Ann: FLLYR: NZX: NZX 2012 Full Year Results

• Release Date: 18/02/13 11:00
• Summary: FLLYR: NZX: NZX 2012 Full Year Results
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NZX
18/02/2013 09:00
FLLYR

REL: 0900 HRS NZX Limited

FLLYR: NZX: NZX 2012 Full Year Results

NZX 2012 Full Year Results

18 February 2013. NZX's results for the full year ended 31 December 2012
reflect continued growth in the core information, markets and infrastructure
businesses offset by a year of low capital raising activity, a number of
one-off expenses and the need to invest in the business to take advantage of
revenue growth opportunities going forward.

Operating revenue grew to $56.0 million, 2.4% higher than the prior
corresponding period ("PCP").

Expenses rose from $29.5 million to $34.0 million. This includes $1.3 million
of costs associated with the CEO transition, other one-off items, and the
Ralec litigation. A further $1.0 million of one-off revenue and expense
accruals also reduced reported earnings.  As previously signalled to the
market at the half-year result, EBITDAF was down 12.7% to $22.0 million.

A change in useful lives of intangible assets to reflect latest estimates
resulted in an increase in amortisation expense of $0.7 million, while a
one-off foreign exchange loss of $1.5 million on the realisation of the
Markit investment was an additional factor in the reduction in net earnings.
NPAT was down 31.7% to $9.9 million.

NZX CEO Tim Bennett commented: "A number of one-off factors influenced this
year's result, which was set against a background of very low levels of
capital raising by historic standards. Despite this, the year ended on a
positive note, with two successful IPO's, the launch of the Fonterra
Shareholders Market and a number of sell-downs by major shareholders. The
resulting momentum in trading volumes carried into the new financial year"

"It is pleasing to note the growth of NZX's Derivatives and Clear Grain
Exchange businesses, which, despite their relatively small scale, performed
strongly.

"NZX made significant investments in core operations during 2012.  The
successful launch of the Nasdaq X-stream trading platform was the result of
an intensive, seven-month project involving stakeholders across the industry,
to whom I would like to express our gratitude for the work programme
involved.

"Ultimately, the new trading platform will drive innovation in NZX's market
offerings, while enhancing our global connectivity capabilities, making our
local markets more accessible internationally in the long term.

Operational performance across all the business remains world-class. The
trading, clearing and settlement functions had 100% uptime in 2012. The
investment in the Clearing House in previous years benefited the market as
clearing volume rose to record levels.

"We also made strategic investments in our people, bringing staff numbers to
appropriate levels to support and grow the business, and we are working hard
to address staff turnover.

"While impacting negatively on costs overall, this investment in resources is
required to meet our obligations to stakeholders and position us to capture
future growth opportunities.

"The change in our structure in June, particularly the separation of our
commercial and regulatory roles and the recruitment of three new members of
the management team has further strengthened the organisation."

"Positive feedback from our customers and stakeholders in response to our
increased customer focus gives me confidence that this investment will
provide the required payback to our shareholders."

Information

NZX's agricultural data and information businesses achieved continued steady
growth during the year, with revenue up 3% on PCP to $12.3 million, on the
back of continued solid performance by its market-leading publications.

NZX Agri delivered a number of achievements that will support future growth
including the launch of New Zealand's first Agri news website, Fwplus.co.nz,
and the opening of an expanded headquarters for the NZX Agri business in
Feilding.

NZX's securities information businesses were buffeted by a high exchange rate
and reduction in capital markets spending globally, resulting in securities
information revenue being down 1% on PCP to $9 million.

Markets

The Initial Public Offering of Moa Group and the listing of the Fonterra
Shareholders' Fund were notable events against a backdrop of an otherwise
disappointing year for new capital raising. Primary issuance was $1.6
billion, well below the 10-year average of $2.1 billion.

Secondary capital raising was also at historically low levels, mainly due to
strong corporate balance sheets. Total secondary capital raised in 2012 was
$4.6 billion, the lowest annual capital raising figure since 2005.

