ASE Technology Holding Co., Ltd. Price & Performance (ASX)

We delivered record operating revenue for a first half, and this was driven by our portfolio of high quality business which deliver value for our markets and for our shareholders. We saw strong revenue growth in our markets, technology and data and securities and payments businesses, with listings being stable. Andrew will provide more detail on our first half financial performance shortly, including each line of business. I'll talk about the business outlook at the end of the presentation. We're almost two years into our five year strategy, and we remain focused on Horizon one. We have more to do to ensure that we're protecting long term shareholder value and positioning ourselves to capture future growth opportunities. This means that we are deliberately prioritized the majority of our investment and effort into our great fundamentals strategic pillar and particularly our key focus areas of regulatory and risk management uplift and technology modernization. We play a key role in promoting financial system stability through the licenses that we hold. And these licenses are foundational to ASX. And to shareholder value. And we're further up lifting our risk management practices that support our privileged role in the economy. And we're making progress, such as the uplift we're making in our control environment, which is driving proactive identification and resolution of issues.

However, this is a multiyear journey. And it requires continued investment in our capability and culture as we build a stronger ASX. And one of the ways that we promote financial system stability is through operating our clearing and settlement for Last year, we released a consultation paper to receive stakeholder feedback on certain aspects of our cash, equities, clearing and settlement pricing policy. This consultation is part of our focus on listening to our customers. And we've had a significant amount of feedback And in the coming months, we'll be discussing our response with key stakeholders including the ASX Business Committee and the CACHEX this stage, we don't expect any potential policy changes to materially impact ASX's revenue. ASX is underpinned by technology. And we are continuing to build a sustainable secure and resilient technology environment. We made good progress in our major technology projects in the first half of the year, which further milestones and rollouts planned in the remainder of FY 2025. I'll provide more detail on this later in the presentation. And finally, we'll continue to be cost conscious in the way we run the business. Including being disciplined in our approach to prioritization and improving efficiency.

Andrew will talk about our expense management initiatives in more ASX So turning to our financial highlights. As I mentioned, we delivered record operating revenue in the first half, which is up 5.9% compared to the same period last year. Underlying net profit after tax also benefited from growth in net interest income and increased by 10.1%. Statutory profit was up by 5.6% following the impact of a significant item. The Board has determined a fully franked interim dividend of $111.02 per share reflecting a payout ratio of 85% of underlying NPAT. Which is in the middle of our guidance range. It's also pleasing to see that underlying return on equity the key metric by which we measure the performance of the organization, is up by 90 basis points to 13.5% for the half, and well within our medium term target range. I'll now hand over to Andrew to provide a more detailed view of the financial results.

Thanks, Helen, and good morning, everyone. Helen has already mentioned, we delivered record operating revenue for a first half demonstrating the quality of our portfolio of businesses. Operating revenue was $541,900,000 for the half, [indiscernible] was an increase of 5.9% compared to the prior corresponding period, or PCP. [indiscernible] total expenses for the period were $220,300,000 Net interest income was up by 9.4% to $43,100,000 The Underlying net profit after tax was up 10.1% compared to 1H24 due to the strong growth in operating revenue and net interest income, [indiscernible] ASX's statutory net profit after tax was up by 5.6% following the impact of a significant item, which represents an onerous lease provision incurred ahead of moving our Sydney headquarters to Martin Place later this calendar year. Higher operating revenue and net interest income were resulted in our EBIT margin increasing to 59.3% in the period, up by two forty basis points compared to the PCP. Underlying earnings per share of 130.9¢ ASX consistent with the trend in underlying net profit after tax. [indiscernible] underlying ROE generated in the half was 13.5% up 90 basis points compared to the PCP, reflects the increase in underlying turning to the business unit revenue outcomes, starting with listings.

