Deutsche Börse Net Revenue Declines
Overview of quarterly results
▪ Net revenue in Q1/2021 declined as expected by 7 per cent to €855.1 million, which was due to the exceptionally strong performance related to COVID-19 in Q1/2020.
▪ Cyclical headwinds, however, were partly offset by secular growth and consolidation effects, including Institutional Shareholder Services.
▪ Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €521.2 million (Q1/20: €592.5 million).
▪ Basic earnings per share came to €1.73 (Q1/20: €2.00).
▪ The Group’s Q1/2021 results are fully in line with the guidance for 2021 and the mid-term plan Compass 2023.
▪ In mid-February, the company raised €1 billion at a yield of 0 per cent on average from bond issues to finance the ISS acquisition.
▪ The virtual Annual General Meeting of Deutsche Börse AG will take place on 19 May 2021. An increase of the dividend to €3.00 per share will be proposed to the Annual General Meeting.
— Deutsche Börse Group (@DeutscheBoerse) April 21, 2021
Overview of material events
End of February 2021 Deutsche Börse Group announced the successful closing of the transaction to acquire a majority stake of 81 per cent in Institutional Shareholder Services Inc. (ISS), a provider of governance solutions, ESG data and analytics. The business operations of ISS and Deutsche Börse are highly complementary. Together the two companies will meet the steadily growing demand for detailed data, research solutions and analysis of non-financial information, particularly relating to ESG criteria.
Comparability of figures
Deutsche Börse Group modified its segment reporting in the first quarter of 2021. In future, the business operations of ISS will be reported in a new segment: ISS (Institutional Shareholder Services). Furthermore, as of the 2021 financial year the company no longer adjusts the performance indicators in the consolidated income statement for exceptional items. Thus, solely the unadjusted IFRS figures, including all underlying factors, are used as the corporate steering mechanism.
Results of operations
Efforts to contain the COVID-19 pandemic continued to be at the centre of day-to-day political, social and business activity in the first quarter of 2021. However, broad-based vaccination programmes around the world did reduce uncertainty among market participants to a certain extent and global equity indices traded around all-time highs. This reduced market volatility as measured by the VSTOXX, which was reflected accordingly in trading activity. Thus, trading volumes fell compared with the exceptionally strong first quarter of the previous year, particularly in the segments Eurex (financial derivatives), EEX (commodities), 360T (foreign exchange) and Xetra (securities). The departure of the United Kingdom from the EU at year-end has not had a material impact on the Group’s business, despite the lack of final agreements covering financial services. In the Clearstream (post-trading) segment the reduction in US prime interest rates in mid-March 2020 continues to have a tangible negative impact on net interest income from banking business, since a large proportion of cash balances is held in US dollars.
On this basis, Deutsche Börse Group reported net revenue of €855.1 million in the first quarter of 2021 (Q1/20: €914.8 million), which represents a decrease of 7 per cent against the very strong first quarter of 2020. The substantial cyclical decline was partly offset by secular growth, primarily in the segments IFS (Investment Fund Services) and Clearstream (post-trading). M&A activities also contributed to the Group’s growth in the form of the acquisitions of UBS Fondscenter AG (IFS segment) and ISS. In the reporting period, net revenue in the Clearstream segment benefited from an exceptional item related to a reimbursement of legal costs of around €17 million.
The Group’s operating costs rose by 9 per cent to €346.5 million (Q1/20: €318.4 million) in the first quarter, nearly all of which is due to consolidation effects of the acquisitions mentioned above.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for Deutsche Börse Group fell accordingly by 12 per cent to €521.2 million (Q1/20: €592.5 million). This includes the result from financial investments of €12.6 million (Q1/20: €–3.9 million). It benefited from a positive development of different shareholdings, including Tradegate AG Wertpapierhandelsbank where the very positive performance continued thanks to sustained high activity by private investors.
Depreciation and amortisation amounted to €61.7 million in the first quarter (Q1/20: €62.0 million) and included effects of around €19 million from purchase price allocation of acquired assets (Q1/20: around €13 million). The Group’s financial result came to €–13.9 million in the first quarter (Q1/20: €–16.5 million).
Net profit for the period attributable to Deutsche Börse AG shareholders was €317.3 million (Q1/20: €367.2 million), which was 14 per cent below the figure for the same period last year.
Earnings per share came to €1.73 (Q1/20: €2.00) at an average of 183.5 million shares. Earnings per share before the effects of purchase price allocations (cash EPS) were €1.81 (Q1/20: €2.05).
Source: Deutsche Börse
The association supports the CFTC’s effort to establish new clearing mandates.
2021 marked the fourth consecutive year of record-setting trading activity.
LCH SwapAgent registered over 10,000 trades in 2021, a five fold increase.
There is growing interest in actionable insights into market data.
The next focal point of the crypto market will be over-the-counter derivatives.