2020 Q1 Results Analyst Presentation Charles Li Chief Executive, - PowerPoint PPT Presentation

2020 Q1 Results Analyst Presentation Charles Li Chief Executive, HKEX Group Romnesh Lamba Co-President, HKEX Group Vanessa Lau Group Chief Financial Officer, HKEX Group 7 May 2020

Disclaimer The information contained in this document is for general informational purposes only and does not constitute an offer, solicitation, invitation or recommendation to subscribe for or purchase any securities, or other products or to provide any investment advice or service of any kind. This document is solely intended for distribution to and use by professional investors. This document is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Hong Kong Exchanges and Clearing Limited (“HKEX”) to any registration requirement within such jurisdiction or country. This document contains forward-looking statements which are based on the current expectations, estimates, projections, beliefs and assumptions of HKEX about the businesses and the markets in which it and its subsidiaries operate. These forward-looking statements are not guarantees of future performance and are subject to market risk, uncertainties and factors beyond the control of HKEX. Therefore, actual outcomes and returns may differ materially from the assumptions made and the statements contained in this document. Where this document refers to Shanghai-Hong Kong Stock Connect and/or Shenzhen- Hong Kong Stock Connect (together, the “Stock Connect” programs), please note that currently, access to northbound trading is only available to intermediaries licensed or regulated in Hong Kong; southbound trading is only available to intermediaries licensed or regulated in Mainland China. Direct access to the Stock Connect is not available outside Hong Kong and Mainland China. Where this document refers to Bond Connect, please note that currently, access to northbound trading is only available to foreign investors that are able to trade onshore bonds on the China Foreign Exchange Trade System & National Interbank Funding Centre. Although the information contained in this document is obtained or compiled from sources believed to be reliable, HKEX does not guarantee the accuracy, validity, timeliness or completeness of the information or data for any particular purpose, and shall not accept any responsibility for, or be liable for, errors, omissions or other inaccuracies in the information or for the consequences thereof. The information set out in this document is provided on an “as is” and “as available” basis and may be amended or changed. It is not a substitute for professional advice which takes account of your specific circumstances and nothing in this document constitutes legal advice. HKEX shall not be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon any information provided in this document. 2

Agenda 01 Q1 2020 Key Highlights 02 HKEX Group Financial Review 03 Business and Strategic Update 04 Appendix 3

Q1 2020 Key Highlights 1 | Financial Performance  Core business revenue up by 19% YoY; total revenue down by 7% YoY; prudent cost management  Record quarterly Stock Connect revenue of HK$404m (+74% YoY)  Net investment loss of HK$47m (Q1 2019: income HK$882m) 2 | Business and Strategy  Strong IPO market #1 globally in number of new company listings (39) and #4 in IPO funds raised (HK$14.4bn)  Strong performance in Connect Schemes  Ongoing market microstructure enhancements  Enhanced technology capabilities, leveraging AI tools and robotic process automation 3 | Business Continuity and Operational Resilience  HKEX, as an operator of regulated exchanges and CCPs, is committed to maintaining resilient, fully functioning and orderly financial markets  Comprehensive Business Continuity Planning and operational framework are in place  Business has demonstrated resiliency, robust operations and strong risk management; LME successfully temporarily transitioned Ring trading to electronic pricing platform 4

HKEX Group Financial Review 5

Key Financial Highlights Very strong core business performance – higher revenue and profit than Q4 2019 Investment income impacted by macroeconomic conditions (HK$) Total revenue & other income Core business revenue Net investment income / (loss) -7% -$929m +19% +7% +28% -$620m $4.3bn $3.7bn $4.0bn $3.4bn $3.2bn $4.1bn $882m $573m $(47)m Q1 2019 Q4 2019 Q1 2020 Q1 2019 Q4 2019 Q1 2020 Q1 2019 Q4 2019 Q1 2020 EBITDA PAT Basic earnings per share -10% -13% -14% +15% +14% +14% $3.3bn $2.6bn $3.0bn $2.0bn $2.3bn $1.58 $1.80 $2.6bn $2.09 Q1 2019 Q4 2019 Q1 2020 Margin Q4 2019 Q1 2020 Q4 2019 (1) Q1 2020 Q1 2019 Q1 2019 77% 69% 74% 1. Basic earnings per share for Q4 2019 is estimated by dividing Q4 2019 PAT by weighted average number of shares in issue less shares held for Share Award Scheme for the year ended 31 December 2019. 2. % is computed based on amounts reported in financial statements. 6

