Investor Presentation - August 2020 - Gruppe Deutsche Börse

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Investor Presentation - August 2020 - Gruppe Deutsche Börse
Investor Presentation
                                                    August 2020

Deutsche Börse Group | August 2020 |
Our purpose

     We at Deutsche Börse create trust
     in the markets of today and tomorrow.

Deutsche Börse Group | August 2020 |   1
Diversified, scalable and resilient business
portfolio serves as a basis for growth                                                                           Geographically diversified

                                                                                                                                  36% Rest of Europe
                                                                                                                                  30% UK
                                                        IFS              Qontigo
                                                                                                                                  22% Germany
                                                       €184m             €190m
                                                  investment fund        index &                                                   7% Americas
                                                      services           analytics
                                                                                                                                   5% Asia-Pacific
                                                             6%           6%

                                                                         Pre-
                                                                       trading                                   Multi-asset class offering
                                                                       €190m
          Clear-                                                       6%                                                         50% Equity / index
          stream                       Post-
                                                                                                                                  25% Fixed income
          €843m            29%
                                      trading
         post-trading                 €1,026m                                                       Eurex                          9% Commodities
                                                      35%
                                                                FY/2019                            €1,009m
                                                                                             34%    financial
                                                                                                                                   7% Interest income
                                                             €2,936     m                          derivatives                     6% Funds
                                                              net revenue                                                          3% FX
                                                                                 59%

                                                                                 Trading &                       High recurring revenues
                                                                                  clearing
                                                                                  €1,720m

                                                11%
                                Xetra                                       10%
                               €329m                           3%                                                                 52% Transactional
                            cash equities                                       EEX                                               48% Recurring
                                                             360T              €289m
Note: Numbers may not add up due to rounding.
                                                             €92m           commodities
                                                             foreign
                                                            exchange

Deutsche Börse Group | August 2020 |                   2
Key pillars of Deutsche Börse’s growth strategy
                                                                                                Organic growth
                                                                                                M&A
                                                                                                Technology
                                                                                                Execution discipline

    Organic growth                                M&A                            Technology

    Exploit secular growth                        Scale through asset class      Maintain leading
    opportunities                                 consolidation                  IT position

    Execution discipline

    Strengthen execution discipline along cost control,
    financial steering and general management

                                           Further increase valuation-multiple

Deutsche Börse Group | August 2020 |   3
Organic growth – secular growth drivers fully intact
                                                                                                  Organic growth
                                                                                                  M&A
                                                                                                  Technology
despite dynamic environment                                                                       Execution discipline

     Main drivers for secular growth                                     Impact on the business

                                                                          Pre-        Trading &            Post-
                                                                          trading     clearing             trading

        Central clearing
        ▪ Demand for liquid EU-based OTC CCP alternative
        ▪ Pull effects for new products and services (e.g. collateral)

        Over the counter (OTC) to on-exchange
        ▪ Shift from OTC to regulated markets (e.g. futurisation)
        ▪ Electronification of less penetrated asset classes

        Active to passive investments
        ▪ Continued shift from active to passive investing
        ▪ Europe still offers significant growth potential

        Importance of buy-side
        ▪ Increasingly self-directed buy-side and corporates
        ▪ Continued pressure on banking industry in general

Deutsche Börse Group | August 2020 |   4
Organic growth – broad number of initiatives support
                                                                                                                                     Organic growth
                                                                                                                                     M&A
                                                                                                                                     Technology
key growth segments                                                                                                                  Execution discipline

Segment                    Secular growth drivers              Growth initiatives

                            OTC to on-exchange                  Product innovation to support futurisation, e.g. total return and dividend futures
       Eurex                Central clearing                    Liquid EU-based OTC clearing alternative, e.g. for Euro interest rate swaps
 (financial derivatives)
                            Active to passive investments       Product innovation to address accelerated buy-side demand, e.g. MSCI derivatives

                            OTC to on-exchange                  Efficient on-exchange services, e.g. to address increasing share of renewables in power
        EEX
    (commodities)           New markets/regions                 New geographical markets and multi-commodity offering, e.g. Nodal (US), Japan, CO2

                            OTC to on-exchange                  Shift supported with new products and services e.g. FX futures, OTC FX clearing
        360T
  (foreign exchange)        Shift to buy-side                   Product/service offering geared directly towards corporates and asset managers

         IFS
   (investment fund         Fragmentation and inefficiencies    Increase of efficiency through central fund distribution and settlement solutions
       services)

                            Active to passive investments       Further expansion and integration of index and benchmarking services
     Qontigo
  (index & analytics)       Shift to buy-side                   Sophisticated risk analytics and portfolio-construction tools

Deutsche Börse Group | August 2020 |       5
Organic growth
Strong performance in key secular growth                                                                                                  M&A
                                                                                                                                          Technology
segments                                                                                                                                  Execution discipline

Total and secular net revenue growth (average Q1/18 to Q2/20)
                                                                                                                         Note
  t/o secular
                                                                                                Pre-trading
  growth (%)
                                                                                                Trading & clearing
    15
                                                                                                Post-trading             Secular growth is key pillar of
                                                                                                Net revenue Q2/20 (€m)   Deutsche Börse’s growth strategy.

