Australian Stock Exchange (ASX) today announced an operating profit after tax of $27.13 million, an increase of 18% on the $23.01 million recorded for the previous corresponding period.
The Board has declared a fully franked interim dividend of 26.8 cents per share. This compares to the dividend of 24.3 cents per share paid in the previous corresponding period and effectively represents a fully franked payout ratio of 100% of profit after tax. This payout ratio has been in place since the company's listing in 1998, reflecting the Board's view that the company's cash position warranted this level of dividend.
However, for prudent capital management and having regard to future growth opportunities, the Board has determined that the dividend payout ratio will be amended to 70% of net profit after tax and will be applicable commencing with the final dividend for the current financial year.
The profit for the period was achieved on revenues of $95.53 million, 9% higher than the $87.81 million recorded for the previous corresponding period and due primarily to an overall increase in the level of market activity.
Commenting on the results, ASX Managing Director, Mr Richard Humphry, said: "The first half of 2000/01 has seen the continued strong financial performance of the company but has been equally important in terms of the development of initiatives to meet the changing needs of our customers and the challenges of rapidly globalising financial markets.
"During the period we have announced our plans to develop the Australian market for Exchange Traded Funds (ETFs) and entered into an alliance with BridgeDFS under which we have taken a 15% stake in the company. We have also continued to progress our World Link service through the development of trading links with the US and Singapore markets. We have recently completed trials of the US link and the service is now being made available to brokers," he said.
Operational Performance
- Revenue from equities trading, clearing and settlement increased by
7% to $42.44 million, due to an increase in the average number of
trades per day to 50,900 from 43,200. As a result of the introduction
of volume related discounts for clearing and settlement and the
increased number of retail trades, the average fee per two-sided
trade for the period was $5.36 ($5.67 for the previous corresponding
period).
- Revenue from listings was $17.62 million ($18.46 million for the previous corresponding half). There were 102 new listings for the period, similar to the previous corresponding period. However, due to the lower relative size of the new listings, the average fee per new listing was slightly lower. Revenue from annual listing fees was in line with the previous corresponding half.
- A 28% increase in revenue from market data to $17.21 million due to the higher levels of market activity coupled with increased sales of market access terminals.
- Revenue from derivatives trading, clearing and settlement was
$13.95 million compared to $13.93 million for the first half of the
previous year. Daily average option contracts traded were 37,800
compared to 39,400 for the previous corresponding half. This was
offset by a strong increase in the number of new warrant series
listed (396 compared to 248 for the first half of 1999/00).
Total operating expenses for the period increased by 4% from $56.04 million to $58.52 million. While in part reflecting the higher level of market activity than for the first half of 1999/00, as previously indicated, the increase in costs primarily relates to a number of new initiatives currently being pursued by the company.
The changing market conditions confronted by exchanges - in particular those of globalisation of financial markets and growing investor demands - have underpinned ASX's longer-term strategic initiatives during the period. In developing its capabilities as a market services provider, the company has continued to pursue its strategy of leveraging off its technological infrastructure and market expertise to broaden the range of products and services it provides, as well as developing its program of international alliances. Particular initiatives implemented or further developed during the period include.
- Development of ASX's co-trading agreement with the Singapore Exchange (SGX). ASX anticipates that this service will be introduced in the third quarter of the 2001 calendar year. Both ASX and SGX believe this model has the potential to be rolled out to establish linkages with other markets.
- An alliance with, and 15% equity stake in, BridgeDFS Limited,
Australia's leading provider of order management services to
professional financial market participants. One of BridgeDFS' core
operations is the provision of the BridgeDFS IRESS Order System
product (IOS) an order routing network currently operating between a
high proportion of Australian and New Zealand institutions and
institutional brokers. The alliance will allow ASX to pursue a number
of opportunities to enhance the products and services it is able to
provide to this part of the market.
On 21 February 2001, BridgeDFS announced that it had achieved its prospectus forecasts for the full year to 31 December 2000.
- Plans to develop and promote the Australian market for Exchange Traded Funds. In addition to meeting the growing demands of Australian investors, ASX believes ETFs will complement its World Link program and benefit ASX listed companies by providing an easy mechanism for overseas investors to gain exposure to ASX's market. Strong international growth in both assets under management and ETF trading volumes as well as local issuer interest provides an encouraging context for this market.
- ASX's joint venture registry business with Perpetual Registrars Limited, APRL, won the registry business for NRMA Limited and the contract for the merged CBA-Colonial registry business. The development of a new registry system has continued and remains on schedule to be operational in the latter part of 2001. In February 2001, APRL also entered into a strategic alliance with Lloyds TSB Registrars, a major step in APRL's business plan of linking with partners in other jurisdictions in order to satisfy the growing international needs of corporations and their shareholders.
- The interest rate market achieved promising turnover growth during the latter part of 2000, reflecting the growing awareness of the market as well as the number of new products available for investors such as Hybrid Debt securities that have recently been issued and offer 'fixed' fully franked returns.
- ASX has also continued to actively participate in the Global Equity Market (GEM) discussions initiated in 2000 by the New York Stock Exchange.
- The establishment of a new company, ASX Supervisory Review Pty Ltd.
The new company is designed to enhance the transparency and
accountability of ASX's supervisory activities.
In addition, during the period, the Minister for Financial Services and Regulation, Mr Joe Hockey, announced the Government's intention to increase the ownership limit on ASX from 5% to 15% (with discretion to go above this level). This decision requires the approval of both houses of parliament and will be included with the Financial Services Review Bill. ASX believes that in the international market place in which the company now operates, the increase in the ownership limit is necessary to provide it with greater flexibility in pursuing commercial relationships.
- Commenced making its trading link into the US markets available to brokers. The service enables Australian investors to trade, settle and hold a range of equity securities quoted on the Nasdaq market and the New York Stock Exchange (NYSE). At this stage, approximately 70 securities quoted on NYSE will be eligible for trading.
- Acquired a 50% interest in Orient Capital Pty Ltd, Australia's leading strategic investor relations consultancy, as part of its strategy to enhance the services it provides its listed company customers.
- Australian Derivatives Exchange (ADX) commenced operations. As part of ASX's program to leverage off its technology and infrastructure, ASX is providing a clearing facility for ADX as well as access to a range of technical services.
- Concluded discussions with NZSE concerning a merger of the two exchanges, as it was not possible to find a solution that was in the interests of ASX's shareholders.
Commenting on the company's outlook, Mr Humphry said: "Revenue for the full-year will continue to be driven by the overall level of market activity and in particular, equities trading volumes. Whilst volumes are inherently difficult to forecast in the short-term, they have been growing strongly over the past ten years. Daily average equity volumes for January and February are above levels for the same period in 1999, but below the record volumes achieved in the same period of 2000. While revenues in the short-term will reflect these lower volumes, we believe growing levels of investment and the level of retail interest in the market, coupled with favourable economic reforms such as the abolition of stamp duty in July 2000, will assist in continued long-term growth in volumes.
"During the second half of the financial year, we will continue to implement our longer-term strategy to develop our capabilities as a market service provider through our international alliances and broadening our products and services. In particular, while our link to the US markets will commence, work will continue on the development of the market linkage with Singapore, the registry system build for APRL and the development of the ETF market," he said.
