Investor Presentation - May 2021 - Gruppe Deutsche Börse
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Investor Presentation May 2021
Diversified, scalable and resilient business portfolio serves
as the basis for growth
F Y / 2 0 2 0 | € 3 , 2 1 4 m n e t r e ve n u e
Pre-trading Trading & clearing Post-trading
€248m €1,906m €1,060m
8% 59% 33%
8% 35% 9% 3% 12% 26% 7%
Qontigo | €248m Eurex | €1,110m EEX | €302m Xetra | €392m Clearstream | €827m IFS | €233m
index & analytics financial derivatives commodities cash equities post-trading investment fund
360T | €102m services
foreign exchange
Geographically diversified Multi-asset class offering High recurring revenues
36% Rest of Europe 50% Equity/index 52% Transactional
30% UK 25% Fixed income 48% Recurring
22% Germany 9% Commodities
7% Americas 7% Interest income
5% Asia-Pacific 6% Funds
3% FX
Deutsche Börse Group 2 May 2021We successfully achieved our Roadmap 2020 targets
Financial scorecard 2017 – 2020 ROADMAP 2020
TARGET
ARCHIEVEMENT
9% NET 12% NET
CAGR REVENUE CAGR PROFIT a d j .
Strategic scorecard
▪ Delivery on secular growth target of >5% p.a.
▪ Multiple M&A deals in focus areas closed
▪ Investments in new technologies like cloud & DLT
▪ Reduction of structural costs by ~€100 million
▪ Execution discipline strengthened
Deutsche Börse Group 3 May 2021With Compass 2023 we target continued secular growth
and an increased M&A contribution
Compass 2023 N e t r e ve n u e ( € b n ) EBITDA reported (€bn)
~4.3
CONTINUED
SECULAR GROWTH
2.9
~ 10%
CAGR
Cyclical
~0% growth
INCREASED 1.7
M&A CONTRIBUTION M&A
+5% growth 10%
~
CAGR
Secular
+5% growth
2019 2023E 2019 2023E
Deutsche Börse Group 4 May 2021Our key growth drivers are favorable capital market trends
Major trends Our credentials
OTC TO ▪ Growing importance of futurization Eurex, EEX and 360T very well
ON-EXCHANGE ▪ Standardization of OTC derivatives opportunity for central clearing positioned to win market share
Eurex OTC clearing is a winning
BREXIT ▪ Brexit creates momentum to shift margin and collateral pools
proposition
SELL-SIDE IFS with strong position to benefit
▪ Sell-side has to adapt due to regulatory and cost pressure
UNDER PRESSURE from outsourcing trend
IMPORTANCE ▪ Growing importance of buy-side and shift to passive products Qontigo and ISS with strong
OF BUY-SIDE ▪ Increasing demand for analytics and ESG starting point to support demand
▪ Technology and digitization are transforming the way Leading technology is at
DIGITIZATION
the financial sector operates (e.g. cloud, DLT) the core of our business model
▪ Severe implications for economy and markets Products and services across
COVID-19
(digitization, efficiency, ESG) the Group to support clients
Deutsche Börse Group 5 May 2021Our secular growth ambition is based on a broad set of initiatives
Pre-trading Tr a d i n g & c l e a r i n g Post-trading
Introduce new derivatives products
and build the leading OTC clearinghouse
in the Eurozone Strengthen the European proposition
Combine index and analytics to increase
to continuously onboard new portfolios/
buy-side penetration and become a leader
clients and grow custody services on
in the field of investment intelligence Expand on the leading position in a global scale
European energy markets and win a
significant position in the US energy market
Become a global ESG leader through the Leverage the partnership model and add
highly complementary combination of ISS new clients/services to strengthen the
and Deutsche Börse Further develop the FX one-stop-shop leadership position for the funds service
exchange and OTC solutions with a business platform
leading technology platform
Deutsche Börse Group 6 May 2021We will continue to pursue our successful M&A agenda
M&A focus areas Strategic guidelines Financial guidelines
▪ Strong fit with strategic growth areas ▪ Cash earnings accretive in year 1,
P r e - t r a di ng latest in year 3
▪ Value creation for shareholders
▪ Index and analytics
▪ ESG ▪ ROI in year 3 should be higher than
▪ Successful integration and synergy WACC (~6%) across M&A portfolio
potential
▪ Margin dilution acceptable for
Tr a di n g & c l e ar i ng ▪ Public M&A only with high closing transactions with strong strategic fit
▪ Commodities certainty
▪ Foreign exchange
▪ Fixed income ▪ Avoidance of auctions if possible
▪ Partnerships and majority stakes
preferred
P o s t - t r a di ng
▪ Investment fund services ▪ Larger deals (€1 – 5bn++) explicitly
targeted, but only if there is a strong
