mid-term financial outlook ▪ Business segment deep dive ▪ Wrap-up and Q&A
Slide 4: Environment with high dynamics but very attractive opportunities
Investor Day 2018 30 May 2018 Deutsche Börse Group 4 Deutsche Börse operates in an environment with high dynamics, but very attractive opportunities Multiple strong secular Ongoing consolidation in growth opportunities the industry and high M&A (e.g. OTC to on-exchange, activity (though with very sh
Slide 5: Strong business portfolio covering the full value chain
Investor Day 2018 30 May 2018 Deutsche Börse Group 5 Deutsche Börse has a strong business portfolio that covers the full value chain 2017 net revenue Size equals % of total net revenue Pre-trading Trading & clearing Post-trading 11% 36% 53% STOXX Data Eurex EEX 360T Xetra Clearstream IFS GSF (index)
Slide 6: Solid financials proving scalability of the business model
Investor Day 2018 30 May 2018 Deutsche Börse Group 6 Solid financials proving the scalability of the business model Net revenue 2014–2017 (€bn) +9% CAGR CAGR 2.5 t/o inorganic growth +3% 1.9 t/o organic growth +6% t/o secular +4% t/o cyclical +2% Net profit (adjusted) 2014–2017 (€bn) +11% CAGR 0.9 0
Slide 7: Secular and cyclical growth opportunities along the value chain
Investor Day 2018 30 May 2018 Deutsche Börse Group 7 Secular and cyclical growth opportunities along the value chain Pre-trading Trading & clearing Post-trading Increasing importance of the buy-side and passive Opportunity to consolidate investments assets under T2S Secular Generational euro clearin
Slide 8: Investor survey in Q1/2018 yielded positive feedback
Investor Day 2018 30 May 2018 Deutsche Börse Group 8 Investor survey in Q1/2018 yielded positive feedback Deutsche Börse … where cyclical Deutsche Börse … and a satisfying primarily seen as growth is slightly with a credible high dividend growth stock … more important strategy … policy Not very Some
Slide 9: Position of strength, with specific areas to be improved
Investor Day 2018 30 May 2018 Deutsche Börse Group 9 Deutsche Börse is in a position of strength, with specific areas to be improved Areas of strength … … and weakness ▪ #1 European player ▪ Valuation multiple disadvantage ▪ Technology leadership ▪ Slightly more cyclically driven business ▪ Diversif
Slide 10: Execution excellence will be the key to our success
Investor Day 2018 30 May 2018 Deutsche Börse Group 10 Execution excellence will be the key to our success Three priorities for the new … to create value for the CEO … Group 1 Grow the company Build scale in sub-scale business segments Maintain technology 2 leadership Reduce valuation multiple discou
Slide 11: Agenda
Investor Day 2018 30 May 2018 Deutsche Börse Group 11 Agenda ▪ Point of departure ▪ Roadmap 2020 ▪ Mid-term financial outlook ▪ Business segment deep dive ▪ Wrap-up and Q&A
Slide 12: Growth programme Roadmap 2020 built on three pillars
Investor Day 2018 30 May 2018 Deutsche Börse Group 12 Growth programme “Roadmap 2020” built on three pillars I II III Strong organic portfolio Programmatic M&A New technologies as foundation ▪ Strong organic secular net ▪ Programmatic investment ▪ Creation of growth revenue growth >5% across into se
Slide 13: Diversified organic portfolio with strong secular growth outlook
Investor Day 2018 30 May 2018 Deutsche Börse Group 13 Diversified organic portfolio with strong secular growth outlook Size represents 2017 700 Cyclical growth net revenue (€m) 70 CAGR 2017-2020 Very high Secular net revenue growth of at least 5% across the Group High Clear- stream GSF Xetra Eurex I
Slide 14: M&A was and will be an important contributor
Investor Day 2018 30 May 2018 Deutsche Börse Group 14 M&A was and will be an important contributor 2015 2016 2017 2018 Step-up from 50% Full acquisition and controlling stake to increase of stake in full ownership EEX ~CHF 650m ~USD 207m Share swaps for Full acquisition Full acquisition Full control
Slide 15: Focused and disciplined M&A approach
Investor Day 2018 30 May 2018 Deutsche Börse Group 15 We will follow a focused and disciplined M&A approach A disciplined M&A approach … … focused on five growth areas ▪ Systematic opportunity screening Pre-trading 1 Data ▪ Clear focus on defined areas General ▪ Partnership formats as option (e.g. p
Slide 16: Focusing on four key technologies
Investor Day 2018 30 May 2018 Deutsche Börse Group 16 We want to stay a leading technology provider by focusing on four key technologies … How Deutsche Börse will capitalise Create markets/ Increase Enhance Four transformational technology trends drive revenue efficiency client service Distributed l