Total listings revenue was stable at $104,900,000 are driven by market capitalization as at thirty one May each year. Higher market capitalization in May 2024 supported revenue growth of 3.7% to $55,500,000 in the period, We recognized the revenue derived from listings and secondary raisings over five years and three years respectively so the revenue outcomes reported mainly reflect prior period activity. This is shown in the bar charts on the slide This amortization profile was the primary driver for the lower initial listings revenue recognized in the half of $9,400,000 down 8.7% and secondary raisings revenue of $34,900,000 down 5.7% compared to the PCP. [indiscernible] Total net new capital quoted for the half was negative $9,200,000,000 primarily driven by a few large delistings including Altium and CSR following the completion of long standing takeover deals. However, the new shares issued as a result of the merger of Chemist Warehouse and Sigma Healthcare are due to start trading today. Is expected to add just over $27,000,000,000 of new capital to our market. [indiscernible] Moving now to the markets business. $6,400,000 was up 10.5% on last year supported by a 19.9% increase in total futures and options on futures volumes driven by global interest rate volatility in the period Strong growth was observed across all major products including ninety day bank bill futures and three and ten year treasury bond futures, which traded volumes up 243219% respectively, Commodities revenue was down primarily driven by lower trading activity in electricity derivatives as a result of less volatility in electricity prices.

Cash market trading revenue was $33,400,000 up 11.3% on the PCP, driven by an 11% increase in the total ASX on market value traded This was also supported by auctions traded value which was up by 18.8% and derives higher fees. ASX's share of on market cash market trading averaged 87.4% for the half, which is marginally down from 88.4% in the PCP. Equity options revenue was $8,600,000 down 2.3% reflecting lower trading activity particularly index and single stock option volumes were broadly stable in the period. Now looking at the Technology and Data business, total revenue of $132,900,000,000 in increasing by 6.7%. Information services generated revenue of $82,200,000 up 8.2% supported by strong growth in demand in the half [indiscernible] Technical services was also up with revenue coming in at $50,700,000 up 4.3% which was supported by modest growth in the number of cabinets at our ALC data center. Finally, moving on to our four business segment, Securities and Payments. $7,000,000 up 5.2%. Issuer services revenue was $30,100,000 up 1.7% driven by a higher number of chess statements issued and holder maintenance fees partially offset by a small decline in subscription revenue. Equity post trade services revenue increased by 3.7% to $66,700,000 This was primarily driven by an increase in the total on market value cleared and settlement message volumes as a result of higher equity market activity.

In relation to the CHEST batch settlement incident last December, we have paid a $1,000,000 credit disbursement the form of a rebate to settlement participants. This rebate was recognized in the equity post trade services revenue line in this half. Ostraclear generated revenue of $38,900,000 up 10.8%. It saw a 2.1% growth in issuances to just over $2,900,000,000,000 at thirty one December and a 15.9% increase in transaction volume The Ostriclia revenue also includes the net operating contribution from Simply ASIC's property settlement joint venture. Simply further reduced its cost base in the half due to uncertainty around the pathway to interoperability between e conveyancing platforms. While the New South Wales and Queensland governments have expressed interest in proceeding with interoperability simply awaits further information from regulators before a potential way forward and timeline become clear. ASX's share of Simply's operating loss was $5,300,000 compared to a loss of $5,600,000 in the first half of FY 'twenty four representing a 5.4% reduction. Turning now to expenses. Total expenses for the half were $220,300,000 down 0.2% on the PCP, which was a period in which there were elevated operating expenses to meet the group's regulatory commitments and technology roadmap. The lower expenses in the half also demonstrate some of the benefits of our expense management initiatives which are part of the cost conscious approach to the way we manage the organization.

Employee expenses were down by 4%, reflecting the reduced use of contractors and recruitment costs ASX well as a lower number of employees working on operational activities. Permanent and contractor headcount increased from one eleven forty in the first half of FY 'twenty four to twelve ninety eight at the end of this half. As you can see from the chart at the bottom of the slide, was a reduction in the number of employees allocated to operational activities in the half, which demonstrates our focus on workforce optimization, The growth in project related headcount primarily relates to our technology modernization program, and reflects the increased level of activity, in the trading, derivatives clearing and chess projects We saw a significant increase in equipment costs, which primarily due to higher licensing fees costs related to technology projects. This was largely offset by a decline in administration expenses and regulatory expenses, which reduced by 60.3% reflecting lower legal costs and no We reported depreciation and amortization up 10.7% as more elements of our new technology systems start to go live. We reconfirm our total expense growth guidance provided at our Investor Forum in June, we expect FY 2025 total expense growth to be between 69% compared to FY 2024. [indiscernible] Total expenses in the second half of FY 2025 expected to be higher than the first half [indiscernible] equipment costs and also depreciation and amortization.

Excluding D and A, we expect operating expense growth of between 47% for FY 'twenty five significantly lower than the FY 2024 growth rate. As previously communicated, we also expect a steady step up in D and A in the years ahead ASX prior period CapEx spend starts to amortize various technology systems transition into production We are continuing our cost conscious approach in FY 2025 and have made further progress on workforce optimization in the first half primarily by reducing the use of contractors. [indiscernible] remain focused on other cost optimization opportunities in including process simplification, strategic procurement. Our CapEx for the first half was $82,500,000 compared to $49,900,000 in the PCP, which reflects the increased investment in the major projects as part of our technology program. We reconfirm the guidance provided at our Investor Forum last June of CapEx spend of between $160,000,000 and $180,000,000 a year from FY 2025 to FY 2027 then our aim is for CapEx to start to reduce. We expect an average depreciation and amortization schedule of five to ten years for these major projects once they go live. Moving now to interest income. Net interest income consists of net interest earned on ASX's cash balances and net interest earned from the collateral balances lodged by participants.

Representing an increase of 9.4%. Group interest income of $20,700,000 was down 6.8% and was primarily driven by higher financing costs relating to the $275,000,000 corporate bond issued a year ago and costs related to our short term bank facilities This was offset by higher earnings on ASX's cash due to the higher average cash rate and higher average collateral balances during the period. In interest earned on the collateral balances was $22,400,000 up 30.2% compared to the PCP. This reflects an increase in the average collateral balances to $11,900,000,000 this half due to growth in activity across our markets. [indiscernible] was combined with a five basis point increase in the average investment spread on these balances to 15 basis points as we saw emerging opportunities to achieve high return by adding a small amount of tenor to our investment portfolio. We expect this spread to stay around the current level for the remainder of this The average collateral balances subject to risk management haircuts increased from $6,700,000,000 in the first half of FY 'twenty four to $7,700,000,000 this half ASX overall collateral balances increased. As at thirty one January, collateral balances of $12,500,000,000 and balances subject to risk management haircuts of $8,900,000,000 higher than the first half average and this has created a positive start to the second half of FY twenty twenty five net interest on collateral balances.

ASX's balance sheet continues to be strong and positioned conservatively with an S and P long term rating of AA minus. From a shareholder return perspective, underlying ROE for the first half was 13.5%, up 90 basis points compared to the PCP reflecting the higher reported underlying profit in the half. As Helen mentioned earlier, the Board has determined an interim fully franked dividend of $111.02 per share 85% of underlying earnings per share reflecting the midpoint of the dividend policy to pay out 80% to 90% of underlying NPAT. The Board has also approved the operation of the dividend reinvestment plan for the interim dividend and no discount will be applied to the DRP share price. Our balance sheet and shareholder return profile profile give us the capital management flexibility to support a ASX's future funding requirements. This includes a dividend payout ratio range of 80% to 90% of underlying NPAT, and the potential operation of our dividend reinvestment plan, we have a $300,000,000 corporate debt facility available, which we are currently undrawn well as a $275,000,000 corporate bond, which was raised in February. We are also in the process of finalizing a leasing program of up to $60,000,000 to help support our future technology equipment requirements.

In In summary, the record operating revenue we reported in the half reflects the strength of ASX's diversified businesses. We will continue our cost conscious approach to expense management ASX we balance the investment requirements of our Horizon one focus areas with Horizon two growth opportunities. We have a strong balance sheet access to various funding sources to support the delivery of the technology roadmap. And we are focused on returns for our shareholders as illustrated by disciplined cost management in the half, strong underlying NPAT uplift of 10.1% compared to 1H24 and an underlying ROE of 13.5% well within our target range of 13% to 14.5%. With that, I'll hand back to Helen.

