ASX Announces Return Of Capital And Special Dividend

Australian Stock Exchange Limited ("ASX") today (September 28) announced its intention to return $30m to shareholders. The return will implemented by a reduction in capital of approximately $20m and a special dividend of approximately $10m which will be fully franked. In determining the amount to be returned to shareholders the Board considered the following: an appropriate level of permanent capital in light of ASX's important role. ASX believes the minimum level of permanent capital should be $100m; the amount of cash considered surplus to fund any business development or acquisitions; and the Board's desire to maintain a cash balance of around $120m. The passing of the Demutualisation of Non-Insurance Mutual Entities ("NIMO") Legislation has made it possible for ASX to transfer a maximum of $118.9m to permanent share capital from retained earnings without triggering the operation of the share capital tainting provisions and to facilitate a capital return on a tax effective basis. In the context of its decision and the remaining cash reserves, the Board also determined to maintain ASX's current dividend policy of payment of 100% of after tax profits for 1999/00. "The Board's decision is consistent with the commitments we gave in our Information Memorandum and also at the release of our full year results, to review our surplus cash in order to deliver best value to shareholders," said ASX's Managing Director and CEO, Mr Richard Humphry. "We will of course continually review growth opportunities and, accordingly, monitor our cash requirements. "Unlike most other companies, we think that it is important for ASX to maintain a relatively high level of cash reserves because of our unique role - we need to ensure the need for unquestioned market confidence. "Some of the remaining cash is earmarked to fund the development of other initiatives, such as the Nasdaq alliance. While the SFE is not currently on our agenda, this cash return doesn't preclude us from looking at any merger with the SFE in the future," he said. Shareholder approval for the capital reduction will be sought at an extraordinary general meeting to be held in February 2000. At that time ASX will also seek to implement a dividend reinvestment plan to be activated at the Directors' discretion. ASX currently has no plans to activate the dividend reinvestment plan. If approved, it is anticipated the capital repayment would occur in March, along with payment of the special dividend and interim half year dividend.