NZX says 2015 focus on funds services paid off

Growing KiwiSaver balances are likely to fuel growth in equities markets in this country, NZX says.

Wednesday, February 24th 2016, 9:29AM

The sharemarket operator has released its full-year results to December 31.

Total revenues for the year of $73.2 million were up 12.2% on 2014. EBITDA was unchanged at $24.6 million.

It reported a net profit of $23.9 million, up from $13.1 million in 2014, driven by its sale of its stake in Link Market Services.

Chief executive Tim Bennett said the acquisition of SuperLife was one of its highlights of 2015 as it put the focus on its funds services business.

He said the 2015 result was 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.”

He said NZX significantly boosted the focus on its funds services business in 2015 with the acquisitions of SuperLife in January and wealth management platform Apteryx in August.

The acquisition of SuperLife enabled the launch of 16 new 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.

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.

Bennett said the acquisition of Apteryx reflected NZX’s commitment to investing in and growing areas of the capital markets that are undeveloped, and where it saw considerable potential value creation for shareholders. “NZX is focussed on marketing the Apteryx solution to prospective clients to unlock significant growth potential in this business.”

Other highlights included the first listing on the NZX’s NXT market, the listing of $5.6 billion of local government funding agency (LGFA) bonds and the Link Market Services sale, for $13.8 million.

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% 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.

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.

Bennett said: “Based on the Australian experience, where compulsory superannuation was introduced in the 1990s, our markets are at the start of a 10- to 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.”

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 is predicting FY2016 EBITDA to be in the range of $22.5 million to $26.5 million.

Tags: NZX