GENERAL: NZX: NZX reduces carrying value of carbon registry business

12 Feb 2010 5:47 pm

NZX 12/02/2010 GENERAL

REL: 1747 HRS NZX Limited

GENERAL: NZX: NZX reduces carrying value of carbon registry business

NZX reduces carrying value of carbon registry business

12 February 2010 - The lower priority given to carbon trading on the global political and corporate agenda post Copenhagen in late 2009 has prompted NZX to reduce the valuation on its balance sheet for a prospective 2012 performance payment from the sale of its TZ1 Registry business last year.

Macro conditions have moved against carbon trading compared with where the world was when the registry business was sold. Whilst some corporates - including key New Zealand companies - continue to assign a high priority to environmental concerns, in general the lack of a global political agenda around carbon, coupled with the global financial crisis, has made such 'discretionary' expenditure a lot more contestable and scarce. In addition, the impact of the global financial crisis on falling industrial output has reduced the corporate need for voluntary carbon issuance activity, upon which a carbon registry business revenue model depends.

This means that NZX is less confident that the baseline 2012 EBITDA number will be achieved under the 2009 sale agreement, to reach the US$37.1 million figure at which the asset has been valued to date. Therefore the sensible business decision is to reduce the carrying value of NZX's sale proceeds to the bottom of the range of possible 2012 outcomes, at US$21.4 million. This accounting change will result in a NZ$19.9 million reduction in the gain on disposition of assets as held on the NZX balance sheet.

In spite of tough operating conditions, the TZ1 registry business continues to lead the field in customer acquisition worldwide. As such it is very well-placed to benefit when the carbon agenda, and corporate willingness to commit voluntary spend in this field, return.

The past 12 months was a planned, intensive growth phase for the carbon registry business, and that growth has been slowed by macro headwinds. NZX remains confident around the long-term success of the this business. End CA:00191161 For:NZX Type:GENERAL Time:2010-02-12:17:47:03

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