EURONEXT
AGILITY FOR GROWTH
13 MAY 2016
AGILITY FOR GROWTH DISCLAIMER
This presentation is for information purposes only and is not a recommendation to engage in investment activities. The information and materials contained in this presentation are provided ‘as is’ and Euronext does not warrant as to the accuracy, adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions. This presentation contains materials (including videos) produced by third parties and this content has been created solely by such third parties with no creative input from Euronext. It is not intended to be, and shall not constitute in any way a binding or legal agreement, or impose any legal obligation on Euronext. All proprietary rights and interest in or connected with this publication shall vest in Euronext. No part of it may be redistributed or reproduced without the prior written permission of Euronext.
This presentation may include forward-looking statements, which are based on Euronext’s current expectations and projections about future events. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of Euronext. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no undue reliance should be placed on any forward-looking statements. Forward-looking statements speak only as at the date at which they are made. Euronext expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statements contained in this presentation to reflect any change in its expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law.
Financial objectives are internal objectives of the Company to measure its operational performance and should not be read as indicating that the Company is targeting such metrics for any particular fiscal year. The Company’s ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control, and upon assumptions with respect to future business decisions that are subject to change. As a result, the Company’s actual results may vary from these financial objectives, and those variations may be material.
Efficiencies are net, before tax and on a run-rate basis, ie taking into account the full-year impact of any measure to be undertaken before the end of the period mentioned. The expected operating efficiencies and cost savings were prepared on the basis of a number of assumptions, projections and estimates, many of which depend on factors that are beyond the Company’s control. These assumptions, projections and estimates are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. The Company cannot provide any assurance that these assumptions are correct and that these projections and estimates will reflect the Company's actual results of operations
Euronext refers to Euronext N.V. and its affiliates. Information regarding trademarks and intellectual property rights of Euronext is located at https://www.euronext.com/terms-use. © 2016, Euronext N.V. - All rights reserved.
AGILITY FOR GROWTH 2 OUR TRACK RECORD: EURONEXT HAS OUTPERFORMED SINCE IPO, REACHING TARGETS A YEAR IN ADVANCE Total shareholder return of 141% since IPO Initial and 80% in 2015 2016 targets €519m
1 Third party revenues €471m 1 (€m) €433m €500m
Cost efficiencies (€m) -€83m3 -€60m4
EBITDA margin 29%1,2 42%1 55% 45%
2013 2014 2015
1. Revenues and operating expenses adjusted for the impact of clearing contract 2. Operating expenses 2013 inflated with expenses related to third-party revenues AGILITY FOR GROWTH 3. Run-rate efficiencies as of 31st December 2015 4. On a run-rate basis 3 OUR FUNDAMENTAL ASSETS TO DRIVE FUTURE GROWTH
1 Euronext is a fully independent European player focused on its core European markets
2 Euronext offers a wide range of products, services and platforms with a strong international presence
3 Euronext offers liquidity and transparency to all market participants through its regulated exchanges
4 Euronext’s model is resilient and delivers consistent growth and profitability above that of its comparable peers
5 Euronext is ‘united in diversity’; its open federal model is best suited to contribute to the construction of a true pan-European market
OUR MISSION IS TO POWER PAN-EUROPEAN CAPITAL MARKETS TO FINANCE THE REAL ECONOMY
AGILITY FOR GROWTH 4 OUR STRATEGIC AMBITIONS UNTIL 2019: AGILITY FOR GROWTH
I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 5 AGENDA FOR THE DAY – MORNING SESSION
Ambitions: Agility for Growth 11:00 Stéphane Boujnah, CEO Euronext I Capture opportunities arising from the environment 11:10 Lee Hodgkinson, Head of Markets and Global Sales 1. Market trends and economic outlook as an opportunity Lee Hodgkinson, Head of Markets and Global Sales 2. Regulation as a driver of our growth Catherine Langlais, General Counsel 3. Innovation as a transforming force of our business Nicolas Rivard, Chief Innovation Officer II Enhance agility 11:40 Stéphane Boujnah, CEO Euronext 1. Cost management discipline Stéphanie Bia, Head of IR and Business Performance 2. Upgraded IT & infrastructure platforms Jos Dijsselhof, COO 3. M&A discipline Stéphane Boujnah, CEO Euronext III Strengthen the resilience of the core business 12:15 Lee Hodgkinson, Head of Markets and Global Sales 1. Listing Anthony Attia, CEO Euronext Paris and Global Head of Listing Danielle Mensah, Head of Cash Markets 2. Cash & derivatives trading Adam Rose, Head of Financial Derivatives 3. Market data and indices Maurice van Tilburg, CEO Euronext Amsterdam
A buffet lunch will be served between 13:15 and 13:45
AGILITY FOR GROWTH 6 AGENDA FOR THE DAY – AFTERNOON SESSION
IV Grow in selected segments 13:45 Stéphane Boujnah, CEO Euronext 1. Adding value to issuers 1.1 The exchange for European Tech SMEs Eric Forest, CEO EnterNext 1.2 Data & analytics: The modular corporate services provider Lee Hodgkinson, Head of Markets and Global Sales 2. Adding value to investors 2.1 ETFs: One-stop-shop pan-European ETF platform Benjamin Fussien, Head of ETFs 2.2 Indices: Euronext branded European family of indices Adam Rose, Head of Financial Derivatives 2.3 Commodities: Specialist content on agricultural commodities Olivier Raevel, Head of Commodities 2.4 Post trade solutions Andrew Simpson, Head of Post Trade Break 15:15 V Deliver value to shareholders 15:30 Giorgio Modica, CFO Q&A session 15:50 All
AGILITY FOR GROWTH 7 I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 8 CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT Market trends and economic outlook as an opportunity
Lee Hodgkinson, Head of Markets and Global Sales
AGILITY FOR GROWTH THE NEXT THREE YEARS WILL BE SHAPED BY A SET OF KEY DRIVERS
. Economic conditions to remain supportive of the core business . Quantitative easing (QE) and low rates will continue to drive investor search for yield . Volatility will continue as theme; Brexit “pause” will pass . Capital requirements and profitability challenges will change behaviour of major intermediaries: • Low-touch, capital light, cleared activities to dominate activity • Investors to exercise greater discretion and control • HFT activities to continue amidst tighter regulation • SME demand for capital markets to increase . Regulatory direction of travel remains positive for regulated exchanges . Pan-European FTT unlikely to materialise, but stays on the agenda . Exchange consolidation more likely than not - few new entrants AGILITY FOR GROWTH 10 EURO-AREA REAL ACTIVITY CONTINUES ITS POSITIVE TRAJECTORY … Growth momentum will restore Keynes’ “animal spirits” and investor appetite 130
120
110
100 Eurozone Now-Casting Index 90
80
US Now-Casting Index Casting Nominal Value Nominal Casting
- 70 Now 60 Now-Casting Index: real activity index based on a model built on monthly and quarterly economic 50 indicators covering 1)production, 2) labour, 3) construction, 4)national and international trade, China Now-Casting Index 5)services and 6) surveys 40
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Source: Euronext, Bloomberg, Gavekal, Macrobond, April 2016 11 …AMIDST A STABLE MACRO-ECONOMIC ENVIRONMENT AND OUTLOOK Consensus expectation is for Euro Area GDP growth 1,5 5 Euro Area GDP Growth EuroCoin Indicator 4 1
