NZX Annual Report 2007

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NEW ZEALAND EXCHANGE LIMITED ANNUAL REPORT

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Issued 11 March 2008
Contents
1 . C h a i r m a n ’s R e p o r t
2 . C h i e f E xe c u t i v e ’s R e p o r t
4. Performance Summary and Outlook
15. Board of Directors
20. Financials
62. Statutory Information
72. Directory
ANNUAL MEETING and Financial Calendar
Annual Meeting
The Annual Meeting of shareholders of NZX will be held at NZX Centre, Level 2, 11 Cable Street,
Wellington, New Zealand on Thursday 10 April 2008, commencing at 4.00pm. Full details, including
the business to be dealt with, are contained in the Notice of Meeting.
Financial Calendar
31 December 2007 2007 Financial Year end
15 February 2008 Preliminary Full Year Financial Results issued
11 March 2008 2007 Annual Report issued
4.00pm, 8 April 2008 Latest time for receipt of proxies for Annual Meeting
4.00pm, 10 April 2008 Annual Meeting – Record and payment date for dividend advised
July 2008 Preliminary Half Year Announcement issued
September 2008 2008 Half Year Report issued
31 December 2008 2008 Financial Year end

CHAIRMAN’S REPORT
There has been some very hard work going on behind the scenes in 2007 to create an optimal
environment for the ongoing development of New Zealand’s capital markets. NZX has been
working closely with both the New Zealand and Australian governments to contribute to legislative
change that will drive forward some key innovations for NZX in both markets.
Here in New Zealand we have been working with the Ministry of Economic Development to
facilitate an active derivatives market for this country. Currently investors can trade only cash
products on NZX markets. The 2008 priority for NZX is the upgrade of our clearing and settlement
system, which will enable us to offer a broader range of equity, debt and derivative products including
commodity derivatives and carbon units. This will also align us with international best practice for
clearing and settlement for all products traded on NZX markets.
In preparation for the launch of AXE ECN in Australia we have been working with the Australian
Securities and Investment Commission (ASIC). ASIC released two Consultation Papers in 2007,
both of which supported a positive regulatory landscape for market participants, and a market
landscape where competition drives value. AXE ECN will provide value in pricing, innovation and
technology for market participants. NZX is proud to be integral to that offering.
2007 was a year of doing the necessary and invisible work behind the scenes. The next chapter will be
about execution. These exciting market developments - coupled with sound and sensible regulatory
and fast, scalable and leading technological infrastructure, spanning both domestic and international
territory - will deliver benefits to NZX stakeholders.
The immediate future is thus one of providing a better trading environment for market participants
and listed companies, and offering a more sophisticated market with a broader range of investment
options for New Zealand investors, expanding NZX group’s activities beyond traditional activities -
and in doing so, continuing to generate value for our NZX shareholders.
We are pleased to report these initiatives while at the same time achieving a very positive
financial performance.
Simon Allen, Chairman

11 March 2008
1
CHIEF EXECUTIVE’S REPORT
A pivotal point in our evolution
NZX’s strategy recognises that in a global context that is fast, complex and uncertain, the only
approach to strategy that can consistently add value over time is flexibility around a core set of
strategic criteria. While a fixed focus on a couple of set tenets may maximise value in any given
period, inevitably that period will run out, and failure to be flexible can have catastrophic results.
NZX will not fail to be flexible and adapt.
NZX is at a highly defined, and pivotal, point in its evolution. As you will have read and heard
in previous communications from me, Phase I - from 2002 to 2004 - was aimed at fixing the
franchise: getting the house in order so we could meet the challenges of a new era of visibility and
accountability. Overlapping that was Phase II, from about 2003 to 2006. This was dedicated to
maximising the value of the core franchise, and strengthening its long-term viability and resiliency.
Phase III commenced in 2007, and we’re already seeing its impacts in 2008. The predominant
focus of Phase III continues to be seeding real and valuable options in major growth areas such as
derivatives, the Australian market (specifically with AXE ECN) and carbon, amongst others. Over
Phase III, as these options generate positive cash flows, NZX’s cost and capex lines will show some
growth ahead of revenue recognition.
Phase IV, which begins now, will run simultaneously with the latter part of Phase III, and persist for
the next three to four years. The key feature of this phase will be realising the positive value of those
options. The result will be an NZX that displays the following characteristics:
• A strong domestic position and resilience in the growth franchise, with real upside from
derivatives and liquidity growth
• Emerging international business exposure in a couple of global niches in which we can be

distinctive, and which we can scale beyond New Zealand or any one market
• A successful strategic investment portfolio, which has both strengthened the financial position
and the core business of NZX.
One of the factors in the resilience of NZX’s business is our debt/hybrid market. It provides both
counter-cyclical cover to the listing businesses, and provides a great facility for NZX Market
Participants to provide quality products to their customers. Underwriting and distributing debt and
hybrid products is important to the financial health of NZX Market Participants - which matters to
NZX and to the long-term health of the markets more broadly.
Beginning with this report, we will deliver a detailed insight into the subsidiaries and strategic
investments beyond the core NZX Markets business. This will ensure that all our stakeholders
have a clear picture of how NZX’s strategy, combining essential stability with critical flexibility, will
continue to present genuine options for growth into the future.
Mark Weldon, Chief Executive Officer

11 March 2008
2 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

NZX conducted a survey of market
analysts in 2007. They told us they
wanted to see a stronger focus on
future outlook, and more detail on
subsidiaries and strategic investments,
in our financial releases.
Accordingly, NZX will produce a detailed report at Full and
Half Year result periods that comprises four sections:
I. NZX Group: 2007 Performance Summary
II. NZX Group: 2008 Outlook
III. NZX Group: Key Operating Metrics
IV. NZX Group: Statement of Financial Performance 2007
3
I. NZX Group: 2007 Performance Summary
Operating revenue: $31.45 million versus $25.03 million (excluding changes in fair value of financial assets) in
2006, an increase of 26%.
Operating expenses: $16.71 million versus $14.23 million (excluding one-off items) in 2006, an increase of 17%.
EBITDA: $14.74 million versus $10.44 million in 2006, an increase of 41%.
EBITDA margin: 47% versus 42% in 2006, an increase of 12%.
NPAT: $8.71 million versus $6.50 million in 2006, an increase of 34%.
NPAT margin: 27.7% versus 26% in 2006, an increase of 6.5%.
Fully diluted earnings per share: 36.17c per share versus 27.91c per share in 2006, an increase of 30%.
EBITDA for the NZX Group was up 41% in 2007. This is evidence of the resilience and strength of our business in a year
where market conditions were characterised by uncertainty and volatility.
The financial results continued the trend of previous years with revenues growing faster than costs, and both earnings
and margins improving significantly. Key contributions came from the data and listings areas, with a particularly strong
showing by secondary capital raisings. Also worth noting are the improved contributions from Smartshares Limited (SS)
and a much improved year from LINK Market Services Limited (LINK).
AXE ECN (AXE) experienced delays in regulatory approvals, which NZX is confident will be resolved early in 2008. NZX
expects to see increased earnings contributions to the Group result from all the above-named subsidiaries.
Overall operating expenses increased 17% to $16.71 million in 2007. The majority of this increase was in relation
to employee costs associated with businesses purchased in the second half of 2006 and 2007. NZX also opted to
make the maximum 4% employer KiwiSaver contribution from the 1 July 2007 KiwiSaver launch date.
NZX Markets Business: 2007 Performance

