NZX - NZ Exchange

**Balance** · 15-07-2011, 09:39 AM

More like it.

According to NBR, NZX being investigated for breach of disclosure.

**Balance** · 15-07-2011, 09:55 AM

NZX obviously felt that it is a law unto itself.

FMA confirms NZX inquiry
TIM HUNTER Last updated 09:43 15/07/2011

The Financial Markets Authority has confirmed an inquiry into stock exchange operator NZX, after BusinessDay revealed comments by NZX chief executive Mark Weldon apparently at odds with market disclosures.

Last Friday BusinessDay reported details of a lawsuit and employment dispute involving NZX subsidiary the Clear grain exchange, acquired by NZX in 2009.

The lawsuit related to alleged deceptive conduct by the vendors of Clear - interests associated with former St Kilda football coach Grant Thomas and software specialist Dominic Pym.

Both were retained as employees by NZX after the deal, but an employment dispute led to the departure of Thomas last year.

In a Melbourne court hearing in May this year Weldon gave evidence that Clear was showing "a substantial economic loss".

"We've got another audit committee meeting coming up in June where we will look at what the actual numbers are against the purchase price - the business is not performing well," he said.

Published statements by NZX about Clear's performance were more positive. In its annual report published in March, NZX said Clear was "demonstrating real momentum, with trading currently tracking at four times the levels reached in the previous harvest.''

The FMA said it was aware NZX was undertaking an inquiry into matters relating to its subsidiary Clear grain exchange.

''We have asked some questions of NZX and we are following their inquiry with interest. We expect to hear their conclusions late this week or early next.''

As a stock exchange issuer, NZX is subject to its own listing rules, enforced by the special division of the NZX Markets Disciplinary Tribunal.

The FMA has a statutory responsibility to oversee the compliance of listed issuers, including NZX itself, with their continuous disclosure obligations.

**Xerof** · 15-07-2011, 09:55 AM

FMA is off to a good start then - tasty case to sink a new set of teeth into

**Balance** · 16-07-2011, 10:19 AM

http://www.nzherald.co.nz/business/n...ectid=10738763

Contrast the two statements :

"Continuing the commodities exposure available through NZX, the Clear Grain Exchange in Australia is demonstrating real momentum, with trading currently trading at four times the levels reached in the previous harvest." March 2011

"We've got another audit committee meeting coming up in June where we will look at what the actual numbers are as against the purchase price - the business is not performing well," he said.
"There is a substantial economic loss, there is a substantial cash flow loss in Australia." May 2011

And as per usual, Mr Weldon is nowhere to be seen or heard as this is not good for his image. The spin machine has gone into overdrive :

NZX chairman Andrew Harmos said it was not right to say the NZX was under investigation.

"It is not a big, sensational matter at all. It is normal routine inquiry ... and they are awaiting the outcome of our review which we will announce as soon as it is completed."

Accounting firm KPMG had been called in to compile a report for the NZX's audit committee, Harmos said.

Very careful use of words. Not a big sensational thing according to the spin machine. Why then bring in KPMG to compile a report? Will the audit committee answer the question why NZX, Mr Weldon and Mr Harmos saw fit not to advise the market that the Clear grain business is not doing well. Especially when Mr Weldon sold 2m shares after an upbeat AGM and brokers' presentations.

**winner69** · 16-07-2011, 10:44 AM

"Cowboys belong in the movies" says the FMA

Good to see they are going after a high profile cowboy .... doubt whether it will come too much though

Not a good look though - but then we ordinary folk just don't get it - its just a ruse for the rich to screw the ordinary folk .... and they are doing a good job

For one 'setting the standards' interesting to see that NZX don't put much emphasis on reporting their NPAT - all they concentrate on is what they call EBITDAF .... goodness gracious

Never really studied NZX as a company but I thought with a market cap of nearly $300m they must be making heaps and was surprised to see they only made $10m (real profit after the ITDAF bits) last year

just a rave .... doesn't matter cause they will continue on their merry way and be cowboys ... and setting the standards ... we should be proud of them

**Balance** · 18-07-2011, 10:58 AM

Oh dear, NZX has just scored an own goal in its case in Australia?

Watch out now for the Australians to go for the jugular in court.

NZX audit clears market disclosure
TIM HUNTER Last updated 10:40 18/07/2011

Stock exchange operator NZX has confirmed the value of its Clear grain exchange remains unimpaired after comments by CEO Mark Weldon came to light apparently casting doubt on its performance.

In a statement published to the market this morning, NZX said its audit and risk committee had carried out a thorough review, of the Australian unit with the help of accountancy firm KPMG, over the last 10 days.

''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 signalled in NZX's accounts,'' it said.

''The board confirms that the carrying value of the CGX asset on the NZX Group balance sheet remains unchanged.''

The statement followed concern from the Financial Markets Authority over the accuracy of NZX disclosure relating to Clear, triggered by comments from CEO Mark Weldon apparently at odds with the company's published accounts.

In evidence relating to an employment dispute given to a Melbourne court in May, Weldon said two years after acquiring Clear the business was struggling to gain customers.

''We've got another audit committee meeting coming up in June where we will look at what the actual numbers are as against the purchase price - the business is not performing well. There is a substantial economic loss, there is a substantial cash flow loss in Australia.''

The NZX annual report published in March had said Clear was ''demonstrating real momentum, with trading currently tracking at four times the levels reached in the previous harvest.''

In its statement today, NZX said Weldon's reference to a substantial economic loss ''was intended, in context, to refer to the periods ending 31 December 2009 and 31 December 2010.

The comments were also directed at the context of CGX - not the NZX Group. Those amounts had already been included in the NZX 2009 and 2010 full year financial accounts.

''Therefore Mr Weldon's comments, in addition to being specific to two previous calendar years and limited to the CGX business alone, were both historically accurate and not material in the context of the NZX Group as a whole. They were not intended to refer, as has been implied, to either the current or prospective performance of CGX, or the NZX Group.''

NZX said to sustain Clear's the current carrying value in its accounts, Clear ''needs to achieve market share in relevant market segments (i.e. not the entire Australian grain market) at or around 7 per cent by 2015, which is not materially above current market share levels. CGX is currently estimated at around 4 per cent of the relevant market.''

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NZX also said share sales by Weldon disclosed on July 1 had been made with approval of 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.''

Clear was acquired by NZX in 2009 for about $8.8 million from its founders, former Aussie rules football coach Grant Thomas and software specialist Dominic Pym, who had started the business a year earlier.

Its value in NZX accounts as of December was mainly an intangible asset relating to the software of $7.8m.

NZX filed a lawsuit against Thomas and Pym in Wellington High Court on July 5, alleging misleading or deceptive conduct relating to the Clear deal.