3
1.6 1.6 1.7 2 0,5 1 0 0 Forecast -1
EuroCoin Indicator Indicator EuroCoin -0,5
-2 Euro Area GDP Growth % Growth GDP Area Euro -3 -1 -4 -1,5 -5
Source: Euronext, Bloomberg GDP consensus forecast, IMF, ECB, Gavekal, April 2016 The Euro Area Coincident Indicator includes economic variables that tend to change at AGILITY FOR GROWTH approximately the same time as the overall economy. EuroCoin Growth indicator gives a sense of the current state of the economy in terms of real time GDP. 12 …AND EASIER FINANCIAL AND FISCAL CONDITIONS Improving credit conditions will facilitate expansion of real economy corporates
5 ECB QE France Germany Banks’ interest rates to non-financial corporations Spain (1-5 year loans)
4 Italy
Interest Rate % Rate Interest 3
2
2010 2011 2012 2013 2014 2015 2016 AGILITY FOR GROWTH
Source: Euronext, Bloomberg, Gavekal, Macrobond, April 2016 13 MATERIAL QE COMBINED WITH VOLATILITY WILL SUPPORT VOLUME Heightened but not extreme “Goldilocks” volatility is healthy for Euronext’s franchise
10 000 60 Euronext ADV (€m) Stoxx 50 Volatility Volatility Threshold 9 000 ECB QE 50
8 000 Announcement
7 000
40
m 6 000 € 5 000 30 4 000 20 3 000 2 000 Sustained periods of
10 Value Volatility Nominal ADV on Euronext Euronext on ADV volatility under QE tend to 1 000 impact volumes positively
- 0
April
July July July July July
May May May May May
June June June June June
April April April April April
March
March March March March March
August August August August August
January January January January January January
October October October October October
February February February February February February
December December December December December
November November November November November
September September September September September 2011 2012 2013 2014 2015 2016
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Source: Euronext, Bloomberg, May 2016 14 EXPERIENCE OF US PEERS SHOWS LITTLE TO FEAR FROM END OF QE At the end of QE, similarly to the US, no negative impact is expected
BATS Global Markets - US Nasdaq - US NYSE 6 000 000 Taper announcement 5 000 000 Fed’s QE taper did not affect ADV on US 4 000 000 exchanges negatively
3 000 000 ADV US$ m US$ ADV 2 000 000 1 000 000
-
July July July July
May May May May
March March March March March
January January January January January
November November November November
September September September September 2012 2013 2014 2015 2016
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Source: Euronext, World Federation of Exchanges, April 2016 15 RESULTS FROM G20 POST-CREDIT CRISIS RESPONSE
“Never again” mantra, which The roll out of a regulatory has led to increased Quantitative easing and low change programme across the transparency, reduced systemic interest rates world’s major marketplaces risk and better use of capital
Reshaping how business gets done
New world is supportive to transparent, neutral, centrally cleared exchanges
AGILITY FOR GROWTH 16 CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT Regulation as a driver of our growth
Catherine Langlais, General Counsel
AGILITY FOR GROWTH REGULATION WILL INCREASINGLY DRIVE VALUE TOWARDS TRANSPARENT AND OPEN MARKETS…
Pressure of .CRD IV . Push for more equity and debt market-based financing disintermediation will . Easier SME access to public listing .Prospectus directive remain . Rise of electronic markets for capital intensive products
Push of OTC towards .EMIR . Push of OTC and dark volumes in equity towards transparent markets . Most standard and liquid OTC derivatives pushed towards on-exchange trading transparent market .MiFIDII/R . Push for exchange-based indices models will increase .Benchmark regulation . Benchmark regulation ending banks marking their own homework
No material move on .EMIR . Post 2020 opening of access to index licences, regulation remains silent on pricing market data and post- .MiFIDII/R . Post 2020 clearing open access along local exemption possibilities trade before 2020 .Benchmark regulation . Increased transparency over market data fees and costs
European single .CSDR . Pan-European settlement framework and platform market will be further .Target 2 Securities . Further European integration of laws on securities incentivised .CMU . MiFID III…
AGILITY FOR GROWTH 18 … RESULTING IN AN OVERALL FAVOURABLE ENVIRONMENT FOR EURONEXT Today 2018 2019
Growing debt and equity financing needs Listing Opportunity to capture more listings through increased SME outreach
Trading Growing trading volumes (all asset No regulatory change Opportunity to capture more activity classes) through innovative market models
Stable margins on existing raw data Market data business No regulatory change and indices Mitigation by expanding towards added-value data offering
Neutral impact as local exemption No regulatory change Post trade possibilities
AGILITY FOR GROWTH 19 CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT Innovation as a transforming force of our business
Nicolas Rivard, Chief Innovation Officer
AGILITY FOR GROWTH INNOVATION AND NEW ENTRANTS WILL TRANSFORM CAPITAL MARKETS
Numerous drivers for accelerated innovation …with incremental or disruptive impacts in capital markets…
Evolving regulation, stringent capital requirements push for Higher performance and cost efficiency of existing new ways of serving clients processing chain . High performance, low cost, and highly agile platforms Accelerating pace of technological adoption, e.g. big data, . Advanced analytics, e.g. for investment decisions, cloud… fraud detection, …
Record investment in Fintech, $13.8 bn in venture capital Potential disintermediation of traditional capital market backed investments in 2015, of which > $0.5 bn in Blockchain actors . Distributed ledger e.g. through Blockchain . Alternative funding platform, e.g. crowdfunding New customer behaviours driven by B2C, e.g. simplicity, . Emerging platforms connecting buyers and sellers speed, …
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Source: CB Insights, KPMG 21 EURONEXT’S DISCIPLINED AND STRUCTURED INNOVATION STRATEGY WILL SUPPORT GROWTH
Euronext has strong foundations to innovation A disciplined and structured strategy to innovation
Spot market opportunities to build quickly Euronext capabilities on Passionate people growth selected segments . With sound technological asset, performing, scalable, modular secure, and readily exploitable . With entrepreneurs with a strong drive to leverage Euronext's assets to further develop business Creative drive Deploy external innovations and position Euronext in most promising projects . Leveraging and extending Euronext ecosystem: 1,300 issuers, 300+ members, academic resources Collaboration spirit Enhance internal innovation capabilities to deliver client driven innovation faster, cost efficiently, with a start-up mode approach
AGILITY FOR GROWTH 22 I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 23 ENHANCE AGILITY
Stéphane Boujnah, CEO Euronext
AGILITY FOR GROWTH ENHANCE AGILITY
Intensify client centricity
Attract, retain and develop best talent and entrepreneurs
Continue disciplined cost management
Strengthen IT and infrastructure platforms
Create a disciplined M&A framework
AGILITY FOR GROWTH 25 ENHANCE AGILITY Cost management discipline
Stéphanie Bia, Head of Investor Relations and Business Performance
AGILITY FOR GROWTH EURONEXT’S TRACK RECORD: SUCCESSFUL FIRST COST REDUCTION PLAN Delivery, in a reduced timeframe, of €85m cost reductions versus initial target of €60m
H1 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
IT rationalisation . Notification and restructuring of London, IT staff, Euronext Separation Programme Simplification . Contract renegotiation - SLA replacement desktop support, global web, disaster recovery site migration Restructuring . Real estate reduction: Cannon Bridge House exit, London, Brussels and Paris moves – Lisbon being optimised . Restructuring: redundancies and social plan . Refresh of core trading infrastructure
