Ann: QUARTER: NZX: NZX Q3 2015 Revenues and Operating Metrics

• Release Date: 30/10/15 09:12
• Summary: QUARTER: NZX: NZX Q3 2015 Revenues and Operating Metrics
• Price Sensitive: No
• Download Document  7.5KB

					NZX
30/10/2015 09:12
QUARTER
PRICE SENSITIVE
REL: 0912 HRS NZX Limited

QUARTER: NZX: NZX Q3 2015 Revenues and Operating Metrics

NZX's Q3 revenue report released today shows revenue growth of 12.9% on Q3
2014, largely driven by the expansion of NZX's fund management business and
strong trading activity during the quarter.

Revenue from NZX's funds management business increased by $1.7 million to
$2.4 million compared to Q3 2014. Of this growth, $1.6 million was
attributable to acquisition of SuperLife, which saw growth of 19.8% in Funds
Under Management (FUM) in its KiwiSaver business, and 7.9% growth in total
FUM compared to Q3 2014.

NZX's Exchange Traded Funds (ETFs) business, Smartshares, also experienced
steady growth in FUM, up 9.5% on Q3 2014. During the September quarter
Smartshares launched an additional nine international ETFs, which allow
investors to invest in a broad range of international securities through one
simple NZD purchase. Smartshares will launch a further four ETFs (fixed
interest and property) in November, bringing the total suite of ETFs offered
to 23, covering all major asset classes.

In NZX's capital markets business, trading volumes and values both saw strong
growth over the period, up 26.0% and 51.2% respectively on Q3 2014. This
growth translated into increased securities trading and clearing revenue, up
25.1% and 27.1% respectively.

With the exception of the ETFs launched by Smartshares, there were no IPOs
during the quarter. However, secondary capital raisings were up 958.0% on Q3
2014 due to significant secondary capital raising activity by dual listed
Australian banks. As a result, listing fees grew by 5.7% to $3.5 million.

Effective 1 June 2015, NZX acquired 100% of Apteryx, a provider of rich
online functionality that enables New Zealand investment advisors and
providers to efficiently manage, trade and administer their clients'
portfolios. Apteryx contributed additional revenue of $0.3 million in the
quarter.

NZX's New Zealand agri business saw little improvement in market conditions
during the quarter, with the low dairy prices impacting farmer confidence and
advertising spend. Total paid advertising page equivalents were down 9.5% on
the prior comparable period, driving the 5.5% drop in Q3 2015 revenues to
$2.9 million.

Dairy derivatives had a stellar quarter, with record volumes of 35,761 lots
traded achieved in August. Total lots traded for the period were up 125.1% on
Q3 2014, and revenues up 232.1%.

NZX also announced today that contract negotiations with the Electricity
Authority (the Authority) for the provision of the four market operator
service provider roles for which NZX had been selected as preferred tenderer
are complete. NZX has entered into eight year agreements with the Authority
to continue NZX's service provision within these roles, with an option for
the EA to extend these roles for a further three years. The total value of
these contracts over the initial eight year period is approximately $41
million.

Revenue by business line

Capital markets - Capital markets revenue was up 9.9% on Q3 2014 to $10.4
million, with growth driven by increased trading volumes and values and
strong secondary listing activity.  NZX's newly acquired business Apteryx
contributed an additional $0.3 million during the quarter. Securities
information revenue declined 6.0% relative to Q3 2014 as a result of audit
revenues included in the prior period.

Soft commodities - Dairy derivatives continued to experience strong growth in
lots traded, up 125.1% on Q3 2014, driving revenue growth of 232.1%. The
Clear Grain Exchange also saw an uptick in trading volumes, up 44.2%, albeit
off a low base as Q3 is traditionally the weakest quarter for grain trades as
the market gears up for the new season (commencing October). Total soft
commodities revenue was up 163.4% to $0.4 million.

Agricultural information - Agri information revenue saw little improvement on
the first half of 2015, with revenues down 5.5% on Q3 2014 to $2.9 million.
This resulted from lower publication revenues in New Zealand. Total paid
advertising pages were down 9.5% as a result of current adverse market
conditions impacting the dairy sector. This was partly offset by growth in
agri data revenue.

Funds management - Funds management revenue was up 249.4% to $2.9 million due
to the acquisition of SuperLife and steady growth in FUM. SuperLife's
KiwiSaver business experienced a 19.8% increase in FUM compared to Q3 2014.
The Smartshares ETFs business also experienced a 9.5% increase in FUM.

Market operations - Market operations revenue was down 8.2% on Q3 2014, a
result of reduced consulting activity for the Authority during the period. As
noted earlier, NZX and the Authority today signed renewed eight year
agreements for the four market operator roles tendered this year by the
Authority. The total contracted revenue over the initial eight year period of
$41 million is made up of $32 million for the base service provider
contracts, $5.5 million for system upgrades and $3.5 million committed
consulting activity for annual system and rule changes. The fees will be
subject to annual CPI adjustment.

Costs
Costs associated with the Ralec litigation have increased as a result of
additional court activity.  A court hearing was held in October to consider
additional applications and preliminary matters associated with the main
trial scheduled for 2016.  As a result of the additional hearing and the
preparatory work required, NZX now expects that its 2015 Ralec legal
expenditure will be between $2.5 million and $3.0 million (an increase from
previous guidance).

NZX Regulation Metrics & general commentary
NZX also released its Q3 2015 regulation metrics today. These show NZX
Regulation commenced 35 investigations during the quarter in relation to
Issuers, with 6 six investigations remaining ongoing at the end of the
quarter.

There were 18 investigations in relation to participants that commenced
during this quarter, with 12 remaining ongoing at quarter end.

In July, various amendments to NZX's market rules came into effect. The
amendments were in response to legislative changes affecting New Zealand's
financial markets (including implementation of the Financial Markets Conduct
Act 2013).

The NZ Markets Disciplinary Tribunal issued three determinations during the
quarter. Details can be viewed at:
https://www.nzx.com/NZMDT/tribunal-decisions

In October, David Flacks was appointed as an independent non-director member
of NZX's Conflicts Committee. The role of the committee is to review and
consider the effectiveness of NZX's policies and procedures for ensuring that
any perceived or actual conflicts of interest within the NZX group are
appropriately managed, including as between NZX's regulatory responsibilities
and its commercial interests.

David is currently chair of the NZ Markets Disciplinary Tribunal, a member of
the Takeovers Panel and a director of a number of companies, including
boutique specialist law firm Flacks & Wong.

For further information please contact:
Kate McLaughlin
Corporate Communications
T: 09 309 3654
M: 027 533 4529
E: [email protected]

About NZX Limited
NZX builds and operates capital, risk and commodity markets and the
infrastructure required to support them. We provide high quality information,
data and tools to support business decision making. We aim to make a
meaningful difference to wealth creation for our shareholders and the
individuals, businesses and economies in which we operate. To learn more
about NZX, please visit: www.nzxgroup.com
End CA:00272565 For:NZX    Type:QUARTER    Time:2015-10-30 09:12:17