In This Article:
Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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ASX Ltd (ASXFF) delivered record operating revenue for the first half, up 5.9% compared to the previous year.
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Underlying net profit after tax increased by 10.1%, driven by growth in net interest income.
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The company declared a fully franked interim dividend of $111.02 per share, reflecting a payout ratio of 85% of underlying impacts.
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ASX Ltd (ASXFF) made significant progress in its technology modernization program, with several project rollouts planned for the remainder of FY25.
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The company's balance sheet remains strong, with access to various funding sources, including a $300 million corporate debt facility and a $275 million corporate bond.
Negative Points
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Total expenses for the period were $220.3 million, reflecting a 0.2% decrease, but future expense growth is expected to be between 6% and 9%.
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The company incurred a significant item related to an onerous lease provision, impacting statutory net profit after tax.
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Electricity derivatives trading activity was down due to lower volatility in electricity prices, affecting revenue.
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ASX Ltd (ASXFF) faces regulatory challenges, including an ASIC investigation into a chess batch settlement incident.
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The company anticipates higher expenses in the second half of FY25 due to increased equipment costs and depreciation and amortization.
Q & A Highlights
Q: Can you explain the discrepancy between the 20% increase in futures volumes and the 10.5% increase in revenues? A: Helen Lofthouse, CEO: The slower revenue growth is due to a change in product mix. The rates products, which have lower price points, saw strong growth. This affected the average fee due to product and cost mix, as well as rebates.
Q: How should shareholders evaluate cost growth given the significant increase in CapEx and other expenses? A: Andrew Tobin, CFO: The onerous lease provision is a one-off item due to early lease termination. Despite this, we maintained flat cost growth compared to last year, focusing on workforce optimization and strategic procurement.
Q: Is the decline in electricity derivatives revenue due to seasonality or other factors? A: Helen Lofthouse, CEO: The decline is primarily due to lower volatility in electricity prices, though there is some seasonality. We expect the electricity market to grow due to ongoing electrification.
Q: With the first half costs being lower, are you expecting to hit the top or bottom end of your guidance for the second half? A: Andrew Tobin, CFO: We are comfortable with our guidance range of 6-9% expense growth. Known factors like depreciation and technology investments will increase costs in the second half, but we are not refining guidance yet.