strategic fit and clear post merger
integration plan
Deutsche Börse Group 7 May 2021Our growth ambition is based on a multitude of strategic initiatives
M i d - t e r m n e t r e ve n u e g r o w t h o p p o r t u n i t i e s ( € m )
~0.6bn ~4.3bn
~0.2bn ~0.1bn ~0
~0.4bn
2,936
5% sCeAcGuRl a r 0% cCyAcGl iRc a l 5% MC A&GA R
2019 2023E
Trading & clearing Post-trading Pre-trading
New ETD1 ~110 IFS ~100 Indices ~60 NII ~−130 Closed M&A ~100
EEX ~90 Custody ~90 Analytics ~40 Trading & ISS ~300
360T/FX ~70 GSF3 and others ~30 clearing, ~+170 Future M&A ~200
Post-trading
Pricing ~40
OTC IRS ~35
GFF2 ~30
Buy-in agent ~25
BREAKDOWN BY PRODUCT FOR INDICATIVE PURPOSE
1| Exchange traded derivatives; 2| Global Funding & Financing; 3| Global Securities Financing
Deutsche Börse Group 8 May 2021Mid-term secular net revenue growth opportunities fully intact
Net revenue Growth
Segment 2019 (€m) CAGR 2023E t/o secular t/o M&A
Tr a di n g & Eurex 1,009 7 – 10% >5% ~1% Quantitative Brokers
c l e a r i ng
EEX 289 7 – 10% >5% –
360T 92 >10% ~10% –
Xetra 329 0 – 3% 0% –
P o s t - t r a di ng Clearstream 843 0 – 3% 3 – 5% –
IFS 183 >15% ~10% ~6% Ausmaq, UBS Fondcenter
P r e - t r a di ng Qontigo 190 >15% ~10% ~5% Axioma
>5% secular growth
ISS ~2% expected for ISS
Future M&A ~2%
TOTAL 2,936 ~10% ~5% ~5%
1| Exchange traded derivatives; 2| Global Funding & Financing; 3| Global Securities Financing
Deutsche Börse Group 9 May 2021Eurex – Trading and clearing of financial derivatives
K e y s e c u l a r g r o w t h d r i ve r s N e t r e ve n u e g r o w t h
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
NET REVENUE
GROWTH
7 – 10% CAGR 2019-23E
FIXED INCOME BUSINESS – OTC CLEARING
▪ Partnership program driving volume growth by factor 6;
Euro Interest Rate Derivatives (IRD) with ~20% market share
t/o secular
>5%
CAGR
SERVICE AND BUSINESS EXPANSION – ORGANIC AND M&A
t/o M&A
▪ Quantitative Brokers – quant-tech algorithmic execution
(Quantitative Brokers)
~1%
▪ Buy-in Agent – service for failed securities settlement CAGR
Deutsche Börse Group 10 May 2021EEX – Trading and clearing of commodity spot and
derivatives markets
K e y s e c u l a r g r o w t h d r i ve r s N e t r e ve n u e g r o w t h
▪ Further market share wins in European power and natural
gas markets vs. the uncleared OTC market
▪ Leveraging the unique physical-delivery capability of
our clearing house European Commodities Clearing NET REVENUE
GROWTH
▪ Developing our US energy exchange Nodal, regionally 7 – 10% CAGR 2019-23E
expanding business, strengthening Asian footprint
t/o secular
>5%
CAGR
Deutsche Börse Group 11 May 2021360T – Foreign exchange markets
K e y s e c u l a r g r o w t h d r i ve r s N e t r e ve n u e g r o w t h
▪ FX market: Global, large and growing
▪ Shift to electronic execution and multi-dealer platforms;
reputation, regulatory status key
NET REVENUE
▪ Changing market structure: Rise of non-bank liquidity providers, GROWTH
largest bank liquidity providers getting bigger, market fragmentation > 10% CAGR 2019-23E
▪ Reduced credit capacity: PB capacity linked to higher costs,
de-selecting clients based on credit availability, alternatives needed
t/o secular
~10%
▪ Technological progress:
CAGR
Digitization, electronification, low latency, data
Deutsche Börse Group 12 May 2021IFS – Leading provider of investment fund distribution services
K e y s e c u l a r g r o w t h d r i ve r s R e ve n u e g r o w t h
▪ Positioning in sweet spot of global fund sector growth, third party
distribution acceleration and outsourcing pressures
▪ Expanding #1 position as leading European fund processing
service provider with ~€3.1tr assets under custody NET REVENUE
GROWTH
▪ Strengthening fund distribution services (via Fund Centre) as > 15% CAGR 2019-23E
foundation for growth and onboarding of new portfolios
▪ Cross-selling synergy effects from business combinations,
t/o secular
e.g. Ausmaq, Fund Centre, Clearstream (I)CSD ~10%
CAGR
▪ Expanding in alternative fund shares issuance via digital
enablers and DLT (FundsDLT)
t/o M&A
▪ Strengthening funds data and analytics solutions (Ausmaq, UBS Fondcenter)
~6%
CAGR
Deutsche Börse Group 13 May 2021Qontigo – Building state-of-the-art investment products of the future
K e y s e c u l a r g r o w t h d r i ve r s R e ve n u e g r o w t h
▪ Investment intelligence market will grow by 5-10%
p.a. with deep growth pockets of >15%
▪ Active-to-passive migration will continue – Qontigo
