ASX LIMITED — Interim / Quarterly Report 2014

May 6, 2014

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7 May 2014 Australian Securities and Investments Commission ASX Market Announcements Office Mr Oliver Harvey ASX Limited Senior Executive Leader, Financial Market Infrastructure 20 Bridge Street Level 5, 100 Market Street SYDNEY NSW 2000 SYDNEY NSW 2000

ASX LIMITED – EARNINGS UPDATE TO 31 MARCH 2014

Attached is a media release advising ASX’s earnings update for the 9 months to 31 March 2014 and a copy of a presentation to be delivered by ASX’s Managing Director and CEO at Macquarie’s Australia Conference later today.

Amanda J Harkness

Group General Counsel & Company Secretary

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ASX Limited 20 Bridge Street www.asx.com.au T +61 2 9227 0000
ABN 98 008 624 691 Sydney NSW 2000 Customer service 13 12 79
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MEDIA RELEASE

7 May 2014

ASX Limited earnings update for the nine months to 31 March 2014

ASX Limited (ASX) has provided an earnings update for the nine months to 31 March 2014. The update is provided ahead of ASX’s participation at an investor conference in Sydney today.

Relative to the prior comparative period (pcp - nine months to 31 March 2013) the unaudited results were as follows:

Group Profit and Loss Statement	YTD March 2014 $M	YTD March 2013 $M	Variance $M	Variance %
Operating revenues	488.4	457.1	31.3	6.8%
Operating expenses	115.0	107.5	(7.5)	(6.9%)
EBITDA	373.4	349.6	23.8	6.8%
Depreciation and amortisation	24.4	22.9	(1.5)	(6.5%)
EBIT	349.0	326.7	22.3	6.8%
Interest and dividend income	56.3	42.5	13.8	32.3%
Profit before tax	405.3	369.2	36.1	9.8%
Income tax expense	(118.4)	(108.5)	(9.9)	(9.2%)
Profit after tax	286.9	260.7	26.2	10.0%

Revenues increased by 6.8% for the nine months to March 2014. Key market activity indicators were as follows:

• Listings: total capital raised was up 32.3% to $44.4 billion, driven by a strong second (December) quarter.

• Cash Market: average daily on-market value traded in the ASX cash market was up 5.4% to $3.3 billion.

• Derivatives: average daily number of ASX 24 futures and options on futures contracts traded was 464,407 contracts, up 9.3%. Equity options continued to underperform with volume down 20.6%.

Operating expenses increased by 6.9%, driven by investment in new products and post-trade services. Average staff numbers increased by 4.1% to 534 full-time equivalents. Expense growth in the third quarter slowed compared to the first half of the year. There is no change to previous expense growth guidance of approximately 5% for FY14.

Capital expenditure to the end of March was $28.3 million. Key initiatives remain on track and there is no change to previous capital expenditure guidance of $40-45 million for FY14.

Mr Elmer Funke Kupper, ASX Managing Director and CEO, said: “ASX’s financial performance for the nine months to 31 March was pleasing, building on the recovering global economy and the improved activity levels that were evident in the half-year results. There was growth in all of ASX’s major revenue categories during the period.

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“ASX is continuing to make significant investments to ensure that Australian investors have access to a world-class financial market infrastructure. By the end of the financial year we will have delivered a number of new services, including OTC clearing, client clearing and collateral management. These services provide strong risk management protections for end-investors and an efficient solution for domestic and international banks. Our investments will support Australia in meeting its G20 commitments.

“A strong central market infrastructure is essential for financial market stability, and is a pre-condition to be a financial centre. All major markets in Asia have a central infrastructure supported by regulations that are tailored to the needs of the local market.

“ASX is determined to ensure that Australia remains globally relevant and competitive. ASX has provided input to the Council of Financial Regulators and the Financial System Inquiry on the regulatory settings that will support this ambition.”

Further detail of ASX’s performance for the nine months is contained in the following Appendix. ASX has also released its presentation to be given to today’s Australian investor conference.

The ASX Group Monthly Activity Report for April 2014, which was released on Monday, is not reflected in this earnings update.