Total NZX Markets operating revenue grew to $28.55 million, from $23.00 million in 2006, an increase of 24%.
The NZX market information business generated $10.54 million in revenue, an increase of 72% on 2006. Key drivers
were continued growth in demand for NZX data with the number of real time terminals worldwide at the end of 2007
up 20% on 2006, and revenue growth from acquired businesses Company Research Centre (formerly IRG Data),
NZX Agrifax, FundSource and NZX NewsRoom. These new businesses together provide a full suite of New Zealand
business data offerings.
Listings revenue grew to $9.10 million, a 12% increase on 2006. There was also a significant level of secondary
capital raised in 2007 with existing issuers raising capital for growth and acquisitions.
Trading, clearing and settlement revenue was up 3% on 2006 at $4.85 million.

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NZX Subsidiaries and Strategic Investments: 2007 Performance

Smartshares EBITDA reached $673,000, a 24% increase on 2006.
LINK delivered an EBITDA result of $985,000 versus $325,000 in 2006. LINK also began to return capital to NZX,
redeeming preference shares in 2007.
AXE has worked effectively with ASIC on gaining regulatory approvals, which we confidently expect in 2008. AXE
also announced that it will move quickly to launch a full trading facility in addition to the reporting facility.
A key event in 2007 was the announcement of the formation of the TZ1 Carbon Market.
NZX Capital Management

NZX’s current dividend policy is to pay a dividend of up to 60% of NPAT. Continuing this policy, NZX will pay out
60% of NPAT for the 2007 year, giving a total distribution of $5.2 million, or 21 cents per share, fully imputed. The
NZX Board has also resolved that if the 10-day volume weighted average price (VWAP) of the NZX share price is
below $8.50 immediately prior to the NZX Annual Meeting on 10 April 2008, the dividend reinvestment plan will
be suspended, and dividends for all shareholders will be paid in cash. If the 10-day VWAP is $8.50 or above, the
dividend reinvestment plan will remain available. In this circumstance, shares issued under this programme will be
at the 10-day VWAP. In line with this policy, the NZX Board will make its final capital management announcement in
respect of the dividend distribution at the Annual Meeting.
NZX’s capital management policy is to fund infrastructure investment, organic growth and bolt-on acquisitions
from retained earnings. Any larger investments or acquisitions will likely be funded from existing cash reserves,
and thereafter by debt funding.
The NZX Group currently has no borrowings. NZX anticipates that opportunities may arise which require larger investment
amounts. For opportunities with the right returns profile, NZX is likely to obtain debt funding. Debt funding will only be
undertaken where it reduces the weighted average cost of capital (WACC) from its current equity-only basis.
5
II. NZX Group: 2008 Outlook
Strategy
The NZX Group has two dominant areas of strategic focus for 2008.
First, infrastructure and market development. Central to this is implementation of a Central Counterparty (CCP), a
Central Securities Depository (CSD) and an upgraded Clearing and Settlement infrastructure. This will benefit our broker
customers by enabling them to scale their own businesses better and to manage risk more simply, and will enable the
development of a strong, New Zealand-based derivatives market with a wide range of products traded including equity
derivatives and commodities. A sharpened focus on specific aspects of the listing and liquidity areas is also a priority.
Improvements to liquidity through market microstructure, new products, greater use of Direct Market Access (DMA) and
continued work with technology companies on listing will predominate.
Second, further developing international niche businesses that leverage our skills and knowledge. NZX’s focus is on creating
opportunities in products and jurisdictions with higher growth characteristics than our domestic business. AXE ECN (AXE)
and TZ1 are key components, but NZX expects these to be augmented by additional international investment in 2008.
NZX will, as previously, continue to assess and, as appropriate, execute manageable “bolt-on” acquisitions at sensible
prices in the data area.
Financial Performance
The strategy executed by NZX over the past four years has built increased financial resilience to short-term changes
in market performance, listings and liquidity. Accordingly, while there remains uncertainty for 2008, NZX is confident of
continuing to deliver improved financial results at Group EBITDA and NPAT levels.
Until this point, the NZX business has been relatively simple, with the focus very much on EBITDA. Going forward,
however, NZX’s subsidiaries and investments will become increasingly important. Accordingly, we will report on their
performance and outlook in greater detail from this point forward.
Team
Our approach to organisation is driven by the need to be expert at three things: running a strong and resilient market,
innovating and executing projects.
All our recruitment, development, incentive and other talent programmes are driven by the need for the wider NZX team to
be expert in these three activities.

NZX Markets Business: Future Outlook
Strategy
NZX group priorities – aimed at infrastructure, derivatives and liquidity improvements – are directly centered in this area.
The new Trayport trading system implemented in 2007, combined with an upgraded Clearing and Settlement system in
2008, will increase the range of products able to be traded on NZX markets. The new Clearing and Settlement system will
enable a range of derivative products - equities, commodities and carbon - to be traded and cleared at a low marginal cost
to customers. Equity derivatives and commodities are the focus.
The performance focus for liquidity is to improve the underlying liquidity of NZX markets at every level of listed product.
Microstructure initiatives (e.g. market makers and DMA) are critical.
These major technology upgrades, and the product opportunities they enable, are expected to have a positive impact on
overall market liquidity. The 2008 performance target in liquidity is to see average daily trade numbers increase 10% from
the current level of 2,500.
Financial
Of the business lines most influenced by local market share price performance (i.e. bull vs. bear), listings has the
greatest sensitivity. Bull or stable markets result in strong listing growth; bear markets do not. While the market
information business is not exposed to market performance, it has some exposure to global financial institution
headcount changes, where significant headcount cuts could impact terminal numbers.
NZX Subsidiaries and Strategic Investments: Detailed Performance and Future Outlook
Strategic Criteria
NZX’s domestic subsidiaries and investments Smartshares, LINK and Appello align with NZX’s strategic investment criteria
of deepening and improving the quality of the overall New Zealand capital markets.
For NZX to make international investments, these must extend market infrastructure or expertise into high growth niche
areas, increasing our scalability and growth outlook.
NZX spends significant time evaluating the strategy of each potential business investment. NZX’s approach to managing
its positions in subsidiaries and investments is similar to that of a listed investment company. For non 100%-controlled
subsidiary companies, NZX manages its exposure through boards and governance, rather than through directly managing
the businesses themselves.
7
Business Overview Future Outlook
Smartshares is a wholly-owned subsidiary of NZX. As at 31 Over each of the last four years, Smartshares’ main
December 2007, Smartshares had $652 million in Funds focus has been on acquiring new funds, launching
Under Management. Smartshares manages five listed, new funds, or adding product features such as direct
exchange traded funds (ETFs) all of which are registered as deposit. For 2008 the focus is purely on improving
Portfolio Investment Entities (PIEs). Smartshares also has Smartshares’ profitability through managing fund
its own KiwiSaver scheme, Smartkiwi. Smartshares funds expenses downward, growing units in the existing
focus on the most tax efficient investment geographies for Smartshares funds and adding revenue lines such as
New Zealanders. those arising from the introduction of stock lending.
Smartshares expects to deliver significant productivity