                                                                 24     360T
                                                                                                                         Diversified business model serves
                                                                                                                         as basis for secular growth along
    10
                                                                                                                         the full capital markets value chain.
                                                EEX
                                                                   51      IFS   53   Qontigo

                                                  71                                                                     Eurex, EEX, 360T, IFS and Qontigo
                                                                                                                         are key secular growth segments.
                              Group                 272
                                                                 Eurex
      5                       213                                                                                        Continuous strategic investments
                                              Clearstream                                                                planned to support growth
                                                                                                                         momentum.
                              94

                            Xetra

                                                                                                        total
      0                                                                                                       1
          0                             10                            20         30                  40 growth (%)
1) Total growth includes secular, cyclical and M&A growth.

Deutsche Börse Group | August 2020 |                         6
Organic growth – midterm targets
                                                                                                                 Organic growth
                                                                                                                 M&A
                                                                                                                 Technology
                                                                                                                 Execution discipline

       Net revenue growth target                                        Net profit growth target (adj.)
       (€m)                                                             (€m)

                                          Mid-term target                                 Mid-term target
                                        >5% secular CAGR                                  +10-15% CAGR

                                                +6%           ~3,000-
                                                                                                  +10%
                         +13%                                  3,300                                                ~1.20bn
                                                      2,936                        +17%                  1,106
                                        2,770
                                                                                          1,003
             2,462
                                                                            857

              FY/17                     FY/18         FY/19   FY/20E       FY/17          FY/18          FY/19       FY/20E

Note: Adjusted for exceptional items.

Deutsche Börse Group | August 2020 |                  7
M&A – focused and disciplined approach started
                                                                                                                Organic growth
                                                                                                                M&A
                                                                                                                Technology
in 2018 yielded good results                                                                                    Execution discipline

M&A focus on five growth areas                M&A delivery since 2018
Pre-trading

                         Data, index &        ▪ Axioma acquisition strengthens Deutsche Börse’s pre-trading offering and
                     1
                         analytics              improves access to the buy-side and the US (Apr 2019)

                                              ▪ Acquisition of Grexel Systems (energy certificate registry; Dec 2018)
                                              ▪ Spark Commodities JV with Kpler for liquefied natural gas trading (Apr 2019)
                     2 Commodities
                                              ▪ Acquisition of NFX’s futures and options exchange core assets, including
Trading & clearing

                                                the portfolio of open interest in NFX contracts (Nov 2019)

                     3 Foreign exchange       ▪ Acquisition of the spot FX platform GTX ECN allowed for expansion into the
                                                US and the dealer-to-dealer market segment (May 2018)

                     4 Fixed income

                                              ▪ Acquisition of Swisscanto Funds Centre to expand services with
Post-trading

                                                management of distribution contracts and data processing (Apr 2018)
                                              ▪ Acquisition of Ausmaq, a managed funds services business for the steadily
                     5 Investment funds
                                                growing Australian fund market (May 2019)
                                              ▪ Acquisition of UBS Fondcenter AG (closing expected H2/20) creates a leading
                                                provider of fund distribution services with high benefits for customers

Deutsche Börse Group | August 2020 |      8
Technology – capabilities in new technologies are
                                                                                                             Organic growth
                                                                                                             M&A
                                                                                                             Technology
growing steadily                                                                                             Execution discipline

Technology trends

                         Cloud and provision of         ▪ First contracts regarding public cloud operation have been
                         services via APIs is helping     signed with Microsoft, Google and SAP
Public cloud
                         to increase agility, improve   ▪ Contracts meet regulatory requirements to move significant parts
                         quality and reduce costs         of operations into the public cloud over time

                         Helps to create new
DLT /                    market structures and          ▪ HQLAx: innovative blockchain solution for collateral management
block-chain              allows adding products           based on tokens to improve collateral mobility
                         onto existing structures

Robotics /                                              ▪ Centre of excellence for automation established; several
                         Key efficiency driver for
automation /                                              automation tools already in production for task automation;
                         operations-heavy tasks
AI                                                        further steps defined along use case roadmap

