ASX Limited Half-Year 2013 Results Presentation 21 February 2013 - PowerPoint PPT Presentation

ASX Limited – Half-Year 2013 Results Presentation 21 February 2013

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 (21 February 2013). It is provided in summary and does not purport to be complete. You should not rely upon it as advice for investment purposes as it does not take into account your investment objectives, financial position or needs. These factors should be considered, with or without professional advice, when deciding if an investment is appropriate. To the extent permitted by law, no responsibility for any loss arising in any way (including by way of negligence) from anyone acting or refraining from acting as a result of this material is accepted by the ASX Group including any of its related bodies corporate. 2

1H13 Highlights Statutory Statutory Underlying Revenue Expenses Dividend Net Profit EPS Net Profit $304.8m $71.3m 87.9c $171.1m 97.7c $171.1m (3.3%) (1.3%) (5.3%) (2.5%) (2.5%) (5.3%) • Underlying net profit $171.1m, down 5.3% ‒ Dividend 87.9 cents per share; 90% payout ratio • Revenue performance ‒ Decline driven by equity market activity falling to cyclical low of $3.8bn per day, down 24.5% ‒ First quarter down 8.8% compared to strong quarter previous year; second quarter up 2.8% driven by Listings, Derivatives and Technical Services • Expenses well controlled • Regulatory environment in cash equities business stabilising ‒ Controls around equities trading – dark pools, HFT ‒ Clearing market structure retained, Code of Practice under development • Capital expenditure $15.4m ‒ Increasing focus on post-trade services – OTC clearing, collateral management ‒ Strong balance sheet position maintained All comparisons are to prior comparative period (pcp) 3

Income Statement 1H13 1H12 2H12 % Variance % Variance $ Million $ Million $ Million Operating Revenue 304.8 315.1 (3.3%) 295.3 3.2% Cash Operating Expenses 71.3 70.4 (1.3%) 70.7 (0.9%) EBITDA 233.5 244.7 (4.6%) 224.6 3.9% Depreciation and Amortisation 15.4 12.9 (19.5%) 14.7 (3.8%) EBIT 218.1 231.8 (5.9%) 209.9 3.9% Interest and Dividend 25.2 25.2 - 24.6 2.6% Profit Before Tax 243.3 257.0 (5.3%) 234.5 3.8% Income Tax Expense (72.2) (76.3) 5.4% (69.0) (4.7%) Underlying Net Profit 171.1 180.7 (5.3%) 165.5 3.4% Significant Items After Tax 0.0 (5.1) 100.0% (1.9) 100.0% Statutory Net Profit 171.1 175.6 (2.5%) 163.6 4.6% EBITDA Margin 76.6% 77.7% 76.1% Variances expressed favourable/(unfavourable) 4

Revenue Movement ($M) 5.0 (12.0) 315.1 (4.0) 2.0 (2.2) 1.3 (0.4) 304.8 1H12 Listings and Cash Market Information Technical Derivatives Austraclear Other 1H13 Issuer Services Services Services Services % Change 7.3% (18.0%) (11.7%) 8.8% (2.3%) 7.5% (3.5%) (3.3%) Underlying revenue categories as per ASX’s segment disclosure 5

Revenue Performance by Quarter 1Q13 % Variance 2Q13 % Variance $ Million to PCP $ Million to PCP Listings and Issuer 33.7 3.4% 39.9 10.8% Services Cash Market 27.9 (25.2%) 27.0 (9.1%) Information Services 15.1 (13.2%) 15.5 (9.9%) Technical Services 12.1 8.0% 12.5 9.6% Derivatives 48.3 (9.4%) 46.0 6.4% Austraclear Services 9.6 6.1% 9.5 8.9% Other Revenue 3.7 (9.8%) 3.9 - Operating Revenue 150.4 (8.8%) 154.4 2.8% Variances expressed favourable/(unfavourable) 6

Revenue Profile Over 3 Years (1H10 to 1H13) 1H10 ($302.8 million) 1H13 ($304.8 million) Austraclear Other Other Austraclear 2% Services 3% Services 5% Listings & 6% Listings & Issuer Issuer Services Services 24% 27% Derivatives 24% Derivatives 31% Cash Market Trading 5% Cash Market Cash Market Trading Clearing Technical 9% 7% Services Cash Market 5% Cash Market Information Settlement Clearing Technical Cash Market Information Services 6% 8% Services Settlement Services 12% 8% 8% 10% Reduced Contribution from Cash Equities Derivatives + 7% Cash Markets - 7% Technical Services + 3% Information Services - 2% 7

