Smith City angry at NZAX for reporting error

By Duncan Bridgeman

Friday 13th February 2004

The New Zealand Exchange's fledgling alternative market yesterday faced criticism over the quality of financial information it released to the market.

While he supported the NZAX structure he was disappointed his company's results were displayed incorrectly, Smith City Group chief executive Rick Hellings said.

The NZAX had published the company's six-month result as a full-year result and had yet to fully correct the mistake, he said.

"We were promised more professionalism and a more regulated market ... that's why the unlisted market had to go," he said. "Now [the correct information] is not getting out anyway."

The mistake meant some financial institutions had calculated Smith City's PE ratio and dividend yields on a 12-month basis, when the results were in fact for six months.

The interim result was released in November but the information was not withdrawn for several weeks. Mr Hellings said the exchange had yet to post replacement figures on its website or on share tables.

"From that point of view we feel the NZAX hasn't performed as well as we were led to believe it would."

NZX markets development manager Geoff Brown said he was working on fixing the problem, which stemmed from the share tables having no earnings history for the NZAX companies.

While the misleading PE and dividend yield figures had been withdrawn, the replacement figures could not be calculated without earnings history, he said.

"We've clearly got to fix this ... I know Smiths City is losing patience."

Mr Brown said he would be sending a note to all the NZAX companies in the next few days asking for earnings and dividend information for the last year so it could be put on the NZX database.

"It's top of my list."

Apart from the financial information problems, the NZAX was performing well.

Most companies had reported a lift in trading since the inception in November last year.

A comparison in trading volumes of NZAX companies that were previously on the unlisted market revealed a 52% increase for the three months ended January 2004 on the same period a year ago, Mr Brown said.

Average price appreciation had increased 32% compared with the same three months a year ago on the unlisted market, he said.

Mr Hellings said Smiths City had received good exposure as part of the First XV launch in November but that was a short spurt. "Since then the AX has been relatively unnoticed."

Other companies were full of praise for the new board. Comvita chief executive Graeme Boyd said the launch gave his company tremendous exposure and profile.

"It's early days but we're expecting the market to be able to offer us more in the future."

He said trading had been reasonable since the inception three months ago. "We have been very positive about the move."

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