NZX Full Year 2018 Results & Annual Report Published

NZX Annual
Report 2018
LEADING A SUSTAINABLE
CAPITAL MARKET FOR
NEW ZEALAND
TE PAEHOKO O AOTEAROA

CHAIR REPORT FROM
JAMES MILLER
CEO REPORT FROM
MARK PETERSON
04
06
STRATEGY
EXECUTION
10
RESULTS AT
A GLANCE
14
SPOTLIGHT ON
SMARTSHARES
20
SUSTAINABILITY
AND NZX
24
CUSTOMER CASE
STUDY – KATHMANDU
CUSTOMER CASE
STUDY – SANFORD
34
36
FUTURE DIRECTOR
PROFILE – ANNA
MOLLOY
42
THE BOARD
52
THE EXECUTIVE TEAM
54
CORPORATE
GOVERNANCE
56
FINANCIALS
STATUTORY
INFORMATION
72
114
DIRECTORY
124
Bird’s eye view of river braiding,
Aoraki Mt Cook National Park, New Zealand
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NZX Annual Report 2018
2

Results at
a glance
*Operating earnings are before net
finance expense, income tax, depreciation,
amortisation and impairment, adjustment to
provision for earnout, gain and loss on disposal
of business and property, plant and equipment.
Total operating earnings are $28,129,000
(being $27,283,000 from continuing activities
and $846,000 from discontinued activities).
**Continuing and discontinued activities and
includes impairment write downs of $3.01
million (continuing activities $0.35 million and
discontinued activities $2.66 million) relating to
the disposal of non core businesses.
up 0.5%
REVENUE FROM CONTINUING OPERATIONS
$67.5 million
up 0.8%
EXPENSES FROM CONTINUING OPERATIONS
$40.2 million
up 0.1%
OPERATING EARNINGS FROM CONTINUING OPERATIONS*
$27.3 million
is lower than 2017 due to the strategic
decision to focus on our core capital markets
business, resulting in the disposal of non-core
businesses (and the related impairments of
$3.0 million). Disposal proceeds were returned
to shareholders through a special dividend of
1.5 cents per share
NPAT**
$11.6 million
FINANCIALS
INTERIM
3.0
cents per
share
cents per
share
cents per
share
cents per
share
DIVIDEND
SPECIAL
1.5
FINAL
3.1
TOTAL
7.6
Total capital raised (new capital and
secondary capital raised) up 10.0% to
KEY METRICS
$9.5 billion
On-market trading up
27.4%to53.4%
total value traded down 13.1% to
Dairy data
license
products up
24.4% to
963
FUNDS UNDER
MANAGEMENT UP 8.1% TO
$2.9 billion
FUNDS UNDER
ADMINISTRATION UP 70.2% TO
$2.0 billion
$38.2 billion
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NZX Annual Report 2018
4
Results at a glance

Strategy
We shared our strategic
priorities and are delivering
against them.
Over the past year we have
actively transformed NZX
strategically, operationally
and culturally.
CORE MARKET
Issuer
Relationships
$9.5 billion capital
raised in 2018,
+10.0% on 2017
Customer
engagement
• Team formed, proactive customer management plans
implemented, 100% customer engagement
• Five new customers joined the NZX across equity,
funds and debt
• Nine customer events hosted (including in
Singapore), connecting issuer and investor
communities local and globally
Framework• Updated market structure and rule set finalised,
making it easier for customers to raise capital
• Website content enhanced, providing greater
information for existing and prospective customers
Product
suite
• First green bond listed (July), currently four listed
• First Carbon fund listed
• New rules facilitating a growing pipeline for equity,
funds and debt (includes green bonds and
wholesale debt)
Secondary
Markets
On-market trading
reached record
high of 57.2% in
December 2018
Marketing
the market
• 100% engagement with market participants, Hobson
Wealth Partners accredited as cash trading, clearing
and settling participant (July), pipeline developing
strongly
• Increased engagement with all stakeholders,
stepped up presence at industry events in Asia,
U.S. and Europe
On-market
liquidity
• Revised trading and clearing pricing structure
implemented alongside targeted rule and technology
changes (October)
• Total value traded ($38.2 billion) down 13.1% due
to international crossings ($5 billion) and delisting
($1 billion)
• On-market value traded increased 27.4%, averaged
53.4% of total trade in 2018
Functionality• Trading and clearing systems changes: four decimal
place pricing (October)
• Mutualised default fund implemented to support
dairy derivatives growth (November)
Data &
Insights
45% growth in
non-display
application data
licensing billings
in 2018
Internal• Initiation and delivery of internal data process, more
than 1,000 hours spent on core market data requests
B2B• 45% growth in non-display application data licensing
billings as algorithmic trading volumes increased
End user• Dairy information service developed following
divestment of agri businesses to support dairy
derivatives market
Capability• Customer management data platform delivery
underway, includes subscription management
• Customer relationship management provider
selected for implementation early 2019
Execution
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NZX Annual Report 2018
6
Strategy Execution

Smartshares
2018 FUM growth
+8.1% to $2.919
billion (achieved
2018 target of 7%)
Grow end
users
• Launched institutional sales channel. New sales
process across three client segments: institutional,
retail and corporate
• Retail member numbers up 10%. Smartshares ETF
net cashflow up 26%. Smarshares’ total net cashflow
up 22%
Cross-
sell and
innovatively
market
• Funds distributed through new platforms (including
Sharesies and InvestNow) up 350%
Target
corporate
super
• New corporate super clients added, automated
member on boarding, member numbers up 2.2%
Wealth
Technologies
2018 FUA growth
+70.2% to
$1.988 billion
Go-live • Core platform development required by inaugural
customer completed (Q2)
• Platform development required specifically for
inaugural customer completed (Q3)
• Large customer went live (November), focus now on
product refinement and sales
Clarity and
alignment
• Divested non-core agri businesses, returned
proceeds to investors with special dividend
Efficiency
improvements
• Continued automation of operational processes
• Further progression on IT infrastructure programme
Capital
structure
• Subordinated notes issued, mutualised default fund
implemented, dividend reinvestment plan established
Dairy
Derivatives
2018 volumes
345,651 lots traded
(achieved 2018
target: 400,000 –
500,000)
Expand
global
access
• Calendar spread trading functionality launched
(March), significantly improving bid-offer spreads in
futures markets
• Extended trading hours delivered (July), 40% of
volumes or 70,375 lots traded in extended session
Boost
sales and
marketing
• Additional FTE hired to develop NZ milk price future
and options contracts, trading up 39%
• New website launched, includes Chinese translation,
charting functionality, upgraded quotes
• Expanded sales activity, events hosted in Asia, U.S.
and Europe
• Local licensing for Singapore sales office underway
• Marketing collateral revamped
Extend
product set
• Market consultation completed on options market
margining and exercise style
MAXIMISE OPTIONS
GROWTH OPPORTUNITIES
GET FIT
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NZX Annual Report 2018
8
Strategy Execution

2018 was a transition year for NZX, in which we made
significant progress implementing our five-year strategy.
Your board, executive team and all staff have worked tirelessly
to deliver on the initial stages of the strategy to ensure we
successfully embed the customer centric culture that is now
at the heart of our organisation. This was achieved while
also delivering our second best operating earnings in the
company’s history. At the same time, we have lowered the
risk profile of our capital structure.
Over the past 12 months, we have made significant
progress in the execution of our five-year strategy
to develop a stronger public capital market for New
Zealand, while advancing the focus of our funds
management and wealth technologies businesses from
an integration and development phase to one more
focused on sales execution and product refinement.
We are leading efforts to create a sustainable
capital market for New Zealand
NZX operates at the centre of New Zealand’s capital
markets. The market plays an important role in enabling
sustainable economic growth for New Zealand. While
the New Zealand capital markets have performed well
in several areas, such as return performance, KiwiSaver
growth and debt issuance, equity listings remained
subdued as we experienced similar issues to our global
peers, with public market issuances facing global
headwinds. We have identified this as a material issue.
With significant progress made to improve the platform
and growth prospects of our core markets business, it is
now the right time for us to take an increasingly active
leadership role in the industry and plan for its future,
last month announcing an industry led review of New
Zealand’s capital markets.
Capital Markets 2029 is designed to bring the industry
together and deliver a ten-year growth agenda for the
sector. It is modelled on the successful Tourism 2020
initiative. Discussions on this initiative started more
than 15 months ago in response to industry concerns
about the low number of equity listings. The purpose
of Capital Markets 2029 is to consider opportunities
to improve the effectiveness of the capital markets
ecosystem, and in particular, to remove blockages in
the capital formation process in respect of initial equity
public offerings.
The initiative has Government support, but is industry
led, initiated by NZX and the Financial Markets
Authority (FMA). Martin Stearne, a capital markets
veteran with deep experience in equity capital markets,
will chair a steering committee comprising of industry
leaders who will bring a breadth of experience and
perspectives. EY has been appointed as a consultant to
support the work and produce the final report, which
will be released in the third quarter of 2019.
We thank the industry for its encouragement and
support of Capital Markets 2029 and look forward to
hearing your views as it progresses. A particular thanks
to the Minister of Commerce, Rob Everett, Simone
Robbers and Garth Stanish of the FMA and former NZX
directors Neil Paviour-Smith and Dame Therese Walsh
for your support in ensuring this initiative started.
Capital Markets 2029 will also build on efforts
undertaken by NZX in 2018 to improve our market’s
long-term sustainability. One of the most significant
actions was the first holistic review of our market’s
structure and rule set in 15 years, released last October.
The refreshed structure and rules will enhance our
competitive advantage, and encourage the listing of a
broader range of financial products for New Zealanders,
particularly in the areas of debt and funds.
Driving secondary market development, further
improving liquidity levels and enhancing price
transparency were also important initiatives outlined
in the strategy and achieved during 2018. A revised
trading and clearing pricing structure took effect in
October, alongside targeted policy changes, and
improved trading system functionality. These changes
again lay the foundation for improved price discovery
and market integrity.
Seeking new ways to retain and attract customers has
been a priority for the board. Over the past 12 months,
we progressed alliances with global peers to ensure that
an NZX listing connects New Zealand issuers with the
world. Our relationships with the Nasdaq, Singapore,
Hong Kong and Shanghai exchanges, along with the
transformation in our service offering to issuers, ensures
we are developing a product that is relevant and
competitive.
We are committed to increased transparency
This year we have adopted the principles of a formal
sustainability-reporting framework, the Global Reporting
Initiative (GRI). Integrating this information into our
reporting is intended to provide a more comprehensive
view of how we create value for our customers,
community, and people, and create a clearer picture
of how we are tackling material issues affecting NZX
through progressing our strategy.
To support this and provide increased clarity for
shareholders and the market on our financial
performance and strategy execution, a series of five-
year targets are now being externally communicated.
Alongside our monthly metrics, these will improve the
Kia ora, welcome
to our annual report.
11
NZX Annual Report 2018
10
Chair Report

assessment of our performance and delivery. Further
information on these targets can found in the investor
presentation.
Against the backdrop of delivery, revenues and
expenses for continuing operations were relatively flat
at $67.5 million and $40.2 million respectively. Net
profit after tax from all operations (continuing and
discontinued) was $11.6 million, down 21.7% due to the
strategic decision to focus on our core capital markets
business, resulting in the disposal of non-core assets.
The intense focus on transforming our business was
reflected in this result. With substantial effort made over
the past 12 months to reshape the business to focus
on core markets and lay the foundation for long-term
growth, these steps have established the platform for
NZX to keep delivering in 2019 and beyond.
NZX expects full year 2019 EBITDA to be in the range
of $28.0 million to $31.0 million. This guidance takes
into account the impacts from the disposal of non-core
businesses, the changes to the exchange’s clearing and
trading pricing structure and the implementation of IFRS
16 Leases.
The guidance is subject to market outcomes,
particularly with respect to market capitalisation, total
capital raised, secondary market value and derivatives
volumes traded and funds under management growth.
Additionally, this guidance assumes no material adverse
events, significant one-off expenses, major accounting
adjustments, other unforeseeable circumstances, or
future acquisitions or divestments.
Further information about NZX’s financial performance
and 2019 guidance is included in the investor
presentation, which now incorporates information
previously found in the management commentary of
this report.
Our performance over the past year
Your board was pleased to declare a final ordinary
dividend of 3.1 cents per share, fully imputed. The
dividend reinvestment plan announced at the half-year
result will apply to this dividend.
Together with the interim ordinary dividend, fully
imputed, of 3.0 cents per share, and the special,
dividend, fully imputed, of 1.5 cents per share, the total
2018 dividend, fully imputed, was up 24.6% to 7.6 cents
per share. As at 31 December 2018, NZX’s dividend
In terms of the foundation date, the question was: what
can New Zealand point to as a “year zero” for share
market trading activity, and, crucially, when and where
did it really begin?
A number of avenues were explored in an effort to
unearth a clear beginning. Various resources articulated
a range of activity amongst early businessmen and
women in the area of stocks and shares. This activity
reflected the boom in gold and associated businesses,
especially in Dunedin, and also in Reefton, Thames
and, by extension, Auckland. Using as our benchmark
the idea that a market is established when two different
people buy and sell shares at an agreed price, one date
stood out.
Before formalised stock exchanges were established,
the country had a number of forerunner organisations,
known as shareholders associations. The first of these
was in Dunedin, formed by two men, Moodie & Connell,
the first to meet and trade shares in a commercial sense.
Emeritus Professor at Victoria University, is a vital part
of the NZX story, Don Trow, points to the association
set up by these two men, in 1866, as New Zealand’s
first stock exchange, while historian David Grant, in his
academic account of the various Exchanges, Bulls, Bears
& Elephants, himself calls this association “the earliest
group of men specifically set up to deal in shares with
the public”, again citing 1866 as the year.
If we settle on the formation of the stock exchange
in Thames, or in Auckland, as a starting point, we
are ignoring the huge burst of commercial activity
that preceded both those entities. Critically, we are
consigning to history the fact that people were coming
together to trade shares well before these were
established. The activities of Moodie & Connell was
captured in the entity known as “The Dunedin Brokers
Association” formed on June 30th, 1866. This, then, is
our firm foundation date.
With this established, we had a launch pad to articulate
our history. This history has been captured in a
book, which will be released later in 2019. Through
comprehensive interviews with a wide selection of key
people throughout the markets’ eco system, the book
updates and debates the markets from a broad range
of perspectives, with a strong emphasis on the last
three decades. Critical to the content, also, is a lens
on the future, of the markets, and the key people and
organisations within it, including the NZX. How can
yield (gross of imputation credits) was 10.8%, excluding
the special dividend it was 8.5%. The dividend policy
is to pay between 80% to 110% of adjusted Net Profit
After Tax. Continuing to improve our Total Shareholder
Return (TSR) remains front of mind for the board.
Building strong governance talent is also a priority for
the board. We continue to support the Future Directors
Programme, with our second participant Anna Scott
joining us last month. Initiatives such as this help to
address board diversity, while widening New Zealand’s
director talent pool.
Anna Molloy completed her term with us in November
2018 and on behalf of the board and executive team, I
would like to thank her for the contribution she made.
Dr Patrick Strange resigned as a director following his
appointment as Chair of NZX listed issuer Auckland
International Airport. My colleagues and I acknowledge
the contribution Patrick made to the development of
NZX, particularly in the energy and dairy derivatives
markets, and more recently in the divestment of our
non-core businesses.
Lindsay Wright joined us in February 2018, with the
election confirmed by shareholders at the Annual
Meeting in April. Lindsay brings extensive global
fund management (active and passive) and finance
experience to the team. Her skills align with growth
plans for our Smartshares business. Lindsay was
appointed Chair of Smartshares’ board in December 2018.
Your directors have a genuine passion to develop
New Zealand’s capital markets and I would like to
acknowledge their ongoing support of our strategy and
vision. While strong progress was made last year to get
our house in order, there have been challenges; I thank
the board for their relentless energy and support of the
executive team.
A strong foundation, a bright future
The New Zealand stock exchange has a long history
of continuous operation, and a wonderful whakapapa,
which is well known. However, a clear foundation
date had, to our knowledge, never been firmly
established. Aware that we were around the 150 year
mark, and wanting to acknowledge and celebrate that
milestone, the board engaged a writer and historian
for two purposes: to establish, once and for all, a clear
beginning point and, secondly, to write a contemporary
account of New Zealand’s capital markets and NZX’s
place within them.
the different market players and organisations work
together to take the country forward into the next
decades and beyond?
With the comprehensive initiative, Capital Markets 2029,
being launched this year, it seemed appropriate timing
to celebrate the exchange’s bright future and firm
foundation in one celebratory year, through both the
book, and key events in 2019.
2019 is our year, and the annual meeting in April,
is appropriately, being held in Dunedin, where the
exchange was born. This celebratory get-together
will be the first of many events through the year and
throughout New Zealand to mark 150 years of the
exchange in this country, as the NZX and the capital
markets celebrate what has gone before and look
forward confidently to what lies ahead.
We hope you can join and engage with us throughout
this celebratory year.
To staff and shareholders
The board acknowledge the work of Mark, and his team
in what was a significant year of delivery and execution
against strategy. Throughout this time, the team have
worked relentlessly to deliver on the initiatives we
outlined in our 2017 strategy, and we are extremely
pleased with the commitment they have shown and
the results achieved to date.
Shareholders should expect this progress to continue
in 2019 as we keep building on our customer
centric culture, and orientate our organisation to be
increasingly sales led. Capital Markets 2029 and our
150th celebrations will support this as we take an
increasingly active leadership role in bringing New
Zealand’s capital markets community together.
Shareholders, thank you for your continued interest and
support of our company in 2018. We look forward to
continuing to update you on our progress.