serves both and can leverage scale in index/passive NET REVENUE
GROWTH
▪ Demand for seamless customer experience and margin pressure > 15% CAGR 2019-23E
will accelerate growth of E2E platforms and interoperable ecosystems
▪ Disruption by ESG and fast lateral entrants will lead to only few
t/o secular
mega-platforms and offer opportunities for superior analytics ~10%
CAGR
▪ Qontigo aggregates scale with its open architecture platform
connecting its own as well as 3rd party content
t/o M&A
(Axioma)
~5%
CAGR
Deutsche Börse Group 14 May 2021ISS – Innovative global leader in data, research and ESG
K e y s e c u l a r g r o w t h d r i ve r s R e ve n u e g r o w t h
▪ The global leader in corporate governance for more than three decades with a
rapidly growing position in broader ESG and distribution services
▪ ISS has strong and deep experience in operating emerging market data and
processing centers, which can be leveraged by Deutsche Börse NET REVENUE
GROWTH
▪ Well established global business with excellent organic and inorganic growth > 5% CAGR 2019-23E
track record
▪ ISS’ business will transform Deutsche Börse Group into a global ESG leader;
t/o secular
Deutsche Börse’s significant financial resources will accelerate ISS’ product roadmap > 5%
CAGR
▪ ISS with very strong US franchise and brand; leverage Deutsche Börse’s strong
European brand/network to expand in EMEA
▪ Highly complementary product offering already within ISS; strong linkages to
Deutsche Börse that offer concrete revenue synergies in/from pre- and post-trading
Deutsche Börse Group 15 May 2021We refined our financial steering logic to support our
growth ambition
SUSTAINABLE
▪ Funding of growth initiatives is linked to sustainable secular net revenue growth
GROWTH
▪ In order to support our secular revenue growth ambition, we expect the operating
OVERALL COST costs to increase
DEVELOPMENT
▪ Reported operating costs will be the new cost metric
Financial
steering
CONTINUOUS ▪ Continuous improvement (~2% productivity increase p.a. or ~€100m by 2023) will
IMPROVEMENT be a key measure to capture efficiencies and ensure scalability of core businesses
▪ We are planning with a broadly stable EBITDA margin until 2023
PROFITABILITY
▪ Additional cyclical support would result in an increase of the EBITDA margin
Deutsche Börse Group 16 May 2021Long standing capital management policy is confirmed
Rating Dividend policy Use of excess cash Capital allocation
▪ AA rating mainly because of ▪ Payout between 40% to 60% ▪ Preferably reinvested into the ▪ Permanent review and
post-trading business of net profit (reported) business to support M&A monitoring of business portfolio
▪ Net debt/EBITDA below 1.75x ▪ With increased earnings, strategy; otherwise buy-backs ▪ Maintain sound balance sheet
payout ratio expected to would be considered structure
▪ FFO/net debt above 50%
decrease
Deutsche Börse Group 17 May 2021Group financials
Q1/2021
Net revenue | €m EBITDA | €m Cash EPS1 | € Note
−7% −12% −12%
−10% (organic) −14% (organic) −13% (organic) Net interest €35m
income −49%
915 €347m
855 Operating cost
+9%
Depreciation2 €62m
593
521
Financial result €−14m
2.05
1.81 €317m
Net profit
−14%
EPS €1.73
Q1/20 Q1/21 Q1/20 Q1/21 Q1/20 Q1/21
Note: Organic growth incl. UBS Fondcenter (IFS),
Quantitative Brokers (Eurex) and ISS like-for-like.
Deutsche Börse Group 18 1) EPS before purchase price allocation. May 2021
2) Includes €19 million purchase price allocation effects.Progress on Compass 2023 targets
Net revenue | €m EBITDA | €m Note
+9% +8% ▪ Compass 2023 mid-term plan
CAGR CAGR targets 10% net revenue growth
(Q1/21 vs. Q1/19) (Q1/21 vs. Q1/19) CAGR (5% secular + 5% M&A) and
10% EBITDA growth CAGR.
▪ Results in Q1/20 driven by
Ø 734 Ø 803 Ø 420 Ø 467 exceptional COVID-19 situation.
▪ Q1/21 net revenue and EBITDA
915
855 compared to 2019 (Compass 2023
721 base year) fully in-line with expected
growth trajectory.
593
521
451
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2020 2021 2019 2020 2021
Deutsche Börse Group 19 May 2021Outlook FY/2021
N e t r e ve n u e | € m EBITDA | €m Guidance 2019 – 23 (CAGR)
+10% CAGR +10% CAGR
Compass 2023 target Compass 2023 target
NET
~10%
~4.3bn
REVENUE
2021 target:
~3.5bn EBITDA
2,936
3,214 ~10%
2021 target:
1,869 ~2.0bn EPS
1,678 ~10%
2019 2020 2021E 2023E 2019 2020 2021E 2023E
Deutsche Börse Group 20 May 2021Disclaimer 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 2021. All rights reserved.
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