NZX flags smaller earnings on Clear litigation, CEO transition

BUSINESSDESK: Stock exchange operator NZX expects smaller first-half earnings than a year earlier as it stumps up as much as $3 million to pay for its Clear Grain Exchange litigation and to cover the costs of installing a new chief executive.

Earnings before interest, tax, depreciation, amortisation and fair value movements were between $9 million and $10 million in the six months ended June 30, the Wellington-based company said. That is smaller than the ebitdaf of $11.7 million in the same period last year. Net profit was between $3 million and $4 million, compared to $4.5 million in 2011.

Its expenses were $2 million to $3 million higher than last year, with about two-thirds arising from the CEO transition, the Clear litigation and other non-recurring items, NZX said.

The outlook for the next six months "combines a traditionally stronger second-half for NZX's businesses with some significant market developments against he backdrop of a challenging global economic environment", the company said. "The medium-term outlook for the business remains strong."

The stock exchange has had to contend with dwindling trading values on its bourse this year as investors remain nervous with Europe's sovereign debt woes eroding confidence.

It returned about $34.4 million to shareholders in May after the getting the proceeds from its TZ1 carbon trading registry sale.

NZX said it wil launch equity derivatives in the first-half of next year and plans to embark on a series of initiatives to bolster its global position with dairy derivatives.

"Resources will also be invested in initiatives designed to increase the attractiveness of listing for small and medium-size companies seeking capital for growth," it said.

The company will give a more detailed outlook when it officially publishes its first-half results on August 20.

The stock rose 1.5% to $1.32 in trading on Friday and has surged 34% this year. It is rated an average "hold" based on three analysts' recommendations compiled by Reuters, with a median target price of $2.84.