Ann: FLLYR: NZX: NZX Full Year 2015 results announcement &...

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    • Release Date: 24/02/16 09:10
    • Summary: FLLYR: NZX: NZX Full Year 2015 results announcement & materials
    • Price Sensitive: No
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    					NZX
    24/02/2016 09:10
    FLLYR
    PRICE SENSITIVE
    REL: 0910 HRS NZX Limited
    
    FLLYR: NZX: NZX Full Year 2015 results announcement & materials
    
    Good progress in NZX's funds services strategy; continued deepening of the
    capital markets
    
    NZX's full year financial results to 31 December 2015 reflect the positive
    impact of the company's investment in its funds services strategy, a broader
    product offering, increased transaction growth and participation in the
    capital markets, and the sale of NZX's shareholding in Link Market Services
    NZ. Total revenues for the year of $73.2 million were up 12.2% on 2014.
    Earnings before interest, tax, depreciation, amortisation, foreign exchange
    gain, and gain on disposal of associate (EBITDA) were unchanged at $24.6
    million.
    
    Highlights in 2015 include the acquisition of funds services businesses
    SuperLife and Apteryx; the first listing on NZX's NXT market for small,
    higher growth companies; the listing of $5.6 billion of Local Government
    Funding Agency (LGFA) bonds; and NZX's retention of the Electricity Authority
    contracts that were extended for a minimum of eight years.
    
    In addition, NZX realised significant shareholder value in June when after
    more than 10 years in a successful joint venture, it sold its 50% stake in
    leading New Zealand share registry Link Market Services NZ for $13.8 million,
    with a further payment of $0.5 million in June 2016 dependent on Link NZ's
    financial performance over that period.
    
    NZX Chief Executive Tim Bennett commented: "NZX's full year financial result
    is in line with expectations - performance is underpinned by the execution of
    NZX's funds services strategy, and positive progress in capital markets
    development, putting more 'products on the shelves' including the launch of
    16 new Exchange Traded Funds."
    
    Business Highlights
    Capital Markets: In NZX's capital markets business - which includes revenue
    from capital raising, trading and clearing, listings, participant services
    and securities data - revenue was up 5.0% to $39.3 million, from $37.4
    million in 2014. This was driven by a significant increase in secondary
    capital raising activity, largely due to additional capital raised by dual
    listed banks, following changes to risk capital requirements in Australia.
    
    Also contributing to the result was increased trading and clearing volumes
    through the year that are tangible benefits of the wave of IPOs in recent
    years.
    
    The market saw a shift in activity to secondary capital raising from IPO
    activity, which declined in 2015 from record levels. In 2015 there were four
    IPOs on the Main Board; one NXT market listing (representing the launch of
    NXT after several years of market development); one Main Board compliance
    listing; a transition from the NZAX to the Main Board, and a transition from
    the NZAX to NXT.
    
    The ratio of market capitalisation of NZX equity markets to Gross Domestic
    Product (GDP) increased to 45.2% at the end of 2015, from 42.1% at the end of
    2014.
    
    Tim Bennett commented: "Based on the Australian experience, where compulsory
    superannuation was introduced in the 1990s, our markets are at the start of a
    10-15 year growth journey. Industry-wide commitment to harness this growth
    potential is imperative, and NZX continues to focus on tackling these
    challenges on behalf of the industry, and ultimately all New Zealanders."
    
    NZX's debt market grew substantially in 2015 in what was an exceptional year
    for debt listings. New debt issues were up 374.3% with $8.1 billion listed,
    including the listing by the LGFA of all six existing series of its bonds,
    representing a total principal amount of $5.6 billion. NZX's debt market
    capitalisation increased in 2015 by 50.3% to $19.8 billion, or 8.1% of GDP.
    
    NZX dairy derivatives continued its exponential growth trajectory in 2015,
    with lots traded up 111.5% on the prior year, mainly due to increased
    interest from Asian-based traders. NZX's markets team is focussed on
    executing on the growth opportunities in this business and evaluating new
    areas for derivatives market development.
    
    Tim Bennett commented: "Price volatility will continue to be a feature in
    agricultural markets - we need to focus on developing a deep risk management
    culture and capability in that sector to ensure New Zealand is not
    disadvantaged versus other agricultural exporters."
    
    NZX continues to perform well in its role as frontline regulator of our
    markets, contributing to the operation of fair, orderly and transparent
    markets that drive confident, informed investor participation, fund business
    growth, and ultimately lower the cost of capital for businesses.
    
    The Financial Markets Authority (FMA)'s fourth annual General Obligations
    Review released in 2015, which assesses and reports on NZX's compliance with
    its statutory obligations, concluded NZX complied with all of its statutory
    obligations in 2014. NZX was not required to take any specific actions in
    response to the review.
    
