Price up as NZX buys shares back

NZX is buying back some of its shares because the sharemarket it operates is not valuing them highly 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 yesterday 10c, or 6.85 per cent, to $1.56.

"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 timing adjustment would help show the market its confidence in earnings growth, and remind investors of the intention to increase the annual dividend by a minimum of 1 cent per share a year for the next four years, the company said.

- NZPA