NZX Q3 2014 Results
The beginning of the quarter saw a flurry of Initial Public Offerings (IPOs), while activity in capital markets in general slowed towards the end of quarter as the markets awaited the outcome of New Zealand’s general election. The level of new capital listed over the period was down 26.7% on Q3 2013 which included the listing of Z Energy.
Dairy derivatives continued to show strong growth, with record levels of lots traded in July and August. Underlining the success of the development of the dairy derivatives market, NZX’s Dairy Futures won Best New Agricultural Contract at the Futures & Options World Awards for Asia in September.
NZX’s Agri information business this month launched two online forecasting tools, developed in conjunction with Massey University, designed to provide better insights into New Zealand milk production and farmgate milk prices.
At NZX’s Australian business Clear Grain Exchange, a new forward contract was launched ahead of the 2014/15 harvest to complement the existing spot market, and an agreement was reached with Daily Grain to assist with the marketing of Clear in West Australia.
Revenue by business line
Capital Markets – Capital markets revenue for the quarter was $9.5 million, up 5.7% on the same period last year. This was largely driven by a 28.5% increase in securities information revenue, a result of slightly increased terminal numbers over the period (up 1.1% on September 2013) and approximately $0.3m of one-off revenue resulting from various data audits. Listings revenue decreased 6.0% over the quarter as a result of significantly reduced secondary capital raisings compared to Q3 2013 and a lower total new capital listed due to the Z Energy IPO in the prior comparable period.
While trade volumes increased 7.5% over the quarter, trade values remained down on the prior period by 9.9%. Despite this, securities trading and securities clearing revenues saw growth of 2.8% and 6.2% respectively, with reduced clearing fees compensated for by higher levels of transactional-based fees and increased stock lending activity.
Soft Commodities – Total dairy derivatives lots traded during the quarter were up 119.7% on the prior period, driving a 92.9% increase in revenue. This was offset by a reduction in commodities trading revenue, down 39.8%, the result of a 34.3% reduction in tonnes traded, compounded by a high NZ/Australia average exchange rate. Q3 is traditionally the low point in the commodity trading cycle as prior harvest inventories are depleted and the new harvest has not yet commenced.
Agricultural information – Agri information revenue saw a small increase to $3.0 million (up 0.7%) despite a 3.0% reduction in advertising pages. Subscription numbers were up 13.8% on 11,745. The Agri business continued to expand its online presence with traffic to NZX Agri websites up 40.0% on Q3 2013, and revenues generated from online advertising growing steadily.
Funds Management – Funds management revenue grew by 14.8% to $0.7 million. Funds under management were up 13.5%, a result of increased units on issue (up 12.4%) including the launch of the NZ Core Equity fund in July 2014.
Market Operations – Market Operations revenue increased by 15.2%. This growth comes from additional consulting revenue generated from major systems projects for the Electricity Authority, partly offset by lost revenue from the Gas Allocation Agent role which was included in the prior period.