Revenue
Revenue for the period was $99.65 million, an increase of 40% on the $95.53 million achieved during the previous corresponding period. An increase in market activity, in the equities market but particularly evident in the derivatives market, has contributed to the increase.
Market activity remains the core driver of operating revenue, with equities trading, clearing and settlement contributing 45% of revenue. Derivatives contributed an increased proportion of revenue at 18%, compared with 15% for the previous corresponding period. This increase underlines the importance of complementing the existing business through product diversification for the future growth of market activity.
Listings contributed approximately 17% of operating revenue, with market data contributing 15%.
Expenses
Total expenses rose to $63.26 million from $58.52 million in the previous corresponding period. This increase includes the effect of costs from Orient Capital totalling $1.4 million.
Although expenses have increased noticeably compared with the previous corresponding period, the level of costs has remained fairly flat over the past 12 months. The increased cost base is reflective of the new initiatives pursued and implemented during the past 12 months. These initiatives include ASX World LinkTM, ASX Futures, Exchange Traded Funds (ETFs), as well as compliance initiatives with the Financial Services Reform Act, the Privacy Act and ASX Supervisory Review.
ASX has also incurred increased occupancy cost, and has enhanced the disaster recovery capabilities of the company.
Earnings
Earnings before interest and tax (EBIT) were $36.39 million, a marginal decrease on the $37.01 million recorded for the previous corresponding period, but higher than the $34.86 million for the six months to 30 June 2001.
Interest and dividend revenue contributed $2.77 million compared with $2.87 million for the previous corresponding period. This reflects the lower level of cash held by ASX during the period as well as the lower prevailing interest rates.
ASX's equity accounted investment in ASX Perpetual Registrars contributed $0.94 million after tax for the period, slightly lower than the $1.00 million for the previous corresponding period, but significantly higher than the $0.1 million full year contribution to 30 June 2001. Amortisation of goodwill arising from the investment in ASX Perpetual amounted to $1.24 million.
Dividend
The directors have declared a fully franked interim dividend of 19.5 cents per share, representing a payout of 70% of profit after tax The final dividend of 16.5 cents per share paid in October 2001 is the only previous dividend paid at the rate of 70% of profit after tax.
Outlook
ASX's operating performance continues to be determined primarily by the level of market activity. However, during the period significant progress has been made towards ASX's longer-term goal of diversification. While volumes remain inherently unpredictable in the short term, current trends remain consistently positive.
As part of the Financial Services Reform Act on 11 March 2002, the limitation on the voting power of any one person in ASX increased to 15% from the previous limit of 5%. Voting power above this level is allowed at the discretion of the Federal Treasurer but subject to Parliamentary disallowance. ASX welcomes this change which allows for strategic flexibility and brings our ownership limit in line with that of Australian banks.
The period has seen the implementation of a number of initiatives including a new platform for listed funds, ETFS, the abolition of stamp duty on share transactions and the launch of ASX World Link co-trading with Singapore Exchange. During the period ASX also announced that trading would commence in ASX Futures shortly after the period.
ASX's capital expenditure has significantly reduced during the period, reflecting a lower level of development work. Management focus has now turned to extracting operational efficiencies within our business, and building the return on recent initiatives.
These recent initiatives follow the path of expanding the available product range in ASX markets, broadening the infrastructure services provided by ASX and increasing our international reach. All of which leaves ASX well placed to focus on delivering shareholder returns by embracing the challenges of the future.
