Ann: HALFYR: NZX: NZX Half Year 2014 results announcement

• Release Date: 11/08/14 08:30
• Summary: HALFYR: NZX: NZX Half Year 2014 results announcement
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					NZX
11/08/2014 08:30
HALFYR

REL: 0830 HRS NZX Limited

HALFYR: NZX: NZX Half Year 2014 results announcement

NZX today reported its half year results for the six months to 30 June 2014.
Net earnings of $7.0 million were 8.3% higher than the previous comparable
period. Total revenues were $31.2 million, 2.8% higher than the same period
last year which included unusually high levels of energy consulting revenue.
Contributing to the revenue growth was strong growth in NZX's capital markets
businesses and good performance in NZX's agri information business following
the sector's full recovery from the drought.

NZX CEO Tim Bennett commented: "We are continuing to experience positive
growth in our capital markets, demonstrated by the seven initial public
offerings we've seen year to date, and with more listings in the pipeline."

"We're seeing the benefits of key structural changes occurring in New Zealand
including the increase in KiwiSaver funds, which continues to drive demand
for investment products including through the public markets. Meeting this
demand by ensuring there are more products for people to invest in remains a
key strategic priority across NZX."

**Reported results are summarised in the table in the announcement
attached.**

Business Highlights

Capital markets: NZX's capital markets business, which includes revenue from
capital raising, trading and clearing, listings, participant services and
securities data, continued to perform strongly during the first half of 2014.

Initial Public Offering activity during the six months included the final
listing in the Government's share offer programme, Genesis Energy, along with
Inturei Education Group, Serko and Gentrack. This activity has continued into
the second half with the listings of IkeGPS, Scales Corporation and Metro
Performance Glass. Vista Group International is scheduled to list this
morning, while EROAD and a compliance listing, Pushpay, are scheduled for
later this week.  Another compliance listing, Lateral Corporation, is
scheduled for next week.

Total new capital of $3.52 billion was listed during the half year, slightly
down on the same period last year, which included the listing of Mighty River
Power.

While listing fees associated with this IPO activity have positively impacted
revenues during the current period, they will also provide recurring annual
listing, trading and clearing revenues.

Mr Bennett commented: "It's exciting that these companies have chosen listing
over other capital raising options available to them and it's worth noting
that listings have a broader benefit for New Zealand's capital markets,
providing KiwiSaver funds with businesses to invest in, bringing new
investors to the market, and continuing to generate interest in saving and
investing."

The development of NZX's new market for small and mid-sized businesses is
progressing well. In July, NZX welcomed approval by the Minister of Commerce,
the Hon Craig Foss, that allows NZX to establish the market using an
alternative disclosure regime, which differs from the traditional continuous
disclosure requirements of the NZX Main Board.

The new market rules have been submitted to the Financial Markets Authority
(FMA) for consideration and approval, which is a prerequisite for launching
the market. NZX currently estimates it will launch the market in Q4 2014
following rules approval.

NZX's Index Futures launched in June, further strengthening New Zealand's
capital markets infrastructure and providing investors with additional tools
for their New Zealand equity investment and risk management needs.

NZX's securities data revenues grew during the half-year, up 11.4% to $4.9
million, due to a positive trend returning in real time data terminal
numbers, along with the first full six months of re-pricing contracts into
NZD.

NZX continues its focus on maintaining a high quality regulatory environment.
In June, NZX welcomed FMA's third annual General Obligations Review which
concluded NZX was fully compliant in 2013 with all its statutory obligations
to ensure that the operation each of its registered markets and the
derivatives market were fair, orderly and transparent.

Two key appointments were made during the period to NZX's regulation team -
the appointment of Joost van Amelsfort as NZX's Head of Market Supervision,
which reflects a split of the current Head of Regulation role, and Jody
Taylor as Leader Participant Compliance.

Soft commodities: NZX's Dairy Derivatives business continued to demonstrate
impressive growth with lots traded up 301.6% on the prior comparable period.
NZX received authorisation in January from the US regulatory agency, the
Commodity Futures Trading Commission (CFTC), as a Foreign Board of Trade
under the US Commodity Exchange Act, improving access to the market for US
customers.

