New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>NZX First take – interim results in line with expectations at EBITDA and Revenue level, guidance unchanged, company expectation top end of range (NZ$30-33.5m vs our NZ$32.9)</h2>

Strong FY20 interim result, outperformance by Secondary Markets
<ul>
<li>Despite a high level of uncertainty due to COVID-19, the group has performance well across the first six months of the year, with the key drivers high volatility in Secondary Markets supported by NZ$6bn of capital raises in the Issuer Relationships division and growth of the funds management businesses.</li>
<li>Guidance for FY20 remains unchanged at a range of NZ$30-33.5m with the company expecting a result towards the top of the range (pre-results our forecast NZ$32.9m)</li>
<li>The Wealth Technologies division is still expected to migrate clients Saturn Advisory and Hobson Wealth by FY20 in addition to a new client migrated in June 2020</li>
<li>Revenue and EBITDA were in line with forecasts with NPAT slightly higher than expected due to decreased depreciation and amortisation as a result of full amortisation of the Clearing System in 2019</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1674856831265016256&amp;th=173e496a0d3009c0&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_4wl5Qv6S--MpN-pvRE09Jalef3K2tsuMgzdjRSFlZlelQfmt1d1JOzmbSacfSUJ3hSOaluTvellbPe8tgtRrz2O-fQnEDULG9hV6LpH9WygDM0AJlELjpMqY&amp;disp=emb" width="356" height="87" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Issuer Relationships
<ul>
<li>Reported revenue was in line at NZ$13.1m vs our NZ$13.1m, with reported EBITDA of NZ$10.3m vs our forecast NZ$10.4m</li>
<li>Total capital raised across the division in 1H20 was NZ$8.2bn with NZ$6.0bn from secondary capital raises in the wake of COVID-19</li>
<li>Costs marginally were higher than our forecasts due to slightly higher personnel costs from annual leave and bonus accruals and additional contractors for the electricity market pricing project</li>
</ul>
Secondary Markets
<ul>
<li>Secondary markets saw EBITDA +85.7% for the year and revenue +47.8% with reported EBITDA of NZ$7.3m slightly ahead our NZ$6.8m</li>
<li>This was due to high volatility as a result of COVID-19 with March and April seeing a period of Super trading and the result of the half higher than the previous year</li>
<li>The number of trades for the half were +216% with the total value traded +52%</li>
</ul>
Data &amp; Insights
<ul>
<li>The data division saw EBITDA slightly below our forecasts (NZ$5.9m reported vs our NZ$6.7m) partly due to higher IT costs, increased use of external contractors for insights and increase in professional fees as a result of increased royalty audit fees</li>
<li>This was despite terminal numbers +17% for the half and licences +7%</li>
<li>Slightly weaker revenue than expected was in part due to weak dairy subscription revenue from decreased dairy subscriptions</li>
<li>Audit revenues are excepted to tail off in H2-20</li>
</ul>
FUM
<ul>
<li>Reported EBITDA for the Funds under Management division was marginally lower than we anticipated (NZ$2.9m vs our NZ$3.0m)</li>
<li>This was partly due to increased fund expenses with the addition of new funds and higher personnel costs from a growing leadership team</li>
<li>Marketing spend has been deferred during the COVID-19 lockdown</li>
</ul>
Wealth Technologies
<ul>
<li>The Wealth Technologies division reported in line EBITDA of -NZ$(535k) vs our –NZ$(533k)</li>
<li>The business won and migrated a new client in June 2020 driving an increase in FUA</li>
<li>Saturn and Hobson are still expected to be onboarded by FY20</li>
<li>The company have highlighted an increase in personnel costs reflected sales activity and operational staff for new clients</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1674856831265016256&amp;th=173e496a0d3009c0&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8iOo6DrjtWN3q1W5ULuxPZ0V7jHaYrD0oBnYOATdQfVGo8Mj42KoXIMqeJ32mFVQMj-W3OdawQH003lbGOTqzMReiCR-N6N2wQ8CYmBLbYonQE5fLQVzpuAHA&amp;disp=emb" class="editor-image img-responsive"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.3&amp;permmsgid=msg-f:1674856831265016256&amp;th=173e496a0d3009c0&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9Nm_8clpEUSn8irE1S_as7pWwfCpGcGHbC5y0duiW-pw_x6Ax8UMKWrbgdCMHSlQJ6jiBpOZ7nT24aNVsU60gDhXk-1-PS6DKOYlamj9g6lN08emuL0Tz4UAI&amp;disp=emb" class="editor-image img-responsive"></figure>
Jamie Foulkes&nbsp; Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.4&amp;permmsgid=msg-f:1674856831265016256&amp;th=173e496a0d3009c0&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9iQebLxkU8KAqiiZD4KU_LAguR_5qaHLOUBCAk4rpBtyAAFhtCLVmRo_1mLYRSb-tUHc-1qk4U65O4n_3hYmU-o1Bn1wIjYq-LcHrW83Dq8W4yL-SxJthBl3c&amp;disp=emb" class="editor-image img-responsive"></figure>
M: +64 20 4196 2993 |P: +64 4 914 2217 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX First take – interim results in line with expectations at EBITDA and Revenue level, guidance unchanged, company expectation top end of range (NZ$30-33.5m vs our NZ$32.9)

Strong FY20 interim result, outperformance by Secondary Markets

Despite a high level of uncertainty due to COVID-19, the group has performance well across the first six months of the year, with the key drivers high volatility in Secondary Markets supported by NZ$6bn of capital raises in the Issuer Relationships division and growth of the funds management businesses.
Guidance for FY20 remains unchanged at a range of NZ$30-33.5m with the company expecting a result towards the top of the range (pre-results our forecast NZ$32.9m)
The Wealth Technologies division is still expected to migrate clients Saturn Advisory and Hobson Wealth by FY20 in addition to a new client migrated in June 2020
Revenue and EBITDA were in line with forecasts with NPAT slightly higher than expected due to decreased depreciation and amortisation as a result of full amortisation of the Clearing System in 2019


Issuer Relationships

Reported revenue was in line at NZ$13.1m vs our NZ$13.1m, with reported EBITDA of NZ$10.3m vs our forecast NZ$10.4m
Total capital raised across the division in 1H20 was NZ$8.2bn with NZ$6.0bn from secondary capital raises in the wake of COVID-19
Costs marginally were higher than our forecasts due to slightly higher personnel costs from annual leave and bonus accruals and additional contractors for the electricity market pricing project

Secondary Markets

Secondary markets saw EBITDA +85.7% for the year and revenue +47.8% with reported EBITDA of NZ$7.3m slightly ahead our NZ$6.8m
This was due to high volatility as a result of COVID-19 with March and April seeing a period of Super trading and the result of the half higher than the previous year
The number of trades for the half were +216% with the total value traded +52%

Data &amp; Insights

The data division saw EBITDA slightly below our forecasts (NZ$5.9m reported vs our NZ$6.7m) partly due to higher IT costs, increased use of external contractors for insights and increase in professional fees as a result of increased royalty audit fees
This was despite terminal numbers +17% for the half and licences +7%
Slightly weaker revenue than expected was in part due to weak dairy subscription revenue from decreased dairy subscriptions
Audit revenues are excepted to tail off in H2-20

FUM

Reported EBITDA for the Funds under Management division was marginally lower than we anticipated (NZ$2.9m vs our NZ$3.0m)
This was partly due to increased fund expenses with the addition of new funds and higher personnel costs from a growing leadership team
Marketing spend has been deferred during the COVID-19 lockdown

Wealth Technologies

The Wealth Technologies division reported in line EBITDA of -NZ$(535k) vs our –NZ$(533k)
The business won and migrated a new client in June 2020 driving an increase in FUA
Saturn and Hobson are still expected to be onboarded by FY20
The company have highlighted an increase in personnel costs reflected sales activity and operational staff for new clients



Jamie Foulkes&nbsp; Analyst, Equities

M: +64 20 4196 2993 |P: +64 4 914 2217 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX: Interim Forecasts in Line, Guidance Expected Top End of Range