Strategic Attributes
and cost improvements in 2008. While revenue has
Smartshares, New Zealand’s largest passive funds reasonable reliance on market performance, any risks to
provider, provides a low-cost investment option for this area should be balanced by new units created and the
retail investors. For the “entry level” investor segment, initiation of stock lending activities. Upside to the financial
Smartshares provides diversified investment options year would come from winning wholesale mandates from
where investors may not have wealth to create a diversified institutions that have experienced underperformance
portfolio themselves, thus allowing an easy “first step”
relative to the market during the recent market volatility.
into the equity markets. As ETFs are good lenders of stock,
Smartshares intends to lend its stock to help develop the Operating Metrics 2007
(currently nascent) short side of the NZX markets. This % Change
should result in liquidity growth in the overall NZX markets.
Funds Under Management $652 million 30%
Financial Attributes Number of Retail Unit Holders 15,011 2%
Smartshares has a scalable business model. Smartshares Financial Highlights 2007

have very low redemption risk, as when investors exit their % Change*
Smartshares position, they sell on market rather than
Operating Revenue $3.10 million 33%
redeeming units. This provides significant financial stability.
Operating Expenses $2.42 million 35%
2007 Financial Results Operating EBITDA $673,000 24%
Revenue growth for Smartshares in 2007 was up 33%. Operating EBITDA Margin 22% 23%
Expenditure in 2007 was up 35%, driven by costs
NPAT $442,00 27%
associated with the introduction of the PIE regime and
our Smartkiwi KiwiSaver products. Absent these one-off NPAT Margin 14% 15%
costs, expenditure growth would have been 24%, and * Margin numbers (Operating EBITDA, NPAT) are shown as actual levels
rather than % change.
NPAT would have risen by 65%.

Business Overview 2007 Financial Results
LINK Market Services Limited (“LINK”) is a 50:50 joint LINK experienced strong revenue growth of 38% in 2007.
venture company between NZX and Link Market Services This resulted in a $985,000 EBITDA result, up from less
Australia (owned by Pacific Equity Partners). LINK provides than $325,000 in 2006. In 2007 LINK returned $700,000
a full range of registry services for both listed and unlisted in Redeemable Preference Shares to its two shareholders
issuers. LINK now has approximately 30% of the New and made an NPAT profit for the first time.
Zealand registry business by number of issuers. In 2007
LINK captured approximately 40% of IPOs by number. Future Outlook
The focus for 2008 is purely on execution of the core
Strategic Attributes business model. LINK’s last three years have all had
LINK provides another means for NZX to benefit from a development focus (core system, wholesale debt
growth in the IPO and secondary issuance market. NZX functionality, a business service centre, and upgrades in
also invested in LINK to bring real competition and electronic communications for issuers). In 2008 the focus
innovation to the registry market. LINK has succeeded is on growing profitability.
in raising significantly the level of technology and service In 2008 LINK is expected to return over $1 million in
provided to issuers in the New Zealand market, and Redeemable Preference Shares to its shareholders,
improving the overall New Zealand capital markets. As driven by improved EBITDA and NPAT results. LINK has
this increases the overall competitiveness and value of a some sensitivity to the IPO market, so the actual EBITDA
listing, it aligns well with NZX’s long-term goals. outcome could range from slightly to materially improved.
Financial Attributes Operating Metrics 2007

% Change
LINK provides high quality, reliable revenue as issuers
tend to remain for a significant period of time with their Number of Holders 320,000 7%
registry provider. Total Number of Issuers 144 11%
As LINK’s core registry systems are electronic, LINK IPOs Won 40% 0%
exhibits good scalability. LINK is currently at the level
where margins will now improve with revenue growth. Financial Highlights 2007
LINK also provides some cyclical protection for NZX. In % Change*
particular, there is little difference in the registry business Operating Revenue $4.151 million 38%
between a debt and an equity IPO. LINK also receives
Operating Expenses $3.166 million 18%
capital markets work in takeovers. While takeovers are
negative for the NZX Markets businesses, LINK receives Operating EBITDA $985,000 203%
additional capital markets work, providing some hedge Operating EBITDA Margin 24% 11%
from such events.
NPAT $26,000 105%
* Margin numbers (Operating EBITDA, NPAT) are shown as
actual levels rather than % change.
9
The Australian ECN
Business Overview Financial Attributes

AXE ECN (“AXE”) in Australia is a joint venture between AXE is a very scalable business. The two main revenue
NZX and five major broking firms (Citigroup, Goldman lines will come from trading and the sale of market data,
Sachs, Commonwealth Securities, Merrill Lynch and both provided by the core trading system. Staffing should
Macquarie). AXE crossings platform is expected to start remain reasonably static with liquidity growth.
trading in the first half of 2008. We confidently expect full NZX will receive a fixed cost for the provision of market
trading to commence in the September quarter of 2008. operations and market surveillance services. This will
ensure that AXE remains current with global trends and
Strategic Attributes regulatory requirements, and provides a fair commercial
AXE gives NZX access to the scale of the Australian capital return to NZX.
market. NZX has earned its spot on the AXE ownership