Further enquiries:

Media

Matthew Gibbs General Manager, Media and Communications Tel: +61 2 9227 0218 Mobile: 0411 121219 matthew.gibbs@asx.com.au http://www.asx.com.au/about/media-releases.htm

Analysts/Investor Relations

Stephen Hammon General Manager, Finance Tel: +61 2 9227 0260 Mobile: 0488 212755 stephen.hammon@asx.com.au http://www.asx.com.au/about/investor-relations.htm

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Appendix – ASX Revenues and Activity Indicators to 31 March 2014

Operating Revenues	YTD March 2014 $M	YTD March 2013 $M	Variance $M	Variance %
Listings and Issuer Services	113.6	105.5	8.1	7.7%
Cash Market	87.8	84.1	3.7	4.3%
Trading	24.6	24.1	0.5	2.0%
Clearing	32.5	30.3	2.2	7.2%
Settlement	30.7	29.7	1.0	3.3%
Information Services	52.4	46.1	6.3	13.7%
Technical Services	39.4	36.9	2.5	6.8%
Derivatives and OTC Markets	152.2	144.3	7.9	5.5%
Austraclear	31.0	28.7	2.3	7.9%
Other	12.0	11.5	0.5	4.1%
Total Operating Revenues	488.4	457.1	31.3	6.8%

Key Activity Indicators	YTD March 2014	YTD March 2013	Variance	Variance %
Listings and Issuer Services
All Ordinaries Index (end of period)	5403.0	4979.9	423.1	8.5%
Number of New Listed Entities (IPOs)	79	62	17	27.4%
Capital Raised, incl. Scrip-for-Scrip ($million)	44,405	33,563	10,842	32.3%
Cash Market
Daily Average Cash On-Market Value ($billion)	3.284	3.117	0.167	5.4%
Derivatives and OTC Markets
ASX 24 Daily Average Contracts Traded	464,407	424,792	39,615	9.3%
ASX Daily Average Contracts Traded	499,780	629,392	(129,612)	(20.6%)

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Earnings update to 31 March 2014
ASX Limited
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Elmer Funke Kupper, CEO

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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 (7 May 2014). 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.

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Nine Months to 31 March 2014[1]

Revenues Expenses EBITDA Interest & Div. Net Profit $488.4m $115.0m $373.4m $56.3m $286.9m 6.8% (6.9%) 6.8% 32.3% 10.0%

• Profit after tax $286.9m, up 10.0%

• Includes additional interest from FY13 capital raising

• EBITDA up 6.8% driven by revenue growth

• Revenues $488.4m, up 6.8%

• Growth in all major revenue categories

• Third quarter revenues up 4.4%

• Expenses $115.0m, up 6.9%

• FY14 guidance unchanged with approximately 5% expense growth

• Capital expenditure $28.3m

• Key initiatives on track – delivery of post-trade services during CY14

• FY14 guidance unchanged at $40-45 million

• Regulatory developments

• Financial System Inquiry

• Guidance on location requirements for market infrastructure

• Renewed focus in USA on market fragmentation and high frequency trading

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1. Unaudited

All comparisons are to prior comparative period (pcp) Variances expressed favourable/(unfavourable)

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Income Statement

	3Q14 $M % Variance YTD Mar 2014 $M % Variance
Operating Revenues	159.1 4.4% 488.4 6.8%
Operating Expenses	37.7 (4.2%) 115.0 (6.9%)
EBITDA	121.4 4.5% 373.4 6.8%
Depreciation and Amortisation	8.2 (7.4%) 24.4 (6.5%)
EBIT	113.2 4.3% 349.0 6.8%
Interest and Dividends	22.0 27.0% 56.3 32.3%
Profit Before Tax	135.2 7.4% 405.3 9.8%
Income Tax Expense	(38.0) (4.8%) (118.4) (9.2%)
Profit After Tax	97.2 8.5% 286.9 10.0%

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Variances expressed favourable/(unfavourable)

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YTD Revenue Movement ($M)

