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Net Profit After Tax Up 25% For NZX Group In First Quarter

Date 01/05/2008

NZX has released a Group Q1 financial result showing NPAT up 25%.

NZX Group – Q1 2008 vs Q1 2007 Performance

  • Operating revenue: $7.99 million versus $7.23 million in 2007, an increase of 10%.
  • Operating expenditure: $4.31 million versus $4.02 million in 2007, an increase of 7%.
  • EBITDA: $3.67 million versus $3.22 million in 2007, an increase of 14%.
  • EBITDA margin: 46.0% versus 44.5% in 2007, an increase of 3%.
  • NPAT: $2.17 million versus $1.74 million in 2007, an increase of 25%.
  • NPAT margin: 27.2% versus 24.1% in 2007, an increase of 13%.
  • Fully diluted earnings per share (EPS): 8.9c per share versus 7.7c per share in 2007, an increase of 16%.

NZX CEO Mark Weldon said, “In what has been widely recognised as a very challenging capital market environment, the structure of our business lines has enabled us to continue to grow revenues faster than costs in the first quarter of this year.”

Operating revenues are up 10% on the first quarter last year, which shows the NZX franchise has strengthened and in these conditions the business remains healthy and continues to grow. Annual listing fees, a revenue line not affected by short-term market fluctuations, were up 19% in Q1 2008. A 7% increase in operating expenditure on Q1 2007 includes consolidated costs of TZ1 staff, offices and administration.

Operating revenues are down 5% from Q4 2007, reflecting the impact of short-term market sentiment on initial and secondary listings and trading revenue lines in particular. Operating expenditure was down 8% on Q4 last year, driven by focused and successful cost control measures within the NZX business.

NZX Markets Business – Q1 2008 Performance

  • Total NZX Markets Business operating revenue grew 11% year on year to $7.31 million in 2008.
  • The NZX market information business generated $2.8 million in revenue in Q1 2008, an increase of 20% on 2007.
  • The performance of the NZX Data business comprises core data business growth and new acquisitions. Real-time data terminal numbers were up 24% on Q1 2007, with 10,990 terminals worldwide at the end of March. The Market Information business includes the core Market Data business and a series of bolt-on acquisitions. Together this set of businesses provide data and research right across the market spectrum, and across the managed fund and agricultural sectors.
  • Listings revenue grew to $2.15 million, a 7% increase on the comparable period in 2007.
  • Trading, clearing and settlement revenue was down 9% on the comparable period in 2007 at $1.07 million, reflecting lower trading volumes in Q1 2008.

NZX Subsidiaries and Strategic Investments – Q1 2008 Performance

Smartshares - EBITDA was $185,000, a 37% decrease on the first quarter of 2007. 2007 EBITDA included an accounting adjustment to revenue of $147,000. Normalised for this adjustment, Smartshares has achieved a 26% increase of the first quarter 2007 EBITDA result. Smartshares funds under management grew to $669 million in Q1 2008, a 29% increase on the same period in 2007. Smartshares’ KiwiSaver offering, Smartkiwi, has further developed their online platform in Q1, allowing investors to see an itemised breakdown of employer, government, and personal contributions to their Smartkiwi KiwiSaver fund as they occur.

Link Market Services - EBITDA was $245,000, a 10% increase on Q1 2007. Link also continued to return capital to investors, redeeming $400,000 of preference shares in Q1 2008. As Link is a 50% owned, equity accounted joint venture, $200,000 falls to NZX's balance sheet. Although market sentiment has had some impact on IPO and corporate action revenue lines, Link's core revenues remained steady in Q1.

Appello - Version one of the Appello platform has been released on schedule and is working efficiently. A cornerstone customer has been secured and initial products (2 single class PIEs and a Cash PIE) are now operating on the platform. A further two large customers have been secured and are in advanced stages of implementation. A number of smaller fund managers have also been secured and are in various stage of implementation. The platform supports Cash PIEs and single class PIEs now with support for KiwiSaver in development. Revenue and expenditure are on budget.

AXE ECN - ASIC has completed consultation on AXE's Australian Market Licence application and has made a recommendation to the relevant minister. An announcement by the minister is pending. If the recommendation is favourable, AXE will move to finalise regulatory arrangements and commence operations.

TZ1 - TZ1 has had a fast start in Q1, focused particularly on registry developments, and is making strong progress in this area. Registry services for voluntary carbon markets is an area currently under-served globally. Market development initiatives have been focused on working with government towards finalising both the New Zealand Emission Trading Scheme (ETS) and market-enabling legislation.

NZX Capital Management

As advised at the NZX Annual Meeting, NZX will pay a cash dividend of 21 cents per share, fully imputed. The record date for the dividend is 2 May 2008 and the payment date is 14 May 2008.

The Distribution Plan (which provides for bonus shares in lieu of a dividend) has been suspended for 2008. As will be detailed today in a separate release, NZX intends to buy back the equivalent number of shares that will be issued under the NZX Employee Share Scheme.

NZX Group - 2008 Outlook

Market conditions remain uncertain in global equity markets which shows up in the New Zealand context. However, the New Zealand market and its underlying fundamentals remain strong. There has been no material change in the number of real-time data terminals resulting from job losses in global investment banks, but this operating metric will be closely monitored. NZX is confident that the structure of our business lines will enable us to deliver strong operating results throughout 2008.

The second part of the trading, clearing and settlement upgrade is currently underway. The upgraded system will include Central Counterparty (CCP) functionality which decreases operational risks and costs to NZX market participants. The new clearing and settlement system also enables the trading of a broader range of products such as derivatives, commodities and carbon on NZX Markets.

In early April NZX completed the acquisition of The Dairy Marketing Group in Australia. NZX will continue to look at acquisitions in the data area, both domestically and internationally, with growth remaining a core focus for all NZX businesses.

ENDS

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