In the past year, we were faced with multiple events of global significance that not only had an impact on the business performance of SIX but also very much affected us at a personal level. We witnessed how war and armed conflict caused suffering to countless people. We also observed persistently high levels of inflation and a marked increase in key interest rates. In other words, the macroeconomic and political context remained complex and in constant flux.
In these challenging times, the core mission of SIX takes on particular importance: the smooth settlement of securities transactions and payments. These are critical to the proper functioning of the economy generally and, by extension, to economic stability in the markets in which we do business.
Positive Trend in Operational Performance and Strong Capital Position Despite Major Non-Cash Value Adjustments
Our diversified business model again proved its value in this demanding environment. We succeeded in extending the positive trend in our operational performance. For full-year 2023, we increased revenue by 3.5% at constant exchange rates and by 2.1% at reported rates. Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew thanks to a stable cost base, to 413.4 million Swiss francs, up 6.7% at constant exchange rates and 4.0% at reported rates.
In the fourth quarter, we had to make two major non-cash value adjustments. The first, of 862.3 million Swiss francs, was prompted by the significant decline in the share price of Worldline. The second charge, again non-cash, was an impairment of goodwill of 339.6 million Swiss francs attributed to BME Group, reflecting higher discount rates and lower trading volumes in Spain and in Europe as a whole. Due to these value adjustments, EBIT was –975.0 million Swiss francs, and the Group net result –1,006.2 million Swiss francs.
The value adjustments did not impact the strong free cash flow generated in 2023, and the capital position of SIX remains strong. For the 2023 business year, the Board of Directors proposes a dividend of CHF 5.20 per share, an increase of 2.0% from the previous year (2022: CHF 5.10).
International Presence Strengthened, Innovations Expanded
While the Exchanges business unit recorded lower trading volumes for the second year in a row, we are pleased to report sustained demand for new listings in the Global Depositary Receipts (GDR) program and the BME Growth segment in 2023. Highlights in the main market included the listings of the Novartis spin-off Sandoz and, in a first for our exchanges, of a company formed from a special purpose acquisition company (SPAC), R&S Group. In the Securities Services business unit, we further developed our international custody business. The interest rate environment led to higher interest income, which combined with the high repo volumes had a positive impact on earnings. In the Financial Information business unit, we successfully expanded our global footprint through a number of new partnerships with platform and distribution providers. Additional growth came from the performance of our Swiss indices and the launch of new indices, including ESG and crypto indices. In the Banking Services business unit, 2023 marked the launch of the new SIC5 platform pioneering instant payments in Switzerland. In the future, moreover, the Swiss National Bank plans to accept register certificates of collateralized mortgages as collateral for liquidity assistance in crisis situations. In doing so, the SNB will rely on the Terravis system owned and operated by SIX.
In December, the platform of our SIX Digital Exchange (SDX) was used to issue and settle bonds in a real wholesale CBDC – a global first. CBDC is short for central bank digital currency and refers to a digital currency issued and regulated by a country’s central bank. The successful issuance of bonds by the cantons of Basel- Stadt and Zurich is part of Project Helvetia Phase III, a joint endeavor of the Swiss National Bank and six commercial banks. The main objective of the project is to investigate potential applications of wholesale CBDC on financial infrastructure based on distributed ledger technology (DLT). This underscores the critical role of DLT-based SIX Digital Exchange (SDX) in driving innovation in Switzerland as a financial center. In addition to the SDX platform, the project, which runs until June 2024, uses further components of our value chain, notably the infrastructure of Swiss Interbank Clearing (SIC) and of SIX SIS, the central securities depository.
New Sustainability Reporting Obligations
Starting with their 2023 annual financial reporting, large and listed companies in Switzerland now also have non-financial reporting requirements to meet. In parallel, the EU began phasing in the Corporate Sustainability Reporting Directive (CSRD). We support all our listed companies in meeting the new reporting requirements. For more on these and further sustainability commitments, refer to our separate Sustainability Report.
New Members on the Board of Directors and the Executive Board
Andreas E. F. Utermann, the chairman of the board of directors of Bank Vontobel AG and Vontobel Holding AG, Sven Holstenson, a managing partner with Pictet Group, and Roger Reist, a member of the executive board of Raiffeisen Switzerland, were newly elected to our Board of Directors at the annual general meeting on May 8, 2023.
In September, Bjørn Sibbern was appointed as Global Head of the Exchanges business unit and as a member of the SIX Executive Board with effect from January 1, 2024. A Danish citizen, Bjørn Sibbern has long international experience in the exchange business. He previously served in various international roles at Nasdaq, most recently as executive vice president and president of European markets.
Outlook
Our medium-term goal is to grow revenue by > 3% p.a. while also extending profitability gains. Looking at our cost base, we will continue to rely on measures to unlock cost synergies and deliver targeted cost efficiencies. Bolt-on acquisitions and partnering opportunities will further strengthen our portfolio.
For 2024, we expect the political and macroeconomic landscape to be similarly challenging for the economy and society as in the previous year. We are also currently witnessing the early stages of large-scale adoption of artificial intelligence (AI). Its rapid dissemination is a harbinger of the massive impact AI technology will have on job profiles, business models, and society. At SIX, our approach to AI is collaborative and cross-functional.
Given our ever-evolving business environment, we place 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 our clients now and in the future. We would like to take this opportunity to thank you – our shareholders, clients, business partners, and employees – for the trust you place in us and for our strong working relationship.
Yours faithfully
Dr. Thomas Wellauer, Chairman of the Board of Directors
Jos Dijsselhof, CEO