SIX Reports Strong Operational Performance Despite Non-Cash Value Adjustments

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(IN BRIEF) Despite facing significant non-cash value adjustments, SIX concluded 2023 with a robust operating result, reflecting a 3.5% growth in total operating income and a 6.7% increase in EBITDA. The company’s diversified business model propelled operational success across various units, with notable growth observed in Securities Services and Financial Information. However, impairments led to negative earnings before interest and tax (EBIT), affecting the Group’s net result. Nevertheless, SIX remains confident in its growth strategy, aiming for continued revenue growth, profitability gains, and targeted cost efficiencies in 2024. The Board of Directors recommends an ordinary dividend increase of 2.0% per share, demonstrating optimism for future performance amidst evolving economic challenges.

(PRESS RELEASE) ZÜRICH, 14-Mar-2024 — /EuropaWire/ — SIX closed 2023 with a strong operating result. The Group achieved a total operating income of CHF 1.5 billion, representing growth of 3.5% at constant exchange rates and by 2.1% at reported rates – versus the previous year. EBITDA was CHF 413.4 million, +6.7% at constant exchange rates and +4.0% at reported rates.

Significant non-cash value adjustments of CHF 1.2 billion in connection with Worldline and BME, as communicated on 14 December 2023, led to a negative Group net result of CHF -1.0 billion.

Group net result (excluding value adjustments) amounted to CHF 181.1 million, slightly below last year. At constant exchange rates SIX would have outperformed previous year’s group net result by 1.3%.

Selected Financials for 2023

• Operating income amounted to CHF 1,526.0 million (+3.5% at constant exchange rates, +2.1% at reported rates)
• Earnings before interest, tax, depreciation and amortization (EBITDA) remains solid at CHF 413.4 million (+6.7% at constant exchange rates, +4.0% at reported rates)
• Earnings before interest and tax (EBIT) was impacted by impairments and amounted to CHF -975.0 million
• Group net result was CHF –1’006.2 million (2022: CHF +185.0 million)

Jos Dijsselhof, CEO SIX: “We are proud to have outperformed the previous year’s performance on an operational level. We are delivering on our growth strategy and the result is a testament of our diversified business model. Unfortunately, the strong operating result was affected by two major non-cash value adjustments. Nevertheless we’re excited to leverage our skills and experience to deliver even more value to our clients. We are confident about our future growth, consistent financial performance, and ability to generate strong returns for our shareholders.”

Overview of Key Figures
Total operating income grew by 2.1% (3.5% at constant exchange rates) to CHF 1,526.0 million. The increase was mainly driven by higher interest income and larger repo volumes in the Securities Services business unit, strong sales in the Financial Information business unit, and expanded revenues from debit and mobile services in the Banking Services business unit. By contrast, the Exchanges business unit faced low trading volumes, and net interest income at Swiss Euro Clearing Bank GmbH (SECB) in the Banking Services business unit was dampened by higher interest paid to depositories.

Results by Business Units
Overall, SIX recorded a decade-low in both trading volumes and volatilities in 2023, as was the trend throughout Europe. In the Exchanges business unit, SIX generated operating income of CHF 332.6 million. This is 9.8% lower than in the previous year (2022: CHF 368.6 million), and a minus of 8.3% at constant exchange rates.

The Securities Services business unit benefited from higher interest rates by successfully investing its cash reserves and earning income. The business unit recorded an operating income of CHF 533.9 million, up 14.6% or 15.6% at constant exchange rates compared to 2022 (2022: CHF 465.9 million).

In the Financial Information business unit, the growth trajectory that started in 2021 continued to show positive results. The unit closed the year with CHF 406.9 million in operating income, a gain of 3.9% or 6.5% at constant exchange rates (2022: CHF 391.5 million).

In the Banking Services business unit, SIX achieved strong customer and revenue growth in newly established business fields, but the unit suffered with SECB reporting a negative interest result due to rising interest rates in the eurozone. Operating income for the business unit was CHF 207.8 million, 7.9% below its previous-year performance (-7.6% at constant exchange rates; 2022: CHF 225.7 million). Excluding SECB, the Banking Services profit would have shown growth of 13.7%, underlining the strong operational performance of the different ecosystems.

