Deutsche Boerse Ag · XETR:DB1
Deutsche Boerse — Deutsche Börse Group — Investor Day (November 2020)
43 slides from Deutsche Boerse's investor day presentation, Nov 18, 2020
Slide 1: Investor Day 2020
Investor Day 2020 Compass 2023: “Growth in uncertain times” Frankfurt, November 18, 2020 Deutsche Boerse Group | November 18, 2020 |
Slide 2: Agenda
Agenda Roadmap 2020: What have we achieved? Compass 2023: What’s the way forward? Key initiatives: How do we want to grow? Financials: How do the numbers square up? Deutsche Boerse Group | November 18, 2020 | 1
Slide 3: We successfully achieved our Roadmap 2020 targets
We successfully achieved our Roadmap 2020 targets Financial scorecard 2017-20E ~9% ~12% CAGR CAGR Net revenue Net profit adj. Roadmap 2020 target achievement Strategic scorecard Delivery on secular growth target of >5% p.a. Multiple M&A deals in focus areas closed Investments in new technology like
Slide 4: Agenda
Agenda Roadmap 2020: What have we achieved? Compass 2023: What’s the way forward? Key initiatives: How do we want to grow? Financials: How do the numbers square up? Deutsche Boerse Group | November 18, 2020 | 3
Slide 5: Ten convictions form the basis for Compass 2023
Ten convictions form the basis for Compass 2023 Maintain and even accelerate our overall Costs are steered according to secular growth 1 growth ambition; Compass 2023 formula: 10% growth p.a. overall (DB1 = growth stock) 6 (cyclicality must not affect growth initiatives) EBITDA margins expected to r
Slide 6: Our key growth drivers are favorable capital markets trends
Our key growth drivers are favorable capital markets trends Major trends Our credentials ▪ Growing importance of futurization OTC to Eurex, EEX and 360T very well ▪ Standardization of OTC derivatives positioned to win market share on-exchange opportunity for central clearing ▪ Brexit creates momentu
Slide 7: Our secular growth ambition is based on a broad set of initiatives
Our secular growth ambition is based on a broad set of initiatives Pre- Combining index and analytics to increase buy-side penetration and trading become a leader in the field of investment intelligence Introduction of new derivatives products and building the leading OTC clearinghouse in the Eurozo
Slide 8: We will continue to pursue our successful M&A agenda
We will continue to pursue our successful M&A agenda Strategic guidelines Strong fit to strategic growth areas Pre- Index and analytics trading ESG Value creation for shareholders Successful integration and synergy potential Commodities Public M&A only with high closing certainty Trading & Foreign-e
Slide 9: Acquisition of ISS with powerful strategic rationale
Acquisition of Institutional Shareholder Services Inc. (ISS) with powerful strategic rationale Very attractive business profile ▪ >5% organic revenue growth and good profitability, which fits well with our Compass 2023 targets ▪ Adds substantial recurring revenue ▪ Continued consolidation opportunit
Slide 10: ISS significantly expands our ESG capabilities
ISS is significantly expanding our ESG capabilities and complements very well with existing businesses Importance of Global top player in ESG Qontigo with world-class ESG research, ratings, data, + indices and best-of-breed continues to rise analytics and advisory portfolio-construction and services
Slide 11: With Compass 2023 we target continued secular growth and increased M&A contribution
With Compass 2023 we target continued secular growth and an increased M&A contribution Compass 2023 Net revenue (€bn) EBITDA reported (€bn) ~10% Continued CAGR secular growth ~4.3 ~10% 2.9 CAGR cyclical + ~0% growth 1.7 M&A Increased +5% growth M&A contribution secular +5% growth 2019 2023E 2019 202
Slide 12: Agenda
Agenda Roadmap 2020: What have we achieved? Compass 2023: What’s the way forward? Key initiatives: How do we want to grow? Financials: How do the numbers square up? Deutsche Boerse Group | November 18, 2020 | 11
Slide 13: ISS – An innovative global leader in data and research
ISS – An innovative global leader in data and research centered around governance and ESG The global leader in corporate governance for more than three decades with rapidly growing position in broader ESG and distribution services >2,000 employees ISS empowers investors and companies to build for lo
Slide 14: ISS – Well established global business with excellent growth track record
ISS – Well established global business with excellent organic and inorganic growth track record Net revenue growth Incl. acquisitions, US$m +15% CAGR >280 I N T E G R AT E D ESG SOLUTIONS & 2014 2015 2016 2017 2018 2019 2020E DISTRIBUTION Oct 2014 Aug 2016 Jun 2017 Mar 2018 Mar 2019 Oct 2020 Executi
Slide 15: ISS – ESG permeates all five businesses
ISS – ESG permeates all five businesses serving investors and corporations Global leader in Innovative and high- Solutions to help Provides critical Market-leading digital providing objective quality ESG research, companies design and research, data, media brands – governance research ratings, index
