NZX profits jump on after asset sales

Half year profits have soared at the NZX, as a result of asset sales, but revenue from ordinary activities was up 17pc. Photo / Kenny Rodger.

A big jump in sharemarket operator NZX's half year profit is largely attributed to gains on the sale of both TZ1 Registry and the company's stake in the Bond Exchange of South Africa (BESA).

NZX today said net profit for the six months to the end of June was $60.76 million, compared to $4.97 million a year earlier.

On June 30 the assets of TZ1 Registry, which records carbon credit generation, purchase and retirement, were sold to international financial services company Markit for a net gain of $52.1m, NZX said.

It also sold its 22 per cent shareholding in BESA in June for $10.2m, an 83 per cent gain on investment.

Meanwhile, NZX acquired rural information business Country-wide Publications and electricity market operator The Marketplace Company.

Total revenues from ordinary activities during the period lifted 17 per cent to $18.63m.

Market data revenues rose 18 per cent to $6.1m, with three key factors affecting data revenues - terminal numbers, exchange rates and pricing.

Listings revenue was up 15 per cent to $5.17m, with debt and secondary equity issuance at record levels, NZX said.

Listings revenue for the second quarter exceeded that for the first, continuing a strong 2009.

Second half listings revenue was expected to be slightly improved on the first half, reflecting expected continued equity issuance with potential equity initial public offering activity in the fourth quarter.

Trading revenue dropped 8 per cent to $2.44m, with the key driver being average daily trade numbers, which were 2184 in the latest half year, compared to 2344 in the corresponding period last year.

The half year also included revenue of $231,000 from 21 days of energy markets activity.

That includes revenue from contracts with the Electricity Commission relating to trading operations of the wholesale electricity market, and two contracts with the Gas Industry Co relating to gas market trading operations.

Management expected the energy markets activity to result in a predictable annualised revenue line of about $4m, NZX said.

NZX chief executive Mark Weldon said an ebitdaf (earnings before interest, tax, depreciation, amortisation and financial instruments) line had been added to the results as an indicator of underlying performance.

Ebitdaf of $9.08m in the first half of 2009 was up 3 per cent on the same period last year. Excluding one-off items ebitdaf would be $10.19m, up 16 per cent on last year.

Operating expenditure for the half year rose 34 per cent to $9.55m.

Weldon said one-off expenditure within the half year included the NZX board's decision to account for the long term incentive portion of the chief executive and senior management share scheme.

It also included the scoping of potential investments NZX decided not to pursue, costs associated with NZX's capital raising, and one-off costs related to integration of newly acquired businesses, he said.

A key investment in the first half was the establishment and staffing of an NZX office in Auckland, focused on the introduction of new futures and commodities products.

NZX said it had made a provision for impairment of the investment in its joint venture trading operation in Australia, AXE ECN, given the ongoing reluctance of the Australian government to address the granting of an Australian markets licence to AXE.

The provision for impairment of the AXE investment in the accounts at June 30 was $3.6m in the parent and $1.82m in the group given previous equity accounted losses.

There were no services revenues from AXE to NZX in the first half of 2009.

Among NZX's strategic priorities for the next 12 months was work on the launch of dairy derivatives.

"While the timing of the launch is yet to be finalised, the medium term view on the prospects for a commodities market is very strong, and customer feedback and interest has been very high," NZX said.

It believed agricultural markets would develop, and that it would have the information, data, and infrastructure assets to support the development of those markets.

Shares in NZX were up 29c, or 3.8 per cent, to $8 just before noon.

- NZPA