group by its ability to extend its world-class (in terms 2007 Financial Results
of speed and scalability) trading system, and its skills
The timing of the Australian election delayed AXE’s launch
at running both regulated markets and an exchange
in 2007. The near-term focus for AXE is thus securing an
business. This also allows NZX to provide world class
Australian Market Licence (AML) to enable Phase I of the
infrastructure across two markets, rather than one.
business to be operational by May 2008.
NZX believes that, in the medium-term, the New Zealand
During 2007 AXE generated revenues of AUD$189,000,
and Australian capital markets will function more and more
incurred total expenses of AUD$1.475 million, and
as one market. In this event, the NZX system will be the
has recognised a future tax benefit in relation to these
only trading system providing common Australasian access
of AUD$383,000, resulting in an after-tax loss of
via standardised FIX 4.4 interface, world-class speed of
AUD$903,000 for 2007. The total future tax benefit
execution (a platform measured with confidence as being
recognised on the balance sheet as at December 2007
faster than the Australian incumbent), high scalability, high
is AUD$608,000. It is expected that AXE will derive
trans-Tasman bandwidth, and knowledge of both regulatory
taxable income in the future to utilise this benefit. While it
environments. As the markets converge, this platform will
awaits approval of its AML application, AXE has attracted
be valuable in bringing new liquidity to NZX (i.e., brokers
significant interest within the Australian financial service
will already be connected to the platform), and providing
sector. The need for competition in this area prompted
real options for further NZX business in Australia.
Australian brokers, institutional investors and industry
groups to make positive submissions to the local regulator.
The AXE crossings platform is due to start trading in the
first half of 2008, with full trading commencing in the
September quarter.

Future Outlook
The AXE business will launch in two phases in 2008. First,
AXE will offer a trade-reporting facility (similar to BOAT in
Europe). Second, AXE will launch a full electronic order
book and matching engine to trade ASX listed securities,
developing a full continuous auction model to complement
the crossings platform. Full trading is expected to
commence in the September quarter of 2008.
Both the AXE Board and NZX are positive about the 2008
financial and strategic prospects for the business.
The risks to AXE centre around potential stalling by ASX in

providing timely access to its vertically integrated CHESS
Clearing and Settlement infrastructure.
The prospect of volatile markets in Australia is not

negative for AXE. One of AXE’s key competitive advantages
is pricing, which will become even more important if broker
profits are squeezed, and attention switches to costs.
AXE’s business model – based on providing a technological

advantage to clients, a best-execution orientation, and
customer-focused pricing – is expected to generate
significant interest and market share.
11
Business Overview Together this provides TZ1 with a cost-effective, fixed
operating cost structure – with other expense purely
In December 2007, NZX announced both the
focused on growth outcomes.
establishment of TZ1 as a separate company, with initial
funding from NZX, and a very strong executive team. The three key business areas are carbon registry, voluntary
TZ1’s ambitions are global, while retaining a strong New carbon trading (largely spot), and trading in compliance
Zealand identity and focus. units (e.g., NZUs and CERs) in both spot and futures
Carbon is emerging as a significant globally traded markets. As with any other market, volume will result in
commodity: greenhouse gas emission permits and credits scalability of returns. As transacting carbon involves the
were traded for 40.4 billion in 2007, an increase of 80% creation of a new set of products and a broader range
on the previous year. of participants, a reasonable lead time to launch and
TZ1 will launch its emissions trading platform in 2008, profitability is expected.
following the passage of both carbon trading and Clearing There are three broad possible outcomes for the TZ1
House legislation, which together support trading of carbon business. First, TZ1 establishes a strong global market
on an exchange in New Zealand. position, with particular strength in the Asia-Pacific time
zone, and is very successful as a stand-alone business.
Strategic Attributes Second, TZ1 establishes a competitive domestic
The New Zealand Emissions Trading Scheme (NZETS), Australasian market platform whereby shareholders are
announced by government in Q4 2007, provides a key rewarded with a moderate return on investment, and
competitive advantage for New Zealand. As the only the business realises capital value for its shareholders
domestic emissions trading scheme outside Europe, by combining with complementary business. Third, the
and the only all-sectors and all-gases Kyoto-linked business does not reach anticipated scale and is excluded
scheme in the world, the NZETS will help create a from any subsequent consolidation.
market for supply and demand of globally fungible
(interchangeable) Kyoto credits.
2007 Financial Results
NZX’s knowledge and networks established in this area
There were no separately reported 2007 revenues
over the past 18 months, together with its infrastructure
or costs for TZ1. All development and set-up costs
and skills, enables TZ1 to seize an early-mover advantage
(employees, legal etc.) are included in NZX’s operating
in this fast-growing global market. For NZX, TZ1 provides
expenses for 2007.
an opportunity to extend its existing infrastructure (trading,
clearing, settlement and data distribution channels) into a
growing global market at an early stage. Future Outlook
The TZ1 team has two key areas of focus for 2008.
Financial Attributes First, determining its strategy with respect to offshore
relationships, cornerstone investors, capital-raising,
TZ1 is a start-up, and very scalable, business. The
strategic acquisitions and other business initiatives.
business model involves a market infrastructure platform
Second, successful launch of its trading platform.
with a fixed cost base. NZX will provide TZ1 with corporate
and market operating services for a fixed annual fee.

Business Overview 2007 Financial Results
Appello Services Limited is a start-up fund NZX acquired 30% of Appello in November 2007. This
management services business which provides a business is in the start-up phase and, as expected,
set of fully electronic administrative and compliance is currently making a loss as no significant revenues
services for New Zealand fund managers. Appello was have been delivered. To date Appello has incurred total
established in response to the increasingly complex expenses of $75,000 and has recognised a future tax
technology needs of fund managers (including those benefit in relation to these costs of $25,000, resulting
created by the PIE tax regime). in an after-tax loss of $50,000 for 2007. The future tax
benefit has been recognised as Appello will derive taxable
Strategic Attributes income in the future to utilise this benefit.
The Appello business model addresses a gap in the

Future Outlook
current funds management business by providing a fully
electronic, scalable system capable of managing multiple The focus for 2008 is to (i) establish its operating
asset classes. The potential customer base is increasing platform, and (ii) secure an anchor customer for the
due to new product opportunities as a consequence Appello solution. It is expected that customers managing a
of the PIE regime, and the expected flow of money into total of $1 billion Funds Under Management will be on the
managed funds. Appello platform by end of 2008.
Appello increases NZX’s exposure to the funds Appello’s infrastructure has been proven through a proof-
management industry, which is attractive because of PIE of-concept customer, who has already been secured.
and KiwiSaver. There are no integration costs to NZX in
this business, but real value delivered because of NZX’s
involvement – including knowledge gained through LINK.
The board and CEO of Appello have proven expertise in
the sector.
Financial Attributes
A fixed cost base and a heavily automated business will
drive significant scalability as multiple customers are
served off the same technology and networks.
Equally, once a fund manager changes (or selects for

the first time) its registry and administrative solution,
the customer is generally committed to the product for
the long term, as it becomes an essential part of their
operations and switching costs are high.
13
III. NZX Group: Key Operating Metrics
NZX Markets Business – Operating Metrics AXE ECN – Operating Metrics

