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NZX boosts 2017 profit 62% as slimmed down agri unit trims costs, Farmers Weekly sold

Monday 19th February 2018

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NZX boosted annual profit 62 percent, cutting costs by trimming down its agri publishing unit and refocusing on its core markets business which relied on a glut of new debt listings to offset the lack of new equity initial public offerings and several delistings in the year. 

Net profit rose to $14.8 million, or 5.5 cents per share, in calendar 2017 from $9.2 million, or 3.4 cents a year earlier, the Wellington-based company said in a statement. Revenue slipped 2.9 percent to $75.3 million, reflecting the 2016 sale of the Clear Grain Exchange and agri magazines, while operating costs shrank 15 percent to $46.3 million. The year-earlier cost base was also inflated by the long-running Ralec litigation. 

The stock market operator embarked on a new five-year strategy to refocus on reviving the capital market with new listing rules, an updated fee structure, a broader suite of products, and deeper links with regional bourses all under consideration. 

As part of that shift, NZX today said it's signed a non-binding term sheet for the sale of rural newspaper Farmers Weekly, which is expected to settle on April 1 at no gain or loss to the stock market operator. The company's agri division had $1.98 million of assets held for sale as at Dec. 31. 

"Public markets play a vital and active role in the New Zealand economy and it is important that we drive initiatives to support this," chief executive Mark Peterson said. "New Zealand's capital market must have more investable product, greater participation, deeper liquidity, and a global presence." 

NZX expects operating earnings of between $28 million and $31 million in calendar 2018, largely flat from this year's $29 million, which were 31 percent higher on a like-for-like basis. That includes a rebasing from the sale of Farmers Weekly and changes to the clearing and trading pricing structure from the second half. 

The board declared a fully imputed final dividend of 3.1 cents per share, payable on March 23 with a March 9 record, up from 3 cents a year earlier, and taking the annual return to 6.1 cents. 

"This is the first increase since 2013, reflecting the board's confidence that the refreshed strategy will deliver improved profitability and earnings over the coming years," NZX said. 

The shares last traded at $1.11, and have gained just 0.9 percent over the past 12 months. 

NZX's core markets revenue shrank 2.3 percent to $52.4 million and operating earnings slipped 2.6 percent to $40 million in the year due to the lack of IPOs and secondary listing fees. Agri earnings more than doubled to $1.8 million on a 25 percent decline in revenue to $8.2 million due to the exit of unprofitable businesses, while the funds management division generated earnings of $2.7 million on revenue of $14.8 million, turning around a loss of $316,000 on revenue of $13 million. 


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