Cumulated cost reductions €22m €29m €38m €44m €51m €64m €77m €85m
Cumulated €20m €26m €45m €38m €63m €65m €67m €67m restructuring expenses
AGILITY FOR GROWTH 27 IMPACT OF COST REDUCTION ON EBITDA MARGIN Strong impact of the cost reduction programme on EBITDA margin improvement
+9pts 55% margin . Compared to 2013 adjusted1, EBITDA margin +17pts increased by: 42% margin • +17pts thanks to cost reductions • +9pts thanks to increase in revenues 29% margin
-13pts . Current EBITDA margin reached 55% at the end of 2015, representing an increase of 26% since 2013 adjusted
1 2013 Adjustments 2013 Cost Revenue 2015 reported adjusted reduction increase reported impact
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1. Adjustments for the impact of the clearing contract and for related-party revenues 28 ADDITIONAL COST REDUCTION PROGRAMME Delivery of €22m savings through infrastructure optimisation and streamlining of the organisation
Infrastructure optimisation . Continuous efforts to improve assets utilisation 1/3 . Rationalise number of sites and set-up IT team in Porto (effective near- shore centre) €22m additional gross cost reduction programme Streamlining of the organisation . Reduction of the footprint in Basildon further to the deployment of the 2/3 new trading platform and renegotiation of the contract . Continuous effort to reinforce the culture of efficiency
AGILITY FOR GROWTH 29 CONSISTENT DELIVERY OF COST REDUCTION INITIATIVES Euronext expects to complete its cost reduction programme of €100m by year-end 2019 while maintaining control over its exceptional restructuring expenses Cost reductions Additional Total since IPO + cost reductions = Cost reductions IT rationalisation €20m1 - €20m Simplification €20m1 - €20m Restructuring €45m €22m €67m Total cost reduction €85m €22m €107m Inflation adjustment 2016-19E2 - -€7m -€7m Adjusted total cost reduction €85m €15m €100m
Cost of restructuring Restructuring €45m €22m €67m Expenses for restructuring €67m €33m €100m Expenses / restructuring (x) 1.5x 1.5x 1.5x
1. Cost reductions which implied no direct exceptional restructuring expenses AGILITY FOR GROWTH 2. Assuming 1% inflation per year 30 ENHANCE AGILITY Upgraded IT & infrastructure platforms
Jos Dijsselhof, COO
AGILITY FOR GROWTH TECHNOLOGY CONTINUES TO ACT AS AN ASSET FOR BUSINESS GROWTH
2014 2015 2016
Carved out Euronext IT from NYSE / LIFFE without impacting operations Separated, downsized and converged cash and derivatives infrastructure
Optimised costs € 20 m cost reduction following closing of London IT office Relocation of back-up site Lower operating costs
Enabling business growth Enhanced delivery of business and commercial initiatives Enhanced technology platform Meeting regulatory requirements Lower residual operational risk
AGILITY FOR GROWTH 32 EURONEXT FOCUSES ON STABILITY AND SECURITY Euronext runs, maintains, enhances and protects the technology required to operate its business and serve its clients
. Seamlessly running our trading platforms with: – #1 priority is the daily start-up, operation & monitoring of systems – Stability controls and strong incident management processes in place – Multiple asset classes and markets Develop Run . Aligning the Information Security Management System with industry best practice (e.g. ISO27001, ISO27002, ISO27005) . Implementing an approved Cyber Security framework (NIST) and complying with SANS Top20 Cyber Controls . Fostering an Information Security culture through cyber risk awareness training and follow-up phishing tests
Protect . Strong alignment with clients’ needs to deliver more value . Launch of Agile methodology for more flexibility and time-to-market implementation
AGILITY FOR GROWTH 33 EURONEXT IS ENHANCING ITS OPERATING MODEL TO DELIVER VALUE TO ITS CLIENTS
A more agile organisation… Relocate teams from Belfast to Porto by 2017
. Industrialise IT processes . Rationalise number of sites and co-locate teams where possible . Implement Agile methodology . Bring on over 100 highly skilled new hires in Porto . Manage IT operations and development, security and finance in conjunction with existing Paris based teams . Leverage existing Portuguese presence by colocating with Interbolsa offices and functions
…which provides business and financial benefits
. Innovative culture . Cost efficient . Closer to businesses and core markets . More flexibility with faster delivery
AGILITY FOR GROWTH 34 TO IMPROVE CUSTOMER EXPERIENCE, EURONEXT IS LAUNCHING A NEW GENERATION TECHNOLOGY PLATFORM
With the cutting edge technology embedded on Optiq™, Euronext is meeting client key expectations
STABILITY AND SCALABILITY AND LOW TIME SIMPLIFICATION & QUALITY OF SERVICE PREDICTABILITY TO MARKET RATIONALISATION COMPLIANCE
. Meet stability and . Answer strong . Deliver products with a . Harmonise cash and . Include MiFID II resiliency challenges requests for improved shorter time to market derivatives systems requirements on a . Provide clients with constant latency and to better adapt to using market standard native basis improved surveillance increased throughput market demand and protocols . Optimise the migration and analytics services on both cash and support strategy . Automate daily strategy taking MiFID II derivatives markets . Have changes impact configuration regulatory calendar . Allow for high clients only if they plan processes into account scalability to use the product / services
AGILITY FOR GROWTH 35 ENHANCE AGILITY M&A discipline
Stéphane Boujnah, CEO Euronext
AGILITY FOR GROWTH EURONEXT’S DISCIPLINED APPROACH TO SCREENING BOLT-ON OPPORTUNITIES
Integration within Fit with Euronext’s Positioning in the cycle strategy Euronext and Valuation personal accountability
AGILITY FOR GROWTH 37 M&A STRATEGIC PRIORITIES
What does Euronext expect from acquisition targets?
Value Entrepreneurial Technology Tangible results Scale proposition spirit
What can Euronext offer to new teams?
Open federal Agile Powerful brand Neutrality Network Efficiency model organisation
AGILITY FOR GROWTH 38 A REINFORCED TEAM AND PROCESSES TO CAPTURE OPPORTUNITIES
Euronext strengthened team and process Key quantitative criteria on potential targets
. Strong track record in delivering Euronext’s . Substantial part of the €100-€150m envelope for successful IPO and stated objectives developments to be allocated to bolt-on acquisitions . New dedicated team at work with the recruitment . Potential to diversify Euronext revenue base and/or of: get scale . Chief Innovation Officer . Purchase multiple discipline . Head of M&A . Revenue and cost synergy potential . Disciplined screening of identified opportunities to . ROCE > WACC in year 3 optimise management time . Solid cash conversion . Investment committee put in place . Deleveraging prospects . Robust post acquisition integration processes
Euronext will analyse any transformational transaction that might become actionable and which might deliver scale and enhanced profitability on a case by case basis AGILITY FOR GROWTH 39 I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 40 STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS
Lee Hodgkinson, Head of Markets and Global Sales
AGILITY FOR GROWTH STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS TO CREATE VALUE Continue to meet obligations to clients today while constantly reaching for change tomorrow
Strategy description Value for clients Value for shareholders
Expand the largest continental European venue to Listing meet client financing needs and deliver a resilient Largest European venue Recurring revenues and diversified source of revenue
Continue optimisation strategy to drive growth Cash trading and remain the market of reference with >60% Deepest liquidity pool Revenue consolidation market share
Extend derivatives product mix, maintain >50% OTC, strong commodity market share on equity options in France, Diversification of business Derivative trading offer strengthen commodities and expand into OTC
Leverage a customisable index business and data Market data and service to offset general trends of a decreasing Solution for changing needs Revenue growth Indices number of screens
