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NZX’s Q1 2015 revenue report released today shows total group revenues of $16.4 million, up 9.1% compared to Q1 2014, driven mainly by NZX’s recently expanded funds management business.
NZX’s funds management business contributed an additional $1.75 million compared to Q1 2014. Of this growth, $1.5 million is attributable to the addition of the SuperLife business (acquired effective 1 January 2015). NZX’s Smartshares business also saw pleasing growth with funds under management up 17.3%, boosted by the launch of two new Australian equity Exchange Traded Funds (ETFs) in Q4 2014. Smartshares also launched an additional three new funds in April 2015. The successful launch of these new ETFs has been enabled by the SuperLife acquisition, with further ETFs to be added to the Smartshares product portfolio in coming months.
In the cash markets, trading volumes and values were up 1.2% and 12.7% on Q1 2014, contributing to a 6.6% growth in trading revenues and 14.4% growth in clearing revenues.
NZX’s Agri business felt the effects of a low dairy price and summer drought conditions in a number of regions, with revenues down 11.7% on Q1 2014. In contrast, dairy derivatives continue their rapid growth, with lots traded up 196.5% on Q1 2014 and revenue growth of 119.0%.
NZX’s Australian grain trading business, Clear Grain Exchange traded 149,544 tonnes in the quarter, down 49.4% on Q1 2014, a consequence of a smaller harvest and high grain prices at the start of the season, resulting in most of the selling activity being completed in Q4 2014.
NZX’s energy market operations business added an additional three contracts during Q1 2015, two smaller information supply contracts, and the Extended Reserve Manager role, which the Electricity Authority selected NZX as the preferred supplier for. This is a new role in the electricity industry and is expected to result in meaningful development revenue through to mid-2016, as well as a relatively small ongoing operational revenue stream.
Revenue by business line
Capital markets – Capital markets revenue was up 3.7% on Q1 2014 to $8.6 million, with growth driven by increases in trading activity, and the increase in annual listing fee revenue resulting from new listings in 2014. Securities information revenue was up 3.1%, despite terminal numbers remaining relatively flat on Q1 2014, due to an increase in licence fees and other miscellaneous data revenues.
Soft commodities – Increased dairy derivatives revenue from continuing rapid growth in derivatives trading volumes was more than offset by the significant reduction in revenue from trading on the Clear Grain Exchange, with resulting total revenue of $0.4 million, 43% down on Q1 2014.
Agricultural information – Revenue was down 11.7% to $2.6 million. This was primarily the result of reduced advertising volumes in print publications, with only 487 advertising page equivalents booked during the quarter (down 20.4% on Q1 2014), a result of reduced confidence in the sector due to the fall in dairy pay out and drought conditions in several regions.
Funds management – Funds management revenue was up 315% to $2.3 million due to the acquisition of SuperLife and growth in funds under management. SuperLife’s KiwiSaver business saw a 28% increase in funds under management in Q1 2015 compared to Q1 2014. The Smartshares ETF business also saw an increase in funds under management of 17.3%.
Market operations – Market operations revenue dropped 1.7% to $2.59 million due to slightly reduced development activity compared to Q1 2014.
NZX Regulation Metrics commentary
NZX also released its Q1 2015 regulation metrics today. These show that NZX Regulation commenced 38 investigations during the quarter in relation to Issuers, in addition to the 10 investigations that were ongoing at the beginning of the quarter. There were 21 investigations into participants commenced during Q1 2015, in addition to the three investigations that were ongoing at the beginning of the quarter. Five investigations relating to issuers and participants remained ongoing at the end of the quarter.