Total of number of trades Market share
Average daily trades Number of shares
Total value traded Value traded
Average daily value traded

TZ1 Carbon Market – Operating Metrics
Total number of NZX listed issuers
Registry customers
Number of data terminals
Voluntary market trades
Total capital raised (primary and secondary)
Compliance market trades (spot)
Smartshares – Operating Metrics Compliance market trades (forward)
Total Funds under Management (retail and wholesale) Open interest
Number of retail unit holders

Appello Services – Operating Metrics
LINK Market Services – Operating Metrics Number of customers
Number of holders
Number of issuers
IPOs won
Note: NZX Operating Metrics - Full Year 2007 are available on

the NZX website at the following link:
http://www.nzx.com/aboutus/news/press/metrics_dec07

BOARD OF DIRECTORS
Simon Christopher Allen – Chairman BSc, BCom, FCSAP

Simon is Chief Executive of ABN AMRO in New Zealand and has 24 years’ experience in the New
Zealand and Australian capital markets.
Simon established BZW in New Zealand (now ABN AMRO) in 1988. ABN AMRO group is a
registered bank in New Zealand and provides products and services to Government, corporates
and investors. Simon is also a director of several ABN AMRO group companies including 50%
owned ABN AMRO Craigs Limited.
Simon has involvement in the New Zealand Business & Parliament Trust (Trustee); St. Cuthbert’s
College Trust Board (Director) and is a Fellow of the Institute of Finance Professionals NZ.
Nigel Williams – DEPUTY Chairman BCom

Nigel Williams has over 20 years’ experience in both New Zealand and overseas capital markets,
including his current role as Managing Director, Institutional, Corporate and Commercial Banking
for both ANZ and National Bank in New Zealand. In this role he is responsible for the Bank’s
business customers, wholesale and investment banking activities. Nigel graduated from the
University of Otago with a Bachelor of Commerce in Marketing, Accounting and Finance and has
also attended advanced management training at the University of Michigan, USA and Oxford
University, England.
Andrew William Harmos LLB (Hons), BCom

Andrew is one of the founding partners of Harmos Horton Lusk, an Auckland-based specialist
corporate legal advisory firm. Andrew was formerly a senior partner of Russell McVeagh, which
he left in 2002 after 21 years with that firm. He specialises in takeover advice and structuring,
securities offerings, company and asset acquisitions and disposals, strategic and board corporate
legal advice. He was appointed a director of NZX in 2002, and prior to that has held a number
of other listed company directorships. He is a director of the Westfield New Zealand group and
Elevation Capital Management Limited.
Neil Paviour-Smith BCA, CA, ACIS, FCFIP

Neil is Managing Director of Forsyth Barr Limited, a nationwide sharebroking and investment
management firm, and a director of various related companies. Neil has extensive experience in
the NZ securities industry including several years in equity funds management and research roles.
Neil is a director of Global Equity Market Securities Limited and listed company Global Corporate
Credit Limited.
Neil is an NZX Advisor, a Fellow and past Chairman of the Institute of Finance Professionals NZ, a
member of the Institute of Chartered Accountants of NZ, the Institute of Directors, the Institute of
Chartered Secretaries NZ, and the CFA Society of NZ.
15
BOARD OF DIRECTORS CONTINUED
Henry William van der Heyden BEng (Agr) Hons

Henry was appointed to the NZX Board on 6 September 2005. He became Chairman Board Committees
of Fonterra Co-operative Group in September 2002 and is a founding director of the

co-operative, which is New Zealand’s largest company, operating in over 100 countries The Remuneration
internationally. He has contributed to industry governance for 16 years, as both a director Committee comprises
and chairman, and played a considerable role in the industry rationalisation that led to
Simon Allen (Chair),
Fonterra’s establishment. He has extensive experience in the disciplines of large-scale
manufacturing and international exporting and the financial, regulatory, trade and customer Nigel Wiliams and
influences on them. He is a Director of Independent Egg Producers (IEP) and King St
Henry van der Heyden
Advertising, and Elevation Capital Management Limited. He is also a Trustee of Asia : New
Zealand and a member of Rabobank ANZ Food & Agribusiness Advisory Board.
The Audit Committee
Mark Rhys Weldon – ChIEF EXECUTIVE BA, BCom, MEcon (First Class Hons), Doc Jur, Dip comprises 
Int’l Law (Hons)
Mark is the Chief Executive of NZX. Mark graduated from Auckland University with a Neil Paviour-Smith
Masters degree in Economics (First Class Honours), a Bachelor of Commerce and a (Chair), Nigel Williams
Bachelor of Arts. Mark then studied at the Columbia University School of Law in New York,
and Simon Allen
graduating in 1997 with a Juris Doctorate and a Diploma in International Law. Mark joined
leading New York law firm Skadden, Arps, Slate, Meagher & Flom as an attorney. Mark
went on to work at the New York office of McKinsey & Company, where he specialised in
stock exchanges, asset management and wholesale banking.

