NZX Limited (NZX: NZX) NZX FY 2021 Results, Annual Report & Rights Offer

Thursday 17th February 2022

NZX Limited today published its full year financial results and annual report for the 12 months ended 31 December 2021 and pro-rata renounceable entitlement offer announced.

NZX today announced operating earnings (EBITDA) of $34.4 million for the financial year ended 31 December 2021, which has seen substantial progress against our strategy to re-engineer the NZX Group for future growth. Excluding acquisition costs, Group operating earnings were up 4.0% year-on-year to $35.8 million.

NZX Chair, James Miller, said operating earnings reflected sustained momentum from the extraordinary COVID-fuelled activity levels of 2020, with growth across all major business areas.

Mr Miller said the company had been true to its growth strategy aimed at “building a more robust, integrated financial services business”. “In addition to strengthening New Zealand’s exchange, our strategy is to grow an NZX Group that is stronger and better positioned to deliver long-term sustainable value to our shareholders,” he said. Alongside growth in 2021, there has been a step-change in investment to support additional capacity, capability, and to enhance the security of operating platforms. The NZX Board has declared a final dividend of 3.1 cents per share to be paid on 10 March 2022, contributing to a FY2021 dividend of 6.1 cents per share fully imputed. Strong operating performance NZX Chief Executive, Mark Peterson, said the COVID pandemic materially stimulated and accelerated activity through 2020, and this had flowed through positively into FY2021 operating performance and financial results – with operating earnings holding up well.

“We have continued to deliver growth in 2021 across all major business areas and we have made a step change in our investment to support additional capacity, capability, and to enhance the security of our operating platform. This will continue in 2022.

Group revenues were up 12% year-on-year to nearly $88 million for the full year. Operating margin excluding acquisition costs at 40.7% was lower, due to the investment in growth, including bringing forward increased spend in people and technology costs to ensure the resilience of our infrastructure and support expansion.

Net profit after tax for the year (NPAT) was $15.0 million, compared with $17.6 million the previous year. Lower interest rates have impacted the level of interest income on operational cash balances, NZX Clearing risk capital and regulatory working capital. Depreciation was higher due to the investment into additional IT infrastructure and the fit-out of NZX’s new Auckland office. Amortisation was also higher due to capitalised costs in late 2020, relating to the spend associated with the migration of new clients onto NZX Wealth Technologies’ platform, and the implementation of a new trading system.

Capital expenditure continues to be focused on investing in IT capacity, resilience and security, alongside the growth opportunities within Smartshares and NZX Wealth Technologies, and creating our new Auckland offices - the New Zealand Capital Markets Centre, as a home for the capital markets in New Zealand, where we were able to host the Winton Land listing in December.

“We are also pursuing a number of opportunities to grow the business that will require investment in the coming year, under our strategy to develop our markets further and deliver greater value to NZX shareholders over the longer term,” he said.

Equity offer

NZX is today announcing an offer of NZX shares to raise approximately $44m to support NZX’s growth and strategy towards a stronger and more integrated financial markets infrastructure and services business.

This pro-rata accelerated renounceable entitlement offer (Offer), announced today alongside our 2021 annual result, gives all eligible shareholders the opportunity to purchase 1 new share (New Shares) for every 9 NZX shares held at 5.00pm NZ time on the Record Date of Friday, 18 February 2022, at an Offer Price of NZ$1.42 per New Share.

The Offer Price reflects a 15.0% discount to the dividend adjusted theoretical ex-rights price of NZ$1.67, and a 16.4% discount to NZ $1.70, being the last close price of NZX shares on 16 February 2022 of $1.73 adjusted for the 2021 final dividend of 3.1cps.

“The proceeds of the Offer will be used to fund our investment into GDT (including NZX's proportion of planned additional growth investment into the platform), replenish our balance sheet following the settlement of the ASB SMT Acquisition on 11 February 2022 and provide capacity to support the potential investment across our market platform as we continue to scale our growth businesses," Mr Miller said.

The institutional component of the Offer has been accelerated and occurs on 17 February 2022, with confirmations due by 10.00am (NZ time) / 8.00am (Sydney time) on Friday, 18 February 2022.

Eligible Retail Shareholders will have until 7.00pm (NZ time) / 5.00pm (Sydney time) on Friday, 11 March 2022 to subscribe for New Shares under the Retail Offer.

New Shares will be issued after the record date for the 2021 final dividend and will therefore not be entitled to that dividend. The dividend reinvestment plan will also be temporarily suspended in respect of the 2021 final dividend, given this equity raising. It is expected to be reinstated and operate for the 2022 interim dividend.

Please see the links below for details

1. NZX Full Year 2021 Results - News Release

2. NZX Annual Report 2021 (including audited financial statements)

3. NZX FY21 Results - Investor Presentation

4. NZX Full Year 2021 Results - Shareholder Letter

5. NZX Full Year 2021 Results - Results Announcement

6. NZX Full Year 2021 Results - Distribution Notice

7. NZX Pro-Rata Renounceable Entitlement Offer - Offer Document

7b. Email to Shareholders on Offer Launch

8. NZX Pro-Rata Renounceable Entitlement Offer - Corporate Action Notice (capital raise)

9. NZX Pro-Rata Renounceable Entitlement Offer - Cleansing Notice

10. NZX Nomination of Directors Announcement

Source: NZX Limited

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