Booming Asx Cops The Cane
The Age
Thursday July 28, 2005
The booming sharemarket has pushed the Australian Stock Exchange to a record full-year profit topping $100 million for the first time.
But investor expectations of a capital return program and fee increases to cover rising costs were dashed, sparking a 4 per cent drop in the exchange's share price from record levels. Buoyed by a record-breaking bull market in the 12 months to June 30, the ASX posted record equity and option trading volumes and a strong contribution from its listings business. "The markets have been good to us in the last 12 months," ASX chief executive Tony D'Aloisio said yesterday. Net profit after tax was $165.5 million, boosted by the sale of the National Guarantee Fund. Excluding one-off items, normalised net profit was $108.5 million, up 31 per cent on the year. Normal operating revenue rose 16 per cent to $279.7 million. A fully franked final dividend of 50.9 ? will be paid on August 26 with the year's total dividend totalling 95.1 ?, up from 80.7 ?. But the ASX's share price fell $1 to $24.95 after expectations it would announce a special dividend and new pricing details were not realised. "What we've concluded is we do not have excess capital at this time and it is not our intention in this financial year to return capital to shareholders," Mr D'Aloisio said. Chief financial officer John Hayes admitted: "I think the analysts may be surprised. There's been some expectations of further capital management initiatives." The ASX decided against a capital return due to the potential impact of new international accounting standards, further investments required to complete its ongoing restructure and capital requirements for its clearing house. Booming market activity saw the cost per trade fall to $4.69 from $5.33 due to large trading volume rebates, which totalled $16.1 million compared with $7.6 million last year. While analysts hoped to see new pricing that limited the rebates, the ASX said the broking community already has to bear "some initial costs" adapting to new trading systems this year. "It will assist them if we maintain our pricing structure as it is for this financial year," Mr D'Aloisio said. Mark Nathan from ABN Amro Asset Management said market reaction was surprising given the strength of the result. "The market has chosen to focus on the short term, on the lack of clarity in the pricing review and the lack of a special dividend," he said. "In the case of the pricing review it's a six- month deferral rather than a cancellation so we should still expect some changes later in the year." Goldman Sachs JBWere analysts said deferring price increases "will come as a significant disappointment to the market, which has been anticipating and pricing in major upside to revenues from the pricing review. The ASX's expenses rose 3.3 per cent on the year, led by occupancy and staff cost increases with 61 redundancies. The ASX will seek to generate additional revenues by expanding its direct market access trading, which allows institutional investors to trade with minimal broker intervention.KEY POINTS ? Hopes of capital returns dashed.? Punters' dim view of rise in fees.? Direct market access trading to be expanded.
© 2005 The Age