James Miller
CHAIR
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NZX Annual Report 2018
12
Chair Report

Strengthening
what NZX
stands for
through
sustained
delivery
OUR YEAR IN REVIEW
Our five-year strategy
reset outlined a
growth pathway for
our business, and
New Zealand’s capital
markets.
One year on, we have strengthened what we
stand for and who we are, while making significant
progress to lay the foundation for long-term growth
through sustained delivery.
15
NZX Annual Report 2018
14
CEO Report

WE HAD SIX OBJECTIVES
IN 2018. THESE WERE TO:
Dedicated relationship
management teams
implemented in Issuer
Relationships and
Secondary Markets
Farmers Weekly, AgriHQ,
and red meat, forestry and
Australia data businesses sold
DIVEST NON-CORE
BUSINESSES
REFOCUS ON
THE CUSTOMER
Service offering transformed,
100%
customer engagement,
more than 1,000 interactions
Strong
customer
pipeline
building
IMPROVE
BALANCE
SHEET RISK
AND BUSINESS
EFFICIENCY
Issued subordinated
note to refinance bank
debt and diversify
funding sources
Eliminated cost wastage, reinvested
back into the business to enable growth
78
projects delivered,
up 90% on 2017
6.2%
increase in staff
engagement over
the past two years
On-market value traded
reached record high of
57.2%
Updated market structure
and rule set released
Product set extended to
funds and wholesale debt
Implemented pricing, rules and
technology changes to enhance
secondary market development
LEAD AND GROW
A SUSTAINABLE
CAPITAL MARKET
FOCUS ON
TARGETED
GROWTH
OPPORTUNITIES
1
Funds under administration up
70.2%,
inaugural customer on-boarded
to Wealth Technologies platform
Debt primary issuance up
51.1%
Dairy derivatives annual
volumes up
10.9%
largest trading year on record
Funds under
management
up 8.1%
1
2
3
4
5
TO SUPPORT
THIS, WE LIFTED
DELIVERY
AND BUILT A
COLLABORATIVE
CUSTOMER
FOCUSED CULTURE.
1 Comparisons to 2017 calendar year
6
Mutualised default
fund implemented
for derivatives
market
Smartshares
net cash flows
up 21.8%
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NZX Annual Report 2018
16
CEO Report

Over the past 12 months, we have completed the
first phase of actively transforming NZX, strategically,
operationally and culturally.
We delivered strongly on our 2018 objectives and our
strategy. The business is now well placed to capitalise
on the opportunities ahead.
We transformed our culture to one that is outward
orientated and customer centric. Expect to see this
continue as we strengthen our focus on sales and
marketing in 2019.
We have built our foundation; now growth
momentum is building
As I look back over the past 12 months, it strikes me
that it was a milestone year of delivery.
We sharpened our focus onto core activities, creating a
more focused NZX – reinforcing the commitment made
to shareholders to develop and grow our core business
– the operation of New Zealand’s equity, funds, debt,
and derivatives markets.
With dedicated customer facing teams and account
management programmes, listed issuers and market
participants have acknowledged and appreciated the
transformation in our core markets service offering and
the strengthened relationship with NZX. This was a
critical step to ensure customers sit at our heart.
On this note, I would like to welcome QEX Logistics,
Christchurch Airport, WEL Networks, Salt Funds
Management and PaySauce who were first time issuers
in 2018.
Momentum is already building following the important
work completed by our policy team to simplify the
market’s structure and rule set. The collaborative
process used to develop the updated rule set has
been a positive hallmark of the process. We are already
seeing encouraging interest from prospective equity,
debt and fund issuers looking to take advantage of
the enhanced rule settings, particularly in our fund
and wholesale debt markets as we actively extend the
available product set.
Our issuer relationship team is encouraged by early
conversations with prospective equity customers and
the pipeline looks promising for 2019. 2018 was a low
point in the cycle, and we acknowledge that new equity
issuance has been subdued.
We have also observed increased activity from private
capital providers, which resulted in more M&A activity
impacting the number of listed NZX securities. This
is a headwind for NZX and is one of the reasons for
initiating the industry-led review of our capital markets.
The objective of Capital Markets 2029 is to review all
aspects of the ecosystem and unlock greater growth
opportunities.
Core market growth will come from having a wider
range of listed products and increased market activity.
It will also be supported by the global alliances we have
initiated and are continuing to build with the Hong
Kong, Singapore, Shanghai and Nasdaq exchanges.
Increasing participation is a critical element to growth in
our market. We have pursued new market participants,
with Hobson Wealth Partners joining as a cash market
participant in June. The prospect pipeline is the
strongest it has been in several years, as we target more
additions in 2019.
A number of prospects are based offshore,
supporting our strategic aims of marketing our market
internationally, and increasing secondary trading activity,
initiatives critical to market health and growth.
Materially moving on-market trading levels over the
past 18 months has assisted in removing a barrier
for overseas participants looking to access the New
Zealand market. This is supported by the high quality of
companies already listed here and the strong returns on
offer.
We continued our investment in the dairy derivatives
market, with the extension of trading hours into the
Asian and European time zones, and the addition of
greater trading functionality. Our marketing efforts
helped continue to grow our customer base with
increasing volumes and active participation. While
volatility was lower than previous years, which did not
assist volumes, it was still a record-trading year for the
market.
Our funds management business had another very good
year. Our Smartshares and SuperLife brands are core to
growing market participation in the exchange business,
so it was pleasing to see an increase in both underlying
members and corporate superannuation customers.
We reshaped this business in 2018 to develop more
operating leverage, and shareholders should expect
this to continue in 2019. Maximising shareholder returns
remains front of mind, this means the board remain
open minded about Smartshares’ future ownership
structure.
More information on our Smartshares business is
available on page 20.
A major milestone was achieved when Wealth
Technologies successfully launched its new core
platform in November for Craigs Investment Partners.
This platform is a leading piece of market infrastructure
that enables advisers and brokers to manage customer
investments. Core platform development did take
longer than expected and resulted in a drag on
operating earnings, but the platform’s successful launch
achieves our core objective to create a leading piece of
New Zealand financial markets infrastructure.
The team are now reaching out to the pipeline of
potential customers who have shown a strong interest in
the platform as we pursue opportunities to leverage our
investment in this business.
In addition to the customer and market development
activities mentioned above, we adjusted the risk
profile of our balance sheet, introducing a mutualised
default fund for the derivatives market and issued a
subordinated note. This was initiated to ensure our
capital structure is appropriate for our business.
Technology remained a priority with meaningful
progress made to modernise our infrastructure,
automate operational activities and improve business
efficiency. We continue to work to achieve accuracy,
uptime and resilience levels that the market would
expect from New Zealand’s exchange operator.
Looking forward
Key strategic projects such as the market structure and
rules review, and pricing changes to support secondary
market development required investment into the
markets infrastructure. With these one-off projects
behind us, we can now focus on taking a more active
leadership role in our industry to promote market
development.
Our team now has greater capacity to input into
meaningful issues affecting our capital markets.
Facilitating and contributing to Capital Markets 2029
will be an important component of 2019. This review
responds to concerns expressed about the depth and
breadth of New Zealand’s capital markets and will
bring the industry together to focus on the structural
blockages of the equity IPO ecosystem.
Defining what we stand for and who
we want to be
Behind the delivery, defining what we stand for and who
we want to be, was an important internal focus of 2018.
Our purpose at NZX is to connect investors and
business so they can grow. We are committed to
bringing investors and businesses together to create
opportunities for New Zealand in an environment they
can have confidence in.
Defining who we are and who we want to be uncovered
the need to ensure we tell our story more widely and
more often. This is front of mind for me in 2019 as we
build on efforts made to improve our customer centricity
and overlay it with an increased focus on sales and
marketing and industry leadership.
Our 2023 aspirations, which are in the accompanying
investor presentation, are unashamedly ambitious. I am
proud to lead a team focused on our strategic priorities
and committed to delivering for our shareholders, our
customers and New Zealand’s capital markets. Our team
take immense pride in working for NZX, and I thank all
staff for their hard work and commitment.
To our shareholders, while it has taken time to get
the foundations right we have now created the right
platform for sustainable growth and momentum
is building. We all share a mutual goal of growing
New Zealand’s capital markets and quickly lifting the
performance of the business.
Tē tōia, tē haumatia
Mark Peterson
CHIEF EXECUTIVE
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NZX Annual Report 2018
18
CEO Report

SPOTLIGHT ON
Smartshares
Bringing the
exchange traded
fund revolution
to New Zealand
investors
Smartshares is a growth engine
for NZX and 2018 was an
outstanding year. More than
85,000 New Zealanders have
entrusted more than $2.9 billion
to our investment schemes, which
are growing fast, as investors
discover the benefits of low
fees and a reliable and passive
investment philosophy.
Investors find us online or through
our distribution partners who
include Sharesies, InvestNow,
other KiwiSaver and workplace
saving schemes, and financial
advisers.
In 2018, our funds under
management and member
numbers grew strongly ahead
of forecasts, allowing us to
lower fees for some funds,
provide certainty to members
by fixing total fund charges,
and increase margins. Due to
this growth, and to operational
changes made during the year,
Smartshares results for the year
were exceptional with operating
earnings up 29% and total
expenses held to a 5.4% increase
(excluding direct fund costs).
OUR NEW STRATEGY
Smartshares developed a new five-year strategy in 2018 that builds on
NZX’s refreshed strategy released in November 2017. It has five key
ambitions to:
• lead the market in systematic, index-tracking investment
management
Smartshares is the only New Zealand issuer of Exchange Traded
Funds (ETFs). Net, new cash flows into our passive, index-tracking
funds are growing rapidly. To accelerate faster, there is now an
opportunity to extend to smart beta and other, more sophisticated
strategies.
• lead the market in financial well-being solutions
KiwiSaver is a great product. New Zealanders will get
ahead financially with Smartshares’ innovative solutions
for financial stability.
• lead the market in corporate superannuation services
Many New Zealand companies support their employees’ financial
wellbeing. Smartshares’ superannuation master trust will build from
its top three position in the market by demonstrating the benefits
to a new generation of employers.
• build an institutional investor market offering
Retail investors have been early adopters of New Zealand ETFs.
Now we’re investing to bring institutional investors on board.
• transform our operations to a low-cost operating model with
great customer outcomes
With scale, we are now delivering lower fund charges, operating
costs and new digital tools to our customers.
THE NEW ZEALAND MARKET
Smartshares is ideally placed as New Zealanders
catch on to the cost and performance benefits of
passive investing. In 2018, S&P Dow Jones Indices
reported that only 2.6% of New Zealand’s open-
ended fund assets were passively invested. Globally
this average is more than 20%, and more than 30%
in the U.S.
With the launch of new online fund platforms,
greater regulation, and a stronger focus on ensuring
investors get value for money, New Zealanders
are joining the passive investment revolution.
Smartshares exceeded growth targets in 2018 and
remains perfectly positioned for growth.
BUILDING INTERNATIONAL
PARTNERSHIPS: THE ASIA REGION
FUNDS PASSPORT
Like NZX, Smartshares has been building
international partnerships via the Asia Pacific
Economic Cooperation Forum. We have teamed
up with the Financial Markets Authority and relevant
government agencies to establish the Asia Region
Funds Passport in New Zealand. This new scheme
will provide a passport to approved fund managers
allowing them to sell their fund products across
the region.
Smartshares was the only New Zealand fund
manager in the 2018 pilot programme, joining
peers from Australia, Japan, South Korea and
Thailand. Once fully implemented, the Asia Region
Funds Passport is expected to challenge the well-
established European UCITS regime.
BUILDING INTERNATIONAL
REACH: GROWTH IN THE PACIFIC
We have also expanded our reach into the
Pacific, working with the Government of Nauru to
establish the country’s first compulsory employee
superannuation scheme. All employers are now
required to contribute to a SuperLife scheme
managed by Smartshares. Nauru residents are
already benefiting from the strong regulatory
oversight of the Financial Markets Authority, the cost
effectiveness of the scheme’s administration, and its
ease of establishment and ongoing management.
LOOKING AHEAD TO 2019
The NZX team believe this business is a key growth
pillar for the organisation. Passive investing is
accelerating in New Zealand as investors switch from
active strategies. Our costs are well controlled as
Smartshares introduces further operating efficiencies
(for example, through renegotiated services
agreements with custodians and administrators,
and through the rollout of our operational workflow
system), and 2018’s achievements will provide more
growth for NZX shareholders in 2019.
For more information on Smartshares, please see
the accompanying investor presentation.
1500
2500
2000
3500
3000
December 18June 18December 17June 17December 16June 16December 15June 15December 14
FUNDS UNDER MANAGEMENT
KEY METRICS
Funds under management up
8.1%
(exceeding 2018 target of
7%) to $2.9 billion, targeting
14.6% in 2019
Investor numbers (ETFs
and SuperLife), up
10.2%
in 2018 on prior year
Operating earnings up
29%
in 2018 on prior year
Revenue (net of fund expenses) up
15.9%
in 2018 on prior year
Net new cash flows up
21.8%
to $292 million
Operating margin has
increased to
49.3%
(2017: 44.3%), based on
revenue being net of
fund expenses
21
NZX Annual Report 2018
20
Spotlight on Smartshares

The PaySauce team outside
NZX Auckland on the company’s
listing day, 21 December 2018
“Ever since I was a young boy, I wanted to be
a business owner and list my company on New
Zealand’s exchange. Thanks to the hard work of
the PaySauce team, I have been able to achieve
my life-long goal of ringing the listing bell.”
PaySauce, CEO & Co-founder,
Asantha Wijeyeratne.
23
NZX Annual Report 2018
22

vw
Sustainability
AND NZX
OUR APPROACH
As a listed company, we must ensure we are earning
meaningful revenue decades from now, and provide
increased transparency for our investors on material
issues and how these impact our strategy.
Sustainable financing is becoming more important
for our core customers – issuers of equity, fund and
debt securities – and for investors in these products.
A vital part of our role as an exchange is to enable
a well-understood and viable flow of capital into
investments that our country needs for sustainable
growth.
With these two roles in mind, we contribute to
sustainability in four key ways:
• we ensure our behaviour is consistent with
international best practice, while creating a
sustainable business and long-term value for our
shareholders;
• we connect businesses and investors so they can
grow;
• we promote good governance in business,
including greater environmental, social and
governance disclosure among listed companies;
and
• we facilitate investment in sustainability-themed
products, leading to sustainable economic and
environmental outcomes.
Blue pools in Mount Aspiring National Park,
Wanaka, New Zealand. Photo by: Cory Woodruff
25
NZX Annual Report 2018
24
Sustainability and NZX