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2.3 0.5 488.4
7.9
2.5
6.3
3.7
8.1
457.1
Up Up Up Up Up Up Up
7.7% 4.3% 13.7% 6.8% 5.5% 7.9% 4.1%
Operating Revenues Up 6.8%
July to March 13 Listings and Cash Market Information Technical Derivatives and Austraclear Other Revenue July to March 14
Issuer Services Services Services OTC Markets
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Revenue Performance Third Quarter

	3Q14 $M	% Variance	YTD Mar 2014 $M	% Variance
Listings and Issuer Services	32.1	0.9%	113.6	7.7%
Cash Market	28.6	(2.1%)	87.8	4.3%
Information Services	18.5	19.1%	52.4	13.7%
Technical Services	13.2	7.0%	39.4	6.8%
Derivatives and OTC Markets	52.4	4.9%	152.2	5.5%
Austraclear	10.5	8.9%	31.0	7.9%
Other Revenues	3.8	(0.8%)	12.0	4.1%
Operating Revenues	159.1	4.4%	488.4	6.8%

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All comparisons are to prior comparative period (pcp)

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Activity Levels – Listings and Cash Market

Listings Total Capital Raised $Billion

ASX Cash Market Average Daily On-Market Value Traded $Billion

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25.7
15.3
12.8
10.9 11.0
7.4 7.7
1Q 2Q 3Q 4Q
FY13 FY14
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3.8
3.5
3.4
3.3
3.1
3.0
2.9
1Q 2Q 3Q 4Q
FY13 FY14
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• 3Q14 up 4.7%

• YTD up 32.3%

• 3Q14 down 0.8%

• YTD up 5.4%

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All comparisons are to prior comparative period (pcp)

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Activity Levels – Derivatives

ASX 24 Derivatives Daily Average Contracts (‘000)

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539
488
479
462
444
404
394
1Q 2Q 3Q 4Q
FY13 FY14
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• 3Q14 up 1.9%

• YTD up 9.3%

ASX Derivatives Daily Average Contracts (‘000)

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643 641
604 608
531
492
478
1Q 2Q 3Q 4Q
FY13 FY14
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• 3Q14 down 17.2%

• YTD down 20.6%

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All comparisons are to prior comparative period (pcp)

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Interest and Dividend Income

	YTD March 2014 $M	YTD March 2013 $M	% Variance
ASX Group Interest Income	22.0	11.2	96.2%
Net Interest Earned on Collateral Balances	23.5	21.9	7.1%
Total Net Interest Income	45.5	33.1	37.5%
Dividend Income	10.8	9.4	15.2%
Interest and Dividend Income	56.3	42.5	32.3%

Highlights

• Total net interest income up 37.5%

• ASX Group interest income up 96.2% following capital raising

• Net interest earned on collateral balances up 7.1%

• Balances $3.8 billion, up 11.5%

• Spread 44 bps (46 bps pcp)

• IRESS dividend up 15.2% following participation in capital raising • Holding 19.3%

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Variances expressed favourable/(unfavourable)

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Expenses

		YTD	YTD
		March	March	% Variance
		2014 $M	2013 $M
	Staff	69.5	64.6	(7.6%)
	Occupancy	10.6	10.2	(4.1%)
	Equipment	17.3	16.3	(6.3%)
	Administration	11.6	11.0	(4.6%)
	Variable	3.2	2.8	(10.5%)
	ASIC Levy	2.8	2.6	(10.3%)
	Total Operating Expenses	115.0	107.5	(6.9%)
	Depreciation and Amortisation	24.4	22.9	(6.5%)

Highlights

• Total expenses up 6.9%

• Third quarter run rate below 1H14

• Average staff numbers up 4.1% to 534 FTEs, driven by post-trade initiatives

• Higher equipment expenses to support platforms for new services

• D&A up 6.5% following higher capital expenditure for post-trade services

• Guidance FY14 unchanged: approximately 5% expense increase

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Variances expressed favourable/(unfavourable)

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Capital Expenditure ($M)

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50.2
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39.1 38.9
27.5 28.3
FY10 FY11 FY12 FY13 9 Months FY14
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FY10
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FY13
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9 Months FY14

