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NZX profit falls 62pc on Ralec court costs

NZ Newswire logoNZ Newswire 13/02/2017 Paul McBeth

NZX annual profit has dropped 62 per cent as the stock market operator faced mounting costs from the protracted Ralec litigation and a new regulatory environment.

Net profit fell to $9.2 million in calendar 2016 from $23.9m a year earlier when the Wellington-based company's earnings were bolstered by an $11.8m gain from the sale of Link Market Services, the company announced on Tuesday.

Earnings before interest, tax, depreciation and amortisation fell 8.4 per cent to $22.5m as operating expenses climbed 13 per cent to $55m, outpacing a 6 per cent gain in revenue to $77.5m.

Last year saw the end of NZX's long-running dispute with the former owners of the Clear Grain Exchange, costing the stock market operator $3m in calendar 2016 alone when the case hit the courts and resulted in what the judge described a "nil-all draw".

At the same time, a downturn in the dairy sector prompted a review of the agri division and NZX sold the Clear exchange and the Country-Wide and Dairy Exporter magazines, while the final leg of the Financial Markets Conduct Act came into effect requiring increased resources.

A final one-off cost borne by NZX in calendar 2016 was the $1.3m of resignation benefits paid out with the exit of chief executive Tim Bennett.

NZX is more optimistic about 2017, forecasting ebitda of between $27m and $30m, although that depends on the level of initial public offerings, secondary capital raisings, and trading and clearing volumes across its various markets.

The shares last traded at $1.14 and have gained 21 per cent over the past 12 months.

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