                         Advanced analytics is both     ▪ New client requirements regarding data / analytics are addressed
Big data /
                         a revenue driver adding          by the creation of a buy-side intelligence leader as part of the
advanced
                         value to data, and an            Axioma acquisition
analytics
                         efficiency lever

Deutsche Börse Group | August 2020 |   9
Execution discipline – strengthened discipline along cost
                                                                                                                 Organic growth
                                                                                                                 M&A
                                                                                                                 Technology
control, financial steering and general management                                                               Execution discipline

                                            ▪ New executive board set-up completed in 2018 with stronger business and
                                              technology focus

                                            ▪ New segment structure with increased P&L responsibilities/incentivisation to
                                              achieve secular growth and improve transparency

                                            ▪ Structural cost improvement programme implemented; savings above €100
             Execution
                                              million target; savings reinvested into growth, new technology and regulation
             discipline

                                            ▪ Upgraded M&A capabilities allow for systematic execution of external growth
                                              opportunities

                                            ▪ Tighter steering and strict consequence management

                                            ▪ Regained trust and support of internal and external stakeholders

Deutsche Börse Group | August 2020 |   10
Group financials
FY/2019 (€m)

       Net revenue                            Operating cost                         EBITDA                   Net profit       Note
        +6%                                   +8%                                   +5%                     +10%
        +5% (organic)                         +5% (organic)
        +5% (secular)                                                                                                         Net interest          €246m
                                                                                                                               income                +20%
                         2,936
         2,770
                                                                                                                               Exceptional cost
                                                                                                                                                     €135m
                                                                                                                               items

                                                                                                                                                     €223m
                                                                                                                               Depreciation (adj.)
                                                                                                      1,813                                          −6%
                                                                                       1,729

                                                                                                                               Financial result      −€54m
                                                                1,130                                                  1,106
                                                1,046                                                         1,003
                                                                                                                               Tax rate              26%

                                                                                                                                                     €6.03
                                                                                                                               EPS (adj.)
                                                                                                                                                     +11%

          FY/18           FY/19                  FY/18           FY/19                  FY/18         FY/19    FY/18   FY/19

Note: Adjusted for exceptional items; operating costs and EBITDA FY/18 non-GAAP indicative figures.

Deutsche Börse Group | August 2020 |                       11
Group financials
H1/2020 | €m

       Net revenue                              Operating cost                           EBITDA                                     Net profit         Note
        +17%                                    +16%                                    +17%                                      +16%
        +14% (organic)                          + 9% (organic)                          +17% (organic)                            +19% (organic)
        + 7% (secular)                                                                                                                                Net interest        €50m
                                                                                                                                                                           €118m
                                                                                                                                                                          €50m
                                                                                                                                                       income
                                                                                                                                                       income              −8%
                                                                                                                                                                          -24%
                                                                                                                                                                           -24%
                          1,692
                                                                                                                                                       Exceptional
                                                                                                                                                       Exceptional cost
                                                                                                                                                                   cost
         1,446                                                                                                                                                            €42m
                                                                                                                                                                          €42m
                                                                                                                                                                          €70m
                                                                                                                                                       items
                                                                                                                                                       items

                                                                                                                                                                          €62m
                                                                                                          1,103                                        Depreciation       €62m
                                                                                                                                                       Depreciation       €124m
                                                                                                                                                                          +14%
                                                                                                                                                                          +14%
                                                                                             941
                                                                                                                                                       Financial result   €-18m
                                                                                                                                             676       Financial result   €-18m
                                                                                                                                                                          −€35m
                                                                     591                                                             580
                                                    509
                                                                                                                                                       Tax rate           26%
                                                                                                                                                       Tax rate           26%
                                                                                                                                                                          €1.57
                                                                                                                                                       EPS (adj.)
                                                                                                                                                                          -1%
                                                                                                                                                                           €1.57
                                                                                                                                                                           €3.68
                                                                                                                                                       EPS (adj.)
          H1/19            H1/20                   H1/19           H1/20                   H1/19           H1/20                     H1/19   H1/20                         -1%
                                                                                                                                                                           +16%
Note: Adjusted for exceptional items. Organic growth incl. Axioma (Qontigo), Ausmaq (IFS) and Börse Berlin (Xetra) like-for-like.

Deutsche Börse Group | August 2020 |                         12
Secular growth trend remained intact
H1/2020 | €m

                     Consolidation                   Secular growth   Cyclical growth       Note
                      +3%                            +7%             +7%
                                                                                            Consolidation effects mainly driven
                                                         +17%                               by Qontigo (Axioma) and a small
                                                                                    1,692   contribution from IFS (Ausmaq).