Very Strong Q1 Core Business Performance YoY; but Net Investment Income Impacted by Macro Environment Revenue and Operating Profit attributable to HKEX income EBITDA Basic earnings per share other income expenses (1) shareholders (2) (HK$ million) (HK$) Core business+NII Core business+NII Core business+NII Core business+NII + 6% - 7% - 10% - 13% - 14% Core business Core business Core business Core business + 19% + 24% + 34% + 33% ADT 77% Margin 74% HK$101.1bn +20% HK$120.9bn 4,288 4,009 NII 882 3,318 2,984 2,608 NII 882 2,262 2.09 1.80 Core business NII 882 Core business 4,056 NII 0.71 Core business 3,406 1,025 970 Core business 3,031 Core business Core business 2,436 Core business 2,309 Core business 1.84 1,726 1.38 NII (47) NII (0.04) NII (47) NII (47) Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Trading & clearing fees  from  Staff costs and professional EBITDA margin  3% PAT %  more than EBITDA due %  more than PAT due to  ADT & ADV, and record Stock fees to one-off deferred tax charge shares issued for scrip dividends Connect revenue arising from increase of statutory UK tax rate from 17% to 19% Listing fees  from  newly listed CBBCs Net investment income (NII)  due to HK$521m losses from external portfolio in Q1 2020 (vs HK$390m record gains in Q1 2019 ) 1. Excludes depreciation and amortisation, finance costs, and share of profits/(losses) of joint ventures 2. For the purpose of this presentation, tax impact of NII is not considered when calculating the PAT attributable to NII. 7

Rolling Q1 2020 Results Stronger than Q4 2019 Despite Fall in Net Investment Income Profit attributable to Operating expenses (1) Revenue and other income EBITDA HKEX shareholders (2) (HK$ million) Core business+NII Core business+NII Core business+NII - 11% + 15% + 14% + 7% Core business Core business Core business + 28% + 50% + 64% ADT 69% Margin 74% HK$77.1bn +57% HK$120.9bn 4,009 3,746 NII 573 2,984 2,600 2,262 1,979 Core NII 573 business Core Core 4,056 NII 573 business 1,146 business Core 1,025 3,173 Core 3,031 business business Core 2,309 2,027 business 1,406 NII (47) NII (47) NII (47) Q4 2019 Q1 2020 Q4 2019 Q1 2020 Q4 2019 Q1 2020 Q4 2019 Q1 2020 Trading and clearing fees  from EBITDA margin  5% PAT %  lower than EBITDA due to one-  Opex due to seasonality  ADT & ADV, and record Stock off deferred tax charge offset by lower %  in D&A and finance costs Connect revenue Listing fees  from  newly listed CBBCs and DWs NII  due to HK$521m losses from external portfolio in Q1 2020 (vs HK$146m gains in Q4 2019) 1. Excludes depreciation and amortisation, finance costs, share of profits/(losses) of joint ventures, and non-recurring costs arising from the proposed combination with London Stock Exchange Group plc (LSEG) 2. The tax impact of NII is not considered when calculating the PAT attributable to NII. 8

Q1 2020 Performance above Historical Trendline Quarterly performance (HK$ million) Profit attributable to Shareholders Revenue and Other income (1) Operating Expenses EBITDA 4,288 4,290 4,150 4,102 4,057 4,044 4,009 3,987 3,747 3,746 3,571 3,523 3,454 3,318 3,307 3,155 3,215 3,195 3,077 3,061 3,038 3,048 2,984 2,879 2,866 2,848 2,796 2,751 2,775 2,638 2,600 2,567 2,555 2,404 2,277 2,215 2,608 2,597 2,562 2,520 2,078 2,479 2,045 2,443 2,014 1,946 2,330 1,897 2,262 2,207 1,705 2,033 1,979 1,878 1,828 1,777 1,716 1,575 1,553 1,543 1,531 1,432 1,241 1,167 1,146 1,025 1,025 968 983 970 983 949 933 935 887 881 878 862 854 829 834 834 833 718 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2019 2020 2015 2016 2018 Q1 2020 performance reflects strength and resiliency of the core business despite COVID-19 outbreak and macroeconomic uncertainty 1. Excludes depreciation and amortisation, finance costs, share of profits/(losses) of joint ventures, and non-recurring costs arising from the proposed combination with LSEG 2. Dotted trend lines are illustrative and do not constitute a forward forecast. 9