NZX's Q1 2013 revenue report released today shows total Group revenue of $14.1 million, up 4.3% on the previous corresponding period. Revenue growth resulted from strength in securities trading and clearing revenue, coupled with the Fonterra Shareholders' Market being fully operational and several projects underway for the Electricity Authority.
The sharemarket continued to gather momentum in Q1 2013, with trading volumes well up on the equivalent period in 2012. This positively impacted both securities trading and clearing revenue, which were up 30% and 23% respectively.
Market operations revenue was also a contributor to growth, with revenues up 27%. The Fonterra Shareholders' Market continues to operate smoothly following its successful launch in the second half of 2012, and Q1 2013 was also a busy period for the Group's Energy business.
Partially offsetting these areas of significant revenue growth, information revenues were 8% down on the prior period. Securities data revenues continued to trend downward, impacted by continued consolidation in capital markets businesses globally and a higher NZD/USD exchange rate than Q1 2012. Agricultural data revenue was impacted by a pull back in rural advertising spend as a result of drought conditions.
Commodity trading revenues from the Clear Grain Exchange business were 33% down on the prior year due to a smaller grain harvest in 2012/13, together with the fact the majority of the crop was sold early in the season due to high grain prices at the end of 2012.
NZX CEO Tim Bennett commented: "Overall it has been a positive start to 2013, with the equity markets in excellent health, which has positively impacted on Q1 revenues. While one of the main features of Q2 will be the listing of Mighty River Power, the remaining IPO pipeline remains promising. In light of the existing positive market conditions, several companies are considering coming to market in 2013. Provided market conditions remain supportive, this augers well for the second half of 2013.
"While our information and commodities trading businesses have been adversely impacted by market factors in the first quarter of this year, the steady growth in total group revenue highlights the benefits of the diversified nature of NZX's business."
Revenue by business line
Securities Information - A 4.5% decline in real-time data terminal numbers and a higher New Zealand dollar against the US dollar (with the majority of this revenue being billed in US dollars) contributed to the 8% decrease in securities information revenue compared to the prior year. The previously anticipated stabilisation in terminal numbers and return to growth in securities information revenue has yet to eventuate.
Agri information - Rural advertisers pulled back their spend in Q1 2013 due to the drought conditions impacting the agricultural sector. This resulted in the 8% drop in Agri information revenues for the quarter compared to the prior year.
Listings - Listings revenue was up 4% in Q1 2013, with relatively limited capital raising in the quarter, similar to the previous corresponding period. The Mighty River Power IPO will be a significant feature of Q2 and the IPO pipeline beyond this remains strong.
Securities trading - Q1 2013 saw very strong trading volumes, continuing the momentum from Q4 2012. The total number of trades was up 14% on the prior comparable period, while the total value traded was up 54%, boosted by some large block trades. As a result, securities trading income was up 30%.
Commodities trading - As signaled at NZX's 2012 full year results announcement, the 2012/13 harvest was smaller than the prior year and high prices at the start of the season meant that a significant proportion of the crop was sold in Q4 2012. As a result, Q1 2013 tonnes traded were 44% down on the prior year. This was reflected in a 33% decline in commodities trading revenue.
Securities clearing - Securities clearing revenues increased 23%, benefitting from the increase in trading volumes and value in the market, as well as increased depository and stock lending transactions.
Market operations - Market operations revenue increased 26% in Q1 2013, benefitting from the Fonterra Shareholders' Market now being fully operational as well as increased project activity within NZX's contracts with the Electricity Authority.
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