Regulatory Developments Cash Market Trading Clearing and Settlement Market Structure Market Structure • Changed 31 October 2011 • Review by Council of Financial Regulators − Best execution 1 March 2013 • Announcement by Treasurer on 11 Feb 2013 ‒ Retain market structure • Investor concern around market quality ‒ Code of Practice • Reforms announced November 2012; further controls under review • New Financial Stability Standards for clearing and settlement ‒ Dark execution ‒ High frequency trading ASX • Essential to retain existing controls • Improve risk management ‒ Tick sizes ‒ Cash market margining ‒ Supervision cost recovery methodology ‒ CME SPAN margining engine ‒ Financial Stability Standards ASX • Invest in new services. Focus next 6-12 months • 1H13 ASX share of on-market traded value 96.5% ‒ OTC derivatives clearing • Expansion of execution services (eg Centre Point) ‒ Client clearing • Investment in Technical Services ‒ Collateral management 8

Listings and Issuer Services Highlights Areas of Focus Revenue $73.6 million, up 7.3% Listings • Capital raising flexibility – 592 AGM approvals • Listings $60.0 million, up 6.8% ‒ Secondary capital $22.5 billion, up 3.6% • Enhanced reporting for mining, oil and gas ‒ 41 IPOs (57 pcp) • Int’l quotations (rejected in proposed form) • Issuer Services $13.6 million, up 9.6% Issuer Services • Fee review • Equity research scheme pilot Total Capital Raised Product Expansion • Fixed income ETFs • Australian Government Bonds Distribution / Market Efficiency • Managed Funds Service – 60 partners Public Policy • Flow-through shares 9

Cash Market Highlights Areas of Focus Trading Revenue $54.9 million, down 18.0% • Centre Point enhancements • Includes equities trading, clearing and settlement − 4.0 % of value traded, 9.6% of revenue • All Ordinaries up 12.8% since 1 July 2012 • Activity at cyclical low; total market value traded • On-market trading market share 96.5% down 19.9%, ASX down 24.5% − Best execution 1 March 2013 • Average fee 1.13 bps, up 8.7% • Regulation of dark pools and HFT Trading Activity Clearing • Cash market margining from June 2013 • Market structure review completed Settlement • Fee unbundling Customer alignment • Revenue sharing arrangements across each business 10

Information and Technical Services Highlights Areas of Focus Information Services $30.6 million, down 11.7% Information Services • Retail and professional data usage declined • Low latency data services for futures; equities data service in place Technical Services $24.6 million, up 8.8% • Growth in liquidity access, community and • Redesign of service in line with user connectivity, and hosting; 111 cabinets in ALC categories (retail, professional, electronic) • Reduction in application services revenue with Technical Services fewer workstations and Fidessa revenue share • Low latency access and data services Revenue Mix Technical Services • ASX Best enhancements • Global connectivity through ASX Net • Continued data centre sales growth 11

Derivatives and OTC Markets Highlights Areas of Focus Revenue $94.4 million, down 2.3% Product Development • ASX 24 Derivatives $79.9 million, down 2.3% • VIX and sectoral futures • ASX Derivatives $14.5 million, down 2.5% • Equity option market enhancements • Revenue performance by quarter Risk Management ‒ 1Q13 revenue down 9.4% vs strong pcp ‒ 2Q13 revenue up 6.4% • CME SPAN margining for futures ASX 24 Derivatives Volumes OTC Markets 60 • OTC Interest Rate Swaps Derivatives clearing 50 Contracts Million Customer Alignment 40 • Revenue sharing, including OTC clearing 30 20 10 0 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 12

Austraclear Services Highlights Areas of Focus Revenue $19.1 million, up 7.5% Collateral management service • Transaction revenue $7.9 million, flat • 2013 focus on Austraclear • Holdings revenue $3.2 million, up 18.5% • Later phases include CHESS collateral ‒ Average balances up 6.8% and connection to global collateral pools • Registry revenue $8.0 million, up 12.7% • ASX joined international Liquidity Alliance • Fee review to explore how collateral services could be linked cross-border Transactions and Holdings Balances 13

Interest and Dividend Income Highlights 1H13 1H12 % $ Million $ Million Variance  Total net interest income flat  ASX Group interest income down ASX Group Interest 7.5 11.6 (35.6%) Income 35.6% due to lower interest rates  Net interest earned on collateral Net Interest Earned balances up 40.2% due to higher on Collateral 14.4 10.3 40.2% Balances balances and earning rates ‒ Average cash collateral Total Net Interest 21.9 21.9 - balances $3.3 billion, up Income 18.9% ‒ Dividend Income 3.3 3.3 - Average investment spread earned 46 bps over the official cash rate (33 bps pcp) Interest and 25.2 25.2 - Dividend Income  IRESS dividend unchanged 14