SGX’s net profit drops 7% to $295m in FY11

The funds raised through its IPOs amounted to a record $14b, placing it sixth worldwide.

SGX recorded net profit of $295 million ($320 million) in FY2011. Excluding the ASX-SGX transaction related costs and gain from disposal of premises, the underlying profit was $312 million ($318 million) and resulted in a return on equity of 38% (39%). This result was achieved on an improved revenue base of $661 million ($640 million).

The Board of Directors proposes a final dividend of 15 cents (15.75 cents) per share. This will bring SGX’s total dividend, including interim dividends to-date of 12 cents (11.25 cents), for the year to 27 cents (27 cents) per share or a 98% (90%) payout of the reported profit. In line with the current dividend policy, the Board has maintained the base dividend of 16 cents per share, or a quarterly payment of 4 cents per share.

Business Highlights

FY2011 was a tough year for global markets. Securities turnover velocity and trading activities declined across markets although benchmark indices, particularly in Europe and the USA, recovered from the lows of Global Financial Crisis. MSCI Singapore Index ended the year 7% higher.

Whilst equity market volatility remained relatively low, we had a 6% increase in securities daily trading value to $1.6 billion ($1.5 billion). In addition, we also recorded an all time high derivatives volume of 66 million contracts (57 million contracts) or an average daily volume of 266,782 contracts (231,938 contracts).

We remain focused on expanding SGX’s Asian Gateway offering with the acquisition of new members and customers; introduction of new products and services; building a state-of-the-art infrastructure; and, making micro-market structural improvements. New products and services were already contributing revenue of $8 million, $3 million of which was in the last quarter, in FY2011.

Securities and Derivatives products: There has been continued interest in our suite of exchange traded funds and our newer derivatives contracts, namely, CNX Nifty futures, FTSE China A50 futures and Nikkei225 options contracts. We also launched three new SGX-LME commodities futures contracts and completed the migration of Rubber and Coffee futures contracts onto the SGX platform.

Equity and Debt Listings: We raised record IPO funds of $14 billion from 34 companies, including Global Logistics and Hutchison Port Holdings Trust. SGX also facilitated a record debt capital raising programme of $170 billion from 287 listings. Of note, SGX ranked 6th in the global IPO funds raised in the first half of 2011 compared to 16th position in 2010.

Membership: We admitted a record number of 24 new memberships. These new members include: IIFL Securities (the first Indian member); SEB (the first Nordic member); Dot Commodity (leading commodities broker in Japan); GETCO Asia (global liquidity provider); and 11 local and international banks admitted for SGX OTC Financial Derivatives.

OTC Financial Derivatives: We launched Asia’s first clearing platform for OTC Financial Derivatives in November 2010 and have since cleared a notional value of $110 billion in Interest Rate Swaps.

Reach initiative: We launched the new SGX Data Centre and SGX Co-Location service successfully in April 2011. This Data Centre also allows us to offer ultra-low latency market data and access. We are pleased with the strong demand for SGX Co-Location service from our members and customers since the announcement in June 2010.