NZX Limited · NZX:NZX
NZX — Non-Deal Roadshow (2018)
32 slides from NZX's roadshow presentation, 2018
Slide 1: Investor Roadshow 2018
Investor Roadshow 2018 Mark Peterson, CEO Graham Law, CFO
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains forward-looking statements, which often include words such as expects, anticipates, believes, intends, plan, continue or other similar words in discussion of future operating or financial performance. These forward-looking statements are based on
Slide 3: Benefits of Investing in New Zealand
Benefits of Investing in New Zealand • Trusted business environment – 1st of 190 economics for ease of doing business • Sound macro base – low inflation, strong banking sector, flexible exchange rate • Simple tax structure • Priority investment sectors – primary, tourism, infrastructure, manufacturi
Slide 4: Our Refreshed Strategy
Our Refreshed Strategy New Zealand’s Exchange Core Market Growth Opportunities Maximise Options Get Fit ü Equity, Debt & Funds listings ü Dairy Derivatives ü SuperLife ü Efficiencies ü Energy Market ü Debt ü Smartshares ü CAPEX ü Fonterra Shareholders’ Market ü Environmental & Energy ü Wealth Techno
Slide 5: Strategy Resulted in Fundamental Reset of NZX
Strategy Resulted in Fundamental Reset of NZX • Rigorous review of business by board and management, market consultation with more than 200 stakeholders, global analysis of peers • Refreshed leadership team to ensure right skill set, team now in place • Organisational principles aligned to the custo
Slide 6: Full Year 2017 Results Highlights
Full Year 2017 Results Highlights Dairy derivatives 311,675 NPAT Operating earnings** Funds under management $14.8 million $29.0 million $2.7 billion Lots traded 61.6% 31.3%* 25.8 % 57.2% Revenue Expenses 2018 Guidance Dividend 1.1%* 11.6%* $28 – $31 million 6.1 Cents per share * Excluding impact of
Slide 7: Results Overview
Results Overview Result underpinned by significant permanent cost savings, establishment of clear and strategic delivery plan 2017 2016 Changes 2016 result included Agri $000 $000 2017 v 2016 businesses which were disposed in late 2016. On a like-for-like basis: Operating revenue $75,325 $77,544 (2.
Slide 8: 2017 Revenue Overview
2017 Revenue Overview NZX has a diversified revenue base Agri Data (Non-Dairy) 4% Publishing Revenue 7% Annual Listing Fees 14% Wealth Technologies 2% Initial Listing Fees 1% Secondary and Issuer Services 4% Smartshares 7% Agri Other Issuer Services 1% 11% Issuer Funds Relationships Services 33% 19%
Slide 9: Operating Earnings of $29.0 Million
Operating Earnings of $29.0 Million $30,000,000 $25,000,000 $20,000,000 Highlights include: • Funds Management (Exchange Traded Funds $15,000,000 and KiwiSaver) business; • Dairy Derivatives market; and $10,000,000 • Cost control $5,000,000 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 10: Operating Earnings Waterfall
FY 20 $000 16 O pe r at 19,000 21,000 23,000 25,000 27,000 29,000 31,000 in g Ea rn An in nu gs IP al O Li sa st in nd g Se Fe co es nd ar y Li st Re in gu gs la EA to (D ry ev Se e r vi lo ce pm s en Issuer Relationships t) Re Pa ve r nu tic e ip an t Se Tr a di rv ic ng e s an d Cl ea rin D D g at
Slide 11: Operating Earnings – Divisional Results (from EBITDA)
Operating Earnings – Divisional Results (from EBITDA) Core Markets: Core Funds Year ended 31 December 2017 Markets Agri Services Corporate Total • Issuer Relationships operating earnings $17.7 $000 $000 $000 $000 $000 million (2016: $19.8 million) reduced due to lower initial listing and secondary i
Slide 12: Executing the Strategy
Executing the Strategy Reshaping our business Advancing the market structure Global exchange partnerships • Full strategy reset – focus back on • New Zealand market structure and • Step change for NZX core markets business, divestment rule set must promote integrity • Shift focus away from regional
Slide 13: Executing the Strategy for Growth
Executing the Strategy for Growth Rebuilding a strong foundation in the Core Market Relationship managers appointed, more than 170 customers meetings Customer engagement completed, 100% issuer contact on target for end of Q1 2018 Framework Issuer Relationships More than 70 listing review rules submi
Slide 14: Executing the Strategy for Growth
Executing the Strategy for Growth Growing opportunities and maximising options that will continue to drive growth New calendar spread functionality March 2018, extended Growth Spotlight on Dairy Expand global access trading hours July 2018, options enhancements on track for second half of 2018 oppor
Slide 15: Global exchange partnerships
Global exchange partnerships Breaking away from the regional exchange model • Create scale via global exchanges alliance model • Major step change for NZX, shift focus away from regional stock exchange model to create partnerships with global exchanges who are committed to promoting confidence and c
