NZX full year results:
Revenue - $32.2m up 2pc
Profit - $10.2m up 17pc
KEY POINTS:
Stock exchange operator NZX today reported full year net profit up 17 per cent to $10.2 million, saying the result reflected the success of strategic reshaping of the business.
Revenue from ordinary activities for the year to the end of December rose 2.3 per cent to $32.2m, while operating expenses were down 7 per cent to $15.5m.
NZX chief executive Mark Weldon said the rise in profit was achieved "under extremely difficult trading conditions".
"NZX has operated in an environment of de-leveraging, declining asset values, reduced listing activity in the face of volatility, and the reshaping of global financial institutions - yet a strong financial performance has still been achieved," he said today.
The 2008 result reflected the success of the strategic reshaping of the business under way for the past three years.
The best indication of the strength of the underlying franchise and strategy was that excluding TZ1, NZX operating ebitda (earnings before interest, tax, depreciation and amortisation) was up 28 per cent in 2008, said Weldon.
The TZ1 Registry, an NZX investment, was in the due diligence stage of a sale for $66m.
Looking ahead, the NZDX debt market listing pipeline for the first half of 2009 was "very strong", NZX said.
"Additionally, in the second half of 2009, with credit tightening up from traditional sources such as banks and the capital market providing better valuations for companies, the environment for equity capital raising is looking more favourable than in the previous 24 months."
The company's key investments in 2008 were mostly offshore, buying two Australian agricultural businesses, becoming the largest shareholder in the Bond Exchange of South Africa (BESA), and growing wholly-owned subsidiary TZ1.
NZX's 22 per cent stake in BESA is now the subject of a takeover offer from the Johannesburg Stock Exchange.
NZX was no longer solely an exchange business. For example, the company was now the leading provider of dairy and agricultural financial information and research, under its NZX Agrifax and Dairy Week brands, said Weldon.
"Global capital market volatility has thus impacted NZX's revenue growth to a much lesser extent than our exchange peers, and NZX has come through 2008 in a position of significant financial strength."
For the NZX Markets business, operating revenue grew 4 per cent to $29.8m, while operating expenditure was down 20 per cent at $11.5m.
Listings revenue was down 8 per cent to $8.4m, while the NZDX debt market grew 20 per cent in 2008, with market capitalisation at $12 billion at the end of the year.
"This is a uniquely successful market globally, of real importance to New Zealand issuers which were able to access debt via the NZDX at a time when global debt markets were `closed'," Weldon said.
Trading, clearing and settlement revenue was down 7 per cent to $4.5m, reflecting the fact that NZX trading revenue was based mainly on number of trades rather than value traded.
Average daily trades were down 5 per cent and average daily value traded was down 18 per cent in 2008.
The NZX Information business revenue rose 17 per cent to $12.3m.
Improving the underlying liquidity of NZX Markets at every level of listed product would continue to be a priority in 2009, NZX said.
The derivatives team was working with key customer and stakeholder groups on product planning and development. During 2009 those groups would focus on building the market structure to launch equity options, index futures and dairy commodity derivatives.
Shares in NZX were down 10c to $5.50 around noon, on low volume, having ranged between $8.41 and $4.60 in the past year.
- NZPA