    NZX's commitment to maintaining positive and robust relationships with other
    regulators was further cemented in 2015 through Memoranda of Understandings
    (MoUs) signed with the FMA and the Takeovers Panel. The MoUs set out
    engagement and cooperation frameworks between regulators, taking into account
    their respective regulatory roles.
    
    NZX continues to proactively engage with participants in our markets to
    facilitate and develop the best practice regulatory and compliance culture
    that is fundamental to the operation of well functioning and vibrant markets.
    
    Market operations: Energy consulting revenues declined in 2015 from high
    levels in 2014 due to lower levels of development activity, although
    contractual revenues were steady.
    
    There was significant focus by NZX in 2015 on securing the four market
    operator contracts tendered by the Electricity Authority. This was
    successful, with NZX being awarded all four roles. The win highlighted NZX's
    independent market status and 20 years of experience providing services to
    the electricity sector.
    
    Funds services: NZX significantly boosted the focus on its funds services
    business in 2015 with the acquisitions of leading superannuation and passive
    funds manager SuperLife in January and wealth management platform Apteryx in
    August.
    
    The acquisition of SuperLife enabled the launch of 16 new Exchange Traded
    Funds (ETFs) during the year, bringing the total number of ETFs offered by
    NZX's Smartshares business to 23. The new ETFs give investors the opportunity
    to invest across all the main assets classes, being cash, bonds, shares and
    property. There was significant growth in units on issue in Smartshares due
    to investment by SuperLife and as a result of growth in the new ETFs.
    
    SuperLife achieved strong growth in funds under management over the year, up
    14.1% overall, including 22.3% growth in its KiwiSaver business (excluding
    the transfer of funds from smartkiwi to SuperLife's KiwiSaver Scheme).
    
    The acquisition of Apteryx reflected NZX's commitment to investing in and
    growing areas of the capital markets that are undeveloped, and where we see
    considerable potential value creation for our shareholders. NZX is focussed
    on marketing the Apteryx solution to prospective clients to unlock
    significant growth potential in this business.
    
    NZX Agri: NZX Agri's performance in 2015 was negatively impacted by adverse
    conditions in the rural sector, reducing advertising volumes in the rural
    publications.
    
    Performance of NZX's Australian operation, Clear Grain Exchange was
    lacklustre, with grain trading revenues well down on the prior year due to an
    early end to the 2014/5 harvest and a slow start to the 2015/16 harvest.
    
    Costs
    Total growth in operating expenses was $8.0 million. Of this amount, $5.0
    million resulted from the acquisition of SuperLife and Apteryx, and $2.1
    million from increased professional fees associated with the Ralec
    litigation.
    
    Underlying expense growth of $0.9 million included increased funds operating
    expenses of $1.2 million resulting from the launch of the 16 new ETFs,
    partially offset by reduced costs in other business areas.
    
    Outlook
    Given the volatility that has affected global markets so far in 2016 and the
    decline in commodity prices impacting NZX's agricultural businesses, NZX sees
    a relatively wide range of possible revenue outcomes for 2016 in capital
    raising, trading, clearing and settlement, funds services and agri publishing
    businesses.
    
    NZX therefore expects FY 2016 EBITDA to be in the range of $22.5 million to
    $26.5 million. This includes an expectation of similar level of Ralec
    litigation costs to 2015 and is subject to market conditions, particularly
    with respect to IPOs, secondary capital raisings, and trading and clearing
    volumes. This guidance assumes no material adverse events, significant
    one-off expenses or major accounting adjustments. It also assumes no
    acquisitions or divestments.
    
    Dividend
    The NZX board has declared a final dividend for the full year of 3.0 cents
    per share, fully imputed. The record date will be 16 March 2016, with a
    payment date of 30 March 2016.
    
    For more information please contact:
    
    Media
    Kate McLaughlin
    Head of Communications
    T: 09 309 3654
    M: 027 533 4529
    E: [email protected]
    
    Investors
    Bevan Miller
    Chief Financial Officer
    M: 021 276 7359
    E: [email protected]
    
    About NZX Limited
    NZX builds and operates capital, risk and commodity markets and the
    infrastructure required to support them. We provide high quality information,
    data and tools to support business decision making. We aim to make a
    meaningful difference to wealth creation for our shareholders and the
    individuals, businesses and economies in which we operate. To learn more
    about NZX, please visit: www.nzxgroup.com
    End CA:00278212 For:NZX    Type:FLLYR      Time:2016-02-24 09:10:25
    				
 
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