NZX defends grain exchange valuation
Sharemarket operator NZX says it will not take an impairment charge on its Clear grain exchange subsidiary despite its performance being linked to litigation against the former owners.
NZX said it came to the conclusion based on an external audit by KPMG, which had spent the past ten days assessing the value of Clear.
“KPMG have reported to the Audit Committee that in their view there are no factors indicating that there is an impairment issue that should be signaled in NZX’s accounts,” NZX said in a statement today.
In its latest annual report NZX carried the grain exchange on its book at $7.8 million.
Questions over the value of Clear were sparked by comments made in May by NZX chief executive Mark Weldon at an employment Court hearing in Melbourne resulting in NZX paying Clear founder Grant Thomas $A259,705 plus interest and costs.
At the hearing Mr Weldon said Clear had not been performing and would report a “substantial economic loss”.
NBR reported Friday that the Financial Markets Authority (formerly the Securities Commission) was looking into the matter, and had asked questions relating to NZX’s continuous disclosure.
In its statement NZX said Mr Weldon’s reference to Clear making a substantial loss was “intended, in context,” to refer to periods ending December, 31 2009 and December 31, 2010.
The comments "were not intended to refer, as has been implied, to either the current or prospective performance of Clear, or the NZX Group.”
NZX said “specific reference” to the employment-related litigation with Mr Thomas was disclosed as a continient liability in its 2010 financial statements.
The amount, which was capped at $A400,000, was not considered material, NZX said.
NZX purchased the Clear Grain Exchange in 2009, paying an upfront sum of $A7 million.
The legal action against the former owners includes allegations of a breach of warranty. NZX is disputing additional payments relating to the sale and purchase agreement.
Mr Thomas has said he is owed up to $A17 million in “earn out” payments.
Meanwhile, NZX confirmed a recent share sale by Mr Weldon was approved by the board.
“The board confirms, including based on the information in this release, that NZX has been and remains in compliance with its continuous disclosure obligations, including at the time Mr Weldon received consent to trade and placed an order to sell shares in NZX Limited.”
NZX shares fell 3c to $2.27 in morning trading.
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Comments and questions23
Storm in a bloody teacup. Complete waste of time.
Agree. It would be nice to see more balanced articles in future where the author does not appear to have constantly pre-conceived views about this business.
NBR = News of the World gutter press. NBR does not support capitalism, but looks to destroy. Keep the pie small NBR. Good strategy for growing business in NZ - make it a place nobody wants to be
The FMA investigating the NZX for potentially breaching its own disclosure rules - Anonymous, you reckon this is not newsworthy?
Newsworthy perhaps, but events don't seem to be happening in the appropriate order.
FMA's investigation looks like it is largely the result of inflammatory news articles which have taken comments out of context and blown the issue out of proportion. Good to see the new regulator trying to do its job, but let them do it in peace and report their findings without biased media influence.
Thanks anonymous, refreshing to see someone who likes to get the facts before coming to a conclusion based on sensationalist reporting!
The FMA is already doing a great job - merely by making it's presence felt. It's a shame they can't go back and prosecute those firms and the NZX for events that happened in past years - I know one NZX firm that would be toast if FMA had those powers - misleading conduct,untrue documentation, theft of information from rival broking firms,etc...lets hope those days are all behind us and the FMA raises the standards of the NZX, NZX participants and the financial markets as whole.
Front up with whose feeding you the shit - let me guess a Ausi !
So we should all just simply accept the NZX spin? Let us now wait for the response of the Australians - who now have a great opportunity to countersue as the Clear Grain business is going so well? But is it really?
Share price of NZX is down 8 cents - market has given its verdict.
So we should all just simply accept the NZX spin? Let us now wait for the response of the Australians - who now have a great opportunity to countersue as the Clear Grain business is going so well? But is it really?
Share price of NZX is down 8 cents - market has given its verdict.
market has not given its verdict, it was on dick trades, not pricing setting you knob
Pretty serious things you mention there about time.....come on spill the beans!
Dick trades?
Try all of the 3,600 shares on the bid at close ($2.18 and $2.20) and 9T to sell at $2.22, 24,236 at $2.24 and 55,951 to sell at $2.25 etc.
Be a hero and buy them then. Just be careful as there appears to be plenty more selling behind the offers in the market.
Enjoy!
If the FMA simply rolls over and accepts NZX version of events, then FMA has failed in its first (and last) test of regulating NZX as a regulator. It must investigate further - just simply ask for the transcripts of evidence given by Mr Weldon. Then, check against the release today.
OLO, if you think 3,600 shares makes a market - go back to primary school. have a look at the average amount traded in the stock. What has clearly happened is that the FMA have closed the market, and a couple of retail punters are playing at less than $20k levels. In terms of FMA, we will see. Litigating through the media, is a very very Australian way to regulate. headlines hurt companies and investors. Need to be very careful with this stuff. Good sheriffs know when to step back as well as forward.
WTF does the first para in this article mean?
Means that NZX thinks that it is a law unto itself. That despite two years of poor performances and suffering substantial economic loss, the Clear grain business has not suffered any loss in value! And KPMG, its auditor, agrees. And that, NZX hopes, is end of the story.
Anon, take a breather and read carefully what the market is telling you rather than what you prefer to read. 3,600 does not make a market and that's the point. Sellers are queuing to get out as far as they can but buyers have disappeared. They have obviously decided they cannot count upon NZX and Mark Weldon to make proper and timely disclosures re any of its operations.
The insightful person that you obviously are however, you would picking up these little darlings at $2.25 in big volume then. But you are not. What does that say about you - kindergarten school teacher?
Didn't know our Kiwi bros have two faced characteristics like us Ozzies! Says one thing to court in Oz but another thing to market in NZ! Your NZX must be hoping for a kangaroo court eh?
Seems the market has severe trust issues with the information nzx has chosen, or not chosen as the case may be, to release to the market in timely and transparent manner. Shame on them for hiding behind the continuous disclosure requirements. Once again they are pushing the moral and ethical boundaries not to mention the spirit of the Listing Rules. The fact is the market will always decide what's important or not and it has decided that this information was important or simply doesn't trust that the market is and will continue to be fully informed on this and other matters.
Hey I would be happy to detail all the serious breaches regarding NZX and market participants...but a comments section is probably not the best way to do it as NBR may end up in strife.
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