ASX results for the year ended 30 June 1999

Australian Stock Exchange Limited ("ASX") announced a pre-abnormal operating profit of $35.893 million ($17.913 million in the year ended 30 June 1998). Operating profit after tax and abnormal items was $37.727 million ($16.699 million in the year ended 30 June 1998). Earnings per share were 37.4 cents, compared with what would have been 16.6 cents had shares been issued in 1998. The Board of ASX declared a fully franked final dividend of 19.4 cents per share, bringing the total dividend paid for the full year to 64% of the full year pre-tax profit. "Record trading volumes in the first half were surpassed in the second and were the key factor behind this very pleasing result for our first year as a listed company," ASX Managing Director, Richard Humphry, said. "A high proportion of our operating costs are fixed. The record trading volumes we've seen in the year mean higher revenue that largely translates to profit. Mr Humphry said that equities trading, which generates nearly half of ASX's revenue, experienced an increase in volumes of 31 per cent on last year. However, this was offset by a reduction in the value per trade as a result of the large proportion of retail investors who are now trading in the market. "At the same time, we've managed to cut costs by around 5%," he said. "We've made savings of $5.5 million through reducing administrative costs." "While this has been a very strong trading year, the future level of market activity is inherently unpredictable," he said. ASX is currently reviewing its capital structure to ensure that shareholder value is maximised and to establish whether any cash holdings are surplus to requirements. This review will take into account the requirements of existing operational and strategic initiatives, including the Nasdaq alliance and other international links. "Since listing in October last year with 606 owners, all of whom were brokers, we now have over 12,000 shareholders, the vast majority of whom are retail investors. "Since we listed, we have made significant progress in positioning ourselves in a highly competitive global market. We can now see emerging a global network of exchanges of which our alliance with Nasdaq is an example. "By linking with other markets, we believe we can create greater pools of liquidity for our investors and companies as the boundaries between international markets come down. "We are working towards co-listing and co-trading with Nasdaq and on links with other international markets. "One of the key reasons we believe we are viewed as an attractive partner to international exchanges is the efficiency and high integrity of our market coupled with our leading edge technology. "Our strategic alliances will benefit our shareholders, our customers and the rapidly growing Australian capital market. "We have begun to roll out changes to a range of fees for our customers. These changes will save our customers a total of $10 million this year if current volumes are maintained. "ASX trading and clearing charges are only a small portion of the total costs of a trade. For a $10,000 trade, ASX charges less than $2.00. "ASX's charges are internationally competitive and will remain so." "We believe the best way to continue to create value for our shareholders is to strive to provide the most innovative services to our customers at cost competitive prices. "We have taken a number of significant steps to improve ASX's competitive position, including: the move to T+3 settlement; establishing and consulting with an industry panel to change the All Ordinaries Index to better meet market needs and provide greater choice in benchmarking; a review of our index business to assess the potential to develop it and to develop our index and related product base; implementing a new state-of-the-art derivatives clearing system; introducing third party clearing to allow brokers more efficient use of back office facilities and to capture cost savings; changing our listing rules to better cater for knowledge based service and technology companies. "During this year, we were approached by the Sydney Futures Exchange to merge. The ACCC has since declined to give us informal clearance for the merger. While a united ASX and SFE was attractive to our shareholders and as a mechanism for delivering synergies and efficiencies to our customers, our objective remains providing the best and most innovative services within the global market. "As an adjunct to the review of our index business, we have begun consulting our customers about the feasibility of establishing ASX-sponsored index shares to give retail investors, in particular, an easy mechanism of diversifying their investment portfolio. Other exchanges including Nasdaq/AMEX and Toronto successfully offer these types of products, which are listed and traded like ordinary shares. "In the next few months we will also be launching our interest rate market - a step which has already attracted enormous interest. 'We will be trialing a new, internet based block trading facility (Blox) in November. This is aimed at providing a more flexible, efficient system to reduce market impact costs for broker and institutional block traders." "If volumes for the first two months of the year continue for the rest of the year, ASX expects to deliver results at least equal to last year. However, these volumes are inherently unpredictable. "The rapid pace of technological change in financial services means ASX must continue to create its future in the global marketplace. Our strong first year result gives us a solid platform from which to pursue this aim," Mr Humphry said.