Slide 16: ISS – Strong and unique opportunities for future growth and synergies
ISS – Strong and unique opportunities for future growth and synergies with Deutsche Börse ESG data spending continues to grow ISS and Deutsche Börse are uniquely rapidly positioned across key ESG segments Global spending, US$m1 ESG indices ESG content Governance Research 1,000 and Voting 800 Corpora
Slide 17: ISS – Partnership to strengthen Deutsche Börse's pre-trade business
ISS – Partnership to strengthen Deutsche Börse’s pre-trade business and to provide runway for ISS to grow ISS’ business will transform Deutsche Börse into a global ESG Future ESG leader; ISS with Deutsche Börse’s significant financial resources will growth accelerate ISS’ product/M&A roadmap ISS‘ st
Slide 18: Qontigo – Building state-of-the-art investment products of the future
Qontigo – Building state-of-the-art investment products of the future Key secular growth drivers Revenue growth ▪ Investment intelligence market will grow by 5-10% p.a. with high growth pockets of >15% ▪ Active-to-passive migration will continue – Qontigo serves >15% both and can leverage scale in i
Slide 19: Qontigo – COVID has accelerated secular growth trends
Qontigo – COVID has even accelerated secular growth trends and strengthened our growth convictions Key drivers Initial objectives COVID acceleration Unite Axioma’s sophisticated analytics Higher requirements for Increasing and technology with STOXX’ indexing sophisticated models post COVID; complexi
Slide 20: Qontigo – Priorities for driving double-digit revenue growth
Qontigo – Priorities for driving double-digit revenue growth Key drivers of distribution and product strategy ▪ Implement segment-specific distribution strategies to optimize cross- New selling partnerships – Wealth channel significantly accelerating – Opportunity to grow asset-based fees tied to ET
Slide 21: Trading & Clearing – Well positioned to deliver scalability and growth
Trading & Clearing – Well positioned to deliver scalability and growth Industry trends Synergetic assets Ambition level Investment themes Trusted markets, global ▪ Active to passive benchmarks and brands ▪ The global venue for ▪ Single to global multi asset benchmark indices ▪ Towards sustainability
Slide 22: Eurex – Trading and clearing of financial derivatives
Eurex – Trading and clearing of financial derivatives Key secular growth drivers Net revenue growth Equity index business – Product innovation ▪ Leading global position with STOXX index family; unique innovation pipeline to capture growth trends in index, futurization, ESG and ETF derivatives 7-10%
Slide 23: Eurex Equity Index – Product innovations lever global lead
Eurex Equity Index – Product innovations lever global lead and drive structural growth ambitions Global index derivatives and futurization: ESG and ETF derivatives: global leader today; scale and expansion next leading entry today; liquidity build-up next Achievements so far Next Achievements so far
Slide 24: Eurex Fixed Income – Successful partnership program drives OTC growth
Eurex Fixed Income – Successful partnership program drives OTC volume growth and market share expansion Achievements since launch in 2018 Next ▪ Same spreads quoted by vast majority of Competitive from 2 to 0 BP dealers for Eurex vs LCH and negligible basis ▪ Further build out USP of integrated risk
Slide 25: EEX – Trading and clearing of commodity spot and derivatives markets
EEX – Trading and clearing of commodity spot and derivatives markets Key secular growth drivers Net revenue growth ▪ Further market share wins in European power and natural 7-10% gas markets vs. the uncleared OTC market Net revenue ▪ Leverage the unique physical-delivery capability of our growth cle
Slide 26: EEX – Leverage potential of the global commodity exchange group
EEX – Leverage potential of the global commodity exchange group, local expertise in global commodity markets Key industry trends Key activities ▪ Long-term trend towards electronic trading ▪ Expand leadership and market share in and more cleared transactions continues European power adding local pro
Slide 27: 360T – Foreign exchange markets
360T – Foreign exchange markets Key secular growth drivers Net revenue growth ▪ FX market: global, large and growing ▪ Shift to electronic execution and multi-dealer platforms; reputation, regulatory status key >10% ▪ Changing market structure: rise of non-bank liquidity Net revenue providers, large
Slide 28: 360T – Driving a holistic FX product and trading suite
360T – Driving a holistic and complete FX product and trading suite on a global scale Key industry trend Key activities Shift to electronic execution and multi-dealer … 360T’s aspiration to continuously platforms across clients, products, regions and scale its business based on these drivers solutio
Slide 29: 360X – New platform for serial marketplace creation
