NZX profit reflects record year

Chief executive Mark Weldon says NZX benefited from a strong market. Picture / Geoff Dale

Strong trading volumes, a high number of new listings and a record-breaking market performance have propelled stock exchange operator NZX to a sharply higher annual profit.

The listed company yesterday disclosed a bottom-line profit of $3.68 million for the year to December 31, up 25 per cent on the previous year's $2.94 million profit.

Shares in NZX spiked to an all-time high on the news, gaining 25c to $9.85.

While there is a tendency to split shares when they hit the $10-mark, NZX chief executive Mark Weldon was sceptical on the likelihood of this happening.

The company benefited from strong market conditions, which were reflected in more listings, initial public offers and transactions, he said, adding that NZX had the second-highest percentage increase in new listings for any exchange in the world last year.

The company will pay a special fully imputed 40c dividend in May. It does not have a stated dividend programme or policy but chairman Simon Allen said NZX would review its dividend policy yearly.

Raw profit rose 69 per cent to $6 million, up from $3.6 million in 2003. Total revenue rose 32.1 per cent to $18.1 million, from $13.7 million.

Weldon said NZX new ventures, such as Smartshares and the joint-venture registry business Link Market Services, were expected to contribute to revenue growth this year.

He said the key drivers of the company's core business performance, including listings, transactions and demand for NZX market data, were expected to remain strong in 2005.

Last year, the company invested in its core market operations business while expanding into two new segments: registry and funds management.

Listing revenue last year was $5.8 million, a 31.1 per cent increase over 2003, and was driven by the addition of new listings - 40 compared with 25 in 2003 - and a pricing change implemented last July.

The total market capitalisation of listed companies increased by $11 billion, while the value traded rose to $28 billion, compared with $22 billion the previous year.
Total funds under management were $192 million spread across four funds, versus $88 million in one fund at the end of 2003.

Smartshares had 10,386 investors direct on register at year-end 2004.

Weldon said: "NZX is happy with the level of new funds under management in Smartshares, especially during a period when wider funds management withdrawals reached $630 million."

Key achievements

 

* Introduced Direct Market Access (DMA), an open interface, to the NZX trading system. Eight trading participants were accredited for use.

* Implemented new participant rules.

* Implemented new regulatory framework, bringing compliance and issuer ruling functions in-house.

* Launched the Smartshares brand, added three funds and raised $50.5 million in initial public offerings.

* Formed Link Market Services, a 50/50 joint venture to provide a superior registry service to all issuers with New Zealand-based shareholders. Link Market Services subsequently bought BK Registries, which is based in Ashburton.