NZX is buying back some of its shares because the sharemarket it operates is not valuing them high enough.NZX gave notice of an intention to buy back up to 3.57 million ordinary shares. The announcement had a positive impact on its share price, which rose
NZX is buying back some of its shares because the sharemarket it operates is not valuing them high enough.
NZX gave notice of an intention to buy back up to 3.57 million ordinary shares. The announcement had a positive impact on its share price, which rose 10c, or 6.85%, to $1.56 today.
"The NZX board is of the view that the current share price is significantly below fair value and doesn't reflect a reasonable valuation of the company today, even without taking into account the growth prospects about which the board and management are confident," the company said in a statement to the market.
The buyback was an opportunity to provide a return to shareholders in excess of NZX's cost of capital.
The company also said it was proposing to pay two dividends a year rather than one.
The interim and final dividends would be two approximately equivalent amounts, with the interim payable in October of each year and the final expected to be paid in April.
This will smooth dividend payments for investors. The company has suspended its profit distribution plan so dividends will be paid in cash until further notice.
"The NZX board and management view this adjustment to the timing of dividend payments as an opportunity to reiterate to the market their confidence in future earnings growth, and to remind investors of their intention to increase the annual dividend by a minimum of one cent per share annually, for the next four years," the company said.
