NZX profits double on listings, trading jump

Photo / File

NZX, the market operator, doubled half-year profits as it benefited from new listings, a surge in trading activity and fees for running market operations, more than making up for a drought-impacted NZX Agri division.

Profit rose to $6.4 million, or 2.51 cents a share, in the six months ended June 30, from $3.2 million, or 1.27 cents, a year earlier, the Wellington-based company said in a statement. Sales rose 14.3 per cent to $30.3 million. Profit was just below First NZ Capital's estimate of $6.7 million.

See the NZX's results presentation here.

NZX has benefited from a revival in companies company to market, topped in the first half by the government's sell-down of Mighty River Power and including SLI Systems, the reverse listing of Mad Butcher and compliance listing of Snakk Media.

That's continued in the second half with Synlait Milk and Wynyard Group, Z Energy's listing today and the potential listing of Meridian Energy in the fourth quarter. NZX said today that the listing of a $1 billion sized company would generate annual revenue of about $150,000.

"Capital markets activity in New Zealand was the strongest it has been in a decade," said chief executive Tim Bennett. "Trading activity has seen a strong start with year-to-date volume and value up 19 per cent and 51 per cent respectively, with growth expected to continue, although at a lower rate."

The biggest revenue contribution came from market operations, which includes fees to run the Fonterra Shareholders' Market and Electricity Authority market operations. Sales jumped 49 per cent to $8.6 million. Securities clearing rose 29 per cent to $2.2 million, contributing to total sales for its infrastructure division of $8.6 million, up 43 per cent from a year earlier.

The markets division posted a 20 per cent gain in sales to $11.6 million, driven by a 37 per cent jump in listing fees to $5.6 million. Securities trading sales climbed 33 per cent to $2 million. Revenue from commodities trading fell 33 per cent to $800,000.

Sales of securities information, which includes data vendor licenses, royalties on data terminals and subscription products, fell 4.3 per cent to $4.4 million and Agri information sales fell 8.1 per cent to $5.7 million.

NZX's wage bill rose 11 per cent to $9.8 million, reflecting a lift in workers to 182 from 140 a year earlier, and contributing the biggest share of a 7.7 per cent increase in overall expenses to $18.2 million, the company said.

Sales at Agri Publishing fell about 10 per cent to $3.88 million as the drought eroded advertiser confidence and trimmed subscriptions. Sales of Agri Data were little changed at $1.82 million.

The company said Agri information sales are expected to rebound following the end of drought and forward advertising booking has improved though the sector remains cautious and revenue is forecast to be flat in the full-year compared to 2012.

The second half will benefit from an increase in listing fees effective July 1.

Trading activity was strong in the first half, with volumes up 18 per cent and value up 56 per cent. NZX said growth would continue in the second half though "at a lower run rate." Electricity Authority market development work generated $1.3 million in revenue in the first half and would continue "at a much reduced level" in the second half.

NZX shares last traded at $1.39 and have gained 15 per cent this year. The company will pay a second-quarter dividend of 1.25 cents a share on Sept. 13, with a record date of Sept. 2