Slide 17: Growing capabilities in all four technologies
Investor Day 2018 30 May 2018 Deutsche Börse Group 17 … and are currently growing our capabilities in all four technologies Entering into phase II (from use cases to broader DLT / blockchain based application) Big data / Systematic monetisation of existing data across the Advanced Analytics Group Ne
Slide 18: Structurally improving cost base to fund growth
Investor Day 2018 30 May 2018 Deutsche Börse Group 18 We will structurally improve our cost base to fund our growth and technology investments through two mechanisms Allowed increase at given scalability: Allowed cost At 10 per cent net revenue growth operating cost can increase grow up to 5 per cen
Slide 19: Strengthening execution discipline through four main levers
Investor Day 2018 30 May 2018 Deutsche Börse Group 19 Deutsche Börse will strengthen its execution discipline through four main levers Description Consequent realisation ▪ Strong business segment heads established 1 of secular growth ▪ Business segment heads with full P&L responsibility ▪ Clearer re
Slide 20: Strong Executive Board team completed
Investor Day 2018 30 May 2018 Deutsche Börse Group 20 Strong Executive Board team completed … Existing Executive Board team … … completed by three new members Theodor Weimer Gregor Hauke Stars Thomas Book Stephan Leithner Christoph Böhm CEO Pottmeyer Cash market, Trading & Pre- & Post- CIO/COO CFO d
Slide 21: Supported by strong business segment management
Investor Day 2018 30 May 2018 Deutsche Börse Group 21 … and supported by strong business segment management Eurex Clearing EEX 360T (financial derivatives clearing) (commodities) (foreign exchange) Erik Müller Peter Reitz Carlo Kölzer Clearstream IFS (investment fund services) STOXX (index) (post-tr
Slide 22: Agenda
Investor Day 2018 30 May 2018 Deutsche Börse Group 22 Agenda ▪ Point of departure ▪ Roadmap 2020 ▪ Mid-term financial outlook ▪ Business segment deep dive ▪ Wrap-up and Q&A
Slide 23: Mid-term financial targets confirmed and made more specific
Investor Day 2018 30 May 2018 Deutsche Börse Group 23 Mid-term financial targets are confirmed and made more specific with a clear ambition to achieve secular growth Growth aspirations until 2020 Capital management Organic/secular net revenue Dividend policy: ~40% to growth of >5% CAGR 60% of net pr
Slide 24: Business model proven scalable in past years
Investor Day 2018 30 May 2018 Deutsche Börse Group 24 In past years, Deutsche Börse business model has proven to be scalable – supported by active cost management in 2016/17 Net revenue growth 2014–2017 (€m) Net profit growth (adjusted) 2014–2017 (€m) +9% CAGR +11% CAGR 2,389 2,462 857 2,220 811 712
Slide 25: Deutsche Börse will grow strongly over the next years
Investor Day 2018 30 May 2018 Deutsche Börse Group 25 Deutsche Börse will grow strongly over the next years Mid-term organic net revenue growth opportunities (€m) Secular Cyclical At least 5% opportunities opportunities secular growth plus cyclical ~500 ~300 growth 100-150 250-350 2,462 80-120 2017
Slide 26: Secular and cyclical growth opportunities across segments
Investor Day 2018 30 May 2018 Deutsche Börse Group 26 Secular and cyclical growth opportunities across segments Growth expectation CAGR 2017-20 (incl. cyclical Business segments Net revenue 2017 (€m) growth) t/o secular growth STOXX (index business) 128 >10% Very high Pre- trading Data 154 5-10% Hig
Slide 27: Cyclical growth opportunities
Investor Day 2018 30 May 2018 Deutsche Börse Group 27 Cyclical growth opportunities Description Volatility Interest Net revenue rates impact 2020E (€m) a Increase of market volatility resulting 50-100 in higher index derivatives activity Eurex b Expectation on future interest rates 50-100 drives fix
Slide 28: Eurex well positioned to capture cyclical effects
Investor Day 2018 30 May 2018 Deutsche Börse Group 28 Eurex well positioned to capture cyclical effects Index derivatives gross revenue and volatility Fixed income derivatives gross revenue and a b development government bond yield development Structural change in revenue com- Structural change in r
Slide 29: Clearstream well positioned to capture cyclical effects
Investor Day 2018 30 May 2018 Deutsche Börse Group 29 Clearstream well positioned to capture cyclical effects Net interest income (NII) and central bank rates Debt issuance activity and c d development ECB deposit rates 250 6 2,000 3 237 NII share driven by 1,828 increased US Fed rates 5 200 1,500 2
