Profit jump masks second-half knocks

Chief executive Mark Weldon predicts NZX will have a strong year as new companies come on board. Photo / Getty Images

A write-down in the gain from the sale of its TZ1 business and ballooning operating costs hit NZX hard in the second half of last year.

The sharemarket operator yesterday reported a full-year net profit of $38.7 million, down 36 per cent on its half-year net profit of $60.8 million.

The half-year profit included a $52.1 million gain on the sale of the TZ1 carbon credit registry business, which NZX established in 2008. But last month the NZX wrote down its potential value to $32.2 million.

The second half of the year also saw operating costs more than double from $9.55 million to $25.25 million.

Chief executive Mark Weldon said NZX had written down the value of the carbon trading platform because of a macro trend away from a focus on the environment.

The final value of the platform will not be known until the end of next year and will depend on its earnings.

But Weldon did not expect to make any more write-downs.

"We have taken that right to the bottom value now."

Of the increase in costs, Weldon said that was attributable to the number of new businesses taken on and a decision to maintain staff numbers.

Year-on-year net profit was up 280 per cent to $38.7 million. But underlying performance measured through earnings before interest, tax, depreciation, amortisation and financial instruments was down 6 per cent from $18.7 million to $17.6 million.

Revenue from new listings, the biggest chunk of NZX's business, was up 30 per cent to $11.59 million after record levels of capital raisings but its other major contributor - market data - was down 3 per cent to $10.56 million.

Weldon said the data drop was due to the number of subscribers going under or being bought out.

But the NZX was expecting a pick-up of 10 per cent in those wanting to buy its market data terminals.

Trading revenue also fell 6 per cent to $5.02 million after the average number of daily trades fell 3 per cent.

Forsyth Barr analyst Guy Hallwright said growth had been lower than expected and there had been a lot of costs associated with new business acquisitions. While some of those costs would go down this financial year some would be maintained and it was difficult to know yet how much that would eat into profits.

But Weldon predicted the company would have a strong year based on a number of new floats. Shares in the NZX closed down 1c yesterday at $2.04.