Slide 1: Half-Year Results 15 February 2018
2018 ASX Limited Half-Year Results 15 February 2018 © ‘= © WY — D) (or — © LL, ASX
Slide 2: Agenda
Agenda For personal use only 1H18 financial performance Dominic Stevens – CEO Strategy Dominic Stevens Business performance Peter Hiom – Deputy CEO Summary and outlook Dominic Stevens Q&A – analysts followed by media Dominic Stevens, Peter Hiom and Stephen Hammon – Deputy CFO 2 |
Slide 3: Highlights – financial results 1H18
Highlights – financial results 1H18 Strong business performance and returns to shareholders For personal use only • $409.0 million, up 5.8% Revenue +$22.4m • Strong overall performance despite subdued equities trading NPAT ($million) • $96.2 million, up 6.7% (3.1% normalised for step changes) Expens
Slide 4: Highlights – activity levels
Highlights – activity levels More capital raised, increased futures trading, lower equities trading, growth in ALC connectivity For personal use only Total capital raised ($billion) Cash market trading ASX value on-market ($billion) 50.3 24.0 Up 22% 529.6 540.5 Down 5% 29.3 vs 1H17 512.2 2H 19.1 413
Slide 5: Highlights – 1H18 revenue
Highlights – 1H18 revenue Solid business performance during period of low market volatility Revenue movement ($million) Revenue $409.0 million, up 5.8% For personal use only 8.5 5.1 (0.7) (0.7) 10.2 Listings and Issuer Services Derivatives and OTC Markets ● Revenue $113.5 million, up 9.8% ● Revenue
Slide 6: Operating expenses
Operating expenses Expense growth influenced by step changes For personal use only Expense movement ($million) Operating expenses increased $6.1 million, up 6.7% up 6.7% up 3.1% 0.6 0.8 Underlying growth up 3.1% 2.8 1.9 • Staff costs up 2.3% ‒ Average headcount in line with 1H17 ‒ Reflects annual re
Slide 7: Continuing strategy
For personal use only Dominic Stevens - CEO Continuing strategy
Slide 8: Diversified business with multiple growth drivers
Diversified business with multiple growth drivers Strong and attractive business model For personal use only Diversification supports revenues across different market cycles • Product and service diversification – Primary market facilitation via listings – Cash market trading, clearing and settlemen
Slide 9: Strong core value proposition
Strong core value proposition Underlying macro drivers plus ASX initiatives supporting growth For personal use only Listings Trade execution Post-trade Deep and diverse liquidity Core customer Initial and ongoing access to capital Capital efficiency Hedging and risk transfer Lower cost of capital Ri
Slide 10: Growing importance as a technology listings venue
Growing importance as a technology listings venue Third largest sector by number of listings For personal use only ASX technology companies1 80 market capitalisation ($billion) Growth in ASX technology companies market capitalisation (Dec-14 to Dec-17) 60 • $26 billion (1.7% of market) to $63 billio
Slide 11: Attracting domestic and offshore trading customers
Attracting domestic and offshore trading customers Technology and marketing strategies paying dividends For personal use only Domestic and offshore proprietary trader volumes (million) Increase in offshore traders underpinned by ASX 40 technology and international marketing presence 35 Volumes up 13
Slide 12: Expansion of technical services ecosystem
Expansion of technical services ecosystem Extending core liquidity access services For personal use only Technical services revenue ($million) ALC 40 Continued growth in customer numbers, up 9.9% Further growth from 35 Revenue up 175% increased • Online reporting to assist customers and operations c
Slide 13: Developing strategy
For personal use only Dominic Stevens - CEO Developing strategy
Slide 14: Growing importance of ASX multi-dimensional technology ecosystem
Growing importance of ASX multi-dimensional technology ecosystem Making business easier for our customers For personal use only Global technology drivers of change Leads to demand for information that is • Computing power/speed • Ultimate source of truth • Real-time • Costs of storage and processing
Slide 15: Technology ecosystem: Hardware and communications
ASX’s multi-dimensional technology ecosystem For personal use only Hardware and communications ALC and ASX Net – the heart of Australia’s financial markets • ALC brought financial community together • Efficiency delivers lower total cost of ownership for technology services • Open ecosystem, with sc
Slide 16: Technology ecosystem: Software and applications
ASX’s multi-dimensional technology ecosystem For personal use only Software and applications Driving customer efficiencies with contemporary technology • New futures trading platform allows for • Low latency, better customer risk management • Better and faster response to customer problems • ASX Col
Slide 17: Technology ecosystem: Data
ASX’s multi-dimensional technology ecosystem For personal use only Data Improved scope and delivery of data • Provision of new high quality data services • Futures and equity orders and trades • Low latency and standard delivery Data • Provision to data on-sellers • New BBSW benchmarks business Curr
Slide 18: Technology ecosystem: Analytics and insights
ASX’s multi-dimensional technology ecosystem For personal use only Analytics and insights Early stages of an exciting opportunity Analytics and insights • Investigating to determine whether AI can provide efficiencies to internal ASX processes • Analytics to sit on top of ‘big data’ platform • Seek
Slide 19: Making business easier for our customers through technology
ASX’s multi-dimensional technology ecosystem Making business easier for our customers through technology For personal use only ASX already has an attractive integrated ecosystem • Ecosystem adding value for customers at each level Analytics and insights • Particularly developed technical services of
Slide 20: Capital expenditure
Capital expenditure Continued investment in core technology and evaluating new opportunities For personal use only Circa $50 million guidance maintained for FY18 Capital expenditure ($million) Core technology • Continued investment to strengthen resilience of platforms CHESS replacement • Consultati
Slide 21: Business performance
For personal use only Peter Hiom – Deputy CEO Business performance
Slide 22: Listings and Issuer Services
Listing and Issuer Services 28% Positive outlook, strong secondary capital raisings For personal use only 1H18 1H17 Var $ Var % Revenue ($million) 113.5 103.3 10.2 9.8% Total capital raised ($billion) and number of IPOs Listings 88.6 80.7 7.9 9.8% 60 100 Issuer Services 24.9 22.6 2.3 10.1% 40 50 Key
Slide 23: Listings and Issuer Services: technology and foreign listings
Listings and Issuer Services Technology and foreign listings, expanding the investment product offering For personal use only ETP market value ($billion) and number of funds Key highlights 40 250 30 200 • Momentum in technology sector 150 20 • 11 listings¹ in 1H18 100 10 50 • 220 entities now listed
Slide 24: Derivatives and OTC Markets
Derivatives and OTC Markets Strong futures activity, continued momentum in key investments 34% For personal use only 1H18 1H17 Var $ Var % Total futures contracts (million) Revenue ($million) 138.1 133.0 5.1 3.8% 80 Futures and OTC 101.6 97.2 4.4 4.5% Equity options 10.9 11.0 (0.1) (0.7%) 70 Up 26%
Slide 25: Derivatives and OTC Markets: global distribution and OTC
Derivatives and OTC Markets Success in global distribution, OTC sales activity and client on-boarding For personal use only 6,000 OTC notional value cleared ($billion) Key highlights Futures 4,000 • Growth in offshore futures trading linked to sales effort OTC clearing 2,000 • Extended clearing hour