ABOUT THE SUSTAINABILITY
SECTION OF THIS REPORT
We have prepared this section using the principles
of the Global Reporting Initiative (GRI) sustainability
reporting standards.
Before reporting, all 2018 corporate activities and
sustainability initiatives were assessed for their
materiality to NZX and our stakeholders. We use the
GRI materiality definition to determine and fine tune
corporate sustainability relevance. We have reported on
topics that have material and significant impact on our
business and stakeholders. By stakeholders, we mean
our shareholders, employees, customers, investors,
regulators, suppliers and civil society.
OUR MATERIAL ISSUES FOR 2018
Our purpose is to bring investors and businesses
together in an environment they can have confidence in.
In this, our first sustainability report, we engaged with
a range of stakeholders (internally and externally) to
identify material issues which affect our ability to deliver
on this purpose and create value. Material issues inform
our strategic priorities, sustainability approach and
reporting. They are:
• the New Zealand market: equity listings, market size
and secondary market liquidity
• people: diversity and inclusion
• governance: role as a market operator and listed
company in promoting high standards of market
behaviour
In addition, NZX’s responsible and ethical business
practices, community engagement, and environmental
impact is covered in this section.
“Listing on the NZX provided our investors with a trusted,
transparent and dynamic trading environment for their units in
the Carbon Fund. For Salt Funds, the NZX’s high profile and
ease of access for investors meant that we could rapidly build
a stronger and deeper investor understanding of the market
for carbon. We started working on bringing a Carbon Fund to
market more than six years ago – and 2018 was the right time
to list. NZX’s Issuer Relationships team were instrumental in
ensuring this process was as seamless as possible.”
Salt Funds Management, Managing Director, Paul Harrison
Salt Funds Management, Managing
Director, Paul Harrison at the company’s
listing event on 8 November 2018
27
NZX Annual Report 2018
26
Sustainability and NZX – About NZX

Our profile
KEY BUSINESS SEGMENTS
Wealth
Technologies
Core
Markets
Funds
Management
FULL-TIME
EMPLOYEES
(FTES EXCLUDING CONTRACTORS
AND CONSULTANTS)
GENDER DIVERSITY
(FTES)
AS AT 31 DECEMBER 2018
2018
214
AS AT 31 DECEMBER 2017
2017
239
AS AT 31 DECEMBER 2016
2016
243
ALL EMPLOYEES
EXECUTIVE TEAM
GENDER VS
EMPLOYMENT TYPE*
FULL TIME
Gender
Number of
employees
Percentage
of employees
Female 7336.32
Male 12863.68
Total201100
PART TIME
Gender
Number of
employees
Percentage
of employees
Female 1583.33
Male 316.67
Total18100
*Note this excludes employees
on parental leave, data based on
headcount.
MALEFEMALE
ETHNIC DIVERSITY
Based on results of the inaugural 2018 diversity
and inclusion survey voluntarily completed by 117
employees. The below shows the results of 115
employees, two survey respondents did not state
their ethnicity.
EUROPEAN
ASIAN
MĀORI
MIDDLE EASTERN/
LATIN AMERICAN/
AFRICAN
PACIFIC PEOPLES
AGE BREAKDOWN*
December201620172018
Under 20
Female-1-
Male---
20-29
Female242521
Male283131
Non Specified1--
30-39
Female302818
Male312841
Non Specified-1-
40-49
Female303127
Male443933
50-59
Female222115
Male282320
60-69
Female544
Male551
70-79
Female000
Male121
Non Specified
Female993
Male5104
Non Specified10--
*Excluded casual employees and employees on
parental leave. In 2016, there was no age and
gender details for NZX’s Melbourne based
business, these employees are included in the
non-specified row.
NZX BOARD GOVERNANCE
AND DIVERSITY
BOARD
STRUCTURE
Single tier
NUMBER OF
DIRECTORS
Six
GENDER
DIVERSITY
Five men,
one woman
1
AVERAGE
DIRECTOR
TENURE
2.41 years
AVERAGE
DIRECTOR AGE
54.5
DIVERSITY
CHARACTERISTICS
Educational qualifications
Professional experience
Personal achievements
Geography
Gender
Age
1 In addition, Anna Molloy was NZX’s inaugural future
director from May 2017 to November 2018. Anna Scott
was appointed as NZX’s future director, effective
1 January 2019.
29
NZX Annual Report 2018
28
Sustainability and NZX – Our Sustainability Profile

NZX
History
Dunedin Stock Exchange Building
1866
Dunedin
Sharebrokers
Association
formed, forerunner
and foundation
of New Zealand
stock exchanges
1870s
Stock
exchanges
established
in Thames,
Auckland
1880s
Stock
exchanges
established in
Reefton and
Wellington
1900s
Christchurch
and Taranaki
stock
exchanges
established
1920s
Invercargill and
Gisborne stock
exchanges
established
1960s
Post trading
introduced,
replacing call
over system
198319892002
New Zealand
Stock Exchange
(NZSE) created
NZSE becomes a
national corporate
body, chair
(David Wale) and
CEO (Bill Foster)
appointed
CEO Mark
Weldon
appointed
31 December, NZSE
demutualised
2003
July,
establishment of
Capital Markets
Development
Task Force
2008
NZSE
becomes NZX,
lists on its own
exchange
2009
Dairy derivatives
market and
Clearing House
launched
2010
Acquisition of M-Co
(energy market)
and New Zealand
and Australian agri
businesses
2011
CEO Tim Bennett
appointed
Fonterra
Shareholders’
Market launched
2012
Financial
Markets
Authority (FMA)
established
20132014
NZX buys
SuperLife,
amalgamated
with Smartshares
business in 2016
Financial
Markets
Conduct
Act
introduced
2016
CEO Mark
Peterson
appointed
2017
NZX Wealth
Technologies
established
20182019
NZX launches
Capital Markets
2029, joint
initiative with
FMA
NZX strategic
plan sees
divestment
of non-core
businesses
31
NZX Annual Report 2018
30
Sustainability and NZX – About NZX

The
New Zealand
Market
EQUITY LISTINGS AND
MARKET SIZE
In recent years, the number of primary equity listings
has declined.
Conversely, the debt and derivatives markets have
improved and we are generating new revenue and
earnings streams from our funds management and
wealth technologies businesses.
The issue of declining equity listings is a global
phenomenon as public markets internationally
compete with an abundance of private capital.
A key issue facing exchanges is the readiness
of asset owners – private equity, venture capital
and institutions – to hold their capital in unlisted
companies for considerably longer than in the past.
Institutions and superannuation funds are also
investing in private companies accessing returns for
investors.
To secure long-term economic sustainability,
exchanges globally are developing new strategies to
build stakeholder confidence, shore up core markets,
and develop new revenue streams. Exchanges are
also looking to form stronger partnerships with each
other as pressure to rationalise markets increases.
NZX is no different. We face the same headwinds
and structural issues as our global peers.
When we created our five-year strategic plan
in 2017, our team extensively consulted with
stakeholder groups, conducting more than 200
interviews. We also undertook global analysis of
peers, markets and key trends. The result was a
strategy reset with four key pillars. Our refreshed
strategy was designed to address issues within NZX’s
control and the next step is to work with others in
the capital markets community to address industry
issues, including through Capital Markets 2029.
Refocus core
Grow opportunities
Maximise options
Get fit
SUSTAINABLE PRODUCTS
There is a long-term opportunity in environmental
markets and sustainable investment products.
Government policies are shifting to become
increasingly aligned with international trends and
treaties such as The Paris Agreement on climate
change and the United Nation’s Sustainable
Development Goals.
As more companies adopt sustainable policies and
invest in our country’s environment, we hope to
see more companies use NZX to allocate a greater
segment of their investable income to green
investment activities.
In June 2018, Auckland Council listed New
Zealand’s first Green Bond to fund electric trains and
associated infrastructure finance, and in November
Salt Fund Management listed New Zealand’s first
Carbon Fund, designed to trade carbon credits and
provide investors (large and small) with exposure to
the carbon market price.
NZX has also been working with the World
Federation of Exchanges (WFE) to identify
characteristics of sustainable commodity derivatives.
This work is ongoing.
BUILDING INTERNATIONAL
PARTNERSHIPS
As mentioned above, NZX can no longer sail alone
as a regional exchange. Our belief is that we can
help New Zealand companies realise their potential
by building partnerships with global peers. This way,
local companies can grow globally while maintaining
a connection to their home exchange.
This strategy allows us to explore global
opportunities and create options for ourselves in
future.
We signed Memoranda of Understandings (MoUs)
with Hong Kong and Singapore in early 2018, the
Nasdaq in September and the Shanghai Stock
Exchange in October.
IMPROVING INVESTMENT ACCESS
As well as supporting issuers and institutional
investors, NZX provides low-cost investment
options for individual New Zealanders, who in the
past may not have been able to participate in the
share market. Many working New Zealanders now
indirectly invest in our capital markets via their
KiwiSaver funds. However, direct access to equities
has remained limited.
ETFs, offered by NZX subsidiary Smartshares, mean
smaller investors can invest directly in a fund that
tracks the performance of a major market index.
An ETF is an investment fund quoted on a stock
exchange, its units can be bought or sold like shares
in listed companies. ETFs own a set of financial
products, such as shares or bonds, which may be
issued by a handful of issuers on a local exchange to
those issued by several thousand issuers in multiple
countries.
SECONDARY MARKET LIQUIDITY
A material issue to many of our stakeholders, and
NZX, was the depth of liquidity in the secondary
market. In the past, off-screen trades have
dominated trading. Listed companies want to be
part of a liquid, open and sustainable market, and
retail investors need access to an ethical, honest and
transparent market.
On-market trading has been steadily increasing.
In 2017 and 2018, growth in on-market liquidity
was achieved through a new pricing structure trial,
which incentivised on-market order placement.
Following the trial’s success, a new transactional
pricing structure was announced, alongside rule and
technology changes.
33
NZX Annual Report 2018
32
Sustainability and NZX – New Zealand Market

Kathmandu
CUSTOMER CASE STUDY
While there are benefits to maintaining a dual listing on NZX and the ASX,
Kathmandu is committed to the New Zealand exchange.
It is very important to have a robust local stock exchange. As a local issuer,
we need a vibrant equities market with a reasonable depth of liquidity. Also,
as KiwiSaver continues to grow, the country needs a strong local market to
invest those funds.
It is quite clear that the NZX is getting more customer-friendly. Since the
arrival of Mark Peterson as Chief Executive, it feels like there is a different
approach. We now have far more contact with the NZX and our account
manager than we did in the past.
With a dual listing, it’s helpful to have similar listings rules. We welcomed
the recent amendments to the NZX listing rules as they move to closer
alignment. That’s really helpful to us and also to trans-tasman investors.
In this aspect I hope to see even closer co-operation between the ASX
and NZX in the future.
Reuben Casey Chief Operating and Financial Officer
and Company Secretary
Kaikoura, New Zealand
35
NZX Annual Report 2018
34
Customer Case Study – Kathmandu

Sanford
The NZX has a huge role to play as a regulator, market provider and
influencer for New Zealand businesses. We couldn’t imagine the New
Zealand economy without it.
Through its governance rules and guidelines, NZX has pushed issuers to be
more transparent on non-financial performance and to report on ethical and
sustainability matters. NZX is a force for change in this regard.
The NZX guideline on Environmental, Social and Governance (ESG)
reporting was a step in the right direction. It was not necessarily specific in
recommending a reporting framework to use. That’s fine as not all firms are
ready for a prescriptive reporting framework. However, NZX has a key role to
play in terms of pushing firms to be more specific about the impact and risks
of climate change to their business.
We’re not advocating a rigid regime that forces companies to collate
and disclose data for data’s sake. It must be meaningful and relate to an
individual business’ material issues and key risks.
If businesses are more sustainable their owners do benefit at the end of the
day. Sustainability is now a pre-requisite for long term business success.
Companies that are focused on creating business-excellence frameworks
understand how sustainability is very much interconnected.
We are thinking about the future of our natural resources and future human
resources for our business. When we talk to university students, we see the
stark difference between baby boomers and millennials. We are a fishing
company and that can draw hostility. Today’s students and graduates ask
hard questions about ethical investment and sustainability. We have to
position ourselves as agile and mindful of the bigger picture, not just the
bottom line.
As a listed company with a 94-year history on the exchange we also think
about our investors and the cost of capital. We see the attraction of the new
ethical funds and green bonds. There is a benefit to the business if you can
deliver a sustainable project at a lower financial cost.
Overall, we have been happy with NZX in the past two or three years. We
have noticed its increased focus on customers and issuer development. We
have attended forums and received good advice when we asked for it. They
are far more proactive now – there is a good relationship between us and
the exchange.
Lisa Martin General Manager Sustainability
Dean McIntosh General Manager Risk and Corporate Affairs
Auckland Fish Market, Wynyard Quarter,
Auckland, New Zealand
CUSTOMER CASE STUDY
37
NZX Annual Report 2018
36
Customer Case Study – Sanford

CORPORATE CULTURE
The diversity and engagement of our people is
central to our organisation. We rely on their skills and
determination to deliver our strategy and to bring our
values to life.
We have spent the past year, since announcing our
strategy reset, ensuring we have the right skills and the
necessary structure to deliver on our strategic intent.
As we transition to become a more outward-orientated
organisation, we are building a culture focused on
customer needs and outcomes. We have restructured
our teams so we can get closer to our customers and
understand what they need and add more value for
them.
We value fresh ideas and thinking that drives growth
and productivity. We achieved a great deal in 2018
by being better organised, by communicating a clear
direction and, in turn, having more engaged employees.
We are constantly innovating to meet the evolving
needs of our customers, and are committed to driving
unnecessary bureaucracy from our services and
processes.
We are committed to building a diverse, engaged,
skilled and responsible workforce.
OUR VALUES
Our People
EMPLOYEE ENGAGEMENT
Employee engagement surveys measure the cultural
health of an organisation and have been annually
monitored at NZX since 2011.
From low levels of engagement and a high degree of
ambivalence in 2011/2012, engagement levels have
improved significantly, particularly in 2018.
More than half of our employees who responded to
the engagement survey in 2018 said they were fully
engaged at work.
Staff attrition, another indicator of engagement,
improved by 17.3% last year.
A range of initiatives designed to ensure we have a
fully engaged workforce have been implemented.
These include a range of internal committees, a fair and
reasonable remuneration policy and rewards for high
performance, such as quarterly NZX values awards, and
short and long-term incentives.
As a listed company and a market leader, we want our
employees to experience the market and have a stake in
our business. Share ownership encourages staff to think
like a shareholder and supports engagement. The board
granted each staff member $1,000 worth of shares in
2018. Going forward all new staff members will also
receive $1,000 worth of shares upon starting at NZX.
From the third quarter of 2018, NZX started recording
the diversity of shortlisted candidates for roles.
GENDER
Female13
Male10
Not specified20
STATED ETHNICITY/NATIONALITY
European13
Chinese3
Filipino1
Māori3
Not specified23
AGE
20-298
30-395
40-493
50-593
Not specified24
Total responses43
We have established internal initiatives to support our
diversity and inclusion policy and LGBTQI policy. These
include:
• a diversity education programme for employees
on topics including unconscious bias, bullying and
harassment and wellness and inclusion;
• a transparent recruitment process, including
reporting on diversity of candidates as shown above,
that ensures the widest possible range of candidates
are considered for roles at all levels; and
• recognising same-sex spouses, partners and their
families in the way that opposite sex spouses and
their families are recognise.
85% of employees think everyone at
NZX is treated fairly, regardless of ethnic
background, race, gender, age, or disability.
Resilient
ANTI-BRIBERY AND CORRUPTION
A protected disclosures policy protects employees if
they disclose information about serious wrongdoing in
good faith from dismissal, demotion, harassment or any
other form of retaliatory action. The policy is in place to
facilitate the disclosure and investigation of wrongdoing
and to protect directors or employees who make such
disclosures.
DIVERSITY AND INCLUSION
We recognise that a diverse workforce, where each
employee brings unique experience and knowledge
to their work, is a competitive advantage. In addition,
an inclusive workplace leads to higher employee
engagement, which in turn results in more innovation,
better decision-making and improved productivity.
Diversity at NZX is measured regularly by the diversity
and inclusion committee, which reports to the board’s
human resources committee.
The board has set the following measurable objectives
for achieving diversity and inclusion:
• Establish a diversity and inclusion education
programme, which includes compulsory unconscious
bias training for hiring managers, which has a 100%
completion rate in 2018;
• Recruit diverse and skilled employees based on
merit while continuously measuring and reviewing
recruitment metrics (quarterly) and demonstrating
improvement over the course of the year to ensure
we have a diverse pool of talented candidates (see
statistics below); and
• Improve engagement across diverse groups,
including gender, ethnicity, and age to be measured
by our bi-annual engagement surveys.
39
NZX Annual Report 2018
38
Sustainability and NZX – Our People