AGILITY FOR GROWTH 42 STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS Listing
Anthony Attia, CEO Euronext Paris and Global Head of Listing
AGILITY FOR GROWTH EURONEXT LISTING: OVER 1,300 ISSUERS
275 large cap companies, including 50% of the EuroStoxx 50 1,043 SMEs financing their growth on Euronext
AGILITY FOR GROWTH 44 EUROPEAN COMPANIES ARE INCREASINGLY SEEKING FINANCING ON EURONEXT
Euronext is the largest and most active exchange Capital raised on Euronext markets in €bn in continental Europe…
91.8 104.0 111.7 Over 1,300 c. €3 trillion 50% of the issuers market cap Euro Stoxx 50
54.3 64.9 …with an attractive value proposition 59.9 2.7 1.5 Cost & time 2.5 Single Order Global pool of 47.1 efficient 45.3 Book investors 29.4 IPO process Corporate bonds 2013 2014 2015 Convertible bonds Equities
Source: Euronext, 31 December 2015 AGILITY FOR GROWTH 45 EURONEXT’S LISTING REVENUE IS STABLE AND RESILIENT
Annual fixed fees coming from listed products are a >70% of capital raised on equities from follow-on deals significant revenue component (>45%) in €bn
45.3 in €m Others 73% 53.5 61.7 70.5 Bond fees 47.1 3.9 IPOs 76% 5.3 2.9 Follow-ons 5.3 12.3 29.4 2.1 Fixed fees 89% 5.4 9.7 6.7 16 Primary Follow on 13.4 10.3 Large M&As and spin-offs form a key revenue stream Spin-off Merger Merger Merger Merger 32.9 29 30.4 June 2015 July 2015 August 2015 September January 2016 €70m Mkt. cap €17bn + €23bn €29bn Mkt. cap 2015 €27bn + €11bn Mkt. cap €1bn Mkt. cap Mkt. cap
2013 2014 2015
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Source: Euronext 46 EURONEXT IS BOOSTING ITS FRANCHISE WITH NEW OFFERS AND INCREASED MARKET REACH
Supported by increased disintermediation …and has provided new added-value services and CMU… to issuers…
Visibility & communication
❶ Reinforced prudential rules Research coverage ❷ Development of diversified funding sources Data & analytics
…Euronext has dynamically developed new offers… …through a strengthened sales force . Private Placement Bonds: €16bn raised since launch . Improved day-to-day client coverage in March 2015 . Added commercial teams on the ground to attract issuers . Strong SRI services: €3.6bn raised in 2015 through . Developed partnerships (Asia, US, Israel) to attract investors 11 Green Bonds issuances
Euronext’s aim is to increase reach to all market participants and geographies as the largest European venue
AGILITY FOR GROWTH 47 EURONEXT PROVIDES A UNIQUE BESPOKE OFFERING FOR SMEs IN EUROPE Client intimacy, education and tight collaboration with the local financial ecosystems are at the heart of Euronext’s strategy EnterNext – Total money raised (€bn) and number Launch of Pre and Post Listing services in 2015 of deals . An all-in service offering for issuers to help address market 10 9 40 deficiencies upstream and downstream of the listing process 7,9 8 35 . Target to become the preferred partner for issuers with an 6,8 independent support 34
6 31 30 Becoming the natural listing venue for high growth SMEs 4 26 25 . Leveraging a strong franchise Tech share pre-IPO 2 20 of 326 Tech SMEs programme . In 2015, innovative SMEs Tech 40 label 0 15 represented 86% of SME IPOs, 2013 2014 2015 raising a record €930m Visibility package
Number of deals (includes primary and secondary offers)
AGILITY FOR GROWTH 48 STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS Cash trading
Danielle Mensah, Head of Cash Markets
AGILITY FOR GROWTH EURONEXT HAS A DIVERSE STRATEGY TO DRIVE GROWTH IN CASH TRADING
Quarterly cash revenues and volumes increase
20 60 Cash ADV Revenues 50 15 40 2013-2015 CAGR Revenues +10.4% 10 30 20 5 10 2013-2015 CAGR
0 0 Volumes +12.3%
average daily volumes daily average
m quarterly revenues m quarterly
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 € bn € 2013 2014 2015 2016
. Focus on profitability through yield management & A top tier European Outperforming in yield nurturing market share trading venue management
. Product development to capture new flow & enhance €8.2bn per 0.48 bps* revenue day* . Innovation to accelerate growth in ETF business
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Source: Euronext analysis on book and off book regulated trades 50 EURONEXT OUTPERFORMS PEERS IN VALUE EXTRACTION
Value extraction measured by market share 25% & yield is significantly stronger at Euronext
20%
15%
European European trading -
Volumes 10% Share Share of pan
5%
0% 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1
Yields Basis points on ‘single-counted’ volumes
AGILITY FOR GROWTH Volumes source: Bloomberg Q1 2016 Yield source: analyst reports, Euronext analysis, Company disclosures 51 EURONEXT IS THE POINT OF PRICE FORMATION WITH SUPERIOR EXECUTION QUALITY
Better execution available vs. MTF competition* Strong flow diversity across multiple client types Multi-Type 21% HFT
Euronext blue chips 15% Institutional Euronext BATS Chi-X Equiduct Turquoise Q1 2016 Agency Broker Retail Average Spread 5.93 bps 11.00 bps 7.78 bps 37.11 bps 7.45 bps 44% 8% Own Account Displayed market € 47,789 € 19,071 € 22,057 € 13,418 € 19,359 5% Other depth at best limit 3% 4%
EBBO setter 60% 3% 18% 0% 13% . In continuous trading Euronext is the source of reference Time at European prices with deep liquidity 78% 27% 60% 3% 57% Best Bid & Offer . Unique liquidity points with close to 100% market share: auctions, option expiries (monthly/quarterly)
. Unique continental client base providing differentiated flow
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*Source: TAG audit 52 EURONEXT HAS KEPT YIELDS STABLE IN A COMPETITIVE ENVIRONMENT…
Average monthly yields for cash trading vs. MTFs (basis points) Segmented agency pricing
0,6 Segmented scheme positions Cash Trading Yield customers for growth, whilst 0,5 extracting value and no rebates
0,4 Flagship ‘supplemental liquidity 0,3 Yield range for Chi-x, programme’ Basis points Basis 0,2 BATS, Turquoise Yield dilutive measures are precisely 0,1 targeted (maker-taker scheme) 0 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16
AGILITY FOR GROWTH 53 … AND WILL NOT OVERPAY FOR YIELD-DILUTIVE MARKET SHARE Market share of ‘primary exchange’ on domestic blue chip index 66% 64% CAC 40 62% AEX 60% DAX FTSE 58% OMXS30 56% 2015 54% 2016 J F M A M J J A S O N D J F M Aggressive pricing for low yield, mobile HFT flow, Turquoise beating Chi-X on market share 25% 20% 15% Chi-X 10% 5% Turquoise 2015 2016 0% BATS J F M A M J J A S O N D J F M AGILITY FOR GROWTH Source: Euronext analysis (on book regulated trades) 54 EURONEXT OUTPERFORMS PEERS IN ETFS
ETFs reached a new level of investment in Europe with significant additional growth potential
. New dedicated & focused team . Strong relationships with the issuers 2015 volume • Fastest listing process in Europe 18% CAGR in +74% on Europe over 3 Euronext • Cost efficiency to grow issuer and product base years* vs.+45.1% in Europe* . Partnership with clients . Organic growth through innovation
ADV (€M) 1 500,0
1 000,0
500,0
0,0
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* Source: EY Global ETF Survey 2015, ETFGI, Euronext 55 STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS Derivatives trading
Adam Rose, Head of Financial Derivatives
AGILITY FOR GROWTH DERIVATIVES MARKET FOOTPRINT BENEFITS FROM A SOLID INDEX FRANCHISE French and Dutch options business is at the heart of Euronext’s offering ~50% volumes* comes from index derivatives
11% Index options
CAC40 ® is the most traded European country index futures * 39% Index futures
Exclusive to Euronext
Regained Individual Equity Options (IEO) market share in an increasingly competitive market through partnering and fee adaptation Individual . Succeeded in re-pricing French IEO to stabilise market share ~50% 50% Equity Products . Regained market share in Netherlands vs. TOM through partnering with DeGiro, now exceeding 70% . On-screen liquidity ensured with 25 market makers . Top 100 most traded options are traded between 50K – 7MM p.y.
