Ann: HALFYR: NZX: NZX Half Year 2015 results announcement

• Release Date: 19/08/15 08:37
• Summary: HALFYR: NZX: NZX Half Year 2015 results announcement
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					NZX
19/08/2015 08:37
HALFYR
PRICE SENSITIVE
REL: 0837 HRS NZX Limited

HALFYR: NZX: NZX Half Year 2015 results announcement

NZX's financial results for the six months to 30 June 2015 released today
highlight the progression of NZX's funds management strategy. Total revenues
increased $3.2 million or 10.4% on the previous corresponding period to $34.4
million, due to the acquisition of SuperLife Limited, which in turn enabled a
significant expansion of the portfolio of Exchange Traded Funds (ETF) offered
by NZX's Smartshares business.

EBITDAF was down 3.6% to $11.7 million as increased professional fees
associated with the Ralec litigation and the launch of the new ETFs reduced
earnings. Reported NPAT was up 157.9% to $18.0 million. Reported NPAT
includes an $11.8 million gain from the sale of NZX's 50% shareholding in
Link Market Services NZ (Link NZ). Excluding this gain, NPAT was down 11.5%.

NZX CEO Tim Bennett commented: "This result demonstrates the strong progress
we have made in 2015 to expand NZX's funds management business, along with
the resilience of our capital markets revenues, despite an absence of any
significant IPO activity during the period. We saw a significant milestone in
the first half of 2015, with total equity market capitalisation topping $100
billion for the first time and continued growth in trading activity. The
continued rapid growth of our dairy derivatives market is another notable
feature of the result."

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

Effective 30 June, NZX sold its 50% shareholding in Link NZ to Link Market
Services Australia. The sale price was an initial payment of NZ$13.8 million
with an additional NZ$0.45 million to be paid to NZX 12 months following the
sale, depending on Link NZ's financial performance over that period. A
resulting gain on sale of $11.8 million is recognised in NZX's half year
financial statements.

The sale of NZX's Link NZ stake ensures NZX is well positioned to take
advantage of other opportunities to invest in the development of New
Zealand's markets infrastructure. This potentially includes NZClear, which is
currently being divested by the Reserve Bank of New Zealand, and the purchase
of wealth management platform Apteryx (see below).

Business Highlights

Capital markets: Revenues in NZX's capital markets business, which includes
capital raising, trading and clearing, listings, participant services and
securities data, were up 0.2% on 1H 2014 to $17.8 million.

In June, NZX welcomed the listing of G3 Group Limited on NXT, which marked
the launch of NZX's new market designed for small and mid-sized businesses.
In addition, Fliway Group listed on the Main Board in April. However,
compared to the first half of 2014, which included the $1.8 billion listing
of Genesis Energy, there was no significant IPO activity in the first half of
2015. As a result, total listing revenue was down 11.7% to $5.5 million.

There was solid trading activity in the six months, with trading volumes and
value up 5.5% and 1.9% respectively over 1H 2014. This contributed to a 4.9%
increase in securities trading revenue and a 9.5% increase in securities
clearing revenue. Securities data revenues were up 10.2% to $5.4 million as a
result of a $450k increase in audit revenue.

NZX continues to work with a range of companies looking to list on the Main
Board and on NXT and depending on market conditions expects more listing
activity in the second half of 2015 than has been the case in the first half.

Soft commodities: NZX's Dairy Derivatives business continues to gain strong
traction, with lots traded in the first half of 2015 up 142.7% on 1H 2014 to
78,612. Dairy Derivatives volumes have grown faster than other new soft
commodity derivatives markets and continue to have strong growth potential.
Trading momentum has continued into the second half of the year with the
record number of contracts traded in July already surpassed in August
(including a record trading day of 5,994 lots traded in August).

The Clear Grain Exchange saw a small lift in tonnes traded during Q2 2015.
Despite this, total trades over the half year of 241,806 were down 23.8% on
1H 2014, a result of the majority of the 2014/15 harvest being sold in Q4
2014. Operationally, the Clear business continues its focus on geographic and
product expansion.

NZX Agri: NZX's agri publications and data business revenues were impacted by
adverse market conditions in the rural sector, with a rapid decline in dairy
prices and drought conditions in some regions. Consequently, print
advertising revenues were down 9.9% over 1H 2014. While the decline in
advertising stabilised somewhat in Q2 2015, the sector outlook remains
challenging.

NZ Agri data revenue was up 20.8% due to an increased uptake of data
products, and growth from the acquisition of leading livestock market
information business iFarm, which NZX announced it had acquired in May,
strengthening NZX Agri's position as a leading provider of information and
data products.

Funds management: Revenues in NZX's funds management business were up $3.6
million largely due to the acquisition in January of leading New Zealand
superannuation and passive funds manager SuperLife. During the six months,
SuperLife's KiwiSaver funds under management (FUM) grew by 15.7%, while total
SuperLife FUM increased by 10.5%.

The SuperLife acquisition provided the catalyst for NZX to accelerate the
growth of ETFs in New Zealand, providing a much broader range of simple,
transparent and low cost listed products for investors. Since December 2014,
Smartshares has launched 14 new ETFs, bringing to 19 the portfolio of ETFs
now offered by Smartshares. NZX expects to launch an additional 2-3 ETFs
before year end.

Smartshares funds under management grew by 16.8% on the same period last
year, excluding SuperLife funds

Market Operations: Revenues in NZX's market operations business were stable.
This business includes the Electricity Authority contracts NZX operates on
the Authority's behalf and the operation of the Fonterra Shareholders'
Market,

Consulting activity in the six months was higher than previously expected due
to the new Extended Reserves Manager contract which the Authority selected
NZX as preferred supplier for in March.

In May, NZX's Energy team submitted a comprehensive proposal to the
Electricity Authority for the Market Operations Service Provider roles which
are currently up for tender. These roles are currently operated by NZX on
behalf of the Authority and the industry. NZX is committed to the sector and
focused on continuing to provide a robust and reliable service to industry
participants. An outcome from the tender process is expected shortly.

Costs
Growth in operating expenses of $3.7 million over 1H 14 reflected $1.9
million of SuperLife expenses; a $1.1 million increase in professional fees
due to the Ralec litigation and the launch of new Smartshares ETFs; an
increase in fund expenditure resulting from the new ETFs; and a small
increase in underlying personnel costs. Gross employee related costs in 1H
2015, excluding costs related to SuperLife, were however down compared to the
second half of 2014.

Acquisition of Apteryx
In June, NZX announced it was in negotiations to acquire 100% of Apteryx, a
provider of rich online functionality that enables New Zealand investment
advisers and providers to efficiently manage, trade and administer their
clients' portfolios. NZX has entering into a binding Sale and Purchase
Agreement for Apteryx and currently expects that this acquisition will be
completed by the end of August. NZX does not expect the business will have a
material impact on earnings in 2015 or 2016. The Apteryx platform has the
potential to be developed into a core industry utility with a goal of
improving effectiveness and efficiency within the New Zealand market, while
at the same time providing medium-term growth potential for our shareholders.

NZX Regulation
NZX continues to focus on maintaining a high quality regulatory environment.
In May, NZX welcomed the Financial Markets Authority's (FMA) fourth annual
General Obligations Review that assesses and reports on NZX's compliance with
its statutory obligations. The report concluded that during the 2014 review
period NZX complied with all of its statutory obligations. There were no
specific actions agreed between the FMA and NZX following the review.

Also in May, NZX signed a Memorandum of Understanding (MoU) with the
Takeovers Panel. The MoU sets out a framework for engagement and cooperation
between the two regulators, taking into account their respective roles.

Dividend
NZX's Board has declared an interim dividend of 3.0 cents, fully imputed. The
record date for the dividend will be 2 September 2015 with a payment date of
16 September. This is unchanged from the dividend declared in respect of 1H
2014.

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

Investor contact:
Bevan Miller
Chief Financial Officer
M: 021 276 7359
E: [email protected]
End CA:00268643 For:NZX    Type:HALFYR     Time:2015-08-19 08:37:37