NZX's Dairy Futures were recently named a finalist in the Futures & Options
World Awards for Asia 2014 for Best New Contract.

Despite an early end to the 2013/14 grain season, trading volumes on the
Clear Grain Exchange were up 1.6% on the prior year, while reported revenues
were down 12.9% due to the impact of a high New Zealand dollar. Operational
highlights during the period included development of a forward contract,
expected to launch later this year, and the signing of a memorandum of
understanding for promotion of Clear Grain in Western Australia.

Agri information: NZX's agri information business performed strongly during
the six months with revenue up 5.4% on the prior period, driven by increased
advertising revenue in its publications business, demonstrating greater
confidence in the sector following recovery from the severe drought
conditions that impacted the first half of 2013.

Traffic to NZX Agri websites continues to grow steadily, with page views up
104.3% on the same period last year. Other operational highlights include the
launch of the Farmgate Dairy report and the Agri Academy, an online learning
tool.

Funds management: NZX's funds management business saw positive movement both
in funds under management and units on issue, up 13.6% and 6.1% respectively.

Operational highlights included the development and launch in July of the NZ
Core Equity fund which launched with an initial $15 million of funds under
management. The investment management of this fund is outsourced to
Dimensional Financial Advisors.

Market operations: Market operations revenue was down 14.8% in the half year
due to reduced energy consulting work and the loss of a gas market contract
in late 2013. However, new system development projects for the Electricity
Authority commenced in Q2 14 that will result in significant development
activity in 2H 2014.

Costs

Total costs were up 4.3% on the prior period to $19.0 million. Employee costs
during the six months were driven by increased contractor costs, a small
increase in staff numbers and full period impact of 2013 new hires.

Print and distribution costs were up on the prior period in rural
publications, in line with higher revenues.

IT costs remained stable despite growth in activity levels, while general and
administration costs were slightly down on the prior period.

Professional fees were high due to Ralec litigation costs, tax audit related
work and legal costs associated with the launch of the new NZ Core Equity
fund.

NZX Board update

As previously signalled, NZX Chairman Andrew Harmos will retire from the NZX
Board at the company's 2015 Annual Meeting. Mr Harmos has served as a
Director on the Board since 2002, prior to the demutualisation and listing of
NZX. He was appointed Chairman in September 2008.

James Miller, currently NZX's Deputy Chairman, will replace Mr Harmos as
Chairman. Mr Miller was appointed to the Board in August 2010. He is an
experienced company director and has extensive capital markets experience. He
is currently a Director on the Boards of the Financial Markets Authority
(term expires April 2015), Mighty River Power, ACC and Auckland International
Airport.

On behalf of the Board, Mr Miller acknowledged Mr Harmos for his outstanding
service and commitment to the Board and the company.

Dividend

NZX's Board has declared a fully imputed interim dividend of 3.0 cents, in
line with its previously announced dividend policy and guidance that NZX
intends to pay a full year distribution for the 2014 financial year of 6.0
cents per share (subject to commitments, working capital and solvency
requirements).

Outlook for the remainder of 2014

There continues to be a good pipeline of small to medium sized IPO
candidates, which will likely deliver further listings in the remainder of
the year beyond those already announced. Annual listing fee income will
continue to grow as a result of new listings, market growth and fee changes
effective 1 July 2014.

While the new growth market will have limited impact on 2014 results, over
time it is expected to provide a pipeline of companies to migrate to the Main
Board.

With double digit growth in funds under management in New Zealand's funds
management industry expected, largely driven by KiwiSaver, NZX expects
positive growth in its Smartshares business. NZX also continues to evaluate
the potential to grow this business through acquisition.

The contracts operated by NZX's energy business on behalf of the Electricity
Authority are set to expire in 2016. NZX expects to re-tender for these in
2015. Energy consulting revenue is expected to be significantly up on 1H 2014
due to large projects that are now underway. This activity will create a
corresponding increase in employee costs due to the additional project
resource required.

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:00253656 For:NZX    Type:HALFYR     Time:2014-08-11 08:30:05