AGILITY FOR GROWTH
* FY 2015, by number of contracts traded 57 EURONEXT HAS BEEN IN A POSITION TO ADDRESS THE COMPETITION ON INDIVIDUAL EQUITY OPTIONS
Partnership Individual Equity Options Amsterdam with DeGiro 20-day Average Daily Volume (contracts) 80% After partnering with DeGiro, the fastest 70% growing on-line 60% broker in Europe, 50% Euronext’s Individual 40% Equity Options market
30% share stabilised against competition 20% 15-01 15-02 15-03 15-04 15-05 15-06 15-07 15-08 15-09 15-10 15-11 15-12 16-01 16-02 16-03 16-04 from TOM in the Euronext TOM Netherlands
AGILITY FOR GROWTH 58 COST EFFECTIVE DIVERSIFICATION WILL CAPTURE OPPORTUNITIES FROM EVOLVING CLIENT NEEDS AND REGULATORY CHANGE
Portfolio diversification in asset classes and geographies New OTC capture platform AtomX to benefit from tailwind of regulatory change Asset class . AtomX, Euronext’s trade capture facility, provides the benefits of diversification Coming Volatility central clearing while ensuring OTC flexibility Soon Products Coming Physically Settled . Initially launched for equity products Exchange For Soon Index Futures . Gradually will launch more products to support strategy on other Less-Equity Physical asset classes, with the aim to fuel the whole value chain related Options on Single Stock ETFs Dividend Futures The benefits of central clearing while retaining OTC flexibility . Eliminate counterparty risk Spotlight Coming AtomX Flex options Soon . Trade Reporting compliant to regulation . More efficient portfolio margining compared to OTC Equity Weekly Coming AtomX non-COB related options Soon contracts . Centralised management of corporate actions Coming Equity options Single Stock on non-Euronext Futures Soon underlying Euronext markets Non-Euronext markets Geographical diversification AGILITY FOR GROWTH 59 EURONEXT IS UNIQUELY POSITIONED TO DEVELOP THE DERIVATIVES FRANCHISE
Financial derivatives at Euronext benefit from: Euronext is uniquely positioned to strengthen its positioning thanks to:
Technology
Amsterdam options franchise
Regulatory tailwind French delta one products
Client community
AGILITY FOR GROWTH 60 STRENGTHEN THE RESILIENCE OF THE CORE BUSINESS Market Data and Indices
Maurice van Tilburg, CEO Euronext Amsterdam
AGILITY FOR GROWTH EURONEXT OUTPERFORMS PEERS BY ADAPTING ITS MODEL TO SERVE EVOLVING CLIENT USAGE OF DATA
Increase in revenues despite decline in the Market Data revenue has outperformed peers over number of screens purchased by clients the last 3 years
250 000 100 Market Data revenue has increased through active 200 000 management of policies and contracts 80 . Addressing changes in the data usage needs of clients 150 000 . Proactive presence in 140 countries via 430+ data vendors . Focusing on increased interest in overseas redistribution, for 60 example in China 100 000
50 000 40 2013* 2014 2015 # of Screens Revenues in €m
AGILITY FOR GROWTH
* 2013 screen numbers include LIFFE 62 DIVERSIFICATION OF DATA BUSINESS IS MEETING CHANGING CLIENT NEEDS WHILE MITIGATING THE IMPACT OF REGULATION
Market evolution Leveraging opportunities and mitigating risk beyond 2019 1. REGULATION . Euronext will mitigate impact through product MIFID II will lead to disaggregated data sold on a innovation reasonable commercial basis 2. DECLINE IN USER NUMBERS Shift from terminals to non-display applications. . Policy changes to offset impact of future decline to Reduction in users through increased cost awareness secure revenue 3. INNOVATION IN TRADEABLE PRODUCTS Product innovation drives demand for sophisticated . Deliver new services to satisfy client demand, such as data solutions sentiment analysis through a partnership with Heckyl 4. GROWTH IN FINTECH Leading to new data points and new ways of . Create advanced analytics solutions delivering and consuming data
AGILITY FOR GROWTH 63 REGULATED AND SCALABLE INDEX OFFERING SUPPORTS CLIENTS’ PASSIVE INVESTMENT NEEDS
Strong and diversified growth in listed products… … which Euronext will capture… +26%
8 000 Tailored made indices based on our proven capability on our existing indices: 7 000 CAC 40 AEX All 6 000 +14% . Reaction time and time to market as a differentiating factor
5 000 . Optimised customisable index processor (23h/day calculation) +58%
4 000 IndexProducts . Product development with innovative partners (Carbone 4, CDP)
3 000 nr.
2 000 …all across the value chain 1 000 0 375 Indices 2013 2014 2015 Listing …in a context of favourable market trends… Calculation . Attractiveness of passive investments based on indices up +8% to Licencing 20% in global AUM over 2003-2015 Derivatives and ETP trading . Client appetite for new index concepts Market data . Need for regulated index provider in light of Benchmark regulation
AGILITY FOR GROWTH 64 BREAK
AGILITY FOR GROWTH I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 66 GROW IN SELECTED SEGMENTS
Stéphane Boujnah, CEO Euronext
AGILITY FOR GROWTH WE ARE APPLYING A DISCIPLINED APPROACH TO INCREASE SCALE AND DIVERSIFY REVENUE STREAMS
Our ambition is to accelerate our top-line growth through a realistic and coherent strategy • Adding value to issuers and investors • Leveraging our assets: technology infrastructure, network, brand, neutrality, product portfolio and industry positioning • Growing organically and accelerating growth through acquisitions • Implementing our strategy, in a disciplined and agile manner
Through six growth initiatives in selected segments, we aim to deliver an uplift in top line of €70m by 2019 while continuing to strengthen the profitability of our businesses
AGILITY FOR GROWTH 68 WE HAVE BEEN SYSTEMATIC AND THOROUGH IN SELECTING STRATEGIC INITIATIVES
Map the Select 15 strategic Identify areas & 6 strategic universe of areas with highest growth select initiatives the possible potential initiatives
• Market dynamics • Fit with growth • Feasibility of initiative ambition and principles • Clients’ needs • Capacity to execute • Revenue potential overall strategic plan • Euronext’s business and adjacencies • Euronext’s right to win • Credibility in the market place
4+ months and 100+ employees involved
AGILITY FOR GROWTH 69 WE HAVE SELECTED 6 GROWTH SEGMENTS TO DIVERSIFY REVENUE STREAMS AND SCALE OUR BUSINESS 3-year targets
The exchange for The modular corporate services provider Adding value to European Tech SMEs on data analytics issuers ~80 non Euronext country 800 clients served Tech SMEs listed
One-stop-shop pan-European ETF Euronext branded European family of platform in partnership with clients indices with an open source model ~30% market share of on 2-5% of revenues currently Adding value to exchange ETF trading in Europe generated by Euro Stoxx50
investors Specialist content on agricultural Diversified post trade solutions commodities and capture OTC flows
10K ADV on AtomX in OTC >12% contribution of new cleared instruments streams to post trade revenues
AGILITY FOR GROWTH 70 GROW IN SELECTED SEGMENTS Adding value to issuers: The exchange for European Tech SMEs
Eric Forest, CEO EnterNext
AGILITY FOR GROWTH EUROPEAN CAPITAL MARKETS ARE INSUFFICIENTLY TAILORED TO THE FINANCING NEEDS OF EUROPEAN TECH SMES
Strong growth potential PE funds to look at stock market for Specific features of exit innovation Need for critical financing investor & analyst Market opportunity Enormous pool size financing needs No reference listing +50% invested by venue in Europe Eurozone PE funds in 2015
AGILITY FOR GROWTH 72 EURONEXT HAS ACCUMULATED YEARS OF EXPERTISE IN RESPONDING TO THE NEEDS OF TECH SMES…
326 €38bn 70 €7bn
Listed SMEs operating in Aggregated market Tech SMEs listings over Raised by Tech SMEs on the Digital, Cleantech and capitalisation the last 3 years our markets over the last Life sciences industries 3 years
