ASX registers rise in operating revenues in H1 FY21
ASX Ltd (ASX:ASX) today posted its financial report for the six months to end-December 2020 (H1 FY21).
Operating revenue for H1 FY21 increased $15.6 million over the previous corresponding period to $470.5 million. This was an increase of 3.4% and reflected growth in ASX’s listings business and its equity trading, clearing and settlement businesses. It was offset somewhat by the revenue reduction in its derivatives business, driven by the expected weakness in short-term interest rate futures volumes due to yield curve control.
Total expenses increased by $11.6 million from a year earlier to $151.4 million. This was a rise of 8.2%, a touch higher than the run rate of ASX’s full-year forecast, with the difference mainly due to variable market-related activity costs and initiatives.
This left EBIT up $4 million in a mixed half to $319.1 million, which was a rise of 1.3%.
With the collapse of short-term interest rates to effectively zero, net interest income was significantly lower, falling $17.4 million on the prior-year period to $26.7 million. This was a drop of 39.5%.
The effect of the lower interest income results in ASX’s NPAT being lower by $8.6 million from a year earlier at $241.8 million, a drop of 3.4%. Consistent with this, ASX’s EPS for the half is also 3.4% lower at 124.9 cps.
ASX’s interim dividend maintains its policy of distributing 90% of underlying earnings and is 112.4 cents per share (cps), a reduction of 3.4%.
The equity capital markets had a dynamic 2020, with IPOs stalling after the pandemic started, alongside a significant increase in secondary raisings as companies impacted sought to recapitalise. Late in 2020, the IPO market came back strongly, with one of the busiest three months ever seen at ASX.
Cash market trading had another strong six months, with $762 billion in total on-market value for the half. Although not as strong as the second half of FY20, which was driven by the massive volatility of March last year, value was up more than 19% on the prior-year period. This increased turnover flowed through to clearing, settlement and issuer services revenue.
Finally, government bond issuance also drove activity levels in Austraclear, with higher holdings, higher transactions and higher registrations.
Dominic Stevens, Managing Director and CEO, addressed the equity market outage which occurred last November:
”Firstly, all outages are hugely disruptive and I apologise to our customers and to investors, and acknowledge the issues they had to deal with. The incident fell short of our own high standards and the standards the market expects.
The November outage was particularly disappointing because, while technology issues cannot be completely eliminated, ASX has done much in recent times to reduce the risk of their occurrence”.