Slide 30: Structural performance improvement to scale business model
Investor Day 2018 30 May 2018 Deutsche Börse Group 30 Structural performance improvement to ILLUSTRATIVE scale business model Net revenue growth Cost development Scalability of business model +10% +5% CAGR CAGR -100 100 2017 2020E 2017 2020E Structural Reinvestment performance if net revenue improve
Slide 31: Key levers for structural cost savings
Investor Day 2018 30 May 2018 Deutsche Börse Group 31 Key levers for structural cost savings split between staff and non- staff cost Cost distribution 2017 Savings targets Key levers to reduce cost base 100% = €1,197 million ▪ Management delayering Staff cost ▪ Process automation and digitisation (R
Slide 32: Savings of €100 million invested into growth and new technologies
Investor Day 2018 30 May 2018 Deutsche Börse Group 32 Savings of €100 million will be invested into growth and new technologies Cost savings (€m) Cost to achieve (€m) Cumulative: 200 Non-staff Staff 100 70 Majority of 66 cost to be incurred in 33 130 2018 2019 2020 2021 €100 million creates flexibil
Slide 33: Cost savings reinvested into growth and efficiency
Investor Day 2018 30 May 2018 Deutsche Börse Group 33 Cost savings and one-time investments for non-staff measures are reinvested into growth and efficiency Segment growth Cumulative cost savings directly Reinvestment invested into growth / new €200m Big data / analytics technologies DLT / blockchai
Slide 34: Balanced capital allocation between growth and dividend
Investor Day 2018 30 May 2018 Deutsche Börse Group 34 Balanced approach: capital allocation between growth and dividend distribution – confirmation of policy going forward ▪ Strong AA credit rating mainly because of post-trading business Rating ▪ Gross debt to EBITDA required to be <1.5x ▪ Payout be
Slide 35: Agenda
Investor Day 2018 30 May 2018 Deutsche Börse Group 35 Agenda ▪ Point of departure ▪ Roadmap 2020 ▪ Mid-term financial outlook ▪ Business segment deep dive ▪ Wrap-up and Q&A
Slide 36: Eurex' global competitive position
Investor Day 2018 30 May 2018 Deutsche Börse Group 36 Eurex’ global competitive position – leading venue to trade and clear European derivatives Business overview and attractions Net revenue breakdown Q1/2018 Markets & products 100% = €237 million ▪ Leading venue to trade Euro-Yield-Curve with 70% m
Slide 37: Eurex' secular growth drivers
Investor Day 2018 30 May 2018 Deutsche Börse Group 37 Eurex’ secular growth drivers – opportunities from transformational shifts in market demands Secular growth drivers Net revenue guidance (€m) Passive investment strategies Shift to passive strategies accelerates buy-side demand for index >10% CAG
Slide 38: Eurex Clearing – industry platform for EU-based alternative
Investor Day 2018 30 May 2018 Deutsche Börse Group 38 Eurex Clearing – industry platform for an EU-based liquid alternative for interest rate derivatives EU OTC derivatives ecosystem Eurex Clearing – world class IT and Govt agencies Regional banks risk management systems Dealers & + Debt issuance in
Slide 39: Eurex Clearing – progress establishing alternative liquidity pool
Investor Day 2018 30 May 2018 Deutsche Börse Group 39 Eurex Clearing – significant progress in establishing alternative liquidity pool for OTC interest rate derivatives Secular growth drivers Eurex OTC services Stepwise approach to build Euro OTC interest rate derivatives Notional amounts outstandin
Slide 40: EEX (commodities) – strong growth expectation
Investor Day 2018 30 May 2018 Deutsche Börse Group 40 EEX (commodities) – strong growth expectation Business overview and attractions Net revenue breakdown Q1/2018 ▪ Scale up through acquisitions in 2015 (new products and 100% = €62 million regions) ▪ EEX is the leading power trading platform with:
Slide 41: EEX (commodities) – secular growth drivers
Investor Day 2018 30 May 2018 Deutsche Börse Group 41 EEX (commodities) – secular growth drivers Business overview and attractions Net revenue guidance (€m) ▪ Continuous customer demand for more efficient on- exchange trading and clearing of commodities from OTC >10% CAGR t/o share of market secular
Slide 42: 360T (foreign exchange) – global FX trading platform
Investor Day 2018 30 May 2018 Deutsche Börse Group 42 360T (foreign exchange) – global FX trading platform with confirmed strong growth ambitions Business overview and attractions Net revenue breakdown Q1/2018 ▪ Acquisition in 2015 to enter into new asset class 100% = €18 million ▪ 360T is a top ran
