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NZX signals end to unconventional dividend policy in 2014

Friday 3rd May 2013

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NZX has signalled an end to its unconventional dividend policy, which has tied the stock market operator to stepped increases of not less than 1 cent a share since 2009.

The Wellington-based company today declared a first-quarter dividend of 1.25 cents a share and expects to pay 5.6 cents for the year. That's based on a dividend policy introduced in 2009 that switched the payment focus to cents-per-share of operating earnings rather than the previous 60 percent of net profit and locked the company into minimum annual increases.

"The board anticipates that from 2014 the company will move to a more conventional payout ratio policy, subject to the normal solvency, working capital and capital expenditure caveats," it said in a statement.

NZX made the announcements ahead of its annual meeting in Wellington. Sales in the first quarter rose 4.3 percent to $14.3 million, led by gains in securities clearing and market operations, up 23 percent to $1 million and 26 percent to $3.05 million respectively.

Sales of securities information fell 8 percent to $2.1 million and sales of Agri information declined 8 percent to $2.7 million, which it said reflected a drop in rural advertising caused by drought. Listing revenue rose 4 percent to $2.3 million.

Total trade in the cash market rose 14 percent to 232,141 trades in the first quarter from a year earlier, while the value of trading surged 54 percent to $10.1 billion.

Equity transactions continue to make up the bulk of turnover, with trades rising 16.2 percent to 224,802 and the value of trading gaining 57 percent to $9.9 billion.

Debt transactions fell 26 percent to 7,339 while the value dropped 13 percent to $230 million. The market capitalisation of equities listed on the NZX rose about 20 percent to $70.4 billion in the first quarter from a year earlier. The value of debt fell 9.1 percent to $14.3 billion.

Total equity securities listed fell 4.7 percent to 163 and debt securities fell by 10 percent to 95. A total of $194 million of capital was raised by issuers in the first quarter, down from $405 million a year earlier.

NZX, which also has separate regulatory functions for the market, released regulatory metrics for the first quarter. A total of three issuers were suspended in the quarter, seven complaints about issuers were received and 19 investigations were begun.

Shares of NZX fell 0.8 percent to $1.33 and have gained 12 percent this year. The stock is rated 'hold' based on two analysts polled by Reuters.

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