NZX's annual profit up more than 60% as cost control kicks in

Stock exchange operator NZX [NZX:NZX] has lifted net profit after tax 62% in its latest financial year, with better cost management and improved efficiency.

The company’s npat for the year to December 31 was $14.8 million.

Operating earnings were up 31% to $29 million on a like-for-like basis (which exclude the impact of 2016’s agri business disposals) while revenue is up 1.1% on a like-for-like basis to $75.3 million.

Operating expenses decreased 11.6% on the same basis as cost control initiatives kicked in.

Chief executive Mark Peterson says the result was underpinned by disciplined cost management, efficiency improvements and a strong customer focus.

Revenue from NZX’s core markets business, which includes issuer, participant and data services, derivatives, and markets operated for Fonterra and the Electricity Authority, was down 2.3% to $52.3 million, reflecting 2017’s subdued capital raising environment.

NZX’s dairy derivatives market is performing better, finishing the year with record annual trading volumes of 57% across all dairy contracts, which translated into derivatives revenue growth of 60% or $1.13 million.

The company plans to focus more on this market and 2018 will see NZX bolster sales and marketing efforts and expand global access.

Annual listing fees revenue increased 11.4% on last year largely due to growth in the debt market where $3.2 billion of new debt was listed through 20 separate issues.

New debt market listings in 2017 included Summerset Group Holdings, Heartland Bank, Property For Industry and Christchurch City Holdings.

Oceania Healthcare listed on the main equity board in May after an initial public offer while TIL Logistics Group joined in November in a back-door listing.

QEX Logistics shares made its debut last week on the small-cap NXT market in the first new listing of 2018. The NXT market is likely to be canned if NZX goes ahead with plans to merge its three equity bourses.

The NZX says data and insights revenue increased 3.5% to $11.4 million, driven by a 24.7% increase in subscriptions and licencing fees, and a 3.1% increase in dairy data subscriptions.

The outlook

Guidance was given for the 2018 full year for operating earnings to be between $28-31 million.

The board declared a final ordinary dividend of 3.1c a share, which is fully imputed, and brings the total ordinary dividend declared for this financial year to 6.1c a share.

This is the first increase since 2013, which the board says reflects confidence that NZX’s refreshed strategy will deliver improved profitability and earnings over the coming year.