630
Active institutional Dedicated value services Diversified markets with a investors offer for Tech SMEs choice of regulated and MTF platforms
AGILITY FOR GROWTH
Source: Euronext 73 …AND IS NOW CAPABLE OF OFFERING AN ENHANCED VALUE PROPOSITION TO EUROPEAN TECH BUSINESS LEADERS
> 2000
> 250
> 1000
> 1300 Addressable market Number of Tech SMEs
Source: Capital IQ AGILITY FOR GROWTH Market size: assess companies with less than 250 employees operating in Media, Biotechnology, Internet Software, Online Services, Telecommunication Services and Health Care Technology 74 THE EUROPEAN TECH SMEs LISTING VENUE OF CHOICE
European capital markets are insufficiently tailored to the financing needs of European Tech SMEs
Euronext has developed growing expertise for domestic Tech SMEs and now offers a compelling value proposition
Euronext will become the European Tech SMEs listing venue of €5m revenue choice with 80 foreign Tech listed companies over the next 3 years by 2019
AGILITY FOR GROWTH 75 GROW IN SELECTED SEGMENTS Adding value to issuers: Data & analytics: the modular corporate services provider
Lee Hodgkinson, Head of Markets and Global Sales
AGILITY FOR GROWTH LIMITED ACCESS TO ANALYTICAL AND IR SERVICES PREVENTS ISSUERS FROM UNLOCKING THE FULL POTENTIAL OF CAPITAL MARKETS
Need for an efficient capital markets cycle
. Roadshow organisation and coordination Access to Capital . Investor intelligence Issuers are looking for efficient access to . Investor targeting capital, fair valuation and liquidity . Investment bank analyst coverage Fair Valuation . Data & analytics tools . Multimedia and communication services Investors seek relevant, timely and easily usable data on the companies they plan . Shareholder identity to follow Liquidity . Buy-side tracking tools . Tracking peer capital flow
AGILITY FOR GROWTH 77 EURONEXT IS LAUNCHING A DEDICATED DATA ANALYTICS AND INVESTOR COMMUNICATIONS SUPPORT SERVICE Targeting relevant corporates listed on Euronext and on partnering exchanges
A digital access to a Investor communications support services user-friendly platform
Fundamental Credit Roadshow Organisation of Analytics company and Webcasts information support events sector research
Shareholder Investor access analysis and for corporates communication
White-labelled to clients of other exchanges
AGILITY FOR GROWTH 78 THE EUROPEAN CORPORATE DATA & ANALYTICS SERVICE PROVIDER OF REFERENCE
Thousands of issuers have limited access to analytical and investor relations services, preventing them from benefiting fully from capital markets
Euronext is uniquely positioned to fill this gap, with its direct access to corporate clients, proprietary data sources, analytics capabilities and digital partners
Euronext will become the European corporate data & analytics €29m revenue service provider of reference, servicing 800 clients by 2019 by 2019
AGILITY FOR GROWTH 79 WE HAVE SELECTED 4 GROWTH SEGMENTS TO ADD VALUE TO INVESTORS
3-year targets
The exchange for The modular corporate services provider Adding value to European Tech SMEs on data analytics issuers ~80 non Euronext country 800 clients served Tech SMEs listed
One-stop-shop pan-European ETF Euronext branded European family of platform in partnership with clients indices with an open source model ~30% market share of on 2-5% of revenues currently Adding value to exchange ETF trading in Europe generated by Euro Stoxx50
investors Specialist content on agricultural Diversified post trade solutions commodities and capture OTC flows
10K ADV on AtomX in OTC >12% contribution of new cleared instruments streams to post trade revenues
AGILITY FOR GROWTH 80 GROW IN SELECTED SEGMENTS Adding value to investors: ETFs: One-stop-shop pan-European ETF platform
Benjamin Fussien, Head of ETFs
AGILITY FOR GROWTH ETFS REPRESENT A GROWING EUROPEAN MARKET OPPORTUNITY
In $ tn +18% ETF/ETP AUM growth p.a. Total AUM is expected to keep growing at evolution 1,5 3.0 a pace of 18% p.a. in average for at least 0.4 forecast in (global) the next 3 years 2005 2010 2015 Europe
ETF/ETP In thousands > 6,900 ETF Enduring global success of the UCITS listing brand continues to spur investment 4,3 6.1 0.5 listed to date optimism amongst asset managers in evolution 1 in Europe Europe (global) 2005 2010 2015
2015 % share of ETF 2015 % ETF securities US vs. on mutual funds lending on loan Strong growth Structural upside market potential should 11% 30% offer opportunity to capture incremental European 4% 5% potential in market share Europe flow Europe US Europe US
AGILITY FOR GROWTH 1. Cross listed Source: ETFGI, “EY Global ETF Survey 2015” , “DB ETF Annual review & Outlook” & Euroclear 82 EURONEXT IS AT THE HEART OF GROWTH IN THE EUROPEAN ETF MARKET
Enriched product offering and ecosystem Re-engaged with a strong issuer base
Launch of new products and services (e.g. fast path listing New comers joining Euronext (e.g. UBS AM, 4th largest initiative, Euronext London, trading thresholds review) European provider of ETF)
Partnerships (e.g. MiFID II, new fee scheme, market Award of the Best European Exchange for ETF listing intelligence, connectivity review) Successfully completed fee rebalancing in 2015 to attract more listings
Growing ETF trading volume Growing market share in ETF listing
Trading Market 2015 vs 2014 Listing Market share volume 2015 share 2015 % change 2016YTD 2016YTD
1 London SE €248bn 32% +56% 1 London SE 81 26% 2 Deustche Börse €187bn 24% +39% 2 Euronext 74 24%
3 Euronext €155bn 20% +74% 3 Borsa Italiana 60 19%
4 Borsa Italiana €83bn 11% +26% 4 Swiss SE 56 18%
5 Swiss SE €70bn 9% +21% 5 Deustche Börse 38 12%
6 Nasdaq OMX €12bn 2% 0% 6 Nasdaq OMX 3 = 1%
AGILITY FOR GROWTH Source: “DB ETF Annual review & Outlook” Source: ETFGI 83 EURONEXT WILL GAIN SCALE AND FUEL TOP LINE GROWTH THROUGH A NEW ETF OFFERING The market is fragmented and Clients are looking for a Euronext will build a dedicated opaque one-stop-shop solution MTF platform and RFQ services in partnership with clients
Lack of transparency and liquidity An innovative and new end-to-
RFQ with large ETF OTC market offering end fully integrated ETF platform
block and NAV trading exchange A broad and flexible service to - on NAV Trading
Fragmented flow and pricing capture different flow and pricing Bringing OTC volumes
mechanisms penalising the market mechanisms Leveraging existing ETF options efficiency Increased efficiency and more
competitive pricing thanks to the ETF Lending platform
full ETF trading coverage liquidity Increasing
AGILITY FOR GROWTH 84 ONE-STOP-SHOP PAN-EUROPEAN ETF PLATFORM IN PARTNERSHIP WITH CLIENTS
Clients seek transparency, but the young and fast growing European ETF market is fragmented and opaque, with 70% of flows from OTC
Euronext has a leading position in listing and trading ETFs, a strong issuer base, and a rich product portfolio
Euronext will become the one-stop-shop pan-European ETF platform, €6m revenue with ~30% market share of on exchange ETF trading in Europe by 2019
AGILITY FOR GROWTH 85 GROW IN SELECTED SEGMENTS Adding value to investors: Indices: Euronext branded European family of indices
Adam Rose, Head of Financial Derivatives
AGILITY FOR GROWTH EUROPEAN LANDSCAPE: A HIGHLY CONCENTRATED MARKET
Thousands of indices are calculated… % Passive (vs. active) in mutual funds and mandates still growing . Multitude of assets: equities, bonds, commodities, FX, multi-assets,… 30% 26%
. 20% Multitude of universes: geographical, sectorial, 13% thematic, strategy,… 8% 10% . Multiple of calculation: price, total return, FX 0% hedged, volume control,… 2007 2013 2020*