CORPORATE GOVERNANCE
BEST PRACTICE
NZX is committed to ensuring it employs best practice governance structures and principles
in keeping with Appendix 16 of the NZSX Listing Rules (Rules) and the Corporate Governance
Principles and Guidelines published by the Securities Commission.
NZX believes good governance starts at the top with the Board of Directors (Board) who are
elected by shareholders to direct and control NZX’s activities.
BOARD
The Board is responsible for the overall direction and strategy of NZX. It selects the Chief
Executive and delegates the day to day operation of NZX’s business to the Chief Executive. The
Chief Executive implements policies and strategies set by the Board and is responsible to it.
The Board has established a Code of Ethics that provides a set of principles for Directors to
apply in their conduct and work for NZX. The principles include managing conflicts of interest, the
required skills of Directors, trading in NZX’s shares, and maintaining confidentiality of information
received in their capacity as Directors of NZX.
BOARD COMPOSITION
The Board currently comprises six Directors of whom five are non-Executive Directors and
also Independent as defined in Rule 3.3.1B. The Independent Directors are Simon Allen
(Chairman), Nigel Williams (Deputy Chairman), Andrew Harmos, Neil Paviour-Smith and Henry
van der Heyden. Mark Weldon, the Chief Executive, is the only non-Independent Executive
Director on the Board.
In accordance with the Constitution and the Rules, one third of the Directors are required to
retire by rotation and may offer themselves for re-election by shareholders each year. NZX
also accepts nominations for Directors in accordance with the Rules.
The Board holds regular scheduled meetings. An agenda and papers must be circulated at
least five business days before each meeting to allow Directors sufficient time to prepare.
The Board also holds ad hoc meetings to consider time sensitive or specific issues
(including via teleconference).
The Board has access to executive management and key executive managers are invited to attend
and participate in appropriate sessions of Board meetings.
COMMITTEES
The Board has two standing committees: an Audit Committee and a Remuneration Committee.
17
CORPORATE GOVERNANCE CONTINUED
AUDIT COMMITTEE
The audit committee operates under a charter, which sets out its role in assisting the Board with
corporate financial matters. It may only comprise Independent Directors and at least one member
of the audit committee must have expertise in accounting. The members of the audit committee
are Simon Allen, Neil Paviour-Smith (Chairman) and Nigel Williams.
The audit committee has a clear line of communication with the independent external auditor and
the internal finance and audit team, and it may, at its discretion, meet with the independent auditor
without company management being present.
REMUNERATION COMMITTEE
The remuneration committee operates under a charter that sets out its role. It assists the Board
in reviewing the remuneration policies, practices and performance of NZX as they relate to the
Directors including any committees that Directors may serve on, and also the remuneration and
performance of the Chief Executive.
The remuneration committee comprises entirely non-Executive Directors. The members of the
remuneration committee are Simon Allen (Chairman), Nigel Williams and Henry van der Heyden.
NOMINATIONS
Given the size of the Board, there is no nominations and succession committee. Rather, the full
Board is involved in the Director Nomination process.
2007 NZX DIRECTORS’ ATTENDANCE RECORD
Director NZX Board/Committees

Simon Allen 16/16
Andrew Harmos 6/6
Neil Paviour-Smith 10/10
Mark Weldon 10/10
Nigel Williams 16/16
Henry van der Heyden 12/12
- Please note the 16 meetings comprised 6 Board meetings, 4 Audit Committee meetings and 6 Remuneration
Committee meetings held in 2007.
- Mark Weldon is not a member of either of the committees but may attend meetings as an invited attendee.

DISCLOSURE
NZX has internal procedures in place to ensure that key financial and material information is
communicated to the market in a clear and timely manner. In addition to its disclosure obligations
under the Rules, NZX has adopted a quarterly reporting regime and produces operating metrics
monthly. This additional information provides transparency and assists the market in evaluating
NZX’s performance. NZX also maintains a website which provides contact points for the public and
is continuously updated with information regarding NZX and its releases.
RISK MANAGEMENT
The Board is responsible for ensuring that key business and financial risks are identified and
appropriate controls and procedures are in place to effectively manage those risks.
Directors may seek independent professional advice to assist with their responsibilities.
During the 2007 financial year Directors sought independent professional advice where
necessary and appropriate.
INSURANCE AND INDEMNIFICATION

NZX provides indemnity insurance cover to Directors and executive employees. This is explained
further on page 65.
SHARE TRADING
The company has adopted a formal NZX Securities Trading Policy to address insider trading
requirements under the Securities Markets Act 1988 (as amended by the Securities Markets
Amendment Act 2006). The NZX Securities Trading Policy is modelled on the Listed Companies
Association Securities Trading Policy and Guidelines and administered by the NZX Securities
Trading Committee that consists of the Corporate Counsel, the Head of Market Products, the Head
of Market Supervision and the Chairman of the Board. The NZX Securities Trading Policy (“Policy”)
restricts trading in a number of ways including:
• Prohibiting trading in NZX’s securities during ‘black-out’ periods set out in the Policy. These
occur where quarterly financial results have not yet been released to the market.
• If a Director, officer or employee of NZX wishes to trade NZX securities outside of a black-
out period, that person must first apply, and obtain, consent from the NZX Securities Trading
Committee or its delegated representatives.
Because of the nature of NZX’s business, any employee who wishes to buy or sell any security
listed on NZX’s markets must follow the NZX Securities Trading Policy and apply to NZX for
consent to trade. This policy is reinforced through individual employment agreements.
19
IV. NZX Group: Statement of Financial Performance 2007
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 the New Zealand Exchange
Limited and its subsidiaries (“NZX Group”) as at 31 December 2007 and the results of their operations and cash flows for
the year ended 31 December 2007.
The Directors consider that the financial statements of NZX Group have been prepared using accounting policies
appropriate to 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 NZX Group for the year ended 31 December 2007.
The financial statements were authorised for issue for and on behalf of the Directors on 14 February 2008.
S C Allen N Paviour-Smith M R Weldon

Chairman Director Chief Executive Officer

INCOME STATEMENT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007
Group Parent
Note 2007 2006 2007 2006

$000 $000 $000 $000
Revenue 2 31,450 25,085 27,128 22,400
Employee and related expenses 2 (9,846) (8,025) (8,525) (7,220)
Other expenses (6,862) (6,625) (4,789) (5,326)
Profit before interest, income tax, depreciation and amortisation 14,742 10,435 13,814 9,854
Depreciation and amortisation expense 2 (1,052) (897) (874) (813)
Net Interest 2 287 1,117 262 1,114
Share of losses of associates accounted for using the equity method 7 (562) (384) - -
Profit before income tax expense 2 13,415 10,271 13,202 10,155
Income tax expense 3 (4,701) (3,771) (4,384) (3,514)
Profit for the period attributable to shareholders 8,714 6,500 8,818 6,641
Earnings per share
Diluted 16 36.17c 27.91c
Undiluted 16 36.33c 28.32c
Net tangible assets per share 127.4c 98.7c
Notes to the financial statements are included on pages 25 to 60.
21
STATEMENT OF RECOGNISED INCOME AND EXPENSE
Group Parent
2007 2006 2007 2006

$000 $000 $000 $000
Profit for the period 8,714 6,500 8,818 6,641
Foreign currency translation differences (37) - - -
Total recognised income and expense for the year attributable

8,677 6,500 8,818 6,641
to shareholders

BALANCE SHEET
AS AT 31 DECEMBER 2007
Group Parent
Note 2007 2006 2007 2006

$000 $000 $000 $000
Current assets
Cash and cash equivalents 23(a) 12,976 5,531 10,772 4,871
Receivables and prepayments 6 6,159 7,520 3,976 6,400
Other financial assets 533 499 3,863 1,022
Intercompany receivable - - 514 (97)