Thanks, Andrew. [indiscernible] I'll now provide an update on our technology delivery. And our growth opportunities before finishing with outlook and guidance. But just before focusing on our technology project, I also wanted to provide an update regarding the delay to chess batch settlements that occurred in late December last year. So last month, we published a review which detailed the route cause of the incident and the resolution ASX well as the to make sure that CHESS remains stable and robust. And we engage with our regulators during the incident and we'll continue to do so. This month, ASIC notified ASX that it's conducting an investigation into this incident. And of course, we take our regulatory obligations very seriously. And we'll continue to cooperate fully with ASIC. And given that this is an ongoing matter, I'm limited in any further comments that I can make at this time. But I want to emphasize that this incident does not impact our overall strategy, including our technology modernization program. And as you can see on the slide, there is a significant amount of work underway. With several updates planned to be delivered soon. So let's start with the trading project. Service release 15 for cash market trading will deliver a number of important benefits, including the removal of what referred to as the opening auction stagger.

It will also introduce a new post close trading session to provide the market with additional execution opportunities. Customer testing environments are now available. With industry testing to commence shortly. For ASX24, our derivatives trading platform, Service Release four will deliver changes to help support the liquidity during the bond roll period and to improve technical resilience ahead of the move to a new platform. It's currently in customer testing and we're targeting go live for this release in March. For the Derivatives Clearing Project, system and integration testing and we're targeting go live in May. And finally, moving to the CHEST project. For Release one, we're planning for the first industry testing of environment to open later this month, which is a really significant milestone for the project. Consultation. Our response to this consultation was published in November. As you can see, there's a lot of activity in our technology modernization program. We appreciate that there's still plenty of work for us to do, but we are delivering against our indicative roadmap with several project rollouts planned for the next few months. [indiscernible] while our primary focus is Horizon one of our five year strategy, we are also investing in selected Horizon two growth opportunities.

We're focused on customer driven initiatives ASX we look to add value for our participants and our markets. The net zero transition is a structural tailwind for ASX because as an exchange, we're uniquely positioned to offer the markets, the connectivity and the price transparency to support efficient capital allocation and risk management. And we've expanded our suite of products in our transitional energy eco system to include environmental futures contracts for Australian carbon credit units, large scale generation certificates, and New Zealand units. We've seen over 700 contracts traded so far across this product set with solid open interest from the market. And our Wallumbiller gas futures product has supported four success gas delivery cycles with the Wallumbilla hub in Queensland. These products have been developed in consultation with our customers to meet their growing demand and initial interest has been promising. But it's early days. [indiscernible] futures products can take time to build momentum and revenue. In Technology and Data, we're continuing to develop new ways to support our customers as the way that they consume data evolves. We see a great opportunity to further serve debt market participants with the launch of ASX debt market activity services planned for the second half of this financial year.

We intend to offer new debt focused data, which was previously not available. And will be a significant uplift in the breadth of data and insights that our customers can receive compared to current offerings. [indiscernible] We'll be able to achieve this by using the data from our Ostraclear fixed income registry and settlement system. We saw a recent increase in IPO activity in the second quarter of FY 'twenty five. Our listings team works throughout the cycle to engage with companies, advisers, investors ASX other key stakeholders to promote the value proposition of an ASX listing. And this includes a series of local and targeted offshore work collaborations.

Upcoming listing of MariMaca, the TSX listed copper explorer and developer.

Now turning to outlook. As I just mentioned, we saw an increase in the number of new listings [indiscernible] total new capital quoted in the first half of FY twenty twenty five compared to the second half of FY twenty twenty four. And I'm seeing this early momentum continue into the second half of this financial year. It's great to see that the approximately $32,000,000,000 merger of Chemist Warehouse and Sigma Healthcare which includes one of the largest ever share issues on ASX. Is due to start trading today. And you may also have seen some other companies speak publicly about their plans for a potential ASX listing. [indiscernible] Total cash market value for the financial year to January was up by 8%. This was primarily driven by speculation about combined with international geopolitical events including changes to U. S. Economic policy, which is creating some significant volatility. [indiscernible] Total futures and options on futures volume ASX up by 19%, in the seven months to January, with activity across the curve and growth in the number of customers using our rate futures markets. The current environment remains supportive of the short end of the market due to ongoing market speculation regarding a move in the RBA interest rate.

