804dda93-ce6d-49c4-be27-b19352ec7c28.pdf


Media Release

11 February 2016


ASX LIMITED HALF-YEAR RESULTS TO 31 DECEMBER 2015 (1H16)


Highlights relative to the prior corresponding period (1H15 pcp) based on the Group's segment reporting:


Statutory profit after tax

$213.1 million

up 7.3%

Operating revenues

  • Growth in Listings, Trading Services and Equity Post-Trade Services

  • Derivatives and OTC Markets flat with fee reductions offsetting volume growth

  • Accelerate investment in post-trade services in 2H16

  • FY16 guidance expense growth approximately 5.5%

Operating expenses

$376.2 million


$85.1 million

up 7.9%


up 4.4%

Earnings per share

110.2 cents

up 7.3%

Interim dividend per share

  • Fully franked

  • Maintained 90% payout ratio

99.1 cents

up 7.4%

Capital expenditure

  • FY16 capital expenditure guidance approximately $50 million

  • New trading and risk platforms target delivery in 2016

  • Focus on design of post-trade services, including potential use of distributed ledger technology (blockchain) for equity market

  • Selected Digital Asset Holdings to help develop distributed ledger technology, supported by $14.9 million investment

  • Strong balance sheet metrics; AA- long-term credit rating from S&P

$18.7 million

Investment in strategic positioning

  • Investment in infrastructure - creates opportunity for innovation in trading and post-trade services

  • Products and services that give investors choice

  • Higher customer engagement and improved service delivery

  • Organised main business groups to create focus and align with strategic priorities


Mr Elmer Funke Kupper, ASX Managing Director and CEO, said "ASX's financial results for the first six months of FY16 were positive, with activity growth across all major areas. The result was supported by a continuation of the higher activity levels we saw in the second half of the previous financial year. Revenues were up 7.9% to $376.2 million and profit after tax was up 7.3% to $213.1 million.


"During the six-month period, ASX restructured its activities into four key business groups and recruited leading industry skills to ensure that each of the businesses has the right focus and leadership. ASX opened an office and established a technology hub in Hong Kong to connect our growing Asian customer base to Australia's financial markets community. ASX now has points of presence in the USA, Europe and Asia.


"In January 2016, ASX announced that it will develop solutions for the Australian equity market using distributed ledger technology or blockchain. We believe that distributed ledger technology has the potential to change the way our market operates end-to-end, reduce risk and costs for our clients, speed-up the settlement process for investors, and support new services for listed companies. It provides a unique opportunity for Australia to be a world leader in the adoption of innovative market solutions."


Business highlights (based on the Group's segment reporting)


Operating revenues for the half-year to 31 December 2015 (1H16) were $376.2 million, up 7.9% on 1H15.


In the following performance summary all pcp comparisons have been adjusted to ensure consistency with the new business categories.


Listings and Issuer Services - revenue $105.6 million, up 15.6%


Listings and Issuer Services accounted for 28% of Group revenues. The main revenue sources include annual listings fees, fees related to capital raisings, and revenue from structured products.


Listings revenue was $82.4 million, up 16.3%

  • 77 IPOs compared to 71 in the pcp

  • Total capital raised $54.6 billion, up 41.5%, with $13.5 billion from IPOs and $41.1 billion from secondary raisings.


    Issuer Services revenue was $23.2 million, up 13.2%

  • Rise in the number of holding statements by 10% to 7.4 million and higher corporate actions revenue.


    Secondary capital raisings were particularly strong, supported by equity raisings from the banking sector. Australia's 'big four' banks (ANZ, CBA, NAB, WBC) together raised $18.1 billion in 1H16. IPO activity remained positive, although the amount of capital raised was lower than the pcp.


    ASX continued to focus on improving the listings franchise and expanding the 'investment supermarket' for investors. During the half, the number of New Zealand companies listed on ASX rose to 42 and a simplified process for dual listing received regulatory approval. There was also an increase in the size of the ASX-listed technology sector, with 22 new listings in 1H16, and an overall total of 146 technology listings.


    Exchange-traded products (ETPs), which includes ETFs and listed investment companies, grew in 1H16, with 171 ETPs listed totalling $21.4 billion in funds under management.


    NAB became the first major bank to commit to the mFund service, giving investors access to unlisted managed funds through their broker platform. At the end of December 2015, there were 41 fund managers connected to mFund, offering 133 funds via 15 brokers.


    ASX continues to work with ASIC on the requirements for international equities, and supports the adoption of the Murray Inquiry recommendation for a simplified disclosure regime for issuing 'simple' corporate bonds.