Slide 16: Core Market
Core Market 16
Slide 17: Core Markets – Revenue Overview
Core CoreMarkets Markets––Revenue Revenue Overview Overview Change Change Core Markets Core revenue Markets revenue 2017 2017 2016 2016 FY17 FY17 v $000 $000 $000 $000 FY16 Issuer Issuer Relationships Relationships revenue revenue 24,257 24,257 26,770 26,770 (9.4%) (9.4%) Secondary Secondary Markets
Slide 18: Issuer Relationships
Issuer Relationships Create a compelling and attractive proposition for our issuing customers Issuer Fees 2017 2016 Change Revenue $000 $000 FY17 v FY16 $16,000 Issuer Relationships $14,000 Annual listing fees 10,280 9,226 11.4% $12,000 Initial listing fees 931 2,330 (60.0%) Secondary issuance fees
Slide 19: Secondary Markets
Secondary Markets Value and Volume Traded Revenue 2,500,000 $50.00 2017 2016 Change Revenue $000 $000 FY17 v FY16 Number of Trades on SX, AX, DX, NXT $45.00 Secondary Markets 2,000,000 $40.00 Participant services revenue 3,768 3,592 4.9% Value Traded ($billion) $35.00 Securities trading revenue 5,81
Slide 20: Data & Insights
Data & Insights Grow existing data revenues, turn data into insights that drive decisions and sales Percentage of Revenue Revenue 3% 4% 6% 6% 2017 2016 Change Revenue $000 $000 FY17 v FY16 Data & Insights 32% 32% 31% Royalties from terminal 6,367 6,965 (8.6%) 38% Subscriptions and licenses 4,099 3,2
Slide 21: Grow opportunities aligned to New Zealand
Grow opportunities aligned to New Zealand 21
Slide 22: Dairy Derivatives
Dairy Derivatives Accelerate our dairy derivatives market to scale, support New Zealand’s position as a global leader NZX Dairy Derivatives Yearly Volumes Traded and Revenue 350,000 $1,200 • Record volume traded up 57.2% on 2016, directly translated into revenue growth of 60.5% to $1.13 million 300,
Slide 23: Rapid growth towards significant end game
Rapid growth towards significant end game 5x the world’s Hypothetical growth scenario: physical trade growth in the next five years 5x continues at 50% rate which is a New Zealand mid-point between Bursa Malaysia and European physical trade and Euronext peak five year 5x New Zealand growth CAGR ~43
Slide 24: Maximising options
Maximising options 24
Slide 25: Funds Management & NZX WT – Revenue Overview
Funds Management & NZX WT – Revenue Overview 2017 2016 Change • Funds Management operating Revenue $000 $000 FY17 v FY16 earnings $4.4 million (2016: $1.1 Funds Management million) reflects growth in FUM and SuperLife revenue 7,846 7,038 11.5% completion of FMCA compliance Smartshares revenue 5,602
Slide 26: Funds Management
Funds Management Funds under management growth 3,000 2,500 • Strong growth in funds management continued on back of increased retail and adviser investment 2,000 • SuperLife member numbers up 4.8% • Smartshares unitholders (the number 1,500 of investors in each ETF) up 37.6% • Smartshares ETF direct
Slide 27: Balance Sheet
Balance Sheet • Cash includes $20 million Clearing 2017 2016 Change $000 $000 FY17 v FY16 House risk capital which is not Current assets available for general use Cash and cash equivalents 34,881 30,804 13.2% • Additionally the Clearing House Receivables and prepayments 10,940 15,923 (31.3%) complie
Slide 28: Capital Structure
Capital Structure • Board completed capital structure review • Consultation on a mutualised default fund underway to advance Clearing House’s risk model to meet global standards. This is important to ensure we have an appropriate Clearing House risk structure to meet anticipated dairy derivatives ma
Slide 29: Dividend
Dividend Dividend • Final fully imputed dividend of 3.1 cents per share for the 2017 financial year (2016: 3.0 cents per share). Total fully imputed dividends for the 2017 financial year are 6.1 cents per share (2016: 6.0 cents per share) Reinvestment plan • Board to implement reinvestment plan for
Slide 30: 2018 Earnings Guidance
2018 Earnings Guidance • Refreshed strategy marked fundamental reset of NZX – completion of final reset initiatives in 2018 will set business up to deliver long term returns • Divestment of non core assets in 2018 (including rural newspaper Farmers Weekly) and changes to the clearing and trading pri
Slide 31: Summary
Summary 2017 operating earnings of $29.0 million, up 31.3% Result underpinned by performance of Funds Management and Dairy Derivatives businesses, disciplined cost control and efficiency improvements Refreshed strategy marked fundamental reset of NZX – completion of final reset initiatives in 2018 w
Slide 32: Contacts
Contacts Mark Peterson Chief Executive Officer mark.peterson@nzx.com +64 21 390 636 Graham Law Chief Financial Officer graham.law@nzx.com +64 21 276 7359