LEARNING AND
DEVELOPMENT
In 2014, NZX established a
university graduate intake
programme, which started with
three graduates. Since then, 16
graduates have been recruited,
including eight females. By the
end of 2018, 10 graduates had
completed the programme and of
those, five remain in the business.
Graduates work within the
core markets, data and insight,
surveillance, participant compliance,
issuer regulation, policy and legal,
and fund management teams across
all our offices.
We also established a leadership
programme to give up and coming
employees’ opportunities to
develop as leaders.
EMPLOYEE
WELLBEING
Safety and wellbeing
We recognise the need to provide
a safe and healthy workplace for
our employees, contractors and
customers. We make all reasonable
efforts in the areas of accident
prevention, injury management
and improving the well-being
of our employees. As well as
maintaining processes and practices
to prevent manage and monitor
safety incidents, we have a health
and safety committee to facilitate
consultation with staff. We also
provide support and annual training
in the areas of bullying, harassment,
and mental health.
Family-friendly workplace
Raising children and working is
often a balancing act. Supporting
our employees by providing
family-friendly practices, such as
working from home when domestic
situations arise is a priority, with staff
feedback captured regularly via our
diversity and inclusion committee.
TRANSPARENT
ACCESS TO
INFORMATION
NZX’s board is committed to
maintaining the highest standards
of governance by implementing
a framework of structures, practices
and processes that reflect best
practice. A detailed summary
of NZX’s corporate governance
practices is on page 56 of
this report.
As mentioned in the Chair report
on page 10, we have provided
increased clarity on our financial
performance and strategy execution
now externally communicating a
series of three to five year metrics.
Further information on these targets
is in the investor presentation.
Below is how NZX as a market
operator promotes high standards
in the New Zealand market.
Governance
NZX REGULATION IS A
FRONT-LINE REGULATOR
NZX Regulation (NZXR) is required to regulate the
conduct of issuers and participants. To be an effective
regulator, NZXR pro-actively addresses market trends,
changes in technology and law and developments in
international best practice. This is key to maintaining
the attractiveness of NZX’s listing franchise and
strengthening the investment market in New Zealand.
NZX POLICY DEVELOPS
REGULATORY SETTINGS
NZX Policy is responsible for developing and enhancing
the market rules and policies under which NZX’s
markets operate. In recent years, NZX has progressed
a number of important policy initiatives, including a
comprehensive review of its rule set delivered in late
2018 and corporate governance code in 2017. In 2019,
the policy team is focused on a review of the derivatives
market rules and on supporting the government’s
initiatives for a productive, sustainable and climate-
resilient economy.
ESG GUIDANCE FOR
LISTED ISSUERS
We actively encourage and support listed issuers to
report on environmental, social and governance impacts
(ESG), initiatives and risks via principal four of the NZX
Corporate Governance Code.
In 2016, the Sustainable Stock Exchange (SSE) invited
NZX to be a partner exchange and make a voluntary
public commitment to encourage our issuers to promote
ESG disclosures. NZX Policy has published a guidance
note to help issuers to report on ESG.
REMUNERATION
NZX must attract and retain high
quality employees to achieve its
objectives and create shareholder
value. Employee remuneration
plays an important role in mitigating
operational risk in this area. NZX
ensures its remuneration practices
are fair, reasonable and linked to
performance. We conduct annual
remuneration reviews and promote
pay equity at all levels.
Further information on company
remuneration is in the corporate
governance section of page 56.
41
NZX Annual Report 2018
40
Sustainability and NZX – Our People

Sitting as a future director on the
NZX board was a hugely valuable and
rewarding experience for me. From
my first board meeting, there was a
clear expectation that I was there to
contribute not only to observe.
Anna Molloy
FUTURE DIRECTOR PROFILE
NZX has influence and a massive footprint as it occupies the centre of
a complex financial ecosystem. It really is an important institution and,
as such, the board takes on a responsibility beyond just the company to
the broader market.
I was incredibly fortunate to sit at the board table with highly capable
and experienced board directors. It holds a unique position in the
governance space. All boards have increasing governance requirements,
but the NZX board has a big load in that regard.
The NZX board is clearly focused on the financial returns of its
shareholders and the performance of the company. But it is also a self-
regulating and rule-setting organisation.
There was a huge volume of issues and topics to consider as well as
regulation, compliance and conflicts of interest to manage. NZX has
complicated business units – the operation of derivative, equity and
debt markets, fund management and wealth technologies – so the
directors had to be across those.
The work load of the directors is significant and goes well beyond
the monthly board and committee meetings. They need a lot of time
and dedication to the company to understand how value is created,
for mentoring and coaching senior executives, and for digesting and
understanding financial and non-financial information.
In my view, directors need to work together towards a common goal. At
the same time, they need to have a willingness to voice opposing views.
It is also helpful to have specialists on the board.
Given the rate of change in the corporations and the economy I believe
it is important to have a range of ages, experience and skills on a board
to reflect a customer base and represent all stakeholders. I like to
think that the NZX board discussion was enriched by having a different
perspective at the table.
Rather than being a fund manager or broker, that is more concerned
with the mechanics or structure of a market or fund, I brought a more
direct investment view from my background as a securities analyst at an
investment firm.
It is well understood that there is a great deal of value added by having
diversity at the management and board level. But directors should be
there on merit not because of quotas.
This is where the Future Directors programme has a role to play, in
helping broaden the pool of directors and enabling people like me to
build our board experience and skills. The Future Directors programme
goes a long way towards building capability across a more diverse
group to enable diversity within New Zealand governance to grow.
I would recommend the Future Directors programme to colleagues who
are interested in a governance career. I don’t think there is any course
or reading that could equal sitting around the table with experienced
directors and dealing with issues in real time.
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NZX Annual Report 2018
42
Future Firector Profile – Anna Molloy

We are committed to operating in a
socially responsible way. In addition
to practices outlined above, this is
reflected in our approach to fraud
and cyber security, and taxation.
FRAUD AND CYBER
SECURITY
In one sense, as an operator of
digital-based markets, wealth
management platforms and data
services, NZX is a technology
company. Many of our services
depend on the operational
excellence of our IT management
and the ability of our digital
suppliers to deliver a secure and
reliable network and platform.
Over the past two years, we have
modernised and simplified our data
centre and network infrastructure to
create a more flexible and robust
mechanism for market participants
to connect to NZX’s core markets
and wealth technologies platforms.
Fraud and cyber-security impact
customer satisfaction and service
quality. As a market operator and
provider of clearing and settlement
facilities, we must be mindful of the
risk of fraud – either internally by
employees or externally by third
parties targeting customers using
NZX’s name or infrastructure.
Responsible and ethical
business practices
2 NZX data as at 31 December 2018, NZIER Report: The economic contribution of NZX
dated 31 December 2017
Community
engagement
EDUCATION
Academic research
NZX is a supporter of the financial academic
community. It currently sponsors the New Zealand
Finance Colloquium, a joint initiative by New
Zealand universities to promote the development of
finance-related research. The sponsorship comprises
two financial awards and a prize for research papers
relating to the NZX markets, corporate governance,
trading practices and the cost of capital. One award
is for a PhD student and a second for any student or
member of the academic staff.
Retail investor evenings
Recognising a desire from retail investors to learn
more about stock markets, economic trends and
individual listed companies, we organised two series
of investor evenings in 2018. The two-hour events
in Auckland, Wellington and Christchurch were
heavily attended, and in some cases over-subscribed.
Attendees received presentations from research
analysts and representatives from listed companies.
The second series, in October, took place during
World Investor Week, a global campaign to raise
awareness about the importance of investor
education and protection.
We have undertaken an in-depth cyber security analysis,
aligned to a best practice framework (taking a risk-based
approach) and are investing in our cyber security ability,
people, tools and services. We see this as a continuous
improvement process, with regular threat and risk
reviews, and appropriate adjustments to the approach
on an ongoing basis.
TAXATION AND CONTRIBUTION TO
THE NEW ZEALAND ECONOMY
2
NZX makes a substantial direct contribution to the New
Zealand economy. According to an independent report
on NZX by economic consultancy, NZIER, in 2016 NZX
directly contributed $52.4 million to New Zealand’s GDP.
NZX directly employs 214 full and part-time staff and
pays more than $29 million in salaries.
NZX spends $23 million on procuring goods and
services from other parts of the economy, supporting
other firms’ revenue and employment.
The NZX Main Board and the NZX debt market covers
198 unique issuers with a total market capitalisation of
$164 billion served by nine cash market participants.
It is supported by around 340 authorised financial
advisers at NZX firms, 68 fund managers and close to
200,000 individual investors. It is difficult to determine
the exact number of workers supported by NZX
activities but around 34,000 people are employed in
closely related sectors.
The total gross domestic product contribution of S&P/
NZX 50 companies was $24.6 billion in 2016. They
had a combined revenue of $61.9 billion and paid a
combined $2.5 billion in taxes in the 2016/2017
financial year.
School visits
NZX hosted more than ten school visits in 2018
– one of these visits is part of a financial literacy
programme of an Auckland school. We have also
participated in the High School Gateway Programme
where a student interned with NZX one day a week
across the year to gain exchange work experience.
First Foundation
The First Foundation partners with corporates to
provide tertiary fee assistance and part-time work
for academically talented New Zealanders who are
unable to meet the costs associated with university
education. NZX sponsored three students in 2018.
Invested.co.nz
NZX launched a retail investor education website
called invested.co.nz with the Commission For
Financial Capability (CFFC) in 2015. This partnership
has continued, with additional video content added
to the website on an ongoing basis.
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NZX Annual Report 2018
44
Sustainability and NZX – Responsible and ethical business practices

FUNDRAISING INITIATIVES
Shares for Good
Shares for Good, is a collaboration between NZX,
JBWere, Computershare and Link Market Services that
allows investors to donate small parcels of shares to
a charity. All partners waive the fees associated with
donations to ensure the viability of the programme.
Variety - the Children’s Charity NZ is the current Shares
for Good recipient.
New Zealand Financial Markets Charity
Golf Classic
In 2018, NZX was the lead sponsor of the New Zealand
Financial Markets Association’s annual charity golf
tournament. The event both raises funds for a charity
and provides networking and stakeholder engagement
for our team. The nominated charity, The Neonatal
Trust, received a $55,000 contribution towards its work
supporting neonatal families and for neonatal research.
ENGAGING WITH GOVERNMENT
Given our leadership role in the market, we foster
and value our constructive working relationship with
Government, engaging with policy development and
meeting regularly on a range of business issues.
In 2018, NZX and the Securities Industry Association
(SIA) jointly responded to the Tax Working Group’s
Interim Report on the Future of Tax. In the submission,
concerns were raised that the Tax Working Group was
considering extending taxation to capital income. NZX
and SIA are concerned that extending capital income
taxation to investments in New Zealand shares has the
capacity to discourage direct investment and damage
our capital markets.
As mentioned in the Chair report, NZX and the Financial
Markets Authority initiated an industry led review of
New Zealand’s capital markets, Capital Markets 2029
last month, and will consider the current structure
and regulatory settings or the market, and outline
recommendations for Government and industry to
harness opportunities for its long-term development.
Given our leadership role in
the market, we foster and value
our constructive working
relationship with Government,
engaging with policy development
and meeting regularly on a range
of business issues.
NZX Head of Issuer Relationships Joanna Lawn
speaking at our retail investor evening in Wellington
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NZX Annual Report 2018
46
Sustainability and NZX – NZX in the community

We are also committed to
utilising resources in ways
that ensure the long-term
sustainability and profitability of
our business, while benefiting
the environment.
Our primary environmental impacts arise from our offices in Auckland and
Wellington, data centres, staff travel and indirectly from our supply chain.
We have used the operational control boundary for our greenhouse gas
emissions and environmental reporting in this report. An organisation
has operational control if it has full authority to introduce and implement
operating policies in the area of health, safety and environment.
Environmental
Impact
METHODOLOGY
We report all our emissions that fall within our operational control. We
do not have responsibility for any emission sources that are not included
in our operations. We have disclosed emissions from scope 1 (emissions
from owned sources e.g. car transport), scope 2 (indirect emission from the
purchase of electricity) and scope 3 (other indirect emissions from electricity
transmission, air travel and waste to landfill) sources. Our emissions are
calculated using the Ministry for the Environment’s Guidance for Voluntary
Greenhouse Gas Reporting.
GREENHOUSE GAS INVENTORY
ScopeGHG emissions sourcesTonnes CO
2
-e*
Scope 1Kms travelled2.8
Scope 2Electricity9.9
Scope 3Air travel
• domestic
• Short haul international (<3700Km)
• Long haul international (>3700Km)
Transmission and distribution losses
for purchased electricity
Paper disposal
84.6
24.7
92.9
0.8
1.0
Total216.70
* CO
2
– equivalent emissions calculated using Ministry for the Environment
2016 Emissions Factors. This data has been independently calculated.
CLIMATE CHANGE
As stated above, we support the Government’s target for net zero
greenhouse gas emissions by 2050 and encourage a bi-partisan climate
change policy. As the deployment of capital will be essential to meeting
climate change targets, NZX has recommended to government that a
Climate Change Commission should include a financial markets expert. We
also believe that a sound understanding of the capital markets and green
finance will be key to engaging with the private sector.
MECHANISMS TO
ADDRESS CLIMATE
CHANGE
NZX supports strengthening
and improving the NZ Emissions
Trading Scheme. We support
market mechanisms to set the
price of carbon to ensure capital is
efficiently allocated to projects with
the lowest cost of abatement. We
believe international carbon units
should be contemplated so that if
New Zealand is not able to meet
its carbon budget with domestic
emissions reductions, appropriate
alternatives are available. A market
price should be set for emissions
and linked with international
markets and mechanisms.
The availability of ‘green’
finance will be vital in growing
low emissions industries. Green
investment will be required for
the research and development of
practical solutions in the agriculture
sector, which both dominates
New Zealand’s economy and
is a substantial contributor to
greenhouse gases.
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NZX Annual Report 2018
48
Sustainability and NZX – Environmental Impact