Value Adjustments
As already announced on 14 December 2023 in a separate communication, two non-cash value adjustments led to negative earnings before interest and tax (EBIT) of CHF –975.0 million. On the back of the share price decline at Worldline, SIX adjusted the value of the 10.5% stake in Worldline by CHF 862.3 million. The goodwill attributed to BME had to be adjusted by CHF 339.6 million as a result of increased discount rates as well as lower trading volumes in Spain and across Europe. The Group net result was CHF –1,006.2 million (2022: CHF 185.0 million). Excluding value adjustments, the Group net result amounts to CHF 181.1 million, slightly less than last year. At constant currency rates SIX would have outperformed previous years group net result by 1.3%.

The value adjustments did not affect the strong free cash flow generation in 2023, which increased by 31.2% compared to 2022. The capital position of SIX remains strong by reporting an adjusted equity ratio of 64.2% with a net leverage ratio of 1.5x EBITDA.

Both the investment in Worldline and the acquisition of BME continue to hold significant strategic importance for SIX.
Worldline remains a strategic investment for SIX as a key partner in its payments offering, particularly for Swiss banks. In 2018, the sale of SIX Payment Services to Worldline resulted in a positive one-off effect of CHF 2.7 billion for SIX, while significantly strengthening its equity.

BME plays a crucial role in the operational and financial success of SIX, remaining integral to the group’s growth strategy and competitive positioning. In 2023, BME once again made a substantial contribution to the strong financial performance of SIX, generating 18.0% of the Group’s total revenue, and 34.0% of the Group’s total EBITDA for 2023.

Dividend
For 2023, in accordance with the dividend policy of SIX. the Board of Directors recommends that the Annual General Meeting approve an ordinary dividend of CHF 5.20 per share, which equates an increase of 2.0% compared to the previous year (2022: CHF 5.10).

Financial and Business Outlook
For 2024, SIX expects the political and macroeconomic landscape to be similarly challenging for the economy and society as in the previous year. The medium-term goal of SIX is to grow revenue by > 3% p.a. while also extending profitability gains. Looking at the cost base, SIX will continue to rely on measures to unlock cost synergies and deliver targeted cost efficiencies. Bolt-on acquisitions and partnering opportunities will further strengthen its already strong portfolio.

Given its ever-evolving business environment, SIX places an extra premium on ensuring financial market efficiency, stability, and security in our home markets of Switzerland and Spain, and on providing superior services for its clients now and in the future.

The Annual Report 2023, the Sustainability Report 2023, and the Presentation of the Financial Results can be downloaded at six-group.com/annual-report.

Key Figures of SIX

1 Prior year’s figures are translated at average exchange rates for 2023 (constant exchange rates).

2 2023 adjusted by a value adjustment in Worldline (CHF 862.3 million) less tax effect (CHF –14.7 million) and an impairment of goodwill of BME Group (CHF 339.6 million).

3 Operating cash flows adjusted by changes from assets/liabilities from clearing & settlement, financial assets, and financial liabilities (excluding those resulting from operating expenses) less capital expenditures.

4 Adjusted equity ratio = equity / adjusted liabilities + equity as at the balance sheet date. Adjustments to liabilities include the positions from C&S (liabilities from C&S and financial liabilities) in Banking Services and Securities Services.

5 Return on equity = profit of previous 12 months / average equity of previous 12 months.

6 The dividend distribution is based on the reported Group net profit/(loss) excluding non-cash profit contributions in the context of the participation in Worldline and impairment of goodwill of BME Group.

About SIX
SIX provides and operates stable and efficient infrastructure for the Swiss and Spanish financial centers, thus ensuring access to the capital markets and the flow of information and money between financial market players. As a global provider of financial information, SIX delivers high-quality reference, pricing, corporate actions, and ESG data and provides regulatory services and indices to clients around the world. The company is owned by its users (more than 120 banks) with a workforce of 4,160 employees and a presence in 19 countries.
www.six-group.com

Media Contact:

Jürg Schneider
Head Media Relations
+41 58 399 2129

SOURCE: SIX Group