NZX Limited · NZX:NZX
NZX — FY2020 Earnings Presentation
45 slides from NZX's earnings presentation, Feb 17, 2021
Slide 1: NZX Full Year 2020 Results Investor Presentation
NZX FULL YEAR 2020 RESULTS INVESTOR PRESENTATION 17 February 2021 1
Slide 2: Today's Agenda
Today’s Agenda Important notice This full year investor presentation should be read in 2020 Highlights 3 conjunction with the financial statements in the 2020 Annual Report, which provides additional information on many areas NZX’s Strategy 5 covered in this presentation. Business Unit Highlights 12
Slide 3: 2020 Highlights
2020 Highlights 3
Slide 4: 2020 results at a glance
2020 results at a glance Operating Earnings* Net Profit After Tax Dividends $34.4 $17.6 (interim and final) fully imputed million million 6.1 cents per share Final dividend 3.1 cps 9.7% 20.1% Interim dividend 3.0 cps Capital raised Data & Insights Total Value Traded Dairy Derivatives Funds Under Fun
Slide 5: NZX's Strategy
NZX’s Strategy 5
Slide 6: NZX 2.0: The heart of our strategy
NZX 2.0: The heart of our strategy Grow Markets – The previously named ‘Refocus Core’ and ‘Grow Opportunities’ are consolidated under ‘Grow Markets’ with particular focus on driving listings, leveraging the New Zealand advantage New Zealand’s Exchange “Helping to Build New Zealand’s Tomorrow” Empowe
Slide 7: NZX is building an integrated business to support the growth of NZ capital markets
NZX is building an integrated business to support the growth of NZ capital markets 6. Delivers. 1. Product. Will fuel growth to New Zealand’s capital markets and Listed equity, fixed income and fund securities the wider economy. 5. Infrastructure for Financial Advisors. 2. Liquidity. And the platfor
Slide 8: We are doing what we said we would… delivering a growth business
We are doing what we said we would…. delivering a growth business NEW ZEALAND’S EXCHANGE Delivered Results and 2018 Removed Blockages 2019 2020 Growing Our Market Proof Points • Sold the non core businesses • Capital raised – $18.7b (up 95.7% on 2018) • Growth in: • issuance – all listing pathways u
Slide 9: The environment in which we operate supports growth and the NZX strategic direction
The environment in which we operate supports growth and the NZX strategic direction Shifting dynamics support growth in NZX issuance The current economic environment has highlighted the value of the public markets, access to capital is in high demand to shore up balance sheets and for growth – publi
Slide 10: Clear business priorities for 2021 support growth across the board
Clear business priorities for 2021 support growth across the board We will focus on growing markets, with the We will focus on all markets but in the near term the primary near term primary focus being on gaining new focus in this highly competitive environment will be Driving New Listings and Parti
Slide 11: Empowering our performance requires the right building blocks
Empowering our performance requires the right building blocks Operational Excellence 01 We aspire to excellence in delivery through strong technology and operational performance and governance, automation of tasks, continuous improvement, measurement and transparency Capability and Delivery 02 Devel
Slide 12: Business Unit Highlights
Business Unit Highlights "New Zealand's Exchange Te Paehoko O Aotearoa
Slide 13: Capital Raised and Value Traded / Cleared are strong
Capital Raised and Value Traded / Cleared are strong Issuer Relationships – Capital Raised Secondary Markets – Value Traded / Cleared Capital Raised ($'billion) Value Traded / Cleared ($'billion) 25 60 20 50 40 15 30 10 20 5 10 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2008 200
Slide 14: Data & Insights revenue improving and SGX dairy partnership a global opportunity
Data & Insights revenue improving better than expected and the SGX dairy partnership is a global opportunity Data & Insights – Revenue Growth Dairy Derivatives Dairy Derivative Lots (#) 1,600,000 Update graph 1,400,000 for actual H2- 1,200,000 1,000,000 20 Revenue. 800,000 Including 600,000 400,000
Slide 15: Financial Services Businesses continue to drive growth
Financial Services Businesses continue to drive growth Smartshares – Funds Under Management (FUM) Wealth Technologies – Funds Under Admin (FUA) Funds Under Management ($'million) Funds Under Administration (FUA $'b) 6,000 50 45 5,000 40 35 4,000 30 3,000 25 20 2,000 15 1,000 10 5 0 Dec-14 Dec-15 Dec