We're seeing more normal market conditions now that the COVID pandemic and the RBA's yield curve target are well behind us, which is supporting And volumes are also being driven by changing global economic dynamics, particularly in The U. S. And China, and their impact on central bank rates and currencies. [indiscernible] volatility that we're currently seeing demonstrates the importance of all of our markets. As we offer a connected market with price discovery to support our So moving now to guidance. We reconfirm our guidance, which was initially provided at the Inves Forum last June. [indiscernible] expect FY 2025 total expense growth of 6% to 9%, with operating expense growth guidance of 4% to 7%, reflecting FY 2025 capital expenditure is expected to be between £160,000,000 and $180,000,000 and is expected to remain at this level until FY 2027 ASX then our aim is for it to start to reduce. [indiscernible] As our CapEx is primarily to support our technology modernization program, inherent delivery risks in the program may impact this guidance. And finally, we remain focused on underlying ROE as the key performance metrics driving the organization as we continue to focus on disciplined cost management and revenue opportunities.

There's strong momentum at ASX. And the remainder of FY 2025 is about continuing to listen to our customers and delivering our five year strategy. Thank you. And I'll now invite your questions. Your first question comes from Andrei Stadnik from Morgan Stanley.

Good morning. Can I ask my first question around futures volumes versus revenue? So looking at the futures volumes are up 20% year on year.

But revenues were up about 10.5%. And I think there was a few percentage points below what the three point ASX looking for. So, and clearly lagging in terms of 20% volume growth set. Is the slow revenue growth, is it a function of the change in mix or was there something around pricing per contract?

Yes. So it's very much a function of change in mix. So what we're seeing is really strong growth in the rates, product there. So and those are actually at the lowest price point of the futures contract, but obviously a really big driver of the growth. And you're also seeing the average fee change partly because of the product mix and partly because of the customer mix and the impact of rebates too. So what you're seeing in terms of the rate numbers is probably a bit more comparable to in terms of size of the market. If you actually look pre COVID, at the sort of FY 'eighteen, 'nineteen kind of profile, you'll sort of see then a more similar mix in terms of types of activity and average fee.

Thank you, Helen. And look, my second question, I mean, maybe slightly tough question, but but in terms of thinking about costs and how shareholders should evaluate cost growth And that is like a $10,000,000 onerous contract recognition below the line, which pre tax is $13,000,000 ASX it looks like maybe there were some other items noted off. So feels maybe it was even higher than $13,000,000 pretax. But if we add that back on total costs, the total costs were up almost 7% year on year. And that's been setting aside CapEx rising 65%. So how should shareholders think in terms of evaluating the cost performance of ASICs? [indiscernible] I'm happy to grab that question. Thank you. So the owner's lease provision relates to an early termination of the 20 Bridge Street lease and that's a negotiated out outcome between ourselves and the new landlord. The building's been sold and there's plans to redevelop the building here. So the negotiated outcome of the lease termination includes also some amortization of leasehold improvements fixtures and fittings of the building that won't be worth anything when we move to our new headquarters. We've been in this building for over twenty five years.

It is a one off unusual sort of item. And that's why we've classified it as a significant item. In relation to the cost discipline, I'd draw your attention to sort of the cost performance for the period. I'm very pleased we had a flat cost growth, if you like, compared to this time last year. We're very focused on costs. As you've known, we've talked about a number of times, focusing on workforce optimization, strategic procurement, simplification, etcetera. And that focus will continue going forward as well.

Thank you.

Thank you. The next question is from Ed Henning from CLSA.

Thanks for taking my questions. I've just got a few questions following on from Andre. Just on the futures mix, today you touched on electricity derivatives being down and that's a higher margin product. Can you just talk about ASX there any seasonality in this or ASX just lower volatility that pushed down that in the period. [indiscernible] [indiscernible] but actually, I think what you're seeing in the low volumes is the impact of actually lower volatility in elect both seasonality and there's other factors factors in terms of some of the factors that drive price volatility in the wholesale electricity market. So we definitely saw that more sub Jude in the last half. But I think overall from a macro macro perspective, remember that the electricity market generally is one we expect to see continuing to grow substantively. Given the ongoing electrification of energy. So but there certainly are movements which can be a degree of seasonality and can be really linked to just the price volatility or lack of it that we see in the underlying electricity market.

Okay. And then just the next one on cost. And you've reiterated your guidance again which is great. The first half obviously the cost below and you've talked about second half picking up a little bit. The seven point five months through the year now, With the first half being where it is and you've guided for the second half, ASX you looking at towards the top end of your guidance or the cost now and what are the key swing factors to move it to both the top end and the bottom end?

