NZX profits up after carbon registry hit

Photo / Kenny Rodger.

NZX Ltd, which regulates and operates the stock exchange, 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 business.

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.

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 per cent 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 U.K.-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 per cent to $2.06 in trading today, and have declined 13 per cent this year.

NZX boosted revenue 33 per cent to $42.8 million with income from listings up 30 per cent 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 per cent 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 per cent to 575,213, with the average number of daily trades also down 3 per cent at 2,283.

The total value traded in 2009 shrank 12 per cent to $24.79 billion.

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

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