Index changes announced today are scheduled to take effect on Monday 3 April 2006, the first trading day of the next quarter.
As a New Zealand-domiciled company, NZ Refining, which listed in September 1962, is eligible for the NZX 50 Index according to its "free float market capitalisation". This methodology means that the holdings of strategic shareholders are excluded from each security's index weight. The free float methodology is intended to ensure that the NZX 50 Index comprises securities that have sufficient liquidity for investors to be able to invest reasonable sums of cash across the index.
NZ Refining has a full market capitalisation of around $1.5 billion, but has several shareholders that control large strategic stakes, leaving only 13% of the company as "free float". After a strong performance in the past year, this 13% of the company is capitalised at around $205 million, enough to qualify NZ Refining for the NZX 50 Index with a ranking of around 40th, based on the current prices of other securities in the index.
NZ Refining will be filling a vacancy in the NZX 50 Index created by the removal of AXA Asia Pacific Holdings Limited (AXA). AXA is no longer eligible for the index due to cessation of its New Zealand listing.
NZ Refining will be added also to the NZX 50 Portfolio Index and NZX MidCap Index. The NZX 50 Portfolio Index is a replica of the NZX 50 Index, except with the weight of each constituent capped at 5.0%. The NZX MidCap Index comprises the medium-sized domestic companies of the NZX 50 Index - it excludes those companies large enough to qualify for the blue-chip NZX 10 Index.
NZ Refining's promotion to the NZX 50 Index could be expedited if the takeover of Carter Holt Harvey Limited by Rank Group Investments Limited (Rank) were to reach 90%, allowing Rank to compulsorarily acquire the remaining shares. This would result in Carter Holt Harvey Limited being removed from the NZX 50 Index. In this circumstance, NZ Refining would replace Carter Holt Harvey Limited in the NZX 50 Index and an additional issuer would be promoted to replace AXA at the Quarterly Index Review. If Rank's takeover offer does not reach 90%, Carter Holt Harvey Limited is expected to retain a place in the NZX 50 Index for the foreseeable future.
Summary of key index changes effective Monday 3 April 2006:- NZX 50 Index, NZX 50 Portfolio Index
The New Zealand Refining Company Limited (NZR) will be added to the above indices. AXA Asia Pacific Holdings Limited (AXA) will be deleted. - NZX MidCap Index
The New Zealand Refining Company Limited (NZR) will be added to the NZX MidCap Index.
Changes to the NZX Equity Indices in no way reflect an opinion on any NZX Listed Issuer - they are determined solely by the NZX Index Methodology. These index changes arise from NZX's regular Quarterly Index Review schedule. Quarterly Index Reviews are conducted in March, June, September and December of each year.