                                                                           103              All segments with positive secular
                                                                                            growth contribution, with good
                                                                                            progress at Eurex, IFS, Qontigo and
                                                          107                               360T.

           1,446                  36                                                        Cyclical growth mainly driven by
                                                                                            exceptionally high volatility in Q1
                                                                                            due to the Corona situation.

            H1/19                                                                   H1/20

Note: Numbers may not add up due to rounding.

Deutsche Börse Group | August 2020 |            13
Development of segment financials (I/II)
H1/2020 (€m)

Eurex                                        EEX                     360T                 Xetra
Net revenue EBITDA                           Net revenue EBITDA      Net revenue EBITDA   Net revenue EBITDA
 +22%                +23%                   +6%         +9%       +19%       +20%    +18%         +25%
                                                                                           +17% (org.)  +24% (org.)

          618

  506
                                455                                                               196

                        370                                                                 166
                                                    153
                                              145
                                                                                                               131

                                                                                                         104

                                                                79
                                                           72
                                                                            51
                                                                       43
                                                                                  20 24

Note: Adjusted for exceptional items.                                                                     H1/19
                                                                                                          H1/20

Deutsche Börse Group | August 2020 |    14
Development of segment financials (II/II)
H1/2020 (€m)

                       Clearstream                    IFS                           Qontigo
                      Net revenue EBITDA              Net revenue EBITDA            Net revenue EBITDA
                       +6%              +6%          +25%         +38%           +56%         +14%
                                                       +20% (org.)  +35% (org.)    +10% (org.)  +13% (org.)

                                  448
                          424

                                                                                           120
                                               295           106
                                         280

                                                        85
                                                                                      77

                                                                           58                            61
                                                                                                    54
                                                                      42

Note: Adjusted for exceptional items.                                                                             H1/19
                                                                                                                  H1/20

Deutsche Börse Group | August 2020 |             15
Dividend per share and pay-out
FY/2019

       Pay-out ratio (%)                                                           Note
                   55                    54           53     49             48

                                                                                    Deutsche Börse aims to distribute
                                                                                    40-60% of adjusted annual net
                                                                     +7%
                                                                                    profit to shareholders in form of the
                                                                           €2.90    regular dividend.
                                                             €2.70
                                                                                   Within the 40-60% range, pay-out
                                                     €2.45
                                        €2.35                                      mainly depends on the business
                €2.25                                                              development and dividend
                                                                                   continuity considerations.

                                                                                    Remaining free cash is planned to
                                                                                    be reinvested into the business to
                                                                                    support the Group‘s M&A strategy.

                 FY/15                  FY/16        FY/17   FY/18         FY/19

Note: Adjusted for exceptional items.

Deutsche Börse Group | August 2020 |            16
Outlook
FY/2020 | €m

       Net profit guidance                                                          Note

                                                     Mid-term target
                                                                                    Despite strong H1/2020, guidance
                                                     +10-15% CAGR                   for 2020 remains unchanged.

                                                         +10%
                                                                          ~1.20bn
                                        +17%                     1,106              For FY/2020 Deutsche Börse
                                                                                    expects:
                                               1,003

                      857                                                              Continued secular net revenue
                                                                                       growth of at least 5% and

                                                                                       around €1.20 billion
                                                                                       adjusted net profit.

                     FY/17                     FY/18              FY/19   FY/20E

Note: Adjusted for exceptional items.

Deutsche Börse Group | August 2020 |            17
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 and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied and that are
     beyond Deutsche Börse AG's ability to control or estimate precisely. In addition to statements which are forward-looking by reason of context, the words
     'may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue' and similar expressions identify forward-
     looking statements. Actual results, performance or events may differ materially from those statements due to, without limitation, (i) general economic
     conditions, (ii) future performance of financial markets, (iii) interest rate levels (iv) currency exchange rates (v) the behaviour of other market participants
     (vi) general competitive factors (vii) changes in laws and regulations (viii) changes in the policies of central banks, governmental regulators and/or
     (foreign) governments (ix) the ability to successfully integrate acquired and merged businesses and achieve anticipated synergies (x) reorganization
     measures, in each case on a local, national, regional and/or global basis. Deutsche Börse AG does not assume any obligation and does not intend to
     update any forward-looking statements to reflect events or circumstances after the date of these materials.
     No obligation to update information: Deutsche Börse AG does not assume any obligation and does not intend to update any information contained
     herein.
     No investment advice: This presentation is for information only and shall not constitute investment advice. It is not intended for solicitation purposes but
     only for use as general information.
     All descriptions, examples and calculations contained in this presentation are for illustrative purposes only.
     © Deutsche Börse AG 2020. All rights reserved.

Deutsche Börse Group | August 2020 |
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