Asx Beats Downturn With 4pc Lift

Sydney Morning Herald

Thursday February 28, 2002

Jan Eakin

The Australian Stock Exchange yesterday surprised the market with better-than-expected earnings in the six months to December 31, 2001.

Defying an economic downturn and the events of September 11, which hit investor confidence around the world, the ASX posted a record interim net profit of $28.3 million, up 18 per cent on the previous six months and 4 per cent higher than the corresponding period last year.

First half revenue rose to almost $100 million, with equity trading, clearing and settlement accounting for almost half the total income.

Revenue from derivatives such as warrants was much stronger, up from $14 million to $18 million, while income from market data and listings dropped slightly.

Richard Humphry, chief executive of the ASX, said he was ``particularly pleased" with the results given the uncertainty that pervaded the market over the past six months.

``The first half [of fiscal 2002] has been an intensely challenging period for exchanges throughout the world," Mr Humphry said.

``It is very satisfying to produce such strong performance in light of these difficult circumstances."

A fully franked dividend of 19.5c was declared.

Analysts described the ASX figures as a clean result with a better-than-expected result from the APRL share registry joint venture with Perpetual boosting the bottom line further.

Credit Suisse First Boston said there was some potential for minor upgrades in ASX's full-year earnings per share forecasts for the current year but, the broker added, share price valuations would remain in the $11.20 to $11.50 range.

``We continue to rate the quality of ASX's business very highly and would not be surprised to see it continue to trade at a premium to our value," the broker said.

ASX's Mr Humphry said that while earnings continued to be dominated by equity trading (the average number of daily trades jumped from 50,900 to 52,846), the exchange's focus was the development of its dual trading alliance with the Singapore Exchange, the roll-out of Exchange Traded Funds, its new futures licence and the ASX Perpetual share registry system.

Mr Humphry said talks were under way with about five other exchanges around the world to develop similar trading alliances to that of Singapore.

He added that the development of additional investment vehicles was vital if the exchange was to gain from the ``wall of money" that would hit the market as the increase in superannuation is absorbed in the market.

``These are strategic initiatives to ensure Australia remains viable in the future and meets the sophisticated retail investor's demands," he said.

ASX shares rose 16c to $12.61.