Singapore Exchange Limited

Good morning, ladies and gentlemen, and to those viewing via the webcast. My name is Liana Choo from Investor Relations. Happy New Year and a very warm welcome to SGX Group's first half FY2025 results briefing. We will begin today's session with a presentation of the financial results by our new CFO, Mr. Daniel Koh. Dan took on the role as CFO on 1st of December 2024. Following Dan's presentation, our CEO, Mr Low Boon Chye, will present the business updates. We will have a question and answer session later on. Please wait for the microphone to reach you and do identify yourself before you ask your questions. It is now my pleasure to invite Dan up on stage to present the financial results. Dan, please.

Good morning. Thank you for joining us today. As a keen market observer, it is enthralling for me to be standing on this side of the stage, having joined SGX at such a vibrant time. Today, I am delighted to present a strong set of results as the new CFO. SGX Group delivered strong financial performance for the first half FY25. Both our half-year operating revenue and earnings have reached their highest levels. Group net revenue has increased by 15.6% to $646 million, driven by broad-based growth across all operating segments. Group expenses, on an adjusted basis, have stayed comparable from a year ago, while adjusted group NPAT has increased 27.3% to $320 million. Adjusted operating profit margin and adjusted NPAT margin have both showed strong improvement by 6.1% and 4.5% respectively. As mentioned earlier, the revenue performance was driven by broad-based growth, especially in cash equities, derivatives and our OTCFX franchise. Our cash equities business grew significantly, driven by elevated investor interest. Net revenue increased by 35 million, or 22%, and the Securities Daily Average Value, or SDAV, increased 31% to $1.26 billion, driven by strong investment flows into the index stocks and REITs on the back of rate cuts, robust market fundamentals, and other macro factors. Our derivatives franchise, which comprises futures and options on currencies, commodities and equities, also demonstrated strong growth. This was driven by proactive steps that we have taken in broadening client participation amidst higher global market volatility. Total net revenue from our derivative suite grew 35 million, or 14%, driven by 20% growth in overall derivative daily average volume across all asset classes. This has been partially led by our efforts in driving client expansion in the T plus one session, as well as cross-selling. T plus one traded volume contributed about 20% to the overall derivatives traded volume. Treasury Income, or TI, was comparable against a year ago, driven by higher collateral balances from the derivatives franchise, partially offset by declining interest rates. Our OTC FX business continued to see consistent and robust growth. Net revenue grew $14 million, or 36%, with average daily volume increasing by the same magnitude to US$136 billion. This was driven by our continued efforts in expanding the client base and enhancing the platform with cutting-edge functionalities. We are also pleased to see that OTCFX EBITDA contribution to the group grew to 5% compared to 3% a year ago. This clearly demonstrates our efforts in improving the operating margin as the business scales. As communicated previously, starting from this financial year, we have implemented net revenue reporting to better reflect the underlying economics of our business while also aligning with global practice. Transaction-based expenses, i.e. processing and royalty fees, have been moved from operating expenses and netted off against operating revenues to derive net revenue, as shown on the left-hand side of the slide. In the same manner, processing and royalty fees are netted off from the average fees to derive the average net fee. the derivative average net fee for the first half of FY24 is now $1.31 compared to $1.54 reported previously. In a like-for-like comparison, the average net fee this period is now $1.30. We have also provided additional information in the performance summary on the impact of constant currency. This will help the comparison of financial performance across periods without the impact of currency movements. Let me now elaborate on the Group's net revenue performance across our four operating segments. The growth was attributed to the Group's effective execution of the multi-asset strategy amidst macro tailwinds. Our fixed income currencies and commodities segment grew 19 million or 13% and accounts for 25% of total revenue. I had touched on OTCFX earlier. For the exchange traded currency segment, we remain as Asia's largest currency futures exchange and several record volumes were set amongst our key contracts. For the commodities segment, apart from the growth in iron ore products, several pioneering contracts also demonstrated growth momentum. So overall, the FICC segment revenue remains on track to grow at a low to mid-teens percentage over the medium term. The cash equities revenue growth was driven by the higher SDAV mentioned earlier and higher average clearing fees. This segment contributes 30% to our total revenue. Equity derivatives revenue increased by 32 million or 22% driven mainly by the volume increase in our flagship FTSE China A50 and GiveNifty future contracts. This segment accounts for 27% of total revenue. Finally, platform and others' revenue increased by 2 million or 2%, primarily due to higher co-location sales and repricing of connectivity services, partially offset by lower indices revenue. This segment now accounts for 18% of total revenue. Moving on to expenses. We have maintained cost discipline and our adjusted expenses remain comparable. Staff costs increased by $9 million , primarily due to higher variable bonus provision in line with higher profits. Technology expenses remained comparable. Depreciation and amortization decreased by $4 million, primarily due to lower depreciation of technology assets. Other expenses decreased by $4 million with lower impairment of trade receivables and lower spending on marketing and travelling. Now we expect the full year expenses to be at the lower end of our 2-4% increase guidance for FY25. On capital expenditure, we incurred $22 million in the first half FY25 and expect our full-year CAPEX to be at the lower end of our $70 to $75 million guidance. To reiterate what we have communicated previously, our CAPEX will be on an uptrend as we modernise the trading and clearing platforms and data centres. we anticipate overall capex to remain below the historical average of 7% of group revenue over a cycle. This slide shows the reconciliation between our reported and adjusted earnings. The difference is due to non-cash adjustments and one-off items which I will further elaborate upon. First is a net fair value gain of $19 million, mainly from our investment in a private equity fund managed by 7Rich, which holds the company Trading Technologies. Reflecting its strong operating performance, our investment was revalued upwards by $8 million. Second, we took a $2 million impairment due to the lower-than-expected performance of an associated company. Now the fair value adjustments and impairment flow through to our P&L due to the accounting classification, given their non-cash nature. These are removed here for the purposes of adjusted earnings. Third, we recognise a one-off gain of $8 million on the sale of our financial investment in the Philippines Dealing System. Finally, we have a further adjustment of $5 million, mainly from the amortization of purchased intangible assets. Our balance sheet remains robust. Moody's reaffirmed our AA2 rating in November 24, and this remains the highest credit rating it has assigned to any exchange group. Gross debt increased by about $7 million, mainly due to the longer-term lease as we renewed our office space and data centres in early 2024. This was partially offset by the reduced borrowings during our refinancing in March 2024. Our leverage ratios remain at a healthy level. Despite an increase in gross debt, the gross debt to EBITDA ratio, or leverage ratio, declined from 1 to 0.9 times due to our improved margins. Our interest coverage ratio decreased to 56 times from 113 times, mainly due to the higher interest expense when we refinanced our Euro-Zero coupon convertible bonds with SingDollar coupon-bearing notes. The Board of Directors has declared an interim quarterly dividend of $0.09 per share, bringing the total dividends in the first half FY25 to $0.18 per share. This represents an increase of almost 6%, which continues to be in line with our aim to increase dividend per share by mid-single-digit percentage of CAGR in the medium term, subject to earnings growth. With that, let me now hand over to Boon Chye, our CEO, who will deliver the business update. Thank you.

