Singapore Exchange first quarter profit up 18% to $88mn

Despite growth and reforms, the exchange remains cautious with uncertain global financial markets.

For the first quarter of FY2012, Singapore Exchange (SGX) registered revenues of $178 million ($159 million), net profit of $88 million ($74 million) and earnings per share (EPS) of 8.2 cents (7.0 cents) in 1Q FY2012. The Board of Directors has declared an interim dividend of 4 cents (4 cents) per share, payable on 16 November 2011.

Mr Magnus Bocker, SGX CEO, said “We are pleased with our results in this quarter. SGX had record derivatives volumes and continued to see growing interest for listings and new memberships. We successfully rolled out a number of new initiatives, including, reduced minimum bid-ask spreads, all-day trading in our securities market and Reach – our new securities trading engine. We also revised our listing rules to improve corporate governance. These building blocks further enhance SGX as the Asian Gateway. However, we remain cautious with uncertain global financial markets and continuing macroeconomic challenges in Europe and the US.” 

Financial Performance

SGX’s quarterly net profit rose 18% to $88 million ($74 million) and EBITDA 15% to $115 million ($100 million), respectively. Driven by increased revenues, SGX’s EPS was 18% higher at 8.2 cents (7.0 cents) and the ROE improved to 10.1% (8.7%). Revenue was up 12% to $178 million ($159 million). Although Securities and Issuer Services revenues were flat in the quarter, revenues from Derivatives, Depository, Member Services and Connectivity and Market Data, grew by 27% to $90 million ($71 million) in 1Q FY2012, according to an SGX report.

Expenses were 10% higher at $75 million ($68 million) mainly driven by Technology expenses on increased depreciation of new platforms and the phased roll-out of the Reach initiative which began in April 2011. Staff expenses were steady at $29 million ($28 million). The reduction in share-based compensation expense, as the annual performance share plan will only be granted in 2Q FY2012, helped offset the increase in base staff costs and variable bonus. Headcount was 595 (592) on 30 September 2011. Processing and royalties were 25% higher at $8 million ($6 million), primarily due to higher royalties paid on increased derivatives volumes. Cashflow generated from operations grew by 19% to $105 million ($89 million). Capital expenditure incurred in 1Q FY2012 was $15 million ($5 million), largely for the roll-out of the Reach technology initiative and the development of our new Risk Management System. We expect capital expenditure for FY2012 to remain within the range of $40 to $45 million, as previously announced. SGX’s total equity was $868 million ($854 million) on 30 September 2011. The unrestricted cash reserves were $623 million ($617 million), including the FY2011 final dividend of $160 million ($168 million) and 1Q FY2012 interim dividend of $43 million ($43 million).