Normal Capex Data Centre

• Post-trade services delivery on track, $17 million of capital expenditure YTD

• FY14 capital expenditure guidance unchanged at $40-45 million

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Business Development – Focus Areas

Leading multi-asset class exchange group in Asia Pacific

	• Grow Listings and Issuer Services
Broaden investment offer	• Develop investment ‘supermarket’ - domestic equities, int’l equities (UDRs), debt, corporate bonds, EFTs, funds (mFund)
	• Expand derivatives products and asset classes
	• Innovate in trade execution
Lead in competitive market	• Deliver Technical Services to domestic and int’l trading community
	• Re-engineer Information Services and expand product offer
	• Deliver post-trade services that maximise capital and collateral efficiency -
	OTC clearing, client clearing, collateral management, T+2 settlement
Provide world-class infrastructure	• Invest in core platforms - trading, clearing, settlement, risk management
	• Develop multi-currency capabilities
	• Leverage ASX Net Global to grow international client base
Expand client relationships and engagement	• Deepen relationships, including client forums for all key businesses
	• Build customer alignment through revenue sharing
Advocate regulatory settings that	• Maintain settings in equity markets; limit fragmentation
support investors and market	• Ensure Australia maintains world-class financial market infrastructure
growth	• Meet domestic and international financial stability standards

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Financial System Inquiry – ASX Submission

A need to refocus on the competitiveness of Australia

Objectives

Stability

• Secure long-term stability of Australia’s financial markets

Domestic Financial Markets

• Support a vibrant and growing domestic economy and wealth creation

Asian Opportunity

Considerations for the Inquiry

1. Explore ways in which Australia can work with other centres to ensure global regulations are tailored to the Asian region

2. Set location requirements for all systemically important markets, considering financial stability and Australia’s ambition in the region

3. Review the 15% ownership limit that applies only to ASX, following strengthened controls over financial market infrastructure

4. Play a greater role in the delivery of financial services to the Asian region

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Requirements for Financial Market Infrastructure (March 2014) Good progress in setting market-wide controls. ASX recommends tighter OTC market requirements

	Financial Market	Current Guidance	ASX Recommendation
	Domestic equities and equity options	Offshoring restrictions/ Australia	Australia
	Domestically traded derivatives (interest rates, index)	Offshoring restrictions/ Australia	Australia
			Australia for
	Internationally traded OTC derivatives (A$ interest rate swaps)	No controls	systemically important
			users
	Commodities and energy/electricity	No controls	No controls
	+
	Mandate for A$ OTC swaps to be centrally cleared	Recommended	Recommended
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Positive regulatory settings around HFT in Australia

There are some key differences between the US and Australian markets that affect the level and impact of high frequency trading (HFT)

Regulatory settings that have positive impact on Australian equity market

• Maker-taker pricing is not permitted

• Regulatory fees are based on a combination of orders and trades

• Minimum tick sizes have not been narrowed

Structural differences that lead to a lower level of HFT activity

• In Australia, best execution is a broker obligation; in the US ‘routing away’ is an exchange obligation based on price only

• Australia does not operate a ‘consolidated tape’ revenue model for market data; the US does

• Price improvement must be meaningful

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Nine Months to 31 March 2014[1]

Revenues Expenses EBITDA Interest & Div. Net Profit[1] $488.4m $115.0m $373.4m $56.3m $286.9m 6.8% (6.9%) 6.8% 32.3% 10.0%

• Profit after tax $286.9m, up 10.0%

• EBITDA up 6.8% driven by revenue growth

• Revenues $488.4m, up 6.8%

• Growth in all major revenue categories

• Expenses $115.0m, up 6.9%

• FY14 guidance unchanged with approximately 5% expense growth

• Capital expenditure $28.3m

• Key initiatives on track – delivery of post-trade services during CY14

• FY14 guidance unchanged at $40-45 million

• Regulatory developments

• Financial System Inquiry

• Guidance on location requirements for market infrastructure

• Renewed focus in USA on market fragmentation and high frequency trading

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1. Unaudited

All comparisons are to prior comparative period (pcp) Variances expressed favourable/(unfavourable)

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