Slide 16: Regulation
Regulation Finalised structural changes to strengthen our regulatory operating and governance model, which now aligns to global best practice NZX Regulation Limited (NZ RegCo) • Structurally separate from NZX's commercial and operational activities • Governed by a separate board with: • an independe
Slide 17: People
People Our people showed enormous commitment, resilience and flexibility to deliver against strategic priorities – and find new ways to support customers and investors through the challenges of 2020. Our organisation has emerged stronger, more experienced, and ready to deliver further growth in 2021
Slide 18: Financial Performance
Financial Performance New Zealand's Exchange Te Paehoko O Aotearoa
Slide 19: Income Statement
Income Statement 2020 2019 Change $000 $000 Fav/(unfav) Operating revenue 78,426 69,548 12.8% Operating expenses (44,030) (38,184) (15.3%) Operating earnings* 34,396 31,364 9.7% Net finance expense (2,037) (2,153) 5.4% Loss on disposal of business and property, plant and equipment - (83) N/A Depreci
Slide 20: Operating Earnings Waterfall
Operating Earnings Waterfall NZX Full Year 2020 Results 20
Slide 21: Operating Earnings
Operating Earnings 2020 2019 Change $000 $000 Fav/(unfav) Revenue Issuer Relationships 15,192 14,887 2.0% Secondary Markets 27,343 21,870 25.0% Data & Insights 16,146 14,934 8.1% Funds Management 13,669 12,881 6.1% Wealth Technologies 2,425 1,693 43.2% Regulation 3,446 2,808 22.7% Corporate 205 475
Slide 22: Operating Revenue
Operating Revenue Issuer Relationships: Data & Insights: Funds Management: Annual listing fees (ALF) were positively impacted by Royalties from terminals revenue increase relates to FUM based revenue has increased 19.1% driven by: the growth in number and value of debt instruments, higher retail ter
Slide 23: Operating Expenses
Operating Expenses Personnel costs Capitalisation of internal development resources (2020: Professional Fees Personnel costs are driven by the average FTEs in the $5.93 million; 2019: $4.28 million) primarily relates to Professional fees include those relating to: period and the capitalisation of in
Slide 24: Non-operating Income and Expenses
Non-operating Income and Expenses 2020 2019 Change Net finance costs include: $000 $000 Fav/(unfav) • interest income on operational cash balances, Clearing House risk capital Interest income 839 1,033 (18.8%) and regulatory working capital; which have been impacted by decreased Interest on lease li
Slide 25: Financial Position and Cash Flows
Financial Position and Cash Flows 25
Slide 26: Balance Sheet
Balance Sheet 2020 2019 Change $000 $000 Fav/(unfav) Cash and cash equivalents includes: Current assets • Clearing House risk capital ($20 million) which is not available for general use; Cash and cash equivalents 52,775 47,740 10.5% Receivables and prepayments 10,840 9,006 20.4% • Clearing House al
Slide 27: CAPEX
CAPEX Core Markets Capex driven by specific system life cycles which result in large multi-year projects, plus the normal life cycle replacements for IT equipment and software Main projects in 2020 include: • Trading System upgrade – was deferred as result of COVID-19 and implementation now expected
Slide 28: Cash Flows
Cash Flows 2020 2019 Change Operating activities $000 $000 Fav/ (unfav) • Cash flow from operating activities includes net interest and income tax paid Operating activities 31,234 24,790 26.0% Investing activities (9,970) (8,300) (20.1%) • The increase reflects a higher Net Profit After Tax and work
Slide 29: Final Dividend and 2021 Earnings Guidance
Final Dividend and 2021 Earnings Guidance 29
Slide 30: Final Dividend and 2021 Earnings Guidance
Final Dividend 2021 Earnings Guidance Final Dividend 2021 Earnings Guidance • The Board has declared a fully imputed final dividend of 3.1 cents per share NZX expects full year 2021 Operating Earnings to be in the range of $31.5 million • Dividend to be paid on 26 March 2021 to shareholders register
Slide 31: 2021 what Success looks like
2021 what Success looks like Progress towards 2021 deliverables can be monitored within the monthly shareholder metrics External dependencies 2021 deliverables Five-year aspirational target range (2023) ** LOW HIGH NZX Group Total shareholder return (%) * Dependent on external factors outlined TSR a
Slide 32: Questions?
