Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZX first-half profit hurt by Ralec litigation costs

Wednesday 17 August 2016 09:51 AM

NZX first-half profit hurt by Ralec litigation costs as revenue gains

By Sophie Boot

Aug. 17 (BusinessDesk) - NZX's first-half profit dropped 80 percent as costs related to the ongoing Ralec litigation offset gains in operating revenue.

Net profit fell to $3.58 million in the six months ended June 30 from $17.9 million a year earlier, which was bolstered by a one-off gain on an asset sale, the market operator said in a statement. Stripping out that gain and other one-off adjustments, underlying profit fell to $4 million from $6.2 million.

Operating costs climbed 19.7 percent to $27 million in the first half, outpacing a 10 percent increase in revenue to $37.9 million, with costs related to the protracted litigation with the sellers of the Clear Grain Exchange increasing by $1.6 million.

NZX spent $2.9 million on the trial in the first half of 2016, more than twice what it spent in the same period a year earlier, and said the increased cost reflected the flurry of activity leading up to and during the trial which began in May and lasted until July. NZX said it doesn't expect to incur any more significant costs on the Ralec case after July, and anticipates a judgment before the end of the year.

NZX's effective tax rate was 43 percent in the first half, higher than the statutory rate of 28 percent, due to the Ralec expenditure not being tax-deductible, it said.

"We are pleased the Ralec trial and associated costs, which weighed on our result, are behind us now," chief executive Tim Bennett said. "We continue to deliver against our strategic objectives to grow the business and the markets for the long term. We are continuing to see a good pipeline of small to medium sized listing candidates, while debt raising activity is expected to continue at levels above historical averages."

NZX reiterated its expectation for annual earnings before interest, tax, depreciation and amortisation to be in the range of $22.5 million to $26.5 million, a forecast it gave in February, subject to market outcomes.

Revenue gains came from increased funds under management, the launch of new exchange-traded funds (ETFs) and NZX's acquisition of investment platform Apteryx, now called NZX Wealth Technologies, in the second half of 2015, it said.

Market earnings grew 10 percent to $19 million in the first half, while fund services earnings dropped 78 percent to $358,000 and agri dropped 37 percent to $291,000. Fund services earnings fell because NZX Wealth Technologies and some of the ETFS are losing money in an effort to build critical mass, NZX said. The agri decline was due to 11 percent lower advertiser spending in the dairy downturn.

Overall listing fees rose 6 percent to $4.5 million, while initial listing fees jumped 382 percent to $960,000, which NZX said was "consistent with a four-fold increase in the value of new equity listed coupled with a significant increase in new debt listings."

The board declared an interim dividend of 3 cents per share, with a Sept. 2 record date, payable on Sept. 16.

The shares last traded at $1.04, having declined 2.8 percent so far this year.

(BusinessDesk)

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>

ALSO:

Unintended Consequences: Liquor Change For Grocery Stores On Tobacco Tax

Changes in the law made to enable grocery stores to continue holding liquor licences to sell alcohol despite increases in tobacco taxes will take effect on 15 September 2017. More>>

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>

ALSO:

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO: