NZX Q1 NPAT exceeds $3 million, up 40%

NZX Q1 NPAT exceeds $3 million, up 40%

NZX has released a Group Q1 financial result showing NPAT up 40%.

I. NZX Group – Q1 2009 vs Q1 2008 Performance

* Operating revenue: $8.59 million versus $7.99 million in 2008, an increase of 7%
* Operating expenditure: $4.311 million versus $4.314 million in 2008.
* EBITDA: $4.28 million versus $3.67 million in 2008, an increase of 16%.
* EBITDA margin: 49.8% versus 46.0% in 2008, an increase of 8%.
* NPAT: $3.04 million versus $2.17 million in 2008, an increase of 40%.
* NPAT margin: 35.4% versus 27.2% in 2008, an increase of 30%.
* Fully diluted earnings per share (EPS): 12.4 cents per share versus 8.9 cents per share in 2008, an increase of 39%.

NZX CEO Mark Weldon said, “Our strategy comprises three key areas of focus: strengthening the core NZX markets, cementing a broader integrated base from which to grow and generate strong operating leverage, and continuing to proactively reshape the NZX business. This pleasing Q1 result is evidence of the success of this strategy.

“We are currently in the process of successfully exiting two key global investments, TZ1 Registry and BESA. Alongside this we believe this environment presents an unparalleled opportunity to further reshape the NZX business for substantial future growth. Over the next few years NZX is well-placed to continue to deliver strong financial results,” said Weldon.

Looking forward, NZX management sees momentum returning and has a positive outlook. Some leading indicators driving this outlook include:

* A record of $1.4 billion capital was raised in March including significant secondary equity.
* Average daily trades in March were the best year to date, and NZX market data revenues and sales have remained stronger than peer exchanges.
* Operating expenditure is unchanged compared with the previous corresponding period, despite the addition of TZ1 costs, which make up 21% of total costs. The TZ1 Registry business is currently in the due diligence stage of a NZ $66 million sale to leading global financial services company Markit.

Peer exchanges in the Asia-Pacific region reporting decreasing profits in the last two months include: Hong Kong Exchange & Clearing down 17%, Singapore Exchange down 46% and Bursa Malaysia down 63%.

II. NZX Markets Business – Q1 2009 Performance

* Total NZX Markets Business operating revenue grew 5% year on year to $7.67 million in 2009.
* The Information businesses generated $3.89 million in revenue in Q1 2009, half of the total Markets Business revenue, and an increase of 39% on 2008.
* Total listings revenue was $1.78 million, a 17% decrease on the same period in 2008.
* Trading, clearing and settlement revenue was down 15% on the comparable period in 2008 at $905,000.

The Data business continues to deliver strong results for NZX, despite challenging market conditions. In the Rural Information Businesses, NZX will continue to look at suitable acquisition opportunities that will increase its ability to leverage off existing infrastructure and knowledge.

Market services income, with the exclusion of AXE services revenue, has increased 100% compared with the same period last year, largely due to NZX providing additional contracted services to associated companies on commercial terms. NZX will continue to explore these opportunities as they become available.

Positive signs are emerging in listing and trading. Record levels of capital were raised in the first quarter of 2009. Total capital raised on NZX Markets in Q1 was up 67% on the same period last year at $1.4 billion. Debt raised in the first quarter of 2009 was up 87% on 2008, with over $1.2 billion raised on the NZDX Market year to date. Recent total trades on the NZDX Market were up 89% in the month of March and up 13% over the first quarter of 2009. Average daily trade numbers in March were 2,112, the highest since October 2008.

NZX has agreed with the NZX Participant firms a go-live date of 20 November 2009 for its new Clearing House. This will enable futures and commodities markets to be launched this year.

III. NZX Subsidiaries - Q1 2009 Performance

Smartshares

Operating EBITDA was $99,000, a 46% decrease on the first quarter of 2008. This reflects the impact of falls in index values evident in revenues over this period.

Despite these falls, funds under management (FUM), excluding funds managed for the New Zealand Superannuation Fund (NZSF), increased $1.5 million due to regular savings and dividend re-investment plans. In Q1, NZSF provided a further $118 million of FUM for Smartshares to manage. Total FUM at the end of Q1 was $665 million.

Disciplined expense management resulted in an 11% decrease in operating expenditure for Smartshares compared with the same period last year.

TZ1

TZ1 Registry achieved all its customer and credit issuance targets in Q1 2009. At the end of Q1 2009, TZ1 Registry had 182 customers and over 30.5 million credits listed. TZ1 Registry was appointed exclusive registry provider for the American Carbon Registry standard and the Plan Vivo Standard in Q1, and signed a strategic partnership agreement with the World Green Exchange.

In line with its stated business strategy of developing the registry into new environmental market sectors, TZ1 is providing exclusive registry services to a number of regional ecosystem market initiatives in the USA, including habitat-banking and water quantity and quality programs.

The closing date for the TZ1/Markit transaction will be June 30 2009.

IV. NZX Strategic Investments - Q1 2009 Performance

Link

Link continued its stable growth both with a very good Q1 result, meeting budget forecasts with an EBITDA increase of 3% in the quarter versus the same period in 2008. Corporate actions remain active, and capital raisings have provided a solid revenue base for Link over the first quarter. Q1 also saw Link successfully complete its migration of the Air New Zealand registry, and process their first dividend payment under Link.

Link redeemed $300,000 of preference shares in Q1 2009. As Link is a 50%-owned, equity accounted joint venture, $150,000 falls to NZX's balance sheet.

Appello

Revenue for Appello Services Limited (ASL) in the first quarter of 2009 is slightly ahead of projections with operating expenditure on budget. Revenues in 2009 will be derived primarily from continued implementation of new PIE Funds and migration of current funds from legacy systems onto the ASL Unit Registry platform. Appello continues to implement the business plan for the creation of a new generation unit registry platform focusing on funds compliant with the Portfolio Investment Entity (PIE) tax regime.

AXE ECN

AXE’s licence application and the associated legal framework changes for competition in Australia remains in the “Cabinet process” awaiting decision, where it has been since March 2008. AXE understands that a “pro-competition” framework has been designed and recommended by the Minister of Corporate Law (Nick Sherry) but that no timetable is yet set.

Bond Exchange of South Africa (BESA)

The Bond Exchange of South Africa (BESA) recorded a profit in Q1 2009, showing a significant improvement in the underlying performance of the business. The JSE takeover offer is now only subject to review by the competition authorities in South Africa, who have requested an additional 30 days for deliberation. If the decision is positive, it is still expected that the transaction will be completed in Q2 2009.

V. NZX Dividend and Capital Management

NZX Limited has declared a cash dividend of $0.25 per share, fully imputed, to be paid for the year ending 31 December 2008. The record date was 14 April 2009 and the payment and allotment date is 6 May 2009.

NZX has decided to re-implement its Distribution Plan. Under the Plan holders of NZX ordinary shares will receive distributions in respect of their shares in the form of fully paid ordinary shares (“Bonus Shares”), together with an offer from NZX to buy back all, or a portion, of the Bonus Shares.

NZX is in advanced discussions for the acquisition of the energy and related assets of M-co, and would intend to fund this via a combination of debt and equity, details of which will be advised upon final Board determination.

ENDS

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