Singapore Exchange Q3 Profit $78Million
Mr Magnus Bocker, SGX CEO, said, “We reported a net profit of $78 million in the third quarter on improved Securities and Derivatives activities and continued cost discipline. Our efforts to grow our non-Securities businesses continue to bear fruit. SGX is on track to be the first Asian exchange to launch hubs in Chicago and London to conveniently and cost-effectively connect global investors to SGX markets. These hubs will be available along with exchange-hosted pre trade risk controls for the derivatives market.”
* Securities: Securities daily average traded value (SDAV) was $1.46 billion ($1.71 billion), up 30% from $1.12 billion in 2Q FY2012. YTD SDAV was 17% lower at $1.39 billion ($1.68 billion). We expanded our suite of ETFs with three new listings and announced the introduction of dual currency trading to enable investors to trade in their preferred currencies and to enhance liquidity of the securities. As part of our retail investor initiatives, we launched the “My Gateway” portal in January, to meet increasing investor interest for investment knowledge and education.
* Derivatives: Derivatives daily average traded volume (DAV) was 315,919 contracts (316,359 contracts), up 15% from 274,757 contracts in 2Q FY2012. YTD DAV was 13% higher at 304,185 contracts (268,801 contracts). Total open interest increased 46% to 1,459,473 contracts (999,458 contracts), reflecting SGX’s position as the clearing house of choice. Marketing of our Chinese A50 futures contracts was initiated in the US after CFTC approval in January. Chinese A50 futures registered record volumes: DAV almost tripled to 30,247 contracts (11,034 contracts) and was up 78% quarter-on-quarter. DAV of Nikkei225 options doubled to 13,080 contracts (6,265 contracts) and Rubber futures were up 35% to 957 contracts (709 contracts). We registered improved market share for our key contracts. The launch of our new MSCI Indonesia futures contract is expected by end June.
* OTC Clearing: We cleared a total notional value of $26.9 billion ($42.2 billion) in both new and back-loaded Interest Rate Swaps (IRS) this quarter, of which $24.2 billion ($17.4 billion) were new transactions. We also cleared a record 72,394 lots (42,942 lots) of OTC Commodities, an increase of 69%. Forward freight agreements volume was 49% higher at 37,039 lots (24,813 lots) while iron ore swaps volume more than doubled to 32,015 lots (11,121 lots).
* Member Services: We admitted Yuanta Futures (formerly known as Polaris Futures) and HSBC to our Derivatives market. We also welcomed Hong Leong Finance as a Full Sponsor on Catalist, bringing the Sponsor pool to nine Full Sponsors and nine Continuing Sponsors. In addition, we partnered with our Derivatives members – Ong First and Phillip Futures – to set up Professional Traders Development Programme to attract, train and grow the pool of professional traders in Singapore.
* Issuer Services: We had one IPO and one reverse takeover (RTO), raising $36 million (11 new listings and $7.6 billion). Secondary fund raising was $448 million ($1.9 billion) this quarter. In addition, $55.2 billion was raised through 65 new bond issues ($31.1 billion and 64 new bond issues).
Market Development, Risk Management & Regulations
We joined the Monetary Authority of Singapore in signing a Memorandum of Understanding on the Expedited Review Framework for Secondary Listings. This initiative, which is part of the ASEAN Capital Market Framework, will shorten the time to market for secondary listing of ASEAN companies.
This quarter, we consulted the public on the proposed removal of engine-level iceberg order functionality in the Securities and Derivatives markets, as well as proposed changes to the reporting and registration of Negotiated Large Trades in the Derivatives market. We continue to step up efforts to encourage Sustainability Reporting by listed companies. Our latest initiative is a partnership with KPMG to survey the largest 100 listed companies in Singapore on their Sustainability Reporting practices.
Market volumes will continue to be primarily driven by global economic forces. We see growing interest from Singapore and international companies to seek a listing on SGX. We will continue to grow our customer base and product offerings, and pace investments in line with opportunities.
SGX’s net profit was $77.8 million ($67.0 million) with revenue of $163.6 million ($168.8 million) and EBITDA of $102.8 million ($103.4 million). The EPS was 7.3 cents (6.3 cents). For the nine months ended 31 March 2012, SGX’s net profit was $230.7 million ($215.4 million) with revenue of $490.1 million ($500.0 million) and EBITDA of $307.1 million ($312.6 million). The EPS was 21.6 cents (20.2 cents).
SGX’s underlying net profit for 3Q FY2011 and YTD 3Q FY2011, excluding the one-off ASX-SGX transaction costs and gain from disposal of premises, were $77.3 million and $233.2 million, respectively. Revenues from Derivatives, Depository, Market Data and Member Services and Connectivity grew 5% quarter-on-quarter to $84.0 million ($79.8 million) from $80.3 million in 2Q FY2012. These revenues rose 13% to $254.7 million YTD from $225.9 million a year ago. Securities and Issuer
Services revenues, on the other hand, decreased 11% to $79.4 million ($88.7 million) and were 14% lower at $234.6 million ($273.4 million) for the nine-month ended 31 March 2012.
Expenses were 6% lower at $70.6 million ($75.0 million).
Staff expenses increased 2% from $28.5 million to $29.0 million mainly due to annual salary adjustments and new hires following the in-sourcing of certain technology capabilities. However, this increase was partially offset by the write-back of share-based compensation mainly due to staff attrition. Headcount was 603 (588) on 31 March 2012.
Technology expenses were 10% lower at $25.3 million ($28.0 million) mainly due to pacing of project-related expenses.
Cashflow generated from operations was lower at $61.6 million ($96.1 million) due to working capital movements. As at 31 March 2012, the unrestricted cash reserves were $505.8 million ($526.3 million), before the 3Q FY2012 interim dividend payable of $42.7 million ($42.7 million), up from $486.7 million a quarter ago.
Capital expenditure was $7.7 million ($15.6 million) and YTD was $29.6 million ($43.7 million). SGX’s total equity was $769.2 million ($748.0 million) as at 31 March 2012.