GRI CONTENT INDEX
GRI Standard
Disclosures
DisclosureDescription and Page NumberOmission
Organisational
profile
102-1Name of the organisationNZX Limited
102-2Operations Core Market, page 7
102-3Head office Directory, page 125
102-4Locations Directory, page 125
102-5Legal formNZX listed New Zealand liability company
102-6Markets servedPages 7 - 9
102-7Scale of organisationResults at glance, page 4
102-8WorkforceOur profile, page 28
102-9Supply chainNot in scope
102-10Business changes Business operations, page 116
102-11Precautionary principle Risk management, pages 67, 68
102-12ChartersGovernance, page 58
102-13MembershipsNot
disclosed
Strategy102-14Chairman, CEO statement Strategy Execution, pages 6 - 19
Ethics and
integrity
102-16Values, principlesOur People, page 38
Governance102-18GovernanceGovernance, page 58
Stakeholder
engagement
102-40StakeholdersStakeholder case studies,
pages 22, 26, 34, 36, 42
Not
disclosed
102-41Collective agreementsRemuneration, page 40
102-42Stakeholders - basisNot
disclosed
102-43Approach to stakeholder
engagement
Our year in review, pages 14 - 19
102-44Key topicsMaterial topics, page 27
Reporting
practice
102-45Entities includedSegment reporting, page 85
102-46Report contentPage 27
102-47Material topicsMaterial issues, page 27
102-48Restatements of informationNot
applicable
102-49ChangesBusiness operations, page 116
102-50Report period12 months to 31 December 2018
102-51Report dateNZX Annual Report 2018
102-52Reporting cycleAnnual
102-53ContactDirectory, page 125
102-54GRI complianceNot claimed
102-55GRI content indexThis page
GRI Standard
Disclosures
DisclosureDescription and Page NumberOmission
Material topicsRelated indicators
Economic
performance
201-1Economic valueResults at a Glance, pages 4, 5
Responsible business, page 44
203-1Infrastructure investmentsCore market, pages 7 - 9
203-2Significant indirect
economic impacts
Responsible business, page 44
Environmental302-1GHG (scope 1) emissionsPage 49
302-2GHG (Scope 2) emissionsPage 49
305-3GHG (Scope 3) emissions Page 49
Social401-1Diversity of governance
bodies and employees
Our profile, page 28
Our people, pages 38, 39
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NZX Annual Report 2018
50
Sustainability and NZX - GRI Content Index

The Board
LINDSAY WRIGHT
BCOM
LEAD INDEPENDENT DIRECTOR
Lindsay lives in Hong Kong and is Head of Asia and
Global Chief Operating Officer at Matthews Asia. She
has more than 30 years’ financial services and fund
management experience, and prior to Matthews Asia
was Managing Director, Head of Distribution and Co-
Head of Investment Management Asia Pacific for BNY
Mellon Investment Management. Lindsay joined the
NZX board in 2018, and has also held executive roles at
Invesco Hong Kong, Harvest Capital Management and
Deutsche Asset Management. Her prior governance
roles include Deputy Chair of the Guardians and
Chair of the Audit Committee of the New Zealand
Superannuation Fund and director of Kiwibank. Lindsay
is also a current Fellow of the Hong Kong Institute of
Directors. Lindsay has worked in New York, Singapore,
Hong Kong, Beijing, Tokyo and Australia and started her
career in New Zealand at Bankers Trust.
RICHARD BODMAN

DIRECTOR
Richard has spent more than 25 years working in the
financial services sector, primarily at FNZC where
he held several executive roles, including Managing
Director, Head of Compliance. Prior to this, he was
an inspector at the Securities & Futures Authority in
London. Today, he is based in Wellington, and is an
independent director of Forsyth Barr Custodians and
Forsyth Barr Cash Management Nominees. He is also
a member of the GRC (Governance Risk Compliance)
Institute and the Institute of Directors. Richard joined
the NZX board in 2017.
FRANK ALDRIDGE
BBS
DIRECTOR
Based in Tauranga, Frank is Managing Director of
Craigs Investments Partners and has an extensive
understanding of New Zealand’s capital markets
having spent more than 20 years with the company.
Frank joined NZX’s board in 2017, and is also chair of
Australian-based Wilsons Advisory and Stockbroking,
a former member and chair of New Zealand Securities
Association, and sits on several of Craigs Investment
Partners’ subsidiary boards. He is an accredited NZX
Advisor, Authorised Financial Adviser, and a Chartered
Member of the Institute of Directors.
NIGEL BABBAGE
BCOM, BSC (HONS)
DIRECTOR
Nigel lives in Christchurch and brings extensive clearing
and derivatives experience to NZX. He joined the NZX
board in 2017 and previously held executive roles with
British Petroleum (now BP) and Citibank, managing the
New York currency derivatives desk. He also worked for
BNP Paribas where he took on the joint role of Global
Head of Currency Derivatives Trading and Head of
North American Foreign Exchange. Nigel served on the
Foreign Exchange Committee of the Federal Reserve
Bank of New York for three years and is today CEO of
Mohua Investments.
JAMES MILLER
BCOM, FSA
CHAIR
James joined NZX’s board in 2010 and has held the
role of chair since 2015. After 14 years in the share-
brokering industry with Craigs Investment Partners,
ABN AMRO, Barclays de Zoete Wedd and ANZ
Securities, James became a professional director.
Based in Auckland, he is currently a director of
Mercury NZ, the Accident Compensation Corporation
and the New Zealand Refining Company. James is a
qualified chartered accountant, New Zealand Institute
of Chartered Accountants fellow, Certified Securities
Analyst Professional, Institute of Directors member,
and a graduate of Harvard Business School’s Advanced
Management Programme.
JON MACDONALD
BE (HONS)
DIRECTOR
Jon lives in Wellington and has more than 15 years’
experience in New Zealand’s technology sector. He
is the CEO of NZX/ASX listed Trade Me Group. Jon
joined Trade Me in 2003, and was appointed CEO in
2008. Before this, Jon worked for HSBC Investment
Bank in London and Deloitte Consulting with a focus
on telecommunications and financial services. Jon
is a director of Contact Energy, and a Trustee of NZ
Technology Training Charitable Trust. He joined NZX’s
board in 2013 and is a Chartered Member of the
Institute of Directors.
NZX directors from left to right: Richard Bodman, Jon Macdonald, James Miller (Chair), Nigel Babbage, Lindsay Wright and Frank Aldridge
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NZX Annual Report 2018
52
The Board

MARK PETERSON
CHIEF EXECUTIVE
OFFICER
GRAHAM LAW
CHIEF FINANCIAL
OFFICER
JOANNA LAWN
HEAD OF ISSUER
RELATIONSHIPS
BENJAMIN PHILLIPS
HEAD OF MARKETS
DEVELOPMENT &
CLEARING
JEREMY ANDERSON
HEAD OF DATA
& INSIGHTS
HUGH STEVENS
HEAD OF FUNDS
MANAGEMENT
LISA BROCK
HEAD OF WEALTH
TECHNOLOGIES
HAMISH MACDONALD
GENERAL COUNSEL,
COMPANY SECRETARY
JOOST VAN
AMELSFORT
HEAD OF MARKET
SUPERVISION
DAVID GODFREY
CHIEF INFORMATION
OFFICER
Executive Team
Jeremy joined NZX in March 2017 and leads the
Data & Insights team in Wellington. Jeremy has
extensive experience working in agribusiness sectors
across Australia and New Zealand. Prior to joining
NZX, he led and executed Vodafone New Zealand’s
agribusiness strategy and has had experience
working in a number of sales management roles for
fertiliser and rural merchandise businesses.
Hugh joined NZX in February 2018 and leads
the funds management business in Auckland. He
has extensive industry experience gained in New
Zealand and abroad. Hugh is the former Head of
Private Equity and Real Estate Fund Services for
BNP Paribas based in France, and prior to that
was Head of BNP Paribas Securities Services
New Zealand. Before BNP Paribas, Hugh worked
for JP Morgan in London.
Lisa joined NZX in November 2016 and leads the
Wealth Technologies business in Auckland. Lisa has
more than 25 years’ experience in financial services
covering investments, insurance and banking. She
previously worked for the ASB Bank and Sovereign
Insurance holding leadership roles across finance,
investments and operations. Prior to that Lisa started
her career as an auditor with PwC.
Hamish joined NZX in July 2013 and leads the
corporate legal, policy and government relations
team from Auckland and is NZX’s Company
Secretary. He has extensive experience in financial
regulation and policy development work including
with the UK Listing Authority, the body that regulates
issuers listed on the London Stock Exchange. Before
joining NZX, Hamish held legal roles in New Zealand,
Australia and the United Kingdom, most recently
with a superannuation fund in Melbourne.
Joost joined NZX in 2014 and leads the regulation
team in Wellington. He has extensive experience
working in New Zealand, the United Kingdom and
Dubai in the financial regulation and professional
service sectors Joost previously held senior roles at
Simpson Grierson and Linklaters LLP, advising on
corporate governance, capital markets, mergers and
acquisitions, public and private partnerships and
capital markets issuance.
David joined NZX in 2009 and is based in wellington.
He has responsibility for the delivery of technology
solutions and the project management office. He
has more than 25 years of management experience
in IT, from development, including vendor product
based solutions, to enterprise level business
critical in house and consumer based, and “24x7”
operations. David previously worked for a FTSE
100 Property company, a major UK newspaper, in
telecommunications, technology consultancies and
software houses.
Mark joined NZX in May 2015 and is based in
Wellington. He has 25 years’ experience in financial
services covering the capital markets, private wealth,
institutional and retail banking, and insurance. Mark
previously worked as the Managing Principal of ANZ
Securities, and before that held senior management
roles with First NZ Capital, ANZ and The National
Bank of NZ.
Graham joined NZX in November 2017, and leads
the finance team in Wellington. He has experience
working across the financial and professional
service sectors in New Zealand and the UK, and
brings expertise in strategic leadership, corporate
governance, and risk and financial management to
NZX. Graham was previously Managing Director and
Chief Financial Officer at AMP Capital New Zealand
and Head of Finance at ACC.
Joanna joined NZX in September 2017, and leads
the Issuer Relationships team in Auckland. She has
extensive banking and corporate finance experience
previously working at ANZ, in the Institutional
Banking Division, with responsibilities in New
Zealand and overseas, as Head of Client Insights &
Solutions, and Head of Business Management. Prior
to this Joanna worked in the UK and Australia for
Deutsche Bank and Lazard Brothers, in their M&A
and markets divisions.
Benjamin joined NZX in 2014. He leads the
development of the secondary cash and derivatives
markets, its Clearing House and energy operations
in Wellington. Benjamin has worked in New Zealand
and Australia’s financial markets, and was previously
Senior Operations Manager at Citi Australia. Prior
to this, he was at ANZ E*Trade and led its wholesale
execution, clearing and settlement business, and
held several senior positions including Head of
Broking Services.
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NZX Annual Report 2018
54
Executive Team

Corporate
Governance
Sunset at Lake Tekapo, New Zealand
57
NZX Annual Report 2018
56
Corporate Governance

NZX Annual Report 2018
58
Corporate governance
NZX’s shares are quoted on the NZX Main Board. NZX
also has subordinated notes quoted on the NZX Debt
Market. In this part of the annual report, we disclose
the extent to which we have followed the
recommendations set out in the NZX Corporate
Governance Code 2017 (NZX Code). The information
in this section is current as at 31 December 2018 and
has been approved by the board of directors of NZX.
NZX’s board is committed to maintaining the highest
standards of governance by implementing a
framework of structures, practices and processes that
it considers reflect best practice. NZX’s corporate
governance policies and procedures, and its board
and committee charters, document the framework and
have been approved by the board.
The framework has been guided by the
recommendations set out in the NZX Code and the
requirements set out in the listing rules. The board’s
view is that NZX’s corporate governance framework
has followed these recommendations and
requirements in the year to 31 December 2018
(reporting period).
The corporate governance framework is regularly
reviewed by the board against the corporate
governance standards set by NZX, any regulatory
changes, and developments in corporate governance
practices.
The key corporate governance documents referred
to in this section are available from NZX’s investor centre.
NZX Code
Principle 1 – code of ethical behaviour

Directors should set high standards of ethical
behaviour, model this behaviour and hold
management accountable for these standards
being followed throughout the organisation.
Code of Conduct
NZX’s Code of Conduct sets out the standards of
conduct expected of directors (including members of
committees) and employees (including secondees,
contractors and consultants). The purpose of the code
is to underpin and support the values that govern our
individual and collective behaviour.
Training on the code is included as part of the
induction process for new directors and employees.
The code requires directors and employees to
promptly report material breaches of the code and
sets out the procedure for doing so.
The code is reviewed at least every two years and was
last reviewed in August 2017.
F
inancial Products Trading Policy
NZX’s Financial Products Trading Policy sets out
NZX’s restrictions on its directors and employees
buying or selling financial products. In particular:
• directors and employees may not buy or sell NZX’s
shares in the “blackout” periods set out in the
policy (these periods occur prior to the release of
NZX’s financial results to the market); and
• outside of a blackout period, directors and
employees must obtain consent to buy or sell
NZX’s shares.
Because NZX is a licensed market operator, NZX’s
senior managers and employees with access to
market sensitive information must obtain consent to
buy or sell financial products quoted on a market
operated by NZX.
NZX Annual Report 2018
59
Training on the policy is included as part of the
induction process for new directors and employees.
The policy is reviewed at least annually and was last
reviewed in June 2018.
Principle 2 – board composition and
performance

To ensure an effective board, there should be a
balance of independence, skills, knowledge,
experience and perspectives.
Board charter
NZX’s board operates under a written charter, which
sets out the responsibilities and framework for the
operation of the board.
The charter is reviewed at least every two years and
was last reviewed in July 2017.
Management of NZX on a day-to-day basis is
undertaken by the Chief Executive Officer and senior
managers through a set of delegated authorities that
clearly define the Chief Executive Officer’s and senior
managers’ responsibilities and those retained by the
board. The delegated authorities are set out in NZX’s
Delegated Authority Policy. The policy is reviewed at
least annually and was last reviewed and updated in
November 2018.
The board meets its responsibilities by receiving
reports and plans from management and through its
annual work programme. The board uses committees
to address issues that require detailed consideration.
Committee-work is undertaken by directors (and, in
the case of the Conflicts Committee and Regulatory
Governance Committee, non-director members who
have specialist knowledge and experience), however,
the board retains ultimate responsibility for the
functions of its committees and determines their
responsibilities.
Nomination and appointment of directors
NZX has a Nomination Committee, which is
responsible for reviewing candidates for appointment
and re-election to the board and committees, and
making recommendations to the board. An
independent recruitment consultant provides
assistance in preparing a list of candidates for the
committee’s consideration. The committee meets with
preferred candidates before making a
recommendation to the board. Checks are done on
candidates in accordance with NZX’s Fit and Proper
Policy. Key information about candidates is provided
to shareholders in the notice of annual meeting.
At each annual meeting, current directors retire by
rotation as required by the NZX Listing Rules and are
eligible for re-election. Under the updated Listing
Rules a director must seek re-election at least every
three years. Any directors appointed since the
previous annual meeting must also retire and are
eligible for election.
NZX uses a skills matrix when selecting candidates for
appointment and re-election to the board. The board
developed the skills matrix in 2016 and it was last
updated in 2019. The skills matrix outlines the ideal
mix of skills, experience and diversity needed to
ensure the board is equipped to provide the high
standard of corporate governance required to lead
NZX. If the board determines that new or additional
skills are required, training is completed or a formal
recruitment process is undertaken.
The matrix assesses directors against the following
criteria:
• strategy and performance – expertise in respect of
stock exchanges, data information, media,
technology and business operations;
• quality committee leadership – skills to serve on
NZX’s committees; and
• connectivity to stakeholder groups – connectivity
to stakeholder groups such as regulators or
government, the Electricity Authority, listed issuers,
brokers or institutional and retail investors.
The current NZX skills matrix is on the next page.
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58
Corporate Governance

