ASX Limited reported a solid half-year performance for 1H25, with operating revenue up 5.9% to $541.9 million and an interim dividend increase to 111.2 cents per share. The company continues to invest heavily in technology upgrades while navigating ongoing regulatory scrutiny.
- Operating revenue increased 5.9% to $541.9 million in 1H25
- Underlying net profit after tax rose 10.1% to $253.7 million
- Interim dividend declared at 111.2 cents per share, up 9.9%
- Significant investments in CHESS system replacement with costs rising
- ASIC investigations ongoing related to CHESS project and settlement incident
Robust Financial Performance Amid Strategic Investments
ASX Limited has delivered a commendable half-year financial result for the period ending 31 December 2024, with operating revenue climbing 5.9% to $541.9 million. This growth was driven by stronger contributions across its Markets, Technology & Data, and Securities & Payments divisions, while Listings revenue remained stable despite a slight decline in the number of listed companies.
The company reported an underlying net profit after tax of $253.7 million, marking a 10.1% increase compared to the prior corresponding period. Earnings per share also rose by 10%, reflecting improved operational efficiency and higher trading volumes, particularly in futures and cash market trading.
Dividend Increase Reflects Confidence
In line with its solid earnings, ASX declared an interim dividend of 111.2 cents per share, up 9.9% from the previous year. The payout ratio remains consistent at 85% of underlying net profit after tax, underscoring the company’s commitment to returning value to shareholders. The dividend is fully franked and will be paid on 21 March 2025, with a Dividend Reinvestment Plan available to eligible shareholders.
Technology Modernisation and CHESS Replacement Progress
ASX continues to prioritise its technology modernisation program, particularly the replacement of its CHESS clearing and settlement system. The company reached a significant milestone in November 2024 by finalising the implementation plan for Release 2, targeting a 2029 rollout with estimated costs between $270 million and $320 million. Release 1, focused on clearing services, is expected by 2026, with costs anticipated at the higher end of the $105 million to $125 million range.
These investments are critical for maintaining ASX’s infrastructure resilience and positioning the exchange for future growth opportunities, despite the rising project costs and extended timelines.
Regulatory Scrutiny and Legal Challenges
ASX remains under regulatory scrutiny, with ASIC initiating legal proceedings related to alleged misleading statements about the previous CHESS Replacement project made in February 2022. ASX denies these allegations and is actively defending the case. Additionally, ASIC has commenced an investigation into a CHESS Batch Settlement incident from December 2024, with ASX cooperating fully.
These regulatory matters introduce an element of uncertainty, although ASX’s board and management have reaffirmed their commitment to compliance and risk management enhancements, including appointing a new Chief Risk Officer in January 2025.
Operational and Financial Position
Operating expenses were tightly managed, decreasing slightly by 0.2% despite inflationary pressures and increased technology costs. Employee expenses fell due to greater workforce utilisation on capital projects and reduced contractor spend, even as total headcount rose to 1,298.
ASX’s balance sheet remains strong with net assets increasing 1% to $3.76 billion. Cash and financial assets backing participant collateral stood at $12.8 billion, reflecting a slight decrease from the previous period due to lower collateral balances.
The company is also preparing to relocate its Sydney corporate headquarters to 39 Martin Place by October 2025, marking its first office move in 25 years and aligning with a broader workplace transformation strategy.
Looking Ahead
ASX is halfway through its five-year New Era strategy, focusing on regulatory strengthening and technology upgrades. While the company’s financial results demonstrate resilience and growth, the ongoing regulatory investigations and the scale of the CHESS replacement project will be key areas to watch for investors and market participants.
Bottom Line?
ASX’s strong financial footing and strategic investments set the stage for future growth, but regulatory and project risks warrant close attention.
Questions in the middle?
- How will ongoing ASIC investigations impact ASX’s operational and financial outlook?
- What are the potential cost overruns or delays associated with the CHESS Replacement project?
- How will ASX balance technology investments with shareholder returns in the coming years?