Thanks Ed. And happy to grab that as well. Look, we're feeling good about the cost discipline as I mentioned before with the results of the first half.

We haven't refined our guidance given the period still to come We've called out today known increases around the depreciation and amortization line in the second half. So that will tick up a little bit. But also continued investment in technology, which means the equipment cost line will also also go up in the second half. And so there's sort of two known factors. The range just to remind you that 6% to 9% I So we're comfortable with our guidance at the moment. As we get close to the full year, we may refine that, but there's still a little way to go. In terms of sort of potential other things that are out there, I'd point to the recent sort of ASIC investigation that was published and there may be some additional costs in relation to that. [indiscernible] Not significant at all, but we're not in a position to refine our guidance at this point in time, but very comfortable with the results for the first half around the cost discipline.

And if I could just sneak in just one question. You talked about the debt market activity services that you're going to provide Can you just talk about the revenue opportunity here both in the near term for revenue and also over the medium term?

Thanks, Ed. Look, not at this stage. Obviously, we do have some forecasts in our numbers, but I think at this stage, what we'll do is we'll start to share those as they come if they become more material.

Okay. But at this stage, especially for second half, and early next year, you anticipate it to be relatively minor?

Yes. I mean, they're launching in the second half. And obviously, it takes a while to sort of go through the sales cycle and get everyone, onboarded for that data. So I wouldn't expect any material impact for the second half of this year. These are really investments for the future growth of the organization.

Okay. Thank you. The next question is from Freya Kong from Bank of America.

Hi. Thank you. Just following up on some of the questions that have been asked. On costs, are there any keeping the guidance ASX maybe just a bit of a bit of a question. And then also on the revenue yes, sorry, I'll let you answer first. Thanks, Freya.

Freya, there's always sort of timing issues around the expense portfolio, I would say. Suppose the one that we've focused on is around the regulatory cost line where we saw activity last year that hasn't been repeated this year, but that really doesn't impact our plans this year. The example we called out was we incurred costs last year around preparing special reports for example. That's not been repeated this year. But I'll say there's certain timing elements to the expense profile. But as I mentioned before, very pleased with where we've landed for the first half.

And we've Great. And secondly, just on the you talked about the debt market off [indiscernible] a but then on Release 15 and the aftermarket sort of cash trading ability [indiscernible] Thanks, Freya. Yes, we do think there's a revenue opportunity there. It's an [indiscernible] that's not going to be a material factor this year. We'll in due course, we'll be disclosing activity levels in that trading period, I would expect. So you'll be able to actually see some of the detail in our activity report of what's happening there, but not material impact for this half. Should be an additional revenue opportunity for us. From FY 2026? Yeah. [indiscernible] Thank you. The next question is from Nigel Piddaway from Citi. Please go ahead. Good morning, Helen and Andrew. First of all, just a quick question on the move in the spread on participant balances from 10 to 15 basis points. So the fact you're guiding to it's staying at around fifteen second half suggests that sort of extended debt duration was done at the start of the half, yet go back to August and you didn't seem to think there was too much opportunity just trying to understand that a bit better.

Please.

Nigel, I'm happy to take that. So we have seen some duration opportunities or tenure opportunities move as the interest rate are moving around or the curves are moving around. And so so we didn't see that at the start of the period back to that August call and [indiscernible] that point in time. We've called out, we think it persists in the second half. So we're guiding to sort of 15 basis points, if you like, in the second half also. But it does depend on where the curves are at a particular point in time.

Right. So it's not locked in at all, it just still moves around? It's very short. Our weighted average maturity in the portfolio is very short given the nature of, I suppose, the investment mandates that we have. If you think about the collateral balance is moving in and out of the organization, the duration of the portfolio is relatively short.

Yes, okay, understood. ASX then secondly, maybe just sort of have [indiscernible] cost question. I mean, from the guidance, I mean, I hear what you say that the might be scope to alter the guidance. But nonetheless, take that base value and depends where you're within it. But you're looking at sort of maybe around about 10% growth in costs tend to suggest that you've got some pretty good confidence what's going to happen in the revenue line. So is there any sort of division where your particularly optimistic about what might happen to revenue in the second half.

