KEY POINTS:
A bumper year lies in store for sharemarket operator New Zealand Exchange, with operating profit in the first quarter up 90 per cent as revenue grew at almost twice the rate of costs.
The company posted an operating profit, or earnings before interest, tax, depreciation and amortisation (ebitda) of $3.22 million compared with $1.7 million a year ago. Net profit was $1.74 million, up 48 per cent on last year.
The more muted rise in net profit was due to interest earned on $26 million in capital boosting the bottom line during the previous corresponding period. That capital was returned to shareholders at the end of the first half last year.
Chief executive Mark Weldon said the first-half increase in operating profit was due to first-half revenue rising 50 per cent to $7.23 million while costs rose just 28 per cent to $4.02 million.
He said the three months to March were typically the least profitable. "With a very strong result in this quarter, we're very confident around the prospects for the year going forward."
Revenue from the core markets division rose 92 per cent, driven by increased listings revenue and continued strong growth from the market information services business. Recent acquisitions Fundsource and Agrifax also contributed revenue.
Investment fund business Smartshares had a strong first quarter with revenue up 95 per cent and net profit up 470 per cent to $245,000.
Share registry joint venture Link Market Services enjoyed a strong quarter, achieving a $222,000 operating profit against a $65,000 operating loss a year ago.
Shares in NZX closed up 24c at $10.04 yesterday.
Weldon said NZX's future outlook was positive thanks to the increased funds flow likely to follow the introduction of the KiwiSaver scheme. Also encouraging were tax changes to the portfolio investment entity regime.
NZX was continuing to invest in its infrastructure and planned to introduce a new trading system with "substantially enhanced functionality" including the ability to conduct anonymous trading, he said.
The AXE ECN alternative market venture in Australia was on track for its launch in June or July.