Slide 26: Trading Services
Trading Services Further expansion and successes in information and technical services 25% 1H18 1H17 Var $ Var % For personal use only ASX on-market value traded ($billion) and Revenue ($million) 104.5 96.0 8.5 8.8% average trading fee per side per $ value (bps) Cash market trading 22.6 23.3 (0.7) (
Slide 27: Trading Services: distribution and data
Trading Services Focus on distribution, community growth and expanding ASX data For personal use only Key highlights Auctions and Centre Point % of ASX value traded 40% Equity trading 30% • Centre Point value 10.5% of ASX on-market value 20% traded (10.0% pcp) • Auctions value 24.0% of ASX on-market
Slide 28: Equity Post-Trade Services
Equity Post-Trade Services 13% Decline in clearing revenue consistent with decreased cash market activity For personal use only 1H18 1H17 Var $ Var % Total billable value cleared ($billion) Revenue ($million) 52.2 52.9 (0.7) (1.3%) 1,400 Cash market clearing 25.9 26.8 (0.9) (3.4%) 1,200 Cash market
Slide 29: CHESS replacement
CHESS replacement Completion of two-year evaluation led to selection of DLT to replace CHESS For personal use only • Enterprise grade base level software developed by our technology partner Digital Asset • Assessment confirms our confidence in the functional, capacity, security and resilience capabi
Slide 30: Interest and dividend income
Interest and dividend income Higher collateral balances supporting net increase in interest For personal use only $million 1H18 1H17 Var $ Var % ASX Group net interest income 8.7 9.4 (0.7) (7.6%) Interest and dividend income ($million) 50 Net interest on collateral balances 24.4 23.2 1.2 5.2% Total
Slide 31: Summary and outlook
For personal use only Dominic Stevens – CEO Summary and outlook
Slide 32: Summary and outlook
Summary and outlook Continued growth in earnings and core offering, developing new opportunities For personal use only Summary • Strong performance despite subdued equity trading • Revenue up 5.8% led by listings, technical and information services, and futures • EPS and DPS growth consistent with p
Slide 33: Q&A
For personal use only Q&A (Slide to be updated)
Slide 34: Appendices
Appendices For personal use only 1. Income statement 2. Balance sheet 3. Key financial ratios 4. Transaction and activity levels 5. Free cash flow summary 6. Capital attribution 34 |
Slide 35: 1. Income statement
1. Income statement 1H16 2H16 1H17 2H17 1H18 For personal use only $million $million $million $million $million Annual listing fees 36.7 38.5 39.3 40.0 42.6 Initial listing fees 11.7 6.9 9.7 6.3 9.4 Subsequent listing fees 29.0 16.1 26.7 19.8 32.6 Other listing fees 5.0 5.5 5.0 3.5 4.0 Listings 82.4
Slide 36: 1. Income statement (continued)
1. Income statement 1H16 2H16 1H17 2H17 1H18 For personal use only $million $million $million $million $million Staff 50.7 50.4 55.2 55.4 56.5 Occupancy 6.8 7.3 7.3 7.3 8.1 Equipment 13.1 13.9 14.6 13.3 13.8 Administration 9.9 9.4 8.1 10.1 10.4 Variable 3.1 3.1 3.4 3.3 4.0 ASIC supervision levy 1.5
Slide 37: 2. Balance sheet
2. Balance sheet 31 Dec 15 30 Jun 16 31 Dec 16 30 Jun 17 31 Dec 17 For personal use only $million $million $million $ Million $million Assets Cash and available-for-sale financial assets 5,356.3 7,072.8 7,002.2 9,085.6 8,636.2 Intangibles (excluding software) 2,317.6 2,317.6 2,317.6 2,326.6 2,326.5
Slide 38: 3. Key financial ratios
3. Key financial ratios 1H16 2H16 1H17 2H17 1H18 Basic EPS (including significant items) 110.2c 110.2c 113.4c 111.0c 119.1c For personal use only Diluted EPS (including significant items) 110.2c 110.2c 113.4c 111.0c 119.1c Underlying EPS (excluding significant items) 110.2c 110.2c 113.4c 111.0c 119.