Thanks, Nigel. Look, as you know, we don't actually provide guidance on revenue. But what we obviously do do is we publish the monthly activity report. So there's great transparency for you as to sort of what's happening through the year on revenue. I did mention in my sort of outlook comments that we are seeing a degree of volatility, obviously. There's a lot going on in the world at the moment. And I guess what that really emphasizes for me is that that's what the markets are here for. It is during these times of uncertainty that these public markets, whether it's derivatives or the cash market, provide the opportunity to come together to do a really important price discovery function and enable people to share risk, share reward come to the market with their own views on what's happening. So I think overall that that's reasonably supportive for activity, at least based on what we can see today. But we don't guide to that. We'll just keep publishing the Yes. So it's really through the markets division, though. And I guess the flow on effect through securities and payments that you're seeing. That come through because although listings picks up, it obviously gets deferred.

So Yes. We have seen a bit of a pickup in listings, but also as we mentioned in our technology and data business, one of the things that's driven some of that increase in the information services line is demand for derivatives market data. So we see those impact ripple through in a few different places.

Okay. Thank you. Thank you. The next question is from Kieran Chigi from UBS.

Please go ahead.

Good morning, guys.

Can I just circle back apologies yet again on the cost topic? I'm particularly interested in the comment Andrew, about profile lifting into second half. Obviously, the CapEx is going up a lot. You sort of that's been well communicated that can you give us a little better feeling for how significant that delta is into the second half of the financial year and then sort of given the timing of different projects how we should be thinking about that delta again into '26 on D and A specifically? [indiscernible] So I'd go back to the original guidance in the settings around OpEx of 6% to 9%, but if we exclude depreciation, it's 4% to 7%. So you can see that the 2% growth rate represents where we expect depreciation to land and you can sort of back solve that into probably the second half depreciation number. And so hopefully that's helpful.

And on Stolt Valid, is it?

Yes. Yes. That's helpful on the depreciation point in the short term. What was said in the past is that we expect a gradual increase around depreciation into the future. Some of the technology initiatives that we're putting into use you can see by our technology roadmap when they come into use and therefore when they should start depreciating from, noting that there's quite elongated depreciation or amortization profile for some of the larger projects. And so that's why the comment is in there around in the future, post 2025, we expect a gradual sort of rise around that depreciation line.

Okay. But the roadmap is fairly high level. I mean, there's very difficult to sort of ascertain Yes. So you can And there's no dollars attached either.

So we have called out the dollars on test release one and release two. So you can map that And the other component parts you can follow, I suppose, around our CapEx spend in each of the halves that we're producing as well.

Okay. Second question just on Simply, another second part, now what's this half? Sort of annualizing 10 still What is the outlook for that business from here? And what sort of your willingness [indiscernible] Just given the the question marks of the interoperability.

Yes. Thanks, Kieran. So just a reminder that market is an attractive market. The e conveyancing market, it's over a $300,000,000 revenue market. And at this point in time, there's only one market participant in that market. And so we're very supportive of the Simply opportunity and the platform that they've built, but fair to say we're frustrated by the, I suppose, the lack of clarity around the time table to interoperability. And so we're looking for the New South Wales Queensland and Arneq to actually make some announcements around providing clarity to that interoperability timetable. So that's a key data point for us going forward. But overall, we will remain disciplined around looking at equity investments. So right across our equity portfolio, we'll continue to review those positions over the course of the coming period as well. Your next question is from Julien Brganza from Goldman Sachs.

Please go ahead. Good morning, guys. Thanks so much for taking our question. Just the first one on the [indiscernible] spread ex the action that you've taken Is that still that sort of 10 basis points?

Thanks, Julian. So you're asking what's the spread we're taking on the balances, is that right?

Yes, that's right. Yes. Just a little bit Yes. So look, one of the things that we did in response to cash customer requests for greater transparency over the bench marks that we're using ASX that on the customer balance balances, we're now paying based on the RBA's ASX rate payment rate. So we're using that as our benchmark of what we're paying and that's 10% below the RBA target rate. So that's what we pay on balances. And then our investments spreads are based on the investments in what is a very conservative, very liquid portfolio, obviously, with very tight investment mandates around that because, of course, as a clearinghouse, we need to make sure that those resources are available in a very short timeframe for dealing with any issues.

