ASX (ASX:ASX) share price edges higher on mixed FY21 results

Shares in the market operator is edging higher following a mixed FY21 result.

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The ASX Ltd (ASX: ASX) share price has eked out a small gain of 0.54% to $82.08 following the release of the company's full year FY21 results.

ASX share price tips higher on mixed results

ASX delivered a mixed result in light of record levels of retail trading from last year and the effects of the RBA's current policy settings. Key highlights include:

  • Operating revenue of $951.5 million, up 1.4% on FY20
  • Underlying net profit after tax (NPAT) of $480.9 million, down 6.4%
  • Total expenses of $310.3 million, up 8.4%
  • Underlying earnings per share of 248.4 cents, down 6.4%
  • Final dividend per share of 111.2 cents per share, down 9.2%

What happened in FY21 for ASX?

The ASX's listings and issuer services made a strong contribution to growth, with revenue increasing 8.9% to $258.2 million. The company was pleased to highlight 176 new listings with a combined market cap of new listings of $40.6 billion, up a respective 112% and 50.5% against the prior corresponding period. Although, the market for secondary capital raisings was down 11.8% to $61.9 billion given the comparative strength of 2H20 activity.

The strong result from listings and issuer services was offset by a weaker performance from the company's derivatives and OTC markets segment. This segment experienced a 10.4% decline in revenue to $284.6 million, reflecting a decline in futures volume and low-interest rates.

ASX's trading services delivered a solid result in light of record trading volumes in 2H20. The "solid performance in retail activity" translated to a 3.4% increase in revenue to $265 million.

Finally, the company's equity post-trade services experienced a 12.8% increase in revenue to $143.7 million, driven by strong growth in trading and settlement activity.

It appears that the market is relatively pleased with the mixed result, with the ASX share price pushing 1.04% higher to $82.49.

A slight concern could be the 8.4% increase in expenses. However, the company advised that this increase reflects the growth in full-time employees as a result of the timing of FY20 hires and new roles to support the company's growth initiatives.

The ASX elected to pay a final dividend of 112.4 cents per share, reflecting a payout ratio of 90% of underlying profit. This brings the company's FY21 dividend to 223.6 cents per share or a yield of 2.7% at today's prices.

Management commentary

ASX managing director and CEO Dominic Stevens commented on the result, saying:

ASX has delivered a resilient result overall in FY21, with operating revenue growing 1.4% to $951.5 million, up $13.1 million, following a very robust FY20. Strong listings and equity market activity, due in part to an ongoing surge in retail trading, were tempered by the effects of the RBA's current policy settings on both short-end futures volumes and interest income. This led to a 3.6% fall in statutory profit to $480.9 million – down $17.7 million

Looking ahead at FY22, Stevens said:

FY22 has continued where FY21 left off. Equities trading remains robust given ongoing uncertainty
generated by COVID and the listings pipeline looks healthy. While futures volumes remain linked to the
RBA's policy settings, market support for our suite of energy derivatives and for Austraclear activity looks
positive.

What's next for ASX?

The typically slow moving ASX share price has had a solid performance in 2021, up 13% year-to-date.

The company provided solid outlook commentary citing equities trading is likely to remain robust due to COVID-19 related uncertainty and geopolitical issues. In addition to a well-supported pipeline of listings and settlements to benefit from fiscal stimulus and strong mortgage issuance.

ASX expects FY22 expenses to increase 5-7% alongside capital expenditure guidance between $105 million to $115 million.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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