Slide 39: 4.1 Listings and Issuer Services
4.1 Listings and Issuer Services 1H16 2H16 1H17 2H17 1H18 For personal use only Total domestic market capitalisation ($bn) – period end $1,629 $1,620 $1,760 $1,777 $1,932 Total number of listed entities (includes all stapled entities) – period end 2,238 2,204 2,215 2,239 2,275 Number of new listings
Slide 40: 4.2 Equity Options
4.2 Equity Options 1H16 2H16 1H17 2H17 1H18 For personal use only Trading days 130 124 129 124 128 Single stock equity options (‘000) 44,050 44,651 45,241 48,054 41,768 Index options (‘000) 6,201 6,567 5,580 4,808 5,932 Total contracts traded (‘000) 50,251 51,218 50,821 52,862 47,700 Average daily o
Slide 41: 4.2 Futures and OTC Markets
4.2 Futures and OTC Markets 1H16 2H16 1H17 2H17 1H18 Trading days For personal use only 130 127 129 127 128 Total contracts traded – futures ('000) ASX SPI 200 5,919 6,186 6,040 6,215 6,253 90 day bank bills 13,728 15,839 14,061 14,870 15,456 3 year bonds 23,708 26,397 25,431 27,802 28,127 10 year b
Slide 42: 4.2 Futures and OTC Markets (continued)
4.2 Futures and OTC Markets (continued) 1H16 2H16 1H17 2H17 1H18 Total contracts traded – options on futures ('000) For personal use only ASX SPI 200 189 174 120 82 77 3 year bonds 137 219 119 33 51 Overnight 3 year bonds 249 330 194 284 158 Intra-day 3 year bonds 329 331 250 210 207 10 year bonds 1
Slide 43: 4.2 Austraclear
4.2 Austraclear 1H16 2H16 1H17 2H17 1H18 For personal use only Settlement days 130 124 129 124 128 Transactions ('000) Cash transfers 300 290 292 290 296 Fixed interest securities 363 354 367 374 383 Discount securities 75 75 74 72 72 Foreign exchange 6 5 4 5 5 Other 2 0 1 0 2 Total transactions 746
Slide 44: 4.3 Trading Services – Cash Market Trading
4.3 Trading Services – Cash Market Trading 1H16 2H16 1H17 2H17 1H18 For personal use only Trading days 130 124 129 124 128 Total cash market trades ('000) 110,091 125,832 130,984 135,449 144,880 Average daily cash market trades 846,853 1,014,772 1,015,381 1,092,332 1,131,875 Continuous trading ($bn)
Slide 45: 4.3 Trading Services – Technical Services
4.3 Trading Services – Technical Services 1111 1H16 2H16 1H17 2H17 1H18 For personal use only Technical Services (number at period end) Liquidity access ASX sessions 1,141 1,113 1,074 1,033 945 ASX gateways 197 192 184 179 162 ASX liquidity cross-connects 59 57 58 60 61 Futures gateways 222 208 199
Slide 46: 4.4 CCP participant collateral balances
4.4 CCP participant collateral balances 1H16 2H16 1H17 2H17 1H18 For personal use only $million $million $million $million $million Balances at period end ASX Clear – initial margins 583.5 815.7 445.5 672.3 441.9 ASX Clear (Futures) – initial margins House1 853.3 1,293.7 1,425.8 2,030.9 2,192.3 ASX
Slide 47: 5. Free cash flow summary
5. Free cash flow summary 1H16 2H16 1H17 2H17 1H18 $million $million $million $million $million For personal use only ASX Group cash Total cash and short-term investments 5,356.3 7,072.8 7,002.2 9,085.6 8,336.2 Less participants’ margins and commitments – cash backed (4,308.5) (6,088.2) (5,987.7) (8
Slide 48: 6. Capital attribution
6. Capital attribution 31 Dec 15 30 Jun 16 31 Dec 16 30 Jun 17 31 Dec 17 For personal use only $million $million $million $ Million $million ASX Group shareholders’ equity 3,787.2 3,824.1 3,874.1 3,908.1 3,925.2 Capital attribution ASX Clear – default fund contributed by ASX (held in ASX Clear) 250.
Slide 49: Disclaimer
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 (15 February For personal use only 2018). It is provided in summary and does not purport to be complete. You should not rely upon i