KEY POINTS:
New Zealand Exchange's market information division was the star again as the market operator nearly doubled its first half profit despite the surging currency.
NZX's operating profit, or earnings before interest, tax, depreciation and amortisation, rose 102 per cent to $7.15 million, with revenue growing twice as fast as expenses. That flowed through to a 95 per cent increase in net profit to $4.21 million.
"It's a result that is strong and one we're confident we can sustain," said chief executive Mark Weldon.
Revenue from market information services was up 104 per cent to $2.35 million, surpassed only by trading, clearing and settlement revenue of $2.4 million.
More than two-thirds of market information revenue came from sales of core market data, with increased demand from clients in Asia, Europe and the US, but there was also growth from recent acquisitions including Fundsource, Agrifax, IRG, and Newsroom.
Weldon said the market information division's performance was in line with expectations, "but we've got pretty high expectations".
However the business was negatively affected by the high level of the dollar.
"All of the billing for that business is in US dollars so that financial result is despite the currency drag."
Weldon also said the strength of the kiwi dollar was affecting other areas of business.
"It's clearly affected trading activity as all of the brokers are seeing much greater demand from clients to put their liquidity into non-New Zealand dollar denominated instruments at these high levels.
"You're also seeing a little bit of reduced demand for our stocks out of the US for the same reason."
First half operating numbers showed the value of transactions was down 7 per cent from a year ago on the NZSX main board, down 35 per cent on the NZDX debt market and down 44 per cent on the NZAX alternative sharemarket.
Elsewhere, NZX's index fund business Smartshares continued to move in the right direction, with operating revenue up 75 per cent and funds under management rising to $592 million.
The Link Market Services registry business, half owned by NZX, turned an operating profit of $505,000 compared with a $214,000 loss a year ago and was now capturing a "very healthy" 60 per cent share of the initial public offer market.
Weldon said prospects for initial public offers over the rest of the year included four companies that had gone public with their intentions and were "a reasonable way" through the process and six or seven other businesses that were looking at listing, "of which we would be confident of at least four coming to market over the back half of the year".
Weldon reiterated his view that KiwiSaver and related tax changes which kick in in October would be "very positive over time" for the business. NZX would also continue to look for "sensible acquisitions". NZX shares rose 10c to $11.60 yesterday.
RISING MARKET
Six months to June 30
Revenue
2007 - $15.05m
2006 - $10.44m
Expenses
2007 - $7.89m
2006 - $6.61m
Ebitda
2007 - $7.15m
2006 - $3.53m
Net profit
2007 - $4.21m
2006 - $2.16m