… but a limited number of them is widely used by clients AUM on European blue chips indices in $bn 2015 100 . Highly concentrated AUM in Europe 80 60 40 . Limited number of successful index providers 20 0
* Source: PwC AGILITY FOR GROWTH 87 THE INDEX INDUSTRY IS STRUGGLING TO MEET EVOLVING AND GROWING CLIENT NEEDS
The index industry is no longer in line… …with clients’ needs and requirements
. Increasing index licencing fees and associated market . Growing pressure on costs and search for cheaper data fees alternatives . Access to key data elements only available on a . Increasing need for transparency (impacting chargeable basis benchmark regulation to be implemented in 2018) . Concentration trend in the index industry - limited . Increasing competitiveness, in particular between buy credible suppliers side asset managers and structured product desks, spurring client appetite for multiple offering/alternatives
Opportunity to launch an alternative index model to complete Euronext’s current national focused offering
AGILITY FOR GROWTH 88 EURONEXT WILL LAUNCH AN “OPEN SOURCE” MODEL FOR A PAN-EUROPEAN FAMILY OF INDICES A Euronext European family of indices… …leveraging a proven track-record 1 …through a . Strong track-record of creating and maintaining blue From country to disruptive open chip indices in all four markets European centric… source model . Strong footprint in Europe and good reputation in Collaborative approach to index development terms of regulatory compliance
Highly competitive licencing model . Long-lasting client connections
Client and Partner commitment . Independent position as a regulated stock exchange A game changer for the industry
2 Alternative …through selective strategies indices… partnerships
AGILITY FOR GROWTH 89 EURONEXT BRANDED EUROPEAN FAMILY OF INDICES WITH AN OPEN SOURCE MODEL
Client demand for indices continues to grow but the highly concentrated industry is unable to meet their needs in terms of transparency, cost, and diversity
Euronext has a proven track record in creating and maintaining blue chip indices in four markets, supported by long-lasting client relationships
€12m revenue Euronext will launch a European family of indices by 2019 across with an open source model the value chain
AGILITY FOR GROWTH 90 GROW IN SELECTED SEGMENTS Adding value to investors: Commodities: Specialist content on agricultural commodities
Olivier Raevel – Head of commodity derivatives
AGILITY FOR GROWTH EURONEXT’S COMMODITIES FRANCHISE IS RESILIENT AND GROWING
70 000 in lots per ADV 12-Month rolling average show CAGR of +11% trading day Jan-Apr 2016 average stands at 65,212 lots 60 000
50 000
40 000
30 000
20 000
10 000
0
AGILITY FOR GROWTH 92 ONGOING CHANGES IN GRAIN WORLD EXPORTS BALANCE ARE SHIFTING THE PIVOT OF GRAIN TRADE FLOWS EASTWARD TOWARD EUROPEAN BASINS Share of wheat futures OI 2006 Evolution of wheat futures total open interest (MMT) How is Euronext harnessing these 2% 7% fundamental changes for our 22% customers?
. Deploy extensive network of export 69% silos as contracts delivery points . Enhance contract specifications to Matif wheat Chicago Kansas Minneapolis Matif wheat Chicago Kansas Minneapolis mirror industry standards evolutions
Share of wheat futures OI 2016 Share of wheat futures total open interest . Establish intimacy with trade groups
9% 14% . Raise global awareness about our instruments and risk management 25% techniques in farming/processors communities
52%
Matif wheat Chicago Kansas Minneapolis Matif wheat Chicago Kansas Minneapolis
Source: INTL FCStone Inc. (Nasdaq: INTL). The company provides clients across the globe with a AGILITY FOR GROWTH comprehensive range of customised financial services and tools to help them protect their margins and manage volatility 93 EURONEXT IS SERVICING INDUSTRIAL NEEDS FOR ADEQUATE PRICE-DISCOVERY MECHANISMS ALONG 4 CORE DIRECTIONS 2014 2015 2016 Beyond… Moving along EU CAP Deregulation Calendar: Active initiative in domestic EU Sugar and beyond…
Deregulation achieved in EU CAP Further Dairy SMP / Butter / Whey Adjacencies of Co-design/ Extension of Products families: manage products Quick Win Partnering: Euronext core franchise: existing Products: Nitrogen-based with Frontier J.S.E.Cross-Licensing Milling Wheat Fertilizer Market Partners in: & Global Index Rapeseed and Corn Rapeseed Complex (Oil+Meal) Latin America Weightings rebalancing and beyond… China Or Geographic Africa Eurozone industries lacking Extensions: proper price-discovery mechanisms: Black Sea Grain Biomass and beyond…
Leveraging Euronext Countries Strategic Advantages: Beyond…
AGILITY FOR GROWTH 94 EURONEXT WILL BECOME A LEADING SPECIALIST CONTENT PROVIDER AND WILL EXPAND ATOMX INTO COMMODITIES
Customers are looking for extended services Opportunity to leverage Euronext’s positioning and service offering by becoming a leading specialist content provider… Integrate Ags Grow OTC price Generate non A wider array of instruments specialist reporting transaction content provider services based revenues
Further physical market data transparency and analysis …and expanding AtomX into commodities
Harvest next Trade Create Accelerated education of OTC-cleared comingled blockbuster commodity instruments prospective market participants futures derivatives sandbox
AGILITY FOR GROWTH 95 AMBITIOUS TARGETS TO BECOME THE LEADING SPECIALIST CONTENT PROVIDER AND EXPAND ATOMX INTO COMMODITIEST PROVIDER COMMODITIES
Clients are looking for additional services and a wider array of instruments in commodities, as well as greater transparency and deeper analysis
Euronext has been expanding its commodities franchise systematically into adjacent areas to respond to our clients’ needs for adequate price-discovery mechanisms
Euronext will become the leading specialist content provider €10m revenue and expand Atomx into commodities, with 10K ADV1 by 2019
AGILITY FOR GROWTH 96 GROW IN SELECTED SEGMENTS Adding value to investors: Post trade solutions
Andrew Simpson – Head of Post Trade
AGILITY FOR GROWTH EURONEXT IS CREATING OPTIONALITY FOR CLEARING
Euronext is creating optionality because… Exclusive talks to partner with EuroCCP for cash clearing…
. End of the cash and derivative contracts with LCH.Clearnet SA . Reduces frictional costs in 2018, with a one year notice period . Reduces operational costs . The current exchange environment creates further . Supports Euronext’s cash market franchise uncertainties around continued competition . Desire to grow shareholder value, through delivery of risk management services to clients …and analysis ongoing for derivatives clearing, . Clients want certainty, capital efficiency and lower costs with several options under consideration . Open Access for derivatives is unproven, operationally risky, . Extend and renew the current clearing arrangement complex and unavailable before 2020 . Evaluate alternatives that are acceptable to clients and . Limited options for Eurozone derivative clearing and client shareholders migration is complex
AGILITY FOR GROWTH 98 WITH GROWING REGULATORY PRESSURE FOR CUSTOMERS, EURONEXT IS EXTENDING THE POST TRADE FRANCHISE
Revenues sustainable as customers seek Customers want a broad-based offering, an alternative to incumbent CCPs enabling further growth Requires more cleared flow Pre Trade Risk EMIR Improved risk and increased liquidity buffers management Management
Imposes higher capital CRD IV standards regulatory Increased transparency Post Trade Reporting pressure Open Access in derivatives Collateral MIFIR continues likely delay to 2020 Derivatives clearing optimisation
Cash markets not Interoperability Pressure on clients’ Central counterparty negatively impacted balance sheet