Okay. Thanks. And sorry, just to clarify, the you're paying them now based on the RBA ES A rate. Yes. And what was it previously, sorry, just to clarify?

It was previously a haircut on the RBA target rate.

Okay. I'm sorry, is there an improvement just on that just based on Is there a what, sorry, did you say?

Sorry, sorry. It's an improvement in the spread of driven by what you're paying to on customer balances? ASX that how to think about it or is it purely No.

No, actually, they are certainly I mean, they may vary in the future, but certainly at the time when we made the shift they were those were the same number for customers. It was really just using a more transparent observable benchmark rather than a derived calculation. But actually, they were essentially the same number. So but that might be useful for you going forward because it's an observable observable observable benchmark for you as well. And no, the change is really the change in the investments the investment return that we're seeing.

Okay. And just on the upside, do you see further opportunity to increase the spreads or just tired of thinking about it Look, I'd say it is it's not straight forward to predict. It is a very conservatively portfolio. So I think it's important to recognize that there is really a limit to the kind of spreads that are possible for this type of investment portfolio. Portfolio. It's invested with a very strong focus on, obviously, capital preservation and very high level of liquidity. So that does limit the opportunity for upside. And so it's hard to say exactly where it might go. It ASX also [indiscernible] [indiscernible] dated opportunities emerge until those balances came down significantly. Curiously enough, they actually haven't come down significantly, but we have started to see a few of those still fairly short day dated opportunities emerge. So I think your fixed income desk may be able to give you better guidance than I can on that.

Got it. Now along them after the call. Thank you so much for that. And then just the other This is the other bit on just the the cash flows. Just want to be clear And what you're kind of delivering vis a vis the funding mix on [indiscernible] On the balance sheet side, the corporate bond and the test facility. Just to be clear that at this stage, you're comfortably funded for your CapEx profile. Is this just given your free cash flow net of dividend payments?

Julie, I'm happy to take that call. So we emphasize today that the flexibility that we do have in sort of the financial management toolkit, if you like. So it's not only the retained earnings through profitability, it's also the fact that we've issued the corporate bond $275,000,000 We've got access to a 300,000,000 corporate bank facility that's currently undrawn and also today we've announced an equipment financing lease facility of up to $60,000,000 as well. So we're comfortable that there's significant funding available to fund that CapEx program going forward. Okay, got it. Great. Thank you so much, Rebecca. Thank you. Your next question is a follow-up from Ed Heading from CLSA.

Hi, thanks. Just another quick one from me. You were talking earlier about working groups and potential policy changes. And while you said there was likely to be no material changes, do you see any headwinds from revenue from this or at least less ability to increase prices anyway? Yes. Let me take that, Ed.

So this is a pricing policy related to the cash equities clearing and settlement services. So So within our business, that's clearing settlement and issuer services. And that's that's a service where there are significant regulatory expectations about how we price the service. There have been for a long time. But as you know, with the with the recent to now in law and ASIC are sort of working their way through actually putting the relevant rules and regulations [indiscernible] one of the expectations is about how we price that business. And so we've previously had a pricing policy in place. We've published those accounts for the clearing and settlement business. So there's been a really good level of transparency ASX you can see when you go and look at those management accounts that they are typically at slightly lower return on equity than the average return on equity for the rest of our organization. And I think it's fair to say that the sort of the pricing policy approach will continue. To provide a constraint there. So that's I suppose why we wanted to make the point that we don't expect this pricing policy to have a material impact on revenues.

It's really more a case of sort of formalized policy, making sure we're taking on board sort of best practice around regulated pricing models. And then making sure we discuss that with our customers and make sure there's a level of sort of comfort and understanding with how we're approaching that.

Okay. Thank you very much.

In queue, there are no further questions at this time. I'll now hand back to Ms. Lofthouse for closing remarks.

Great. Well, thank you very much everyone for your questions. And just to summarize today's results, we delivered record operating revenue for the first half, and strong underlying NPAC growth, and those demonstrate the quality of our portfolio of businesses. From a strategic perspective, we're delivering on our technology roadmap So thank you very much everyone for joining us today and goodbye for now.