Big fall for NZX Group over carbon trade unit

Stock exchange operator NZX Group had its biggest one-day share drop yesterday after it slashed $19.9 million from the expected sale proceeds of its carbon registry unit.

The lower priority given to carbon trading since the Copenhagen conference last year has cut demand for the registry's service, NZX said.

Accordingly, the company is less confident of the 2012 earnings forecast used to value TZ1 Registry when it was sold to Markit Group for US$37.1 million ($54 million) in July, NZX said. The stock fell 8.7 per cent.

TZ1 was the world's largest environmental registry, with more than 350 customers and 38 million tonnes of voluntary emission reductions recorded, when it was sold.

Under the terms of the sale, the exchange will share TZ1's profits with London-based Markit until the end of next year, at which time it may gain or forfeit as much as US$17 million depending on the registry's performance.

NZX fell 19c to close at $1.99, its lowest since December 7. It is the stock's biggest one-day decline since it began trading in June 2003.

TZ1 leads the market in customer acquisition, NZX said. It was well-placed to benefit when political and corporate demand for carbon instruments returns.

- BLOOMBERG