Good morning, everyone. Thank you for joining us this morning. As Daniel shared, we performed strongly across the board in the first half of this year. The breadth and depth of our multi-asset offering, together with our efforts to broaden our products and customer base, positioned us well to capture market opportunities in 2024. Financial markets were volatile due to macroeconomic and geopolitical events, including a record number of elections around the world and stimulus measures in China. Amidst the volatility, our clients turn to SGX to manage risk effectively and efficiently round the clock. Across our derivative suite, we see customers trading more products and higher activity in our overnight T Plus One session. Let me now update on our key business segments, starting with FX. We are pleased that in the first half of FY25, our FX franchise achieved a record average daily volume of over US $154 billion across OTC FX and listed FX futures. We successfully grew our OTC FX volumes on the back of higher adoption as we enhance our platform functionalities. First half revenue for OTCFX is now at $55 million and is on track to contribute mid to high single-digit percentage of group EBITDA in the medium term. In listed FX, our first half daily average volumes rose 40% year-on-year, led by our CNH and INR contracts. We also see traction in our current one contract, whose volume has increased nearly four times from two years ago. Besides multiple all-time high volumes for our flagship products, we achieved a significant 75% increase in open interest to US $23.4 billion in notional terms. Notably, there is rising interest in our FX futures coming from new market participants such as buy-side firms, asset managers, hedge funds and commodity trade advisors looking to hedge their currency risk. A sizeable 35% of our FX futures DAV are now traded during US and European hours. All in, we are optimistic that we can build on our successes as we enlarge and integrate our FX marketplace. Moving on to commodities, we continue to be the leading international exchange for bark commodity derivatives, led by our flagship iron ore contract. Our efforts to expand the ecosystem and increase financial participation in iron ore are paying off. First, the proportion of screen trading of iron ore futures has increased 2.6 times in the past three years, from 28% to 73%. Financial participants accounted for more than half of our volumes in the first half. Second, volumes coming in during our T Plus One session are now over 20%, compared to 15% three years ago. These all point to the significant role of INR for global portfolio risk management and diversification. We achieved a key milestone in our journey to promote INR index, index investing and INR as portfolio diversifier. Since January this year, our INR contracts are included in the Dow Jones Commodity Index. This follows earlier inclusion in other commodity indices in 2018 and 2022, which reflects the relevance of iron ore in a global portfolio. In equity derivatives, we had a strong half with daily average volumes reaching 728,000 lots on the back of provost volumes in our A50 and GIF nifty contracts. T1 DAV has grown to 15%. Our derivatives ecosystem supported the rise in global usage of our A50 contract amidst market uncertainty. Our active engagement with clients has led to a more diversified client base. We are confident that more clients will make SGX their venue of choice for investing and risk management, given the liquidity and quality of our products. Moving on to our cash equity markets, the Straight Time Index broke multiple records and was one of the best performing indices in the region. This showed in the growth of our SDAV to $1.26 billion in the first half of FY25. We aim to build on this momentum as we introduce more trading products, as well as enhancing our retail outreach in the region. In the first half, we launched the Lion China Merchants Emerging Asia Select Index ETF, depository receipts on Hong Kong-listed stocks and daily leverage certificates on the Magnificent Seven stocks in the US. This widened investment options for investors and enabled them to diversify their portfolio. We also onboarded more brokers to enable regional access to SGX products. In summary, we will deepen and drive greater adoption of our multi-asset offering alongside the evolving needs of investors. We also observe improvements in our IPO pipeline. To further strengthen our ecosystem, we will foster deeper relationships with our customers and help them to better capture cross-asset opportunities. There is a lot more room for us to expand our customer base across segments and globally. While there could be some moderation of macro tailwinds in the near term, we remain optimistic about our medium-term outlook. Our focus on broadening our customer base globally and across segments, as well as expanding and driving greater adoption of our products and solutions, sets the stage for market leadership and we remain optimistic of achieving our revenue target, excluding Treasury income of 6% to 8% growth in the medium term. With that, I end my presentation and will take questions together with my colleagues. Thank you. Yes, we can take the first question.