Clearing Euronext is delivering Provision of high Central Securities Agreement concrete options quality collateral Depository Interbolsa
AGILITY FOR GROWTH 99 BUILDING OPTIONALITY ON CLEARING AND EXTENDING POST TRADE FRANCHISE
With careful analysis of client needs, change in environment and its positioning, Euronext has partnered with EuroCCP for cash clearing to increase customer proposition and is analysing options for derivatives clearing
As regulatory and cost pressure continues to impact clients, €8m revenue1 Euronext will build a broad-based offering to create more options by 2019 to answer their needs
AGILITY FOR GROWTH
1. Excluding current derivatives clearing agreement 100 BREAK
AGILITY FOR GROWTH I V CAPTURE OPPORTUNITIES ARISING FROM THE ENVIRONMENT II ENHANCE AGILITY DELIVER VALUE TO III SHAREHOLDERS STRENGTHEN RESILIENCE OF THE CORE BUSINESS IV GROW IN SELECTED SEGMENTS
AGILITY FOR GROWTH 102 DELIVER VALUE TO SHAREHOLDERS
Giorgio Modica, CFO
AGILITY FOR GROWTH MAIN DRIVERS OF EURONEXT’S TRANSACTIONAL BUSINESS Volume and yield are the main top line drivers of Euronext’s volume related business
Volume impact Yield performance
0,523 0,505 0,492 0,501 7,0 5,4 5,5 6,5 8,3 8,3 0,465 0,478 Historic 68% 67% 66% 64% 64% 61%
trend 2011 2012 2013 2014 2015 Q1-16 2011 2012 2013 2014 2015 Q1-16 Cash trading ADV (€bn) Market Share (%) Yield (bps) Low single digit growth per year over the period and Outlook Ongoing challenge around yield maintenance stable ~60% market share
843 0,424 0,369 653 576 565 529 563 0,332 0,322 0,328 0,314 Historic
trend 2011 2012 2013 2014 2015 Q1-16 2011 2012 2013 2014 2015 Q1-16 Derivatives ADV (€bn) Yield (in bps per lot) trading Mid to high single digit growth per year over the period Pressure on revenue capture will continue but most of Outlook and slight market share recovery the fee adjustments have already been performed
Base Best Base Best +€35m +€65m -€28m -€14m Impact on revenues Management Management upon scenarios 1 +€50m -€21m
AGILITY FOR GROWTH
1. Excluding clearing operations 104 BUILDING BLOCKS OF 2019 SALES TARGET (EXCL. GROWTH INITIATIVES) Core business1 expected to grow 2% per year
€519m +€50m +€10m €505m €467m -€21m -€52m
+€29m
+€39m
2015 reported Clearing 2015 reported excl. Volume impact Yield pressure Non-volume 2019 target1 adjustment clearing business Volume-related business
AGILITY FOR GROWTH
1. Excluding clearing operations 105 KEY TARGETS OF OUR SELECTED GROWTH INITIATIVES €70m top line growth, with a ~50% EBITDA margin Revenues1 OpEx1 Investments
Adding Listing The exchange for European Tech SMEs €5m value to The modular corporate services provider issuers Market Data €29m on data analytics
€100-150m for bolt-on One-stop-shop pan-European ETF Cash €6m €35m acquisitions and platform in partnership with clients development Euronext branded European family of costs Market Data €12m Adding value indices with an open source model to investors Specialist content provider on agricultural Derivatives €10m commodities and capture OTC flows
Creating options and diversified post-trade Post-Trade €8m solutions
+€70m +€35m +€100-150m
AGILITY FOR GROWTH
1. Excluding current derivatives clearing agreement 106 TARGET REVENUE EVOLUTION €575m target1, implying a ~5% CAGR 2015-19 with further potential growth upside related to clearing activities
+1% CAGR 2015-19E
+€71m €646m +€70m €575m €519m +€39m €467m -€52m
2015 reported Clearing 2015 reported Core business Selected 2019 target Clearing add- 2019 target 2 adjustment excl. clearing growth back incl. clearing
1. Excluding clearing operations AGILITY FOR GROWTH 2. Clearing revenues for 2019 estimated on the basis of the current derivatives clearing agreement, taking into account volume assumptions for 2019 107 CONTINUOUS COST MANAGEMENT DISCIPLINE €15m of net additional cost reductions, adding-up to the €85m already completed since the IPO
+€31m €250m €235m +€35m €219m €207m -€28m -€8m +€7m
-€22m
-€15m net additional savings
2015 reported Clearing 2015 reported End of first Additional Inflation Selected 2019 target Clearing add- 2019 target adjustment excl. clearing strategic plan cost adjustment2 growth back 3 incl. clearing (Q1 16)1 reductions
1. Including inflation in Q1 2016 cost savings 2. Assuming 1% inflation per year AGILITY FOR GROWTH 3. Clearing costs for 2019 estimated on the basis of the current derivatives clearing agreement, taking into 108 account volume assumptions for 2019 OVERVIEW OF 2019 FINANCIAL TARGETS1
Selected Core business Total growth initiatives
+2% CAGR 2015-19E +3% CAGR 2015-19E +5% CAGR 2015-19E Revenues1 +€39m +€70m €575m
-3% CAGR 2015-19E +4% CAGR 2015-19E +1% CAGR 2015-19E Costs1 -€23m2,3 +€35m €219m
Volume impact Adding value to issuers 61-63% Drivers / targets Yield pressure Adding value to investors EBITDA margin
1. Revenues and operating expenses excluding clearing derivatives agreement 2. Including inflation adjustment, assuming 1% per year over the period AGILITY FOR GROWTH 3. Including Q1 2016 cost reductions 109 UPDATE ON AVAILABLE RESOURCES AND PRUDENTIAL REQUIREMENTS
Euronext capitalisation and liquidity (Q1 2016) New prudential requirements: key highlights
. Shareholders’ equity: €485m . Mergers and acquisitions . Gross cash position: €203m • Objective to reach positive tangible equity (≥10 years . Liquidity: total available liquidity of €0.5bn (including fully post transaction, grow-in period) drawn RCF) • Possibility to go into negative territory . Dividend policy • Flexibility to define our dividend policy as long as Euronext’s gross debt / EBITDA does not exceed 3.5x
Strong and financially stable Group not restricted to engage in (even transformational) M&A and with the flexibility to define its dividend policy
AGILITY FOR GROWTH 110 CAPITAL ALLOCATION POLICY
Key principles of capital allocation Targets
. Preserve Euronext financial and strategic agility and create . Investment grade profile value for investors . Investments / M&A thresholds: . Disciplined and focused approach to capital allocation • ROCE > WACC in year 3 . Flexibility to take advantage from selected strategic opportunities . Capital return to shareholders: • Dividend payout: 50% of reported net earnings . Proactive and periodic re-assessment of Euronext financial • Possibility to consider extraordinary capital return to structure shareholders should material M&A not materialise
Disciplined approach to capital management
AGILITY FOR GROWTH 111 WRAP-UP
Stéphane Boujnah, CEO Euronext
AGILITY FOR GROWTH EURONEXT AGILITY FOR GROWTH Our mission is to power pan-European capital market to finance the real economy Objectives Enablers . Cost management discipline, €22m gross efficiencies . M&A framework, €100m to 150m for bolt-on acquisitions and Client centricity Agility development costs . Strengthened IT platform, Optiq™ delivered in 2017 and 2018
. Continued core business growth, +2% CAGR revenues 2015-19 Open federal model . Preserved market share, >60% in cash equity trading, >50% in Resilience French equity options . Maintain and expand listings, market data & index businesses Innovation discipline . Add value to issuers, 2 initiatives Growth . Add value to investors, 4 initiatives . Grow revenues, incremental revenues contribution of €70m Talent development . Create optionality in post-trade solutions, investment in EuroCCP Value . Revenues growth, 5% CAGR 2015-19 . EBITDA margin strengthen, 61% to 63% EBITDA margin in 2019 Entrepreneurial culture creation . Disciplined capital allocation, 50% pay out
AGILITY FOR GROWTH 113 Q&A SESSION
AGILITY FOR GROWTH THANK YOU
AGILITY FOR GROWTH