NZX Annual Report 2018
60
Based on these criteria, the board considers that its
members currently have the balance of
independence, skills, knowledge, experience and
perspectives necessary to lead NZX.
Written agreement
NZX provides a letter of appointment to each newly
appointed director setting out the terms of their
appointment. The letter includes information
regarding expected time commitments, the board’s
responsibilities, remuneration, independence
requirements, disclosure requirements, confidentiality
obligations, indemnity and insurance provisions,
intellectual property rights and cessation of
appointment.
Director information
The board currently comprises six directors with
diverse backgrounds, skills, knowledge, experience
and perspectives. All directors are non-executive and
independent. At the reporting date James Miller was
deemed to be non-independent under the NZX Main
Board Listing Rules because he is also a director of
ACC, which was a substantial product holder of NZX
during the period. ACC is no longer a substantial
product holder of NZX and subseqent to the period
end the NZX board has assessed James Miller as an
independent director under the NZX Listing Rules.
Information in respect of directors’ ownership
interests is available on pages 119. NZX’s directors
are not formally required to own NZX shares, but are
encouraged to do so.
NZX Annual Report 2018
61
Lead independent director
Lindsay Wright is NZX’s lead-independent director in
the event that James Miller is conflicted on any
matters that arise.
Further information about NZX's directors is available
on pages 52.
Diversity
NZX’s Diversity and Inclusion Policy sets out how NZX
will set measurable objectives for achieving diversity
and inclusion, and how it will assess its progress
towards achieving these objectives. The policy also
sets out the diversity and inclusion initiatives NZX
currently has in place, together with the initiatives it
is currently implementing.
The policy is reviewed at least annually and was last
reviewed in February 2019. Further details on NZX’s
diversity and inclusion is outlined on page 39 of the
Sustainability Report.
Director Training
Directors are expected to understand NZX's
operations and undertake training and education to
enable them to effectively perform their duties. This
includes:
• attending management presentations in respect
of NZX’s operations
• attending presentations on changes in governance,
legal and regulatory frameworks
• attending technical and professional development
courses
• attending presentations from industry experts and
key advisers
• attending the World Federation of Exchanges
(WFE) conferences of which NZX is a member
• receiving regular educational materials
Assessment of director performance
Evaluations are conducted to review the performance
of the board and each director, and the effectiveness
of board processes and committees. This is
undertaken using a variety of techniques including
external consultants, questionnaires and board
discussions.
The last full board and individual director performance
review was undertaken by an independent board
review expert (Propero Consulting) during 2018. The
review found that NZX’s board has made significant
progress since the last full external review in 2014 in
it's drive towards a high-performance culture.
Opportunities were also identified for the board to
continue to develop and enhance performance.
Each committee reviews its performance at least
annually. The board also reviews each committee’s
performance at least annually.
Separation of the Chairperson and Chief
Executive Officer
NZX’s board chair is a different person to NZX’s Chief
Executive Officer.
Principle 3 – committees

The board should use committees where this
will enhance its effectiveness in key areas, while
still retaining board responsibility.
Committees and members
The board uses committees where specialist skills and
experience is required. Six standing committees have
been established to assist the board on matters falling
within their areas of responsibility. Each committee
has authority to undertake any activity set out in its
charter or as authorised by a separate resolution of the
board.
The board and six committees and the members of
each as at 31 December 2018 are set on the following
page.
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Corporate Governance

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Board and committees (as at 31 December 2018)

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63
Director meeting attendance
DirectorBoard
Audit and Risk
Committee
Clearing
Committee
Conflicts
Committee
Human Resources
and
Remuneration
Committee
Nomination
Committee
1
Regulatory
Governance
Committee
Frank Aldridge6/78/8––3/32/2–
Nigel Babbage
2
7/72/24/41/1––2/3
Richard Bodman
3
7/76/64/42/2––4/4
Jon Macdonald7/7––2/23/32/24/4
James Miller7/7–––3/32/2–
Dr Patrick Strange6/65/51/1––––
Dame Therese
Walsh
4
1/23/3–1/1––0/1
Lindsay Wright
5
6/65/53/3----
1 The Nomination Committee was established in February 2018
2 Nigel Babbage was appointed to the Conflicts Committee in April 2018
3 Richard Bodman was re-appointed to ARC on 10 September 2018
4 Dame Therese Walsh resigned as a director effective 13 April 2018
5 Lindsay Wright was appointed as a director effective 20 February 2018
External committee member meeting attendance
Committee
member
Board
Audit and Risk
Committee
Clearing
Committee
Conflicts
Committee
Human Resources
and Remuneration
Committee
Nomination
Committee
Regulatory
Governance
Committee
Jayshree Das–––2/2–––
David Flacks––––––4/4
Audit and Risk Committee
NZX’s Audit and Risk Committee assists the board to
fulfil its responsibilities in relation to the NZX Group’s
financial practices and reporting, internal control
environment, internal audit, external audit and risk
management. The committee operates under a written
charter, which sets out the responsibilities and
framework for the operation of the committee. The
charter is reviewed at least every two years and was
last reviewed in February 2018.
The committee must be comprised solely of NZX
directors, have a minimum of three members, have a
majority of members that are independent directors
and have at least one director with an accounting or
financial background. The makeup of the current
members of this committee complies with this
recommendation.
The committee’s chair, Lindsay Wright, holds a
bachelor of commerce degree from Auckland
University majoring in finance and accounting and has
previously held the role of CFO of Deutsche New
Zealand (Previously Bankers Trust) and was also
formerly Chair of the Audit Committee for the New
Zealand Superannuation fund. Lindsay’s full biography
is on page 53.
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The committee chair and the board chair are different
people.
Management may only attend meetings at the
invitation of the committee and the committee
routinely has committee-only time and time with the
external and internal auditors without management
present.
Human Resources and Remuneration Committee
NZX’s Human Resources and Remuneration
Committee assists the board in overseeing the
management of the human resources activities of
NZX, including the remuneration of employees. The
committee operates under a written charter, which
sets out the responsibilities and framework for the
operation of the committee. The charter is reviewed
at least every two years and was last reviewed in
February 2018.
The committee must have a majority of members that
are independent directors. The makeup of the current
members of this committee complies with this
recommendation.
Management may only attend meetings at the
invitation of the committee.
N
omination Committee
NZX’s Nomination Committee assists the board in
identifying and recommending to the board
individuals for nomination as directors and members
of committees. The committee operates under a
written charter, which sets out the responsibilities and
framework for the operation of the committee. The
charter is reviewed at least every two years and was
adopted in February 2018.
The committee was established in February 2018.
Prior to this, the board was responsible for identifying
individuals for nomination as directors and members
of committees.
The committee must have a majority of members that
are independent directors. The makeup of the current
members of this committee complies with this
recommendation.
Management may only attend meetings at the
invitation of the committee.
Other Committees
Clearing Committee
The Clearing Committee assists the board in ensuring
that New Zealand Clearing Limited has adequate risk
capital to meet its obligations as the central
counterparty clearing house for NZX Clearing. The
committee operates under a written charter, which
sets out the responsibilities and framework for the
operation of the committee. The charter is reviewed
at least every two years and was last reviewed in
February 2018.
The committee must have a minimum of three
members. The committee may have a non-director
as a member (who must have skills and experience
relevant to the operation of the committee). The
makeup of the current members of this committee
complies with this recommendation.
C
onflicts Committee
The Conflicts Committee assists the board in
overseeing the effectiveness of NZX’s policies and
procedures for ensuring that any conflicts of interest
within the NZX Group are appropriately managed,
including any conflicts between NZX’s regulatory
responsibilities and its commercial interests. The
committee operates under a written charter, which
sets out the responsibilities and framework for the
operation of the committee. The charter is reviewed
at least every two years and was last reviewed in
February 2018.
The committee must have a minimum of three
members, have a minimum of two directors as
members and must have one non-director as a
member (who has skills and experience relevant to the
operation of the committee). The makeup of the
current members of this committee complies with this
recommendation.
The committee’s non-director member is Jayshree Das.
NZX Annual Report 2018
65
Regulatory Governance Committee
The Regulatory Governance Committee assists the
board in reviewing and providing feedback in respect
of the governance of NZX’s regulatory function. The
committee operates under a written charter, which
sets out the responsibilities and framework for the
operation of the committee. The charter is reviewed
at least every two years and was last reviewed in
February 2018.
The committee must have a minimum of three
members, have a minimum of two directors as
members and must have a minimum of one non-
director as a member (who has skills and experience
relevant to the operation of the committee). The
makeup of the current members of this committee
comply with this recommendation.
The committee’s non-director member, David Flacks,
is a former NZ Markets Disciplinary Tribunal chair.
Takeover protocol
NZX’s Takeover Protocol sets out the procedure to
be followed if there is a takeover offer for NZX.
The protocol is reviewed at least every two years and
was adopted in February 2018.
Principle 4 – reporting and disclosure

The board should demand integrity in financial
and non-financial reporting, and in the timeliness
and balance of corporate disclosures.
Continuous disclosure
NZX’s Continuous Disclosure Policy sets out NZX’s
arrangements to ensure material information is
identified, reported, assessed and, where required,
disclosed to the market in a timely manner.
NZX is committed to ensuring the timely disclosure
of material information about the NZX Group and to
ensuring that NZX complies with the NZX Listing Rules.
It is the responsibility of the board to monitor
compliance with the Continuous Disclosure Policy. The
board considers at each board meeting whether any
information discussed at the meeting requires disclosure.
The policy is reviewed at least annually and was last
reviewed and updated in July 2018.
Charters and policies
The key corporate governance documents referred
to in this section, including policies and charters, are
available from NZX’s investor centre.
Financial reporting
NZX is committed to ensuring integrity and timeliness
in its financial reporting and in providing information
to the market and shareholders which reflects a
considered view on its present and future prospects.
The Audit and Risk Committee oversees the quality
and integrity of external financial reporting, including
the accuracy, completeness, balance and timeliness
of financial statements. It reviews NZX’s full and half
-year financial statements and makes
recommendations to the board concerning accounting
policies, areas of judgement, compliance with
accounting standards, stock exchange and legal
requirements, and the results of the external audit.
All matters required to be addressed and for which the
committee has responsibility were addressed during
the reporting period.
NZX has published its full and half-year financial
statements that were prepared in accordance with
relevant financial standards. The full year financial
statements are set out on pages 74 to 110.
The Chief Executive and Chief Financial Officer have
confirmed in writing to the board that NZX’s external
financial reports present a true and fair view in all
material aspects.
Non-financial reporting
NZX releases data on its non-financial performance
metrics each month through its monthly shareholder
metrics publications. It also releases quarterly revenue
and shareholder metrics, and regulation metrics
representing the key features of NZX’s activities in
regulating its markets.
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66
This year NZX has adopted the principles of a formal
sustainability-reporting framework, the Global
Reporting Initiative (GRI). A separate Sustainability
Report is set out at pages 24 to 51 which includes a
description of business strategy. To support this, and
provide increased clarity for shareholders and the
market on our financial performance and execution
of strategy a series of five year financial and non-
financial targets are now being externally
communicated. Further information can found in the
investor presentation.
Principle 5 – remuneration

The remuneration of directors and executives
should be transparent, fair and reasonable.
Directors’ remuneration
Shareholders fix the total remuneration available for
directors. The annual fee pool limit is $435,000 and
was approved by shareholders at the annual meeting
in April 2012.
The current fees paid to NZX’s directors are $50,000
per annum for directors and $100,000 for the chair.
Directors are not paid additional fees for being
members of committees.
Jayshree Das and David Flacks, being non-director
members of committees, are paid $465 per hour for
work on committee business.
Total remuneration received by each director in 2018
is set out in Note 5 of the Statutory Information section
on page 117.
External committee member remuneration set out
below.
External committee member remuneration
Committee memberCommittee member fees
Jayshree Das$9,940
David Flacks$16,973
Directors do not receive any performance or equity
based remuneration, or superannuation or retirement
benefits. This reflects the differences in the role of the
directors, which is to provide oversight and guide
strategy, and the role of management, which is to
operate the business and execute NZX’s strategy.
Remuneration policy
NZX’s Remuneration Policy sets out the principles,
which apply to the remuneration of NZX’s directors
and employees. In particular, director remuneration
is paid in the form of director fees, while employee
remuneration will include a mix of the following
components:
• fixed remuneration (which includes base salary and
employer KiwiSaver contributions)
• short-term incentive plan (which is available to
senior employees)
• long-term incentive plan (which is available to
members of NZX’s executive team and senior
management)
• a one-off grant of $1,000 of NZX shares when an
employee starts at NZX to ensure that all
employees are shareholders
The policy is reviewed at least annually and was
reviewed in February 2018.
NZX’s short-term incentive plan is performance based,
with any short-term incentive plan payment being
conditional on (1) NZX’s financial performance and the
employee’s business unit’s performance; and (2) the
employee’s individual performance.
NZX Annual Report 2018
67
Potential short-term incentive plan payments are
generally between 15% and 45% of base salary,
depending upon the employee’s seniority and role.
Under NZX’s long-term incentive plan, executive team
members and senior managers may be awarded NZX
shares based on NZX’s long-term (generally three
year) performance. The plan is designed to:
• align managers’ rewards with improvement in
shareholder value
• achieve business plans and corporate strategies
• reward performance improvement
• retain key skills and competencies
C
hief Executive Officer remuneration
Mark Peterson commenced his role as NZX’s Chief
Executive Officer on 10 April 2017.
Mark Peterson’s remuneration is a mix of base salary
and short term and long-term incentive plan
components.
Mark Peterson’s base salary for 2018 was $500,000.
Mark Peterson’s potential short-term incentive plan
payment for 2018 was $500,000 ($250,000 for on-
target performance). Mark Peterson’s actual short-term
incentive plan payment for 2018 was $280,000. This
will be paid in February 2019. Mark Peterson's 2018
STI comprised two components. The first component
was based on NZX's financial performance against
target. The second component was based on delivery
against the key elements of the five year strategic plan
which included refocusing the business back on the
core markets business, building on the growth
opportunities, leading the business effectively and
further developing our market engagement.
Mark Peterson is currently allocated a long-term
incentive performance share rights plan to the value
of $250,000 each year. Vesting is dependent on NZX
meeting performance hurdles in respect of NZX's
total return to shareholders and its earnings per share
for the prior five year period, and on Mark Peterson
remaining an employee at the applicable vesting date.
Principle 6 – risk management

Directors should have a sound understanding
of the material risks faced by the issuer and how
to manage them. The board should regularly
verify that the issuer has appropriate processes
that identify and manage potential and material
risks.
Risk management framework
The board is responsible for the establishment and
oversight of NZX’s risk management framework,
together with setting NZX’s overall risk tolerance.
Significant risks are discussed at each board meeting,
or as required.
The board has established an Audit and Risk
Committee with responsibility to:
• review and provide feedback in respect of the
principal risks set out in NZX’s risk register
• ensure that management has established a risk
management framework which includes policies and
procedures to effectively identify, manage and
monitor NZX’s principal risks
• monitor compliance with, and assess the
effectiveness of, the risk management framework
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Principle 8 – shareholder rights and
relations