Trading activity, however, saw significant growth during 2012 with the number
of trades up 22% on PCP.

Commodity trading and dairy derivatives continued on strong growth
trajectories during the year, and have considerable future growth potential.

Infrastructure

The successful launch of the Fonterra Shareholders' Market and renewal of
Electricity Authority contracts were important milestones for the
Infrastructure business.

The launch of the Fonterra Shareholders' Market was the result of valuable
collaboration with industry, and is an example of how an organisation can
retain control by one set of shareholders, while accessing the public equity
markets and therefore providing the business with permanent capital.

"Much of New Zealand's future growth potential is in agriculture, especially
dairy, and the launch of Trading Among Farmers is a major step in supporting
that growth potential," said Tim Bennett.

NZX also recorded further growth in securities clearing revenue, boosted by
the increase in trading volumes.

Expenses

Expenses increased by 15% to $34 million in 2013 as a result of a number of
one-off items, a reduction in capitalisation and a reset of the cost base.
One-off expense items during the year reduced EBITDAF by $2.0 million
including the CEO transition, Ralec litigation costs and other one-off
expenses and accruals. Additional provisioning for doubtful debts totalled
$0.2 million. A reduction in capitalisation of labour costs of $1.0 million
contributed to an increase in reported personnel costs, as did an increase in
staff numbers. With the majority of the increase occurring in the last
quarter of the financial year, the full impact of this will not be seen until
2013.

2013 Outlook

Agricultural and securities information, annual listing and participant fees,
and market operations, provide steady, low to moderate growth revenue
streams.  NZX expects mid-single digit growth across these revenue lines in
2013.

Commodity trading and derivatives (dairy and equity which will be launched in
2013), while a small proportion of total revenues, are expected to continue
to show strong growth.

Additional upside to 2013 revenues are dependent on primary and secondary
capital raising activity and an associated increase in trading volumes and
clearing activity.  Possible listings include the proposed Government partial
share offers and a range of other listings. While the IPO pipeline is
stronger than it has been in many years, the extent to which this translates
into actual listings is highly dependent on market conditions.

Trading in 2013 has started strongly with January value traded up 60% on PCP
and the pattern of sell downs by major shareholders has continued into this
year.

As highlighted earlier, the full year impact of resetting the cost base in
2012 is expected to be evident in 2013, particularly in respect of personnel
costs. Overall costs are expected to increase by high single digits in 2013
with a sharp reduction in the rate of growth expected thereafter.

NZX also expects a reduction in capital expenditure from 2012 levels with no
major projects currently contemplated.

"2013 has some exciting possibilities for the development of New Zealand's
capital markets and for the continued evolution of NZX. We are working hard
to capture these opportunities for the benefit of our shareholders and New
Zealand," said Tim Bennett.

Dividend

The NZX Board has declared a final dividend of 1.25 cents per share, fully
imputed. This is consistent with the Board's previously stated policy of an
increase of at least 1 cent per share per year, adjusted to reflect the
change in capital structure resulting from the share split in May 2012.

The dividend record date will be 8 March 2013, with a payment date of 22
March 2013.

Annual Meeting

As previously communicated, NZX will hold its Annual Meeting in Wellington on
May 3rd.

After three years of service on the NZX Board, Rod Drury, the CEO of Xero,
has indicated his intention to step down from the Board. Xero's rapid
international expansion of its online accounting solution for small
businesses is increasingly requiring all of Rod's time. The NZX Board
sincerely thanks Rod for his contribution and looks forward to his continued
support in attracting new listings to NZX.

ENDS

Attachments

o FY12 Financial Statements
o Appendix 1
o Appendix 7
o 2012 Full Year Results Presentation

Media contact:
Kate McLaughlin
Corporate Communications
M: 027 533 4529
T: 09 309 3654
E: [email protected]

Investor contact:
Bevan Miller
Chief Financial Officer
M: 021 276 7359
T: 04 498 2271
E: [email protected]
End CA:00233047 For:NZX    Type:FLLYR      Time:2013-02-18 09:00:24