Slide 43: 360T (foreign exchange) – secular growth drivers
Investor Day 2018 30 May 2018 Deutsche Börse Group 43 360T (foreign exchange) – secular growth drivers Secular growth drivers Net revenue guidance (€m) 360T stand-alone / OTC FX ▪ Electronification of FX: continuing transformational shifts >10% CAGR t/o share of towards electronic trading venues to
Slide 44: Xetra (cash equities) – continuous revenue delivery
Investor Day 2018 30 May 2018 Deutsche Börse Group 44 Xetra (cash equities) – continuous revenue delivery via capturing of cyclical effects and buildout of pre-IPO ecosystem / platform updates Business overview and attractions Net revenue breakdown Q1/2018 ▪ Reference market for liquid German equiti
Slide 45: Xetra (cash equities) – secular growth drivers
Investor Day 2018 30 May 2018 Deutsche Börse Group 45 Xetra (cash equities) – secular growth drivers Secular growth drivers Net revenue guidance (€m) ▪ Attract OTC trading volumes to Xetra® order books (leverage MiFID II regulation), focus on German blue chips ~5% CAGR t/o share of and ETFs secular
Slide 46: Clearstream (post-trading) – T2S consolidation of custody volumes
Investor Day 2018 30 May 2018 Deutsche Börse Group 46 Clearstream (post-trading) – T2S enables Clearstream to benefit from a consolidation of custody volumes Business overview and attractions Net revenue breakdown Q1/2018 ▪ Leading European supplier of post-trading services (ICSD; 100% = €179 millio
Slide 47: Clearstream (post-trading) – secular growth drivers
Investor Day 2018 30 May 2018 Deutsche Börse Group 47 Clearstream (post-trading) – secular growth drivers Secular growth drivers Net revenue guidance (€m) T2S markets – Investor CSD with local market partnerships for asset 5-10% CAGR t/o share of servicing in T2S zone secular growth: moderate – Wide
Slide 48: GSF (collateral management) – increasing demand
Investor Day 2018 30 May 2018 Deutsche Börse Group 48 GSF (collateral management) – address increasing demand for collateral management services Business overview and attractions Net revenue breakdown Q1/2018 ▪ Lower overall outstanding volumes in repo and central bank 100% = €19 million activity ov
Slide 49: IFS (investment fund services) – onboarding new clients
Investor Day 2018 30 May 2018 Deutsche Börse Group 49 IFS (investment fund services) – continuously onboarding new clients and building upon a globally leading industry position Business overview and attractions Net revenue breakdown Q1/2018 ▪ Leading provider of international fund order routing, se
Slide 50: Data – leverage platform to address broader demand
Investor Day 2018 30 May 2018 Deutsche Börse Group 50 Data – leverage platform to address broader demand for intelligence Business overview and attractions Net revenue breakdown Q1/2018 ▪ Global real-time distribution network for data to all capital 100% = €43 million markets segments (>4,500 instit
Slide 51: STOXX (index) – capture demand for passive investing
Investor Day 2018 30 May 2018 Deutsche Börse Group 51 STOXX (index) – capture demand for passive investing Business overview and attractions Net revenue breakdown Q1/2018 ▪ #1 European tradable index, #2 European provider for rules- 100% = €34 million based strategies, benchmarks and data sets, #4 g
Slide 52: Agenda
Investor Day 2018 30 May 2018 Deutsche Börse Group 52 Agenda ▪ Point of departure ▪ Roadmap 2020 ▪ Mid-term financial outlook ▪ Business segment deep dive ▪ Wrap-up and Q&A
Slide 53: Roadmap 2020 – focused on growth
Investor Day 2018 30 May 2018 Deutsche Börse Group 53 Roadmap 2020 – focused on growth Strong starting Deutsche Börse starts from a strong position and has many assets to position leverage. Opportunities Deutsche Börse is well positioned to capture both secular and cyclical ahead opportunities along
Slide 54: Key performance indicators to measure success
Investor Day 2018 30 May 2018 Deutsche Börse Group 54 Key performance indicators to measure success Deutsche Börse will achieve at minimum 5% CAGR in secular net revenue until 2020 across the Group >5% secular net revenue growth 10- Deutsche Börse will achieve 15% a 10–15% CAGR in net profit until 2
Slide 55: Disclaimer
Deutsche Börse Group 55 Investor Day 2018 Disclaimer Cautionary note with regard to forward-looking statements: This document contains forward-looking statements and statements of future expectations that reflect management's current views and assumptions with respect to future events. Such statemen