The board should respect the rights of
shareholders and foster constructive
relationships with shareholders that encourage
them to engage with the issuer.
Information for shareholders
NZX seeks to ensure that investors understand its
activities by communicating effectively with them and
giving them access to clear and balanced information.
The key information channels are NZX's website,
announcements and media releases, social media
channels, the annual and interim report, and the
annual meeting.
NZX’s investor centre contains annual and interim
reports, investor presentations, dividend information
and other information relating to NZX (including key
corporate governance documents).
Communicating with shareholders
NZX’s investor centre sets out NZX’s Chief Financial
Officer’s and Company Secretary’s contact details for
communications from shareholders. NZX responds to
all shareholder communications within a reasonable
timeframe.
NZX provides options for shareholders to receive and
send communications electronically, to and from both
NZX and its share registrar.
Shareholder voting rights
In accordance with the Companies Act 1993, NZX’s
Constitution and the NZX Listing Rules, NZX refers
major decisions which may change the nature of NZX
to shareholders for approval.
NZX conducts voting at its shareholder meetings by
way of a poll and on the basis of one share, one vote.
Further information on shareholder voting rights is set
out in NZX’s Constitution.
Notice of annual meeting
NZX’s annual meeting was held on 13 April 2018. The
notice of the meeting was released to the market on
16 March 2018 and was posted on NZX’s investor
centre. The 2019 meeting will be held on 5 April 2019
in Dunedin. An audio webcast of the meeting will be
made available to shareholders.
NZX Annual Report 2018
68
The committee reviews the risk register every quarter.
The committee also reviews the risk management
framework annually. The committee receives reports
on the operation of risk management policies and
procedures.
The executive team and senior management are
required to regularly identify the major risks affecting
the business, record them in the risk register and
develop structures, practices and processes to manage
and monitor these risks.
NZX maintains insurance policies that it considers
adequate to meet its insurable risks.
The board is satisfied that NZX has in place a risk
management framework to effectively identify,
manage and monitor NZX’s principal risks, including
a Conflict Management Policy, Continuous Disclosure
Policy, Delegated Authority Policy, Financial Products
Trading Policy, Fit and Proper Policy, IT Acceptable
Use Policy and Protected Disclosures Policy.
NZX engages EY to carry out internal audit functions
on various parts of its operations, including assessing
the effectiveness of NZX’s risk management policies
and procedures. Additionally, independent assurance
is provided, and reviews are undertaken on matters
such as risk capital, operational controls, IT/software
security and anti-money laundering procedures.
Key risks
NZX’s material issues for 2018 are outlined and
discussed at pages 24 to 51 of the Sustainability Report.
Chief Executive Officer and Chief Financial
Officer assurance
The Chief Executive Officer and Chief Financial Officer
have provided the board with written confirmation
that NZX’s 2018 financial statements are founded on
a sound system of risk management and internal
compliance and control; and that all such systems are
operating efficiently and effectively in all material
respects.
Principle 7 – auditors

The board should ensure the quality and
independence of the external audit process.
NZX’s Audit and Risk Committee makes
recommendations to the board on the appointment
and removal of the external auditor. The committee
also monitors the independence and effectiveness of
the external auditor and reviews and approves any
non-audit services performed by the external auditor.
An External Auditor Independence Policy was
approved by the NZX board in July 2018 setting out
the services that may or may not be performed by the
external auditor.
The committee regularly meets with the external
auditor to approve their terms of engagement, audit
partner rotation (at least every five years) and audit
fee, and to review and provide feedback in respect
of the annual audit plan. A comprehensive review and
formal assessment of the independence and
effectiveness of the external auditor is undertaken
periodically. The committee routinely has time with
NZX's external auditor, KPMG, without management
present.
KPMG attends the annual meeting, and the lead
audit partner is available to answer questions from
shareholders at that meeting. KPMG attended the
2018 annual meeting.
KPMG has provided the Audit and Risk Committee
with written confirmation that, in their view, they were
able to operate independently during the year.
NZX has appointed EY to perform a number of
internal audit functions. The Audit and Risk Committee
is responsible for overseeing the independence and
objectivity of the internal audit function and for
reviewing and monitoring the internal audit work plan,
reports from internal audit and management
responses. The committee routinely has time with EY
without management present.
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Corporate Governance

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70
Corporate Governance
NZX Annual Report 2018
70
Directors' Responsibility Statement
The directors are responsible for the preparation, in
accordance with New Zealand law and generally
accepted accounting practice, of financial statements
which give a true and fair view of the financial position
of NZX Limited and its subsidiaries (the NZX Group)
as at 31 December 2018 and the results of their
operations and cash flows for the year ended
31 December 2018.
The directors consider that the financial statements
of the NZX Group have been prepared using
accounting policies appropriate to the NZX Group’s
circumstances, consistently applied and supported
by reasonable and prudent judgments and estimates,
and that all applicable New Zealand Equivalents to
International Financial Reporting Standards have been
followed.
The directors are pleased to present the financial
statements of the NZX Group for the year ended
31 December 2018.
The financial statements were authorised for issue for
and on behalf of the directors on 14 February 2019.
James Miller
Chair of the Board
Lindsay Wright
Chair of the Audit and
Risk Committee

Financials
Auckland Sky Tower and CBD at sunset
FINANCIAL STATEMENTS
Income Statement 74
Statement of Comprehensive Income 74
Statement of Changes in Equity 75
Statement of Financial Position 76
Statement of Cash Flows 77
NOTES TO THE FINANCIAL
STATEMENTS
1. Reporting entity and statutory base 78
2. Intangible assets 81
3. Goodwill 83
4. Impairment tests 83
5. Segment reporting 85
6. Discontinued operations 87
7. Assets and liabilities held for sale 88
8. Adjustment to provision for earnout 89
9. Operating revenue 89
10. Operating expenses 91
11. Net finance expense 92
12. Funds held on behalf of third parties 92
13. Taxation 93
14. Earnings per share and net tangible
assets per share 94
15. Cash and cash equivalents, bank
overdraft and cash flow reconciliation 96
16. Receivables and prepayments 97
17. Property, plant and equipment 97
18. Trade payables 98
19. Other liabilities 99
20. Interest bearing liabilities 99
21. Shares on issue 100
22. Dividends 101
23. Share based payments 101
24. Financial instruments 103
25. Related party transactions 109
26. Lease commitments as leasee 110
27. Contingent liabilities 110
28. Capital commitments 110
29. Subsequent events 110
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Financials

75
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74
Financials
NZX Annual Report 2018
74The accompanying notes form an integral part of these financial statements
Income Statement
For the year ended 31 December 2018
Note
2018
$000
2017
$000
Total operating revenue967,49367,141
Total operating expenses10(40,210)(39,895)
Earnings before net finance expense, income tax, depreciation, amortisation and
impairment, adjustment to provision for earnout, gain and loss on disposal of
business and property, plant and equipment
27,28327,246
Net finance expense11(831)(261)
Gain/(loss) on disposal of property, plant and equipment(1)6
Depreciation and amortisation expense(6,425)(6,531)
Impairment expense4(352)-
Adjustment to provision for earnout815(390)
Profit before income tax19,68920,070
Income tax expense13(6,045)(5,720)
Profit from continuing operations13,64414,350
Profit/(loss) from discontinued operations (net of tax)6(2,024)487
Profit for the year11,62014,837
Earnings per share
Basic (cents per share)144.35.5
Diluted (cents per share)144.35.5
Earnings per share - continuing operations
Basic (cents per share)145.15.3
Diluted (cents per share)145.05.3
Statement of Comprehensive Income
For the year ended 31 December 2018
2018
$000
2017
$000
Profit for the year11,62014,837
Other comprehensive income recognised through equity
Foreign currency translation differences(170)(53)
Total other comprehensive income(170)(53)
Total comprehensive income for the year11,45014,784
NZX Annual Report 2018
The accompanying notes form an integral part of these financial statements75
Statement of Changes in Equity
For the year ended 31 December 2018
Note
Share
Capital
$000
Retained
Earnings
$000
Translation
Reserve
$000
Total Equity
$000
Balance at 1 January 201747,55621,94117869,675
Profit for the year-14,837-14,837
Foreign currency translation differences--(53)(53)
Total comprehensive income for the year-14,837(53)14,784
Transactions with owners recorded directly in
equity:
Dividends paid22-(16,104)-(16,104)
Share based payments21368--368
Cancellation of non-vesting shares21(473)473--
Total transactions with owners recorded directly in
equity
(105)(15,631)-(15,736)
Balance at 31 December 201747,45121,14712568,723
Profit for the year-11,620-11,620
Foreign currency translation differences--(170)(170)
Total comprehensive income for the year-11,620(170)11,450
Transactions with owners recorded directly in
equity:
Dividends paid22-(20,426)-(20,426)
Issue of shares213,201--3,201
Share based payments21534--534
Cancellation of non-vesting shares21(120)120--
Total transactions with owners recorded directly in
equity
3,615(20,306)-(16,691)
Balance at 31 December 201851,06612,461(45)63,482

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76
Financials
NZX Annual Report 2018
76The accompanying notes form an integral part of these financial statements
Statement of Financial Position
As at 31 December 2018
Note
2018
$000
2017
$000
Current assets
Cash and cash equivalents1525,38514,881
Cash and cash equivalents - restricted1520,00020,000
Funds held on behalf of third parties1256,70558,890
Receivables and prepayments169,21710,940
Total current assets111,307104,711
Non-current assets
Property, plant & equipment172,7602,444
Goodwill330,22233,929
Intangible assets236,50536,290
Assets held for sale7-2,415
Total non-current assets69,48775,078
Total assets180,794179,789
Current liabilities
Funds held on behalf of third parties1256,70558,890
Trade payables183,7983,810
Other liabilities1911,73623,580
Current tax liability132,222666
Liabilities held for sale720-
Total current liabilities74,48186,946
Non-current liabilities
Other liabilities19161-
Interest bearing liabilities2038,79720,000
Deferred tax liability133,8734,120
Total non-current liabilities42,83124,120
Total liabilities117,312111,066
Net assets63,48268,723
Equity
Share capital2151,06647,451
Retained earnings12,46121,147
Translation reserve(45)125
Total equity attributable to shareholders63,48268,723
NZX Annual Report 2018
The accompanying notes form an integral part of these financial statements77
Statement of Cash Flows
For the year ended 31 December 2018
Note
2018
$000
2017
$000
Cash flows from operating activities
Receipts from customers73,78278,942
Net interest paid(782)(92)
Payments to suppliers and employees(44,124)(48,394)
Income tax paid13(4,800)(6,072)
Net cash provided by operating activities1524,07624,384
Cash flows from investing activities
Cash (paid on acquisition)/received on disposal of businesses(5,449)7
Payments for property, plant and equipment(1,181)(302)
Payments for intangible assets(8,204)(5,782)
Net cash used in investing activities(14,834)(6,077)
Cash flows from financing activities
Proceeds from former CEO share scheme settlement23-1,874
Loan facility cancellation20(20,000)-
Issue of subordinated notes2040,000-
Transaction costs relating to subordinated notes(1,230)-
Dividends paid(17,508)(16,104)
Net cash provided by/(used in) financing activities1,262(14,230)
Net increase in cash and cash equivalents10,5044,077
Cash and cash equivalents at the beginning of the year34,88130,804
Cash and cash equivalents at the end of the year1545,38534,881

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Financials
NZX Annual Report 2018
78
Notes to the Financial Statements
For the year ended 31 December 2018
1. Reporting entity and statutory base
Reporting entity
These consolidated financial statements are for NZX Limited (the Company) and its subsidiaries (together
referred to as the Group) as at and for the year ended 31 December 2018.
The Group operates New Zealand securities, derivatives and energy markets, including building and
maintaining the infrastructure on which they operate. It provides funds management services including
superannuation and Exchange Traded Funds (ETFs), as well as building and operating wealth management
platforms for other providers. It also provides a range of information and data to support market growth and
development in the securities and dairy sectors.
The Company is incorporated and domiciled in New Zealand, registered under the Companies Act 1993 and
is an FMC reporting entity under the Financial Markets Conduct Act 2013 (FMCA). These financial statements
have been prepared in accordance with the Companies Act 1993 and the Financial Reporting Act 2013. The
Company is listed and its ordinary shares are quoted on the NZX Main Board. The company also has listed
debt which is quoted on the NZX debt market.
B
asis of preparation
The Group financial statements have been prepared in accordance with New Zealand Generally Accepted
Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial
Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit
oriented entities. The financial statements also comply with International Financial Reporting Standards (IFRS).
The measurement basis adopted in the preparation of these financial statements is historical cost, modified
by the revaluation of certain financial instruments as identified in the accompanying notes. These financial
statements are presented in New Zealand Dollars ($), which is the Company’s functional currency. All financial
information presented in New Zealand dollars has been rounded to the nearest thousand, except when
otherwise indicated.
B
asis of consolidation
The Group financial statements are prepared by consolidating the financial statements of all the entities that
comprise the Group, being the Company and its subsidiaries. Consistent accounting policies across the
parent and all subsidiaries are employed in the preparation and presentation of the Group financial statements.
NZX Annual Report 2018
79
i.Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the
date on which control is transferred to the Group. On acquisition, the assets, liabilities and contingent
liabilities of a subsidiary are measured at their fair values at the date of acquisition. In determining the fair
value of assets acquired, NZX assesses identifiable intangible assets including brands, intellectual property,
software, management rights and any other identifiable intangible assets using recognised valuation
methodologies and with reference to suitably qualified experts. Any excess of the cost of acquisition over the
fair values of the identifiable net assets acquired is recognised as goodwill.
ii.Investments in subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
In preparing the Group financial statements all intercompany balances and transactions, and unrealised
profits arising within the Group are eliminated in full.
A
ccounting policies
Accounting policies that summarise the measurement basis used and are relevant to the understanding of the
financial statements are provided throughout the accompanying notes.
The accounting policies adopted have been applied consistently throughout the periods presented in these
financial statements.
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2019, and have not been applied in preparing these financial statements. The
Group does not plan to adopt these standards early. The standards which are relevant to the Group are as follows:
i.NZ IFRS 16 Leases - effective for reporting periods beginning on or after 1 January 2019
This standard requires the recognition of operating leases in the Statement of Financial Position through
recognising a right to use asset and corresponding lease liability. This also results in a change in the Income
Statement, with rental expense being replaced with depreciation of the asset and interest expense on the
discounted lease liability.
The Group has completed an initial assessment of its operating leases in relation to the standards
requirements and determined that predominately property leases and certain other leases are applicable for
restatement.
The Group has elected to adopt the full retrospective approach, which means the 2018 comparative
information will be restated for 2019 reporting. The Group will recognise the cumulative historic effect of
initially applying the standard as an adjustment to equity as at the 1 January 2018 initial date of application.

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The Statement of Financial Position 1 January 2018 opening balances will be adjusted as follows:
Increase/(decrease)
2018
$000
Right of use asset7,147
Sublease receivable196
Deferred tax liability(815)
Right to use lease liability - current1,052
Right to use lease liability - non-current9,203
Equity(2,097)
This adjustment to opening Equity represents the accumulated asset depreciation and the lease liability
interest in prior years in excess of the standard lease expense reported in previous periods.
The impact on the Income Statement for current qualifying leases can be summarised as follows:
Increase/(decrease)
2018
$000
Other expenses(1,277)
Depreciation of right to use assets820
Net interest expense on lease liability/sublease421
Profit before income tax36
Income tax expense10
Profit from continuing activities26
Presentational changes
Certain amounts in the comparative information have been reclassified to ensure consistency with the current
period's presentation.
Accounting estimates and judgements
The preparation of the financial statements in conformity with NZ IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
The principal areas of judgement for the Group in preparing these financial statements that have a significant
risk of resulting in a material adjustment within the next financial year, including information about
assumptions and estimation uncertainties, are set out in:
• note 2 - intangible assets
• note 3 - goodwill
• note 23 - share based payments
NZX Annual Report 2018
81
2. Intangible assets
Intangible assets are initially measured at cost. The direct costs associated with the development of software
and website assets for internal use are capitalised where success is probable and the capitalisation criteria of
NZX's accounting policy and NZ IFRS are met. The cost of intangible assets acquired in a business
combination is their fair value at the date of the acquisition. Intangible assets with a finite life are amortised
from the date the asset is ready for use on a straight-line basis over its estimated life which is as follows:
• Software and websites: 3 — 9 years
• Brands, Trademarks, and rights to use Brands: 10 years
• Data archives, customer lists, databases, and other IP: 10 years
• Management rights: 20 years
At each reporting date, the Group reviews the carrying amounts of its intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. This is outlined in note 4.
Where estimated useful lives or recoverable values have diminished due to technological change or market
conditions, amortisation is accelerated.

