SGX Reports 3Q Performance With Net Profit Of $89 Million

3Q FY2016 Financial Summary

Revenue: $206 million, up 3% from a year earlier
Operating profit: $103 million, unchanged
Net profit: $89 million, up 1%
Earnings per share: 8.3 cents, up 1%
Interim dividend per share: 5 cents [1], up from 4 cents

All figures are for the year except for figures in brackets which are for the year earlier, unless otherwise stated

Singapore Exchange (SGX) today reported net profit of $89.2 million ($88.2 million) for 3Q FY2016. Revenue was up 3% to $205.8 million ($199.3 million). Earnings per share was 8.3 cents (8.2 cents) and the Board of Directors has declared an interim dividend of 5 cents (4 cents) per share, payable on 6 May 2016, in line with the stated dividend policy.

Commenting on the results, Loh Boon Chye, CEO of SGX said, “Our results this quarter showed growth across our three business lines of Equities and Fixed Income, Derivatives and Market Data and Connectivity. This reflected higher levels of market activities as market participants react and adjust to the changes in benchmark interest rates and volatile commodity prices.”

Following previously announced changes to its organisational structure, SGX is presenting results this quarter according to its three business lines.

Results Summary

Results for Equities and Fixed Income comprise Issuer Services, Securities Trading & Clearing and Post Trade Services.

Issuer Services revenue decreased $1.0 million or 5% to $18.7 million ($19.7 million), accounting for 9% (10%) of total revenue.

Listing revenue was $11.4 million, down 6% from $12.1 million due to a decline in the number of new bond listings, while revenues from corporate actions and others was $7.3 million, down 4% from $7.6 million. There were a total of four new equity listings, compared to two a year earlier. Secondary equity funds raised were $0.3 billion ($1.0 billion).
Securities Trading and Clearing [2] revenue increased $2.0 million or 4% to $54.8 million ($52.8 million) and accounted for 27% (27%) of total revenue.
The increase was attributed to revenue growth in Securities Clearing with $42.2 million, up 3% from $41.0 million and Access with $10.3 million, up 5% from $9.9 million, as well as a 17% increase of revenue from $2.0 million to $2.3 million from collateral management, membership and others.
The higher level of market activities this quarter led to an increase in the securities daily average traded value (SDAV) by 5% to $1.22 billion ($1.17 billion) and total traded value also by 5% to $74.7 billion ($71.4 billion). Turnover velocity for the quarter increased 20% to 46% (39%). The average clearing fee was 2.90 basis points (2.94 basis points).
Post Trade Services [3] revenue increased $2.5 million or 10% to $28.5 million ($26.0 million), accounting for 14% (13%) of total revenue.
Securities settlement revenue: $22.1 million, up 10% from $20.0 million, following higher volumes of institutional securities settlement
Contract processing revenue: $4.0 million, up 2% from $4.0 million
Depository management revenue: $2.3 million, up 18% from $2.0 million

Derivatives revenue increased $2.5 million or 3% to $82.2 million ($79.7 million), and accounted for 40% (40%) of total revenue. Revenues from Equity and Commodities were $61.9 million, up 3% from $60.1 million. This reflected increased volumes by 9.5 million or 24% to 48.7 million contracts (39.2 million contracts), primarily from higher volumes in the SGX FTSE China A50 Index futures, Japan Nikkei 225 and iron ore contracts. Average fee per contract was lower at $1.15 ($1.39), mostly due to greater increase in futures and options volumes, and revision in pricing and incentives for iron ore contracts as a result of increased competition.

Revenues from collateral management, licence, membership and others contributed $20.4 million, up 4% from $19.6 million. Average month-end open interest for equity and commodities derivatives was 3.7 million contracts, up 14% from 3.3 million contracts a year earlier.

Market Data and Connectivity revenue increased $0.5 million or 3% to $21.6 million ($21.1 million), accounting for 11% (11%) of total revenue. Specifically, revenue for market data was $9.4 million, down 5% from $9.8 million due to the impact of one-off items, while revenue for connectivity was $12.3 million, up 9% from $11.3 million due to the continued growth of our colocation services business.

Outlook

Mr Loh added, “As we continue to execute on our growth strategy, we will focus on managing costs, against the backdrop of increasing competition and volatile global market conditions. We expect FY2016 operating expenses to come in at the lower end of our previously announced guidance of between $415 million and $425 million

[1] From FY2016 onwards, SGX’s dividend policy is to declare a base dividend of 5 cents per share per quarter, an increase of 1 cent per share. For each financial year, SGX will pay as dividend an amount which is no less than 80% of the annual net profit after tax or 20 cents per share, whichever is higher.

[2] The revenue line previously known as Securities has been renamed to Securities Trading and Clearing.

[3] The revenue line previously known as Depository Services has been renamed to Post Trade Services.