Questions? New Zealand's Exchange Te Paehoko O Aotearoa
Slide 33: Appendix
Appendix New Zealand's Exchange Te Paehoko O Aotearoa
Slide 34: Appendix 1: Segmental Analysis
Appendix 1: Segmental Analysis Operating Earnings By Business Unit 2020 Issuer Relationships Secondary Markets Data & Insights Markets Funds Management Wealth Corporate Services NZX Commercial Regulation NZX Group $000 Sub-total Technologies Operations Total Sub-total Operating revenue 15,192 27,343
Slide 35: Appendix 1: Markets – Issuer Relationships
Appendix 1: Markets – Issuer Relationships Tasked with creating a compelling and attractive proposition for our current and prospective equity, fund and debt customers Change Strategic metrics 2020 2019 Highlights Fav/(unfav) Equity market capitalisation $185.495 billion $161.497 billion 14.8% • Tot
Slide 36: Appendix 1: Markets – Secondary Markets
Appendix 1: Markets – Secondary Markets Tasked with driving secondary market development across all markets and managing participant relationships, and delivering on our contracted service provider offerings Change Highlights Strategic metrics 2020 2019 Fav/(unfav) • Significant engagement with Part
Slide 37: Appendix 1: Markets – Data & Insights
Appendix 1: Markets – Data & Insights Tasked with growing existing data revenues and turning raw data into insights that supports growth in all markets Change Highlights Strategic metrics 2020 2019 Fav/(unfav) • Recurring revenue increased 8.1%: Terminal numbers (3 month average) 8,720 7,444 17.1% •
Slide 38: Appendix 1: Markets
Appendix 1: Markets An integrated business that supports the growth of NZ capital markets 2020 2019 Change Operating expenses (continued) Operating Earnings $000 $000 Fav/(unfav) • Personnel costs have increased by more than wage inflation due to 2020 having higher average Operating revenue FTEs, ar
Slide 39: Appendix 1: Smartshares
Appendix 1: Smartshares This business comprises the SuperLife superannuation and KiwiSaver products and Smartshares Exchange Traded Funds Change Highlights Strategic metrics 2020 2019 Fav/(unfav) • Continued growth in member numbers / unitholders, positive cash flows (2020: $803m) and Funds Net cash
Slide 40: Appendix 1: Wealth Technologies
Appendix 1: Wealth Technologies This business is a platform that enables advisers and brokers to manage client investments Change Highlights Strategic metrics 2020 2019 Fav/(unfav) • Successfully migrated three new clients in 2020 increasing FUA to $7.2 billion Funds Under Administration (FUA) 7.197
Slide 41: Appendix 1: Corporate Services
Appendix 1: Corporate Services This function provides Accommodation, finance, HR, legal, IT and communications and marketing support to the business 2020 2019 Change Highlights Operating Earnings $000 $000 Fav/(unfav) • Currently implementing the recommendations laid out by the Capital Markets 2029
Slide 42: Appendix 1: Regulation (NZ RegCo)
Appendix 1: Regulation (NZ RegCo) Tasked with performing all of NZX’s frontline regulatory functions, resulting in the structural separation of the Group's commercial and regulatory roles Highlights 2020 2019 Change Operating Earnings • Finalised structural changes to strengthen NZX’s regulatory ope
Slide 43: Appendix 2: Operating Revenue Definitions
Appendix 2: Operating Revenue Definitions Issuer Relationships Secondary Markets Funds Management Annual listing fees paid by NZX’s equity, fund and debt issuers is driven Participant services revenue is charged to market participants Funds under management based revenue relates to variable Funds by
Slide 44: Contact
Contact Mark Peterson Graham Law Chief Executive Officer Chief Financial Officer mark.peterson@nzx.com graham.law@nzx.com +64 21 390 636 +64 29 494 2223 44
Slide 45: Thank you
Thank you The information provided is a guide only and intended for general information purposes. It does not constitute investment advice. Any representation or statement expressed in this information is made in good faith on the basis that NZX Limited (NZX) or any of its related companies is not a