Shares in NZX Limited have taken a hit on the company's own exchange today after it slashed $19.9 million from the expected sale proceeds of its carbon trading business.At 3pm NZX shares were down 13c at $2.05, a fall of 6%, on mild volume.Late on Friday,
Shares in NZX Limited have taken a hit on the company’s own exchange today after it slashed $19.9 million from the expected sale proceeds of its carbon trading business.
At 3pm NZX shares were down 13c at $2.05, a fall of 6%, on mild volume.
Late on Friday, after the market closed, NZX announced it would write down the carrying value of remaining sale proceeds of its TZ1 Registry, which it sold to UK firm Markit Group last year.
NZX recorded a $53.6 million gain on the sale of TZ1 in its earnings for the six months to June last year, contributing to a record $60 million half-year profit.
Included in the sale was an earn out provision dependent on a "prospective 2012 performance payment from the sale" of TZ1.
However, NZX said on Friday that the lower priority given to carbon trading since the Copenhagen conference last year had cut corporate demand for the registry’s service.
It would now revaluing the shares from the $37.1 million current carrying value to $21.4 million.
“Given the difficult trading circumstances in that space then it was prudent to make a write-down in that investment,” NZX Markets Development Manager Geoff Brown told NBR today.
He rejected any notion that the timing of the announcement – at 5.47pm on Friday – was a tactical move to lessen coverage of the news.
“Under continuous disclosure the timing of announcements is not always something that a company can influence. When it needs to go out it needs to go out.”
First NZ Capital analyst Greg Main said while the write down probably had an effect on NZX shares today the write down wouldn’t have that big an impact on the valuation of the shares.
“It takes away some of the blue sky I guess … people tend to park the valuation of Markit off to one side.
“That’s because there’s not a lot known about it, it’s not visible, and different people view it in different ways. You are either a believer or a sceptic.
“That’s just the nature of that investment. Unfortunately there’s not a lot of visibility and you have to take NZX at its face value on that one."
TZ1 was the world’s largest environmental registry, with more than 350 customers and 38 million metric tons of voluntary emission reductions recorded, when the sale was completed July 1.
NZX is due to release its full year result on March 1.