83
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Software
and
websites
$000
Brands,
Trademarks
and rights to
use Brands
$000
Data
archives,
customer
lists,
databases,
and other IP
$000
Management
rights
$000
Intangible
work in
progress
$000
Total
$000
Gross carrying amount
Balance at 1 January 201733,5137,9063,38718,1165,72768,649
Additions----5,7825,782
Disposals(601)----(601)
Transfer from WIP6,873---(6,873)-
Transfer to assets held for sale-(5,336)---(5,336)
Balance at 31 December 201739,7852,5703,38718,1164,63668,494
Additions2---8,2028,204
Disposals(1,138)(2,388)(1,929)--(5,455)
Transfer from WIP10,168---(10,168)-
Transfer to assets held for sale(58)----(58)
Balance at 31 December 201848,7591821,45818,1162,67071,185
Accumulated amortisation &
impairment
Balance at 1 January 201723,5505,9831671,582-31,282
Amortisation expense4,728214195789-5,926
Impairment expense--277--277
Disposals(601)----(601)
Transfer to assets held for sale-(4,680)---(4,680)
Balance at 31 December 201727,6771,5176392,371-32,204
Amortisation expense4,92583-784-5,792
Impairment expense-136---136
Disposals(1,074)(1,681)(639)--(3,394)
Transfer to assets held for sale(58)----(58)
Balance at 31 December 201831,47055-3,155-34,680
Net Book Value
As at 31 December 201712,1081,0532,74815,7454,63636,290
As at 31 December 201817,2891271,45814,9612,67036,505
NZX Annual Report 2018
83
3. Goodwill
Carrying amount
2018
$000
2017
$000
Balance at beginning of the year33,92935,764
Agri impairment(2,526)(76)
Goodwill sold(1,181)-
Transfer to assets held for sale-(1,759)
Balance at end of the year30,22233,929
A cash generating unit (CGU) to which goodwill has been allocated is tested for impairment annually, and
whenever there is an indicator of impairment based on the performance of the CGU relative to expected
future performance and other relevant factors.
The directors have carried out impairment testing with the key assumptions set out in note 4. In 2017 the
goodwill impairment ($76,000) related to the Farmers Weekly business. The Farmers Weekly and FundSource
businesses were transfered to assets and liabilities held for sale in 2017. During 2018 the remaining Agri
businesses (AgriHQ and the Grain Information Unit) have been sold, resulting in a goodwill impairment of $2,526,000.
4. Impairment tests
Indefinite life intangible assets are reviewed for impairment annually. They are also reviewed for impairment
whenever there are indicators of impairment, as are finite life intangible assets.
A summary of the CGUs to which intangible assets have been allocated as at 31 December 2018 is outlined below:
Software &
websites
$000
Other finite
life
intangible
$000
Indefinite
life
intangible
$000
Work in
progress
$000
Total other
intangible
$000
Goodwill
$000
Total
$000
Cash generating unit
Clearing House4,839--54,844-4,844
Funds management17612,6172,34425915,39620,73036,126
Wealth Technologies7,912--5768,4881,4949,982
Energy2,953--4443,3977,72011,117
Direct data-1271,458-1,5852781,863
Other
Other intangible assets584--127711-711
Other computer software824--1,2602,084-2,084
17,28812,7443,8022,67136,50530,22266,727
Impairment test
For the year ended 31 December 2018, the directors have reviewed all intangible assets for impairment using
discounted cash flow analysis, comparable EBITDA multiple analysis and/or other factors as appropriate to the
asset being tested. All impairment tests have been undertaken on a value in use basis.

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Key assumptions used in the calculation of recoverable amounts in discounted cash flow analysis are
consistent with those used and disclosed in the financial statements for the year ended 31 December 2017
unless indicated otherwise. Discounted cash flow analysis using a forecast period of five years was used for
all CGUs, other than Energy where forecast periods of six years (to match the remaining contractual period)
and nine years (to match the remaining contractual period plus three years potentially to be renewed) were
both used. The analysis also uses an independently assessed WACC of 10.00% for the New Zealand CGUs
(2017: 10.35% for New Zealand CGUs and 12.76% for Australian CGUs) and were stress tested at higher
rates. The terminal growth rate used to extrapolate cash flow projections beyond five years was 1.75% (2017
between 1.75% and 2%). Management has assessed the long term economic outlook data available, and
assessed that the use of this terminal growth rate was appropriate, consistent with the prior year. Where
relevant, EBITDA multiples were used to cross-check the discounted cash flow analysis for established businesses.
During 2018 the Agri businesses (Farmers Weekly, AgriHQ and the Grain Information Unit) were sold, resulting
in goodwill and intangible assets impairment charges totalling $2,662,000 on disposal (2017: $353,000).
Additionally the FundSource business, within the Direct Data CGU, has incurred an impairment charge of $352,000.
The review of the carrying values of goodwill and intangible assets has determined that all the CGUs have
recoverable amounts exceeding their carrying values.
Further information on specific assumptions (other than the general assumptions outlined above) underlying
the CGU discounted cash flow analysis is set out below.
a.Clearing House
The principal assumption on which the discounted cash flows for this CGU are dependent is the future
revenue growth rate. Future revenue growth is dependent on growth in equity and dairy derivatives markets.
Growth in equity markets has been forecast based on historical growth rates, while dairy derivatives are
expected to grow at 33% p.a. (2017: 1% to 50% p.a.). This assumption is based on trading statistics for similar
derivative products in overseas markets and NZX's five year strategic plan.
b. Funds Management
Smartshares Limited acquired the management rights for SmartOZZY, SmartMOZY, and the SmartMIDZ funds
during 2004 - 2006 for a total value of $2,344,000. These are held in the Group accounts with an indefinite
life, as there is no expiry date for these rights and they are expected to apply indefinitely. Additionally the
acquisition of SuperLife Limited, effective 1 January 2015 has resulted in additional management rights
acquired of $15,772,000, which are held in the Group accounts as a finite life asset to be amortised over 20
years and goodwill of $20,730,000. The principal assumption on which the discounted cash flows are
dependent is the future level of funds under management (FUM), which is assumed to grow through both net
cash flows and market growth, driving FUM based revenue. FUM based revenue would have to reduce by 46%
in the forecast period to potentially indicate an impairment in the intangibles carrying value. The company
considers this reasonable based on historic experience and NZX's five year strategic plan.
NZX Annual Report 2018
85
c.Wealth Technologies
The principal assumptions on which the discounted cash flows for the Wealth Technologies CGU are
dependent is the future level of funds under administration (FUA) which is assumed to grow through both
bringing new clients on to the platforms and current client growth, driving FUA based revenue. FUA based
revenue would have to reduce by 21% in the forecast period to potentially indicate an impairment in the
intangibles carrying value. The Company considers this reasonable given the start-up nature of Wealth
Technologies and based on the continued interest from current and potential customers.
d. Energy
The carrying value of the Energy CGU includes a goodwill amount of $7,720,000. This business has a
significant reliance on service provider contracts it has in place with the Electricity Authority (EA) which were
renewed in late 2015 for the eight year period 1 May 2016 to 30 April 2024, with the EA having an option to
renew for a further 3 years. As a result of this renewal, NZX has certainty of minimum cash flows to be received
over the contract period which, and along with additional contracted consulting revenue, support the current
carrying value of the CGU.
e.Direct data
The principal assumptions on which the discounted cash flows for the Direct Data CGU are dependent is the
future revenue growth rate which is assumed to grow (through increased volumes and price increases) at 4.2%
p.a.to 4.5% p.a. (2017: 1.5% p.a. to 2.0% p.a.) during the explicit forecast period. The Company considers
this reasonable based on historical experience and NZX's five year strategic plan.
5. Segment reporting
The Group has five revenue generating segments, as described below, which are the Group‘s strategic
business areas, and a corporate segment which has no revenue but includes all costs that are shared across
the organisation. The reportable segments are:
• Issuer Relationships - provider of issuer services for current and prospective customers and market operator
for Fonterra Co-Operative Group and the Electricity Authority. For segmental reporting purposes
regulatory services is also included in this division;
• Secondary Markets - provider of trading and post-trade services for securities and derivatives markets
operated by NZX, as well as the provider of a central securities depository;
• Data & Insights - provider of data services for securities and derivatives markets and data and analysis for
New Zealand's dairy sector;
• Funds Management - provider of SuperLife superannuation and KiwiSaver and Smartshares exchange
traded funds; and
• Wealth Technologies - funds administration provider.

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The following segment is now presented as a discontinued operation (refer note 6):
• Agri - provider of information, news, data and analysis relating to the agriculture sectors (other than dairy)
in New Zealand and Australia through printed publications and online services.
In prior periods the Group had three reportable segments - Markets (comprising Issuer Relationships,
Secondary Markets and Data & Insights), Funds Services (comprising Funds Management and Wealth
Technologies) and Agri (now presented as a discontinued operation). The change in reportable segments is
a result of a strategy review completed in November 2017.
The Group’s CEO (the chief operating decision maker) reviews internal management reports for each of these
strategic areas on a regular basis. The Group’s revenue is analysed into each of the reportable segments.
Expenses incurred are allocated to the segments only if they are direct and specific expenses to one of the
segments. The remaining expenses that relate to activities shared across the group are reported in the
corporate segment.
The Group's assets and liabilities are analysed into each of the revenue generating segments, apart from
those assets and liabilities that are utilised on a shared basis, which are allocated to the corporate segment.
Segmental information for the year ended 31 December 2018
Unaudited
Issuer
Relationships
$000
Secondary
Markets
$000
Data &
Insights
$000
Funds
$000
Wealth
Technologies
$000
Corporate
$000
Total
continuing
operations
$000
Agri
$000
Total
including
discontinued
operations
$000
Operating revenue23,56716,65311,72814,4721,073-67,4934,32971,822
Operating expenses(4,939)(5,682)(1,831)(8,786)(2,112)(16,860)(40,210)(3,483)(43,693)
Total segment result18,62810,9719,8975,686(1,039)(16,860)27,28384628,129
Segment assets15,10486,2483,96840,95410,62723,803180,70490180,794
Segment liabilities(8,223)(56,248)(1,174)(6,758)61(44,970)(117,312)-(117,312)
Net assets6,88130,0002,79434,19610,688(21,167)63,3929063,482
Segmental information for the year ended 31 December 2017
Audited
Issuer
Relationships
$000
Secondary
Markets
$000
Data &
Insights
$000
Funds
$000
Wealth
Technologies
$000
Corporate
$000
Total
continuing
operations
$000
Agri
$000
Total
including
discontinued
operations
$000
Operating revenue24,25716,62911,46413,4481,343-67,1418,18475,325
Operating expenses(5,028)(5,360)(1,399)(9,040)(3,026)(16,042)(39,895)(6,427)(46,322)
Total segment result19,22911,26910,0654,408(1,683)(16,042)27,2461,75729,003
Segment assets13,82391,3665,35242,5616,56810,326169,9969,793179,789
Segment liabilities(6,665)(58,606)(876)(15,936)465(27,650)(109,268)(1,798)(111,066)
Net assets7,15832,7604,47626,6257,033(17,324)60,7287,99568,723
NZX Annual Report 2018
87
Geographical information
In presenting information on the basis of geographical segments, segment revenue is based on the
geographical location of customers. Segment non-current assets are based on the geographical location of the
assets.
Revenue
2018
$000
2017
$000
New Zealand55,17455,318
Australia3,1093,268
Other9,2108,555
Total revenue from continuing operations67,49367,141
Non-current assets
2018
$000
2017
$000
New Zealand69,48771,347
Australia-3,731
Total non-current assets69,48775,078
6. Discontinued operations
A discontinued operation is a component of the Group's business that represents a single major line of
business or geographical area of operations that has been disposed of or is held for sale. Classification as a
discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held
for sale, if earlier.
Management has sold Farmers Weekly, AgriHQ and the Grain Information Unit, the combined operations of
which represent the Agri reportable segment. The results for the year and comparatives have been re-
presented to show the Agri results as a discontinued operation, separately from the Group's continuing operations.
The results of the discontinued operation for the years presented in the income statement are as follows:
Note
2018
$000
2017
$000
Total operating revenue4,3298,184
Total operating expenses(3,483)(6,427)
Earnings before net finance income, income tax, depreciation, amortisation
and impairment, adjustment to provision for earnout, and gain/(loss) on
disposal of businesses and property, plant and equipment
8461,757
Net finance expense(32)(67)
Gain/(loss) on disposal of businesses and property, plant and equipment9-
Depreciation and amortisation expense(185)(511)
Impairment expense4(2,662)(353)
Profit/(loss) before income tax(2,024)826
Income tax expense13-(339)
Profit/(loss) from discontinued operation (net of tax)(2,024)487

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The cash flows of the discontinued operations for the years presented in the cash flow statement are as follows:
2018
$000
2017
$000
Net cash used in operating activities1,1221,388
Net cash from investing activities4,401(28)
5,5231,360
7. Assets and liabilities held for sale
In 2017 management committed to a plan to sell the Farmers Weekly business and the FundSource
investment research business. Accordingly, those businesses assets and liabilities were presented as a
disposal group held for sale at 31 December 2017. Farmers Weekly was sold during 2018 (refer note 6). The
assets and liabilities of Fundsource are presented as a disposal group held for sale at 31 December 2018.
a.Impairment losses relating to the disposal group
Impairment losses of $352,000 relating to FundSource for the write-down of the disposal group to the lower
of its carrying amount and its fair value less estimated costs to sell have been recognised in the current year
(refer to note 4). The impairment losses have been applied to reduce the carrying amount of goodwill and
other intangible assets (presented as held for sale) and is recognised within continuing operations.
Impairment losses recognised in 2017 of $353,000 related to Farmers Weekly and are presented within
discontinued operations.
b. Assets and liabilities of disposal group held for sale
As at 31 December 2018, the disposal group was stated at fair value and comprised the following liabilities:
Data
Services
$000
2018 Total
$000
Other current liabilities2020
Liabilities held for sale (current)2020
As at 31 December 2017, the disposal group was stated at fair value and comprised the following assets:
Farmers
Weekly
$000
Data
Services
$000
2017 Total
$000
Goodwill1,4363231,759
Intangible assets544112656
Assets held for sale (non-current)1,9804352,415
NZX Annual Report 2018
89
8. Adjustment to provision for earnout
During the year the Group satisfied the Retention Agreements entered into when NZX sold its 50% stake in
Link Market Services Limited (in 2015) through the issue of 124,540 NZX shares to key employees of Link
Market Services Limited. The value of shares issued was less than the provision held, resulting in a $15,000
adjustment to the provision for earnout.
At 31 December 2017, the Group increased the provision for the final earnout payment for the acquisition of
SuperLife to 100% of amounts payable (an increase of $390,000) to recognise that funds under management
were greater than the 100% earnout target. The earnout was paid (gross amount of $9,970,000) in February 2018.
9. Operating revenue
The Group has initially adopted NZ IFRS 15 Revenue from Contracts with Customers from 1 January 2018.
This standard contains new requirements for the recognition of revenue and involves an assessment of
performance obligations within contracts, allocation of the contract price to those performance obligations
and recognition of revenue as the performance obligations are satisfied. The Group has undertaken a review
of contracts and determined that no changes were required to the way revenue is recognised.
Revenue is recognised to the extent that it is probable that the economic benefit will flow to NZX and the
revenue can be measured reliably, regardless of when the payment is being made. Revenue is measured at
the fair value of the consideration received or receivable. The specific revenue recognition criteria for the
classes of revenue are as follows:
i.Issuer Relationships
• Issuer fees consists of revenue from annual listing fees, initial listing fees and subsequent capital
raisings. Initial and subsequent listing fees are recognised when the listing or subsequent capital raising
event has taken place. Annual listing fees are billed on 30 June for the following 12 month period and
are recognised on a straight line basis over this 12 month period.
• Other issuer services fees are for regulatory services are recognised when the service is provided.
• Market Operations revenue arises from the provision of post-trade systems and technology services for
both the energy and the Fonterra Shareholders markets, and energy advisory and development
services which are recognised over the period the service is provided.
ii.Secondary Markets
• Participant services consist of annual participant fees and initial participant fees. Initial participant fees
are recognised when the participant's application has been approved. Annual participant fees are billed
on 30 June for the following 12 month period and are recognised on a straight line basis over this 12
month period.
• Securities trading fees arise from the trading of debt and equities securities, which are recognised at
trade date.
• Securities clearing fees relate to debt and equity clearing and settlement, which are recognised at
settlement date (currently two days after initial trade date).