    Trading Services - revenue $91.4 million, up 8.1%


    Trading Services accounted for 24% of Group revenues. The business consists of revenues from cash market equities trading, information services (mainly market data) and technical services (mainly data centre services). All three components grew, supported by a rise in overall equity market activity and continued customer support for new ASX execution services.


    Cash market trading revenue was $20.3 million, up 14.9%

  • Total on-market value traded per day across all venues increased 18.6%

  • ASX's on-market value traded per day up 16.6% to $4.1 billion.


    Information services revenue was $40.6 million, up 10.8%

  • Driven by fee changes and higher index royalties.


    Technical services revenue was $30.5 million, up 1.0%

  • Hosting - 219 cabinets (179 pcp)

  • Community and connectivity - 8.3% increase in ALC service connections

  • Revenue growth was impacted by change in access arrangements for futures cross connections and electronic gateways.


    ASX continued to deliver execution services that meet the needs of end-investors. Centre Point, ASX's anonymous mid-point matching service, and auctions at the start and end of each trading day continued to be popular with investors. Together they accounted for 26.3% of ASX on-market value traded and 43.9% of trading revenue. ASX's on-market trading share across the period was 88.4% (89.9% pcp).


    ASX will establish a dedicated team to expand its data and analytic services in the second half of the year.


    The size of the financial markets community in ASX's main data centre, the Australian Liquidity Centre (ALC), grew over the period as more customers utilise the ALC as their primary data centre. The number of customers increased from 93 to 99 and the number of cabinets hosted in the ALC increased from 179 to 219.


    ASX also established an ASX Net Global technology hub in Hong Kong, coinciding with the opening of its Hong Kong office, to connect to its growing customer base in Asia. ASX now has ASX Net Global hubs in Hong Kong, Singapore, Chicago and London providing global access to ASX markets.


    Equity Post-Trade Services - revenue $51.0 million, up 11.7%


    Equity Post-Trade Services accounted for 14% of Group revenues. Revenues are generated from the clearing and settlement of cash market equity transactions, and rose in line with the growth in activity.


    Cash market clearing revenue was $27.2 million, up 17.3%

  • Value cleared up 18.4%.


    Cash market settlement revenue was $23.8 million, up 6.0%

  • Number of dominant settlement messages up 6.7%.


T+2 settlement is on-track to commence in March 2016, providing efficiencies for investors and intermediaries, and keeping Australia aligned with global best practice.


ASX has announced that it will develop solutions for Australia's post-trade equity environment using distributed ledger technology, sometimes referred to as blockchain. Distributed ledger technology has the potential to lower risk, reduce costs and speed-up the settlement process for investors. ASX has selected US- based Digital Asset Holdings as its business partner for this initiative and has invested $14.9 million in the company to acquire a 5% shareholding, fund an initial phase of development, and purchase warrants that give it the right to acquire additional shares and appoint a director if certain conditions are met.


The initial development will take place over the next 6 to 12 months and will bring to life the benefits and implications of a new post-trade solution for the Australian equity market. The development will take place alongside CHESS, which will continue to operate as normal.


ASX and Digital Asset will engage with regulators and Government agencies to ensure that any future post- trade solution meets the high regulatory, operational and security standards that apply to Australia's financial markets.


The adoption of distributed ledger technology would significantly change the way Australia's post-trade processes work. Rather than replace CHESS with technology based on the same legacy processes that operate in the market today, ASX will aim to work with its stakeholders to re-engineer and simplify those processes to deliver significant benefits to market users.


A final decision on the future market design is expected by mid-2017. This will include a decision on the future of CHESS. ASX has decided to maintain the current annual revenue sharing arrangements that exist for its clearing and settlement businesses. In 1H16, ASX provided $2.5 million under these arrangements.


In addition, from 1 July 2016, ASX will reduce its headline clearing fee by 10%, from 0.25 basis points to 0.225 basis points. ASX will also maintain its commitment to the Code of Practice that sets out how it manages the infrastructure on behalf of the market.


ASX's approach balances the interests of ASX clients, issuers, end-investors and regulators, and is focussed on the long-term future and competitiveness of Australia's equity market. It allows all parties to engage fully in the innovation process over the next 18 months and build a positive understanding of the benefits and policy implications of a new solution.

ASX Limited issued this content on 11 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 10 February 2016 22:02:09 UTC

Original Document: http://www.asx.com.au/documents/investor-relations/ASX_1H16_Results_Media_Release.pdf