New Zealand Exchange has released a strong 2007 annual result showing EBITDA for the NZX Group up 41%.
NZX Group – 2007 Performance
* Operating revenue: $31.45 million versus $25.03 million in 2006, an increase of 26%.
* Operating expenses: $16.71 million versus $14.23 million in 2006, an increase of 17%.
* EBITDA: $14.74 million versus $10.44 million in 2006, an increase of 41%.
* EBITDA margin: 47% versus 42% in 2006, an increase of 12%.
* NPAT: $8.71 million versus $6.50 million in 2006, an increase of 34%.
* NPAT margin: 27.7% versus 26% in 2006, an increase of 6.5%.
* Fully diluted earnings per share: 36.17c per share versus 27.91c per share in 2006, an increase of 30%.
NZX CEO Mark Weldon said, “EBITDA for the NZX Group was up 41% in 2007. This is evidence of the resilience and strength of our business in a year where market conditions were characterised by uncertainty and volatility. “The financial results continued the trend of previous years with revenues growing faster than costs, and both earnings and margins improving significantly. Key contributions came from the data and listings areas, with a particularly strong showing by secondary capital raisings. Also worth noting in this result are the improved contributions from Smartshares and a much improved year from Link Market Services.
“AXE experienced delays in regulatory approvals, which NZX is confident will be resolved early in 2008. NZX expects to see increased earnings contributions to the Group result from all the above-named subsidiaries.”
Overall operating expenses increased 17% to $16.71 million in 2007. The majority of this increase was in relation to employee costs associated with businesses purchased in the second half of 2006 and 2007. NZX also opted to make the maximum 4% employer KiwiSaver contribution from the 1 July 2007 KiwiSaver launch date.
NZX Markets Business – 2007 Performance
* Total NZX Markets operating revenue grew to $28.55 million, from $23.00 million in 2006, an increase of 24%.
* The NZX market information business generated $10.54 million in revenue, an increase of 72% on 2006. Key drivers were continued growth in demand for NZX data with the number of real time terminals worldwide at the end of 2007 up 20% on 2006, and revenue growth from acquired businesses Company Research Centre (formerly IRG Data), NZX Agrifax, FundSource and NZX NewsRoom. These new businesses together provide a full suite of New Zealand business data offerings.
* Listings revenue grew to $9.10 million, a 12% increase on 2006. There was also a significant level of secondary capital raised in 2007 with existing issuers raising capital for growth and acquisitions.
* Trading, clearing and settlement revenue was up 3% on 2006 at $4.85 million.
NZX Subsidiaries and Strategic Investments – 2007 Performance
* Smartshares EBITDA reached $673,000, a 24% increase on 2006.
* Link Market Services delivered an EBITDA result of $985,000 versus $325,000 in 2006. Link also began to return capital to NZX, redeeming preference shares in 2007.
* AXE ECN has worked effectively with ASIC on gaining regulatory approvals, which we confidently expect in 2008. AXE also announced that it will move quickly to launch a full trading facility in addition to the reporting facility.
* A key event in 2007 was the announcement of the formation of TZ1 Carbon Market.
NZX Capital Management
NZX’s current dividend policy is to pay a dividend of up to 60% of NPAT. Continuing this policy, NZX will pay out 60% of NPAT for the 2007 year, giving a total distribution of $5.2 million, or 21 cents per share, fully imputed. The NZX Board has also resolved that if the 10-day volume weighted average price (VWAP) of the NZX share price is below $8.50 immediately prior to the NZX Annual Meeting on 10 April 2008, the dividend reinvestment plan will be suspended, and dividends for all shareholders will be paid in cash. If the 10-day VWAP is $8.50 or above, the dividend reinvestment plan will remain available. In this circumstance, shares issued under this programme will be at the 10-day VWAP. In line with this policy, the NZX Board will make its final capital management announcement in respect of the dividend distribution at the Annual Meeting.
NZX’s capital management policy is to fund infrastructure investment, organic growth and bolt-on acquisitions from retained earnings. Any larger investments or acquisitions will likely be funded from existing cash reserves, and thereafter by debt funding. -- www.nzx.com
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