360X – New platform for serial marketplace creation and operations in non-adjacent asset classes 360X structure and focus Deutsche Börse AG ▪ 360X as entrepreneurial platform, based in Frankfurt and led by Carlo Kölzer Partnerships 360X with industry ▪ Vehicle for serial creation and players operati
Slide 30: IFS – Leading provider of investment fund distribution services
IFS – Leading provider of investment fund distribution services Key secular growth drivers Revenue growth ▪ Positioning in sweet spot of global fund sector growth, third party distribution acceleration and outsourcing pressures ▪ Build out #1 position as leading European fund processing service prov
Slide 31: IFS – Well positioned in sweet spot of long-term growth trends
IFS – Well positioned in sweet spot of long-term growth trends Key industry trend IFS with strong position to grow ▪ Order processing capabilities for >190k funds Attractive underlying investment fund market across 43 jurisdictions with assets of $55tr globally and strong historic growth of >10% p.a
Slide 32: IFS – Ambition to further grow footprint, four pillars
IFS – Ambition to further grow IFS footprint along the value chain – strategic roadmap focused around 4 pillars Expand in alternative Optimize core Expand front-office fund shares issuance Vestima services distribution support (via Fund Centre) ▪ Expand the value chain and ▪ Consolidate foundations
Slide 33: Agenda
Agenda Roadmap 2020: What have we achieved? Compass 2023: What’s the way forward? Key initiatives: How do we want to grow? Financials: How do the numbers square up? Deutsche Boerse Group | November 18, 2020 | 32
Slide 34: We fully reached our Roadmap 2020 financial targets
We fully reached our Roadmap 2020 financial targets Net revenue 2017-20E (€m) Net profit (adj.) 2017-20E (€m) ~9% CAGR ~12% ~3.2bn CAGR ~1.20bn 2,462 857 Target Target cyclical 10-15% 2% growth positive CAGR M&A no explicit 1-2% growth guidance secular 5-6% growth >5% 2017 2020E 2017 2020E Deutsche
Slide 35: Compass 2023 KPIs will be based on reported income statement
Compass 2023 KPIs will be based on reported income statement Income statement reconciliation 2019 (€m) Adjusted Exceptionals Reported Going forward, income statement will be published on Net revenue 2,936 2,936 reported basis only Operating costs −1,130 −135 −1,264 Base year for key Compass 2023 KPI
Slide 36: Our growth ambition is based on multitude of strategic initiatives
Our growth ambition is based on multitude of strategic initiatives Mid-term net revenue growth opportunities (€m) ~0.6bn ~4.3bn ~0.2bn ~0.1bn ~0 ~0.4bn 2,936 secular cyclical CAGR 5% CAGR 0% M&A 5% CAGR 2019 Trading & Post-trading Pre-trading 2023E Clearing New ETD1 ~110 IFS ~100 Indices ~60 NII ~−1
Slide 37: Midterm secular net revenue growth opportunities fully intact
Midterm secular net revenue growth opportunities fully intact Net revenue Growth Segment 2019 (€m) CAGR 2023E t/o secular t/o M&A Quantitative Eurex 1,009 7-10% >5% ~1% Brokers EEX 289 7-10% >5% ̶ Trading & Clearing 360T 92 >10% ~10% ̶ Xetra 329 0-3% 0% ̶ Clearstream 843 0-3% 3-5% ̶ Post- trading Au
Slide 38: We will continue to pursue our successful M&A agenda
We will continue to pursue our successful M&A agenda Financial guidelines Pre- Index and analytics trading ESG Cash earnings accretive in year 1, latest in year 3 Commodities ROI in year 3 should be higher than WACC (~6%) Trading & Foreign-exchange across M&A portfolio Clearing Fixed income Margin d
Slide 39: ISS is an attractive growth business fitting Compass 2023 targets
ISS is an attractive growth business, which fits well with our Compass 2023 financial targets Acquisition of a growing business … … in a strategic partnership format Net revenue 2020E ISS management, Deutsche Börse >US$280m (pro forma IFRS) Genstar Capital 80% 20% Organic net revenue >5% CAGR growth
Slide 40: We refined our financial steering logic
We refined our financial steering logic to support our growth ambition Sustainable ▪ Funding of growth initiatives linked to sustainable secular net growth revenue growth ▪ In order to support our secular revenue growth ambition, we Overall cost expect the operating costs to increase development ▪ R
Slide 41: Long standing capital management policy is confirmed
Long standing capital management policy is confirmed ▪ AA rating mainly because of post-trading business Rating ▪ Net debt / EBITDA below 1.75x ▪ FFO / net debt above 50% ▪ Payout between 40% to 60% of net profit (reported) Dividend policy ▪ With increased earnings, payout ratio expected to decrease
Slide 42: Summary financial targets Compass 2023
Summary financial targets Compass 2023 CAGR 2019-23E Net revenue ~ 10% EBITDA (reported) ~ 10% EPS (reported) ~ 10% Note: all figures including ISS Deutsche Boerse Group | November 18, 2020 | 41
Slide 43: Disclaimer
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 statements are subject to known and unknown risks