2006 Performance Summary
- $10.5 million versus $6.6 million in 2005, an increase of 61%.
- Operating revenue: $25.0 million versus $19.5 million in 2005, an increase of 28%.
- Operating expenses: $14.1 million, versus $12.2 million in 2005, an increase of 16%.
- NPAT: $6.4 million versus $4.9 million in 2005, an increase of 31%.
2006 was a transformative year. New Zealand Exchange Limited ( NZX) cemented earlier strategic initiatives at the operational level, and initiated new strategic initiatives, to achieve two principal aims:
- To further develop and enhance the strength of New Zealand 's capital markets, and
- To grow NZX's international relevance as the global capital markets landscape continues to change.
“This is a very strong result. NZX is turning strategy into profit and generating quality, recurring revenue growth at around twice the rate of expense.
“To provide some context for this result, NZX's 2006 EBITDA is now well ahead of total 2002 revenue, which shows the scale of consistent, sustainable growth achieved by the company,” said NZX Chairman Simon Allen.
II. 2006 Business Highlights
NZX Markets business
- Operating revenue: $23.0 million versus $18.1 million in 2005, an increase of 27%.
- The NZX market information business generated $6.1 million in revenue, an increase of 82% over 2005.
- Listings revenue grew to $8.1 million – a 22% improvement on 2005.
- While trading volumes had rallied strongly by year end, a sharp drop in the third quarter resulted in a 2% decrease in revenue at $4.7 million.
- A key event in 2006 was the announcement of the formation of an ECN, a new trade reporting platform for the Australian market, with five Australian partners: Macquarie , Citigroup, CommSec, Goldman Sachs JB Were and Merrill Lynch.
Other businesses
- Smartshares grew to $500 million funds under management, with EBITDA reaching $0.5 million. This represents a 531% improvement over the previous year.
- LINK delivered a significantly improved second-half performance, with EBITDA of $0.4 million resulting in strongly positive free cashflow. LINK will begin to redeem preference shares to NZX in 2007.
Capital Management
- NZX's focus in 2006 was a $16 million capital return to shareholders, a stock split, which increased liquidity, and the introduction of a long-term dividend policy focused at the 60% level.
- NZX will pay a dividend of $0.16 per share, fully imputed, for the year ending 31 December 2006 . The dividend payment will occur in the second quarter of 2007. NZX is currently assessing the implementation of a Dividend Reinvestment Plan (DRP). The exact timing of the 2006 dividend payment will be announced, with details of any DRP, by the Chairman of the Board of Directors at NZX's Annual Meeting on 30 March 2007 .
III. Future outlook
Externally, the policy environment is promising results for the New Zealand capital markets. Proposed tax changes for investments, the PIE regime and the forthcoming introduction of KiwiSaver, in particular, will have a positive impact in 2007 and beyond.
“NZX is very well positioned going into 2007. We are confident that this significantly higher level of revenues is sustainable, and that that we can continue to deliver strong EBITDA growth for our shareholders over the longer term,” said NZX CEO Mark Weldon.
The Statement of Financial Performance, Operating Metrics and Appendix 1 are available to download from the NZX website:
