Feb 12 (Reuters) - Australia's ASX Ltd ( ASXFF ) warned of sharply higher 2026 costs on Thursday, extending a sell-off sparked by Chief Executive Helen Lofthouse's planned exit, which overshadowed a stronger first-half underlying profit.

ASX shares dropped as much as 2.6% to ​A$53.92, before closing down 1.7%. The S&P/ASX200 ended 0.3% ‌higher.    Lofthouse's departure comes midway through a major technology overhaul to upgrade ASX's ageing settlement systems, which have been blamed ⁠for several trading outages. She will leave in May after almost four years as the ⁠CEO.    "Deciding the right time for a CEO transition is never easy. ‌I've got a sense ‌of sadness, given I've been at ASX for 11 years," Lofthouse told Reuters in a phone interview.    "It's been a very ​challenging and demanding period, and I'm excited for a ‌break and see what is next for ASX."

Lofthouse's planned departure comes as ASX faces intensifying scrutiny after a trading settlement failure in late 2024. ASX ​has since published an incident review and ​said it would ‌provide an A$1 million ($711,300.00) credit disbursement to settlement participants through rebates.

"This is an inflection point for the ASX, and there's a really important strategic review and refresh ⁠and a new set of work to take forward," Lofthouse said.

The ASX's failed upgrade ⁠of its settlement system dates back more than nine years, and the exchange has been criticised by the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia. In December, ASIC imposed an additional capital charge of A$150 million on ASX.

A new clearing system will run ⁠on more ‌advanced technology, replacing a three-decade-old system known as the Clearing House Electronic ‌Subregister System (CHESS)

Despite the setbacks, Lofthouse said she believed investors should have confidence that the new ⁠system would work.

The ASX reported an underlying net profit after tax of A$263.6 million for the first half, compared with A$253.7 million a year ago, helped by stronger trading volumes.

Cost pressures dominated the results, with expenses up 20% to A$264.3 million, driven by an ongoing regulatory probe, transformation spending, and higher costs from ageing assets and intangible write-offs.

ASIC inquiry costs are expected to be at the top end of the ​A$25 million-A$35 million range.

ASX declared a fully franked interim dividend of 101.8 Australian cents a share, down 8.5% from a year ago, with a 75% payout ratio at the bottom end of ​its updated guidance range.

($1 = 1.4059 Australian dollars)