Current tax receivable/(payable) 3 854 (257) 786 (182)
Total current assets 20,522 13,293 19,911 12,014
Non-current assets
Investments accounted for using the equity
7 6,557 6,371 7,775 6,926
method
Investments in subsidiaries 20 - - 10,312 6,372
Property, plant and equipment 8 3,483 2,222 3,456 2,133
Deferred tax assets 3 204 516 247 526
Goodwill 9 1,520 714 - -
Other financial assets - 334 - 334

Other intangible assets 10 8,355 4,183 4,126 828
Total non-current assets 20,119 14,340 25,916 17,119
Total assets 40,641 27,633 45,827 29,133
Current liabilities
Trade payables 11 6,696 3,237 7,201 2,916
Other liabilities 12 5,007 4,015 4,695 3,790
Total current liabilities 11,703 7,252 11,896 6,706
Total liabilities 11,703 7,252 11,896 6,706
Net assets 28,938 20,381 33,931 22,427
Equity
Share capital 13 4,419 3,724 7,747 4,246
Retained earnings 14 24,556 16,657 26,184 18,181

Foreign currency translation reserve 13 (37) - - -
Total equity attributable to shareholders 28,938 20,381 33,931 22,427

23
CASH FLOW STATEMENT
Group Parent
Note 2007 2006 2007 2006
$000 $000 $000 $000
Cash flows from operating activities
Receipts from customers 33,600 22,038 30,263 19,632
Interest received 363 1,133 331 1,130
Payments to suppliers and employees (15,308) (13,143) (12,400) (10,844)
Income tax paid 3 (5,500) (3,424) (5,073) (3,294)
Net cash provided by operating activities 23(b) 13,155 6,604 13,121 6,624
Cash flows from investing activities
Payment for property, plant and equipment (1,653) (784) (1,627) (652)
Payment for other assets (1,547) (3,724) (1,345) 18
Payment for investments (2,689) 120 (4,427) (3,137)
Net cash (used in)/provided by investing activities (5,889) (4,388) (7,399) (3,771)
Cash flows from financing activities
Proceeds from issues of shares 1,148 1,446 1,148 977
Capital repaid (154) (16,271) (154) (16,271)
Dividends paid 14 (815) (3,505) (815) (3,505)
Net cash (used in)/provided by financing activities 179 (18,330) 179 (18,799)
Net increase/(decrease) in cash and cash
7,445 (16,114) 5,901 (15,946)
equivalents
Cash and cash equivalents at the beginning of the
5,531 21,645 4,871 20,817
financial year
Cash and cash equivalents at the end of the

23(a) 12,976 5,531 10,772 4,871
financial year

NOTES TO THE FINANCIAL STATEMENTS
1. Summary of Accounting Policies
Statement of compliance
New Zealand Exchange Limited (“NZX” or “Parent”) is New Zealand’s only Registered Exchange. NZX’s business
principally comprises the listing of securities; operating the infrastructure on which those securities are traded, cleared and
settled; supervising the markets upon which these activities occur; and disseminating the information provided to the market
by listed issuers and trade related information to the global markets; NZX operates high quality markets that are fair, orderly
and transparent.
NZX is a for-profit listed public company incorporated in New Zealand, and registered under the Companies Act 1993.
The full year consolidated financial statements of NZX as at and for the twelve months ended 31 December 2007 comprise
NZX and its subsidiaries (the “Group”) and the Group’s interest in associates.
NZX is a reporting entity for the purposes of the Financial Reporting Act 1993 and its financial statements comply with
that Act.
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand
(”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-orientated entities.
Compliance with the NZ IFRS ensures that the Parent and Group financial statements comply with International Financial
Reporting Standards (“IFRS”).
Basis of preparation
All monetary values are NZD unless otherwise stated. The financial statements have been prepared on the basis of historical
cost, except for available-for-sale financial assets which are stated at fair value. The method used to measure fair value is
discussed in note 1 H.
Cost is based on the fair value of the consideration given in exchange for assets.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies
the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events
is reported.
The Group changed its accounting policies on 1 January 2007 to comply with NZ IFRS. The transition to NZ IFRS is
accounted for in accordance with NZ IFRS-1: First-time Adoption of New Zealand Equivalents to International Financial
Reporting Standards, with 1 January 2006 as the date of transition. An explanation of how the transition from superseded
policies to NZ IFRS has affected the Parent and Group balance sheet, income statement and cash flows is set out in note 26.
Principles of consolidation
The Group financial statements are prepared by combining the financial statements of all the entities that comprise the
Group, being NZX and its subsidiaries as defined in NZ IAS-27: Consolidated and Separate Financial Statements.
25
1. Summary of Accounting Policies CONTINUED

A list of subsidiaries appears in note 20 to the financial statements. Consistent accounting policies are employed in the
preparation and presentation of the Group financial statements.
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, 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. If, after reassessment, the fair values of the identifiable net assets acquired exceed the cost
of acquisition, the deficiency is credited to the income statement in the period of acquisition.
The Group financial statements include the information and results of each subsidiary from the date on which the NZX
obtains control and until such time as NZX ceases to control such subsidiary.
In preparing the Group financial statements, all intercompany balances and transactions, and unrealised profits arising within
the Group are eliminated in full.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 31
December 2007, the comparative information presented in these financial statements for the year ended 31 December 2006,
and in the preparation of the opening NZ IFRS balance sheet at 1 January 2006 being the Group entity’s date of transition.
The accounting policies have been applied consistently by Group entities.
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost. The Group’s share of its associates post-acquisition profits or losses
is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves.
The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s
share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates. Where the accounting policies of associates differ from the Group, adjustments to ensure consistency with the
policies adopted by the Group are made.
Significant Accounting Policies

The following significant accounting policies have been adopted in the preparation and presentation of the financial
statements:
A. Revenue recognition
Rendering of services
Revenue from a transaction to provide services is recognised by reference to the stage of completion of the transaction at the
balance sheet date.
Interest revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
B. Significant Estimates Policy
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are disclosed, where applicable, in the relevant notes to the financial statements. These are estimates that require
management’s most difficult, subjective or complex judgements. The notes include details of the nature and carrying amount
of the affected assets and liabilities at the balance sheet date.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision
and future periods if the revision affects both current and future periods.
C. Foreign Currency transaction and balances
Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at balance date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement.
Exchange differences arising from the translation of the carrying value of the net investment in the Group’s foreign associates
are recognised in the foreign currency translation reserve.
D. Property, plant and equipment
Plant and equipment, leasehold improvements and equipment are stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.
Depreciation is provided on property, plant and equipment.
Depreciation is recognised in the income statement and is calculated on a straight line basis so as to write off the net cost
of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the
period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each annual reporting period.
The following estimated useful lives are used in the calculation of depreciation:
Computer equipment 3 - 5 years

Furniture and equipment 10 years
Leasehold improvements 5 years
E. Employee Benefits
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, and sick leave when it is
probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement.
27
F. Income Tax
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid
(or refundable).
Deferred Tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to
the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences
or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, and
associates except where the Group entity is able to control the reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with these investments and interests are only recognised to the extent that it is
probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and
they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and
liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group entity expects, at the reporting date, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
NZX Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items
credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises
from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill
or excess.

G. Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except for receivables and
payables which are recognised inclusive of GST.
H. Financial assets
Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured
at fair value, net of transaction costs.
Financial assets at fair value through profit or loss

The Group entity from time to time classifies certain shares and bonds as financial assets. Any gains or losses recognised in
revaluing these assets to fair value are recognised in the profit or loss statement. These financial assets are classified as current
assets and are stated at fair value.
Available-for-sale financial assets

Other investments in shares are classified as available-for-sale financial assets. Subsequent to initial recognition, they are
measure at fair value and changes therein, other than impairment losses are recognised directly in equity. When an investment
is derecognised, the cumulative gain or loss previously recognised in equity is transferred to profit or loss.
The fair value of the shares is their quoted bid price at the Balance Sheet date, if that is available.
Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method less impairment. Interest is recognised by applying the effective interest rate.
I. Goodwill
Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and
contingent liabilities acquired, is recognised as an asset and not amortised, but tested for impairment annually and whenever
there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in the income statement
and is not subsequently reversed. Refer to note 1 K.
J. Intangible assets
Intangible assets comprise software applications and brand IP rights. The Group separately identifies its intangible assets
into two categories; those with indefinite lives and those with finite lives. Intangible assets with indefinite lives are not
amortised but are subject to impairment tests annually. The classification of indefinite life intangibles is also reviewed by
the Group annually.
All software has finite useful lives and is recorded at cost less accumulated amortisation and impairment. Software is
amortised on a straight line basis over its estimated useful life of 3 to 5 years.
29
K. Impairment of assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Goodwill, intangible assets not yet available for use and intangible assets with indefinite useful lives are tested for
impairment annually and whenever there is an indication that the asset may be impaired. Any impairment of goodwill is
not subsequently reversed.
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred
after the initial recognition of the financial assets the estimated future cash flows of the investment have been impacted. For
financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of a doubtful debts provision account. When
a trade receivable is uncollectible, it is written off against the doubtful debts allowance account. Changes in the carrying
amount of the provision account are recognised in the income statement.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the
income statement immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses other than for goodwill, the carrying amount of the asset (cash-
generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in the income
statement immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is
treated as a revaluation increase.
L. Payables
Trade payables and other accounts payable are recognised when the Group entity becomes obliged to make future payments
resulting from the purchase of goods and services.

M. Share-based payments
The fair value of the amount payable to employees in respect of share scheme shares is recognised at grant date as equity with
a corresponding receivable. In the group these entries are eliminated as the shares are treated as treasury stock. Over the
vesting period the amount is recognised as an employee expense. The amount recognised as an employee expense is adjusted
to reflect the actual number of shares that will vest.
The grant date fair value of options is recognised as an employee expense with a corresponding entry to equity, over the vesting
period. The amount recognised as an employee expense is adjusted to reflect the actual number of options that will vest.
N. Segment reporting
The Group considers that there is only one reporting segment being the operation of a registered exchange and data business
in New Zealand.
O. Comparative amounts
Comparative figures where necessary have been restated to correspond to the current year classifications. Where NZ IFRS
conversions have been made the prior year figures have followed the same accounting policy.
All comparative figures relating to the number of shares have been restated to reflect the capital reconstruction on 21 July 2006.
P. Earnings Per Share
The Group presents undiluted and diluted earnings per share (EPS) data for its ordinary shares. Undiluted EPS is
determined by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted daily
average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of
dilutive potential ordinary shares, which comprise of share based payments.
31
2. Profit from operations
Group Parent
Note 2007 2006 2007 2006
$000 $000 $000 $000
Revenue
Revenue from the rendering of services:
Listings 8,973 8,049 9,098 8,105
Participant fees 1,526 1,413 1,526 1,413
Trading, clearing & settlement 4,853 4,710 4,853 4,710
Market Information 10,471 6,083 9,120 5,479
Smartshares 3,096 2,331 - -
NZX services income 2,534 2,440 2,534 2,634
Change in fair value of financial assets:
Available-for-sale (transfer from equity) (3) 59 (3) 59
31,450 25,085 27,128 22,400
Interest Revenue:
Bank deposits 279 745 254 742
Bonds 8 372 8 372
287 1,117 262 1,114
Profit before income tax
Profit before income tax has been arrived at after
crediting/(charging) the following gains and losses:
Depreciation of non-current assets 8 (510) (474) (481) (469)
Amortisation of non-current assets 10 (542) (423) (393) (344)
Depreciation and amortisation expense (1,052) (897) (874) (813)
Net foreign exchange losses (61) (13) (60) (13)

Employee expense:
- post employment benefits (46) (101) (46) (101)
- termination benefits (17) - (17) -
- other employee benefits * (9,783) (7,924) (8,462) (7,119)
Employee and related expenses (9,846) (8,025) (8,525) (7,220)
Remuneration paid to auditors 5 (94) (180) (55) (112)
Impairment of non current assets - (264) - (264)
Operating lease rental expenses:
Minimum lease payments 19 (665) (665) (665) (665)
* Other employee benefits in 2007 include $276,107 in relation to the new CEO Share Scheme and $26,153 in relation to the previous CEO
share scheme, $82,851 in 2006, (see Note 13 for more details).

3. Taxation
Income tax recognised in profit or loss

Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Tax expense comprises:
Current tax expense 4,685 3,633 4,401 3,426
Adjustments recognised in the current year relating to current tax
3 3
of prior years 45 39
Deferred tax relating to the origination and reversal of temporary
13 93 (20) 49
differences
Total tax expense 4,701 3,771 4,384 3,514
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the
financial statements as follows:
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Profit from continuing operations 13,415 10,271 13,202 10,155
Income tax calculated at 33% 4,427 3,389 4,357 3,351
Non-deductible expenses 46 188 43 187
Change in corporate tax rate 20 - 25 -

Equity accounted earnings of associate 207 196 - -
4,700 3,773 4,425 3,538
Under/(over) provision of income tax in previous years 3 45 3 39

Foreign investor tax credits (2) (47) (2) (47)
Loss offset for 2006 & 2007 years - - (42) (16)
4,701 3,771 4,384 3,514
The tax rate used in the above reconciliation is the corporate tax rate of 33% payable by New Zealand corporