NZX full-year profit reflects hit on TZ1 writedown, first-half gains

Monday 1st March 2010

NZX posted a weaker full-year profit than it achieved in the first six months of the year, after recognising a drop in the value of the Markit shares it got for the sale of its TZ1 carbon registry.

Net profit rose to $38.7 million, or 34.98 cents per share, in the 12 months ended December 31, from $10.2 million, or 10.36 cents, a year earlier, the Wellington-based company said in a statement today.

Full-year profit compares with the $60.8 million reported in the first half, which reflected gains on the sale of the carbon registry and its holding in Bond Exchange of South Africa. NZX took a $19.9 million hit on the value of its TZ1 carbon registry after climate change talks in Copenhagen stalled last year.

In the full year, earnings before interest, taxation, amortisation, depreciation, and financial instruments declined 6.3% to $17.6 million.

“Macro conditions have moved against the Environmental Registry since the sale,” the company said in its financial statements. “The lack of a global political agenda around carbon and the financial climate has made such ‘discretionary’ expenditure a lot more contestable and scarce.”

Last month the bourse operator wrote down the shares it holds in Markit, the UK-based firm that bought TZ1 last June, to US$21.4 million after it had booked a NZ$53.6 million gain on the sale based on the shares as financial assets at fair value. If the registry fails to meet specific EBITDA targets next year, Markit can exercise an option to repurchase its shares from NZX.

The company will pay a final dividend of 6.5 cents per share. The shares rose 0.5% to $2.06 in trading today, and have declined 13% this year.

NZX boosted revenue 33% to $42.8 million with income from listings up 30% to $11.6 million.

Record levels of debt raisings and bond issues underpinned the growth on the NZDX last year, and the bourse operator predicts this year will be dominated by secondary equity raisings from existing listed issuers and a stronger initial public offering market.

Still, employee expenses jumped 69% to $13.8 million as the company brought in specialised staff for its new ventures, while other expenses more than doubled to $11.5 million. This was driven by the $3 million spent on marketing, printing and distribution, the bulk of which came with the new costs of producing its NZX Agri publications.

The total number of trades across the NZX bourse fell 3% to 575,213, with the average number of daily trades also down 3% at 2,283. The total value traded in 2009 shrank 12% to $24.79 billion.

On the NZSX, total trades fell 5% to 529,848 with the value of trades down 11% at $23.22 billion, though the NZDX boosted its total trades 36% to 42,903. The value traded on the bond market tumbled 19% to $1.55 billion. The NZAX oversaw a 20% decline in the number of trades for small-cap companies to 2,462, with the value traded down 26% to $13.19 million.

The market capitalisation for 2009 was up 17% across the platforms to $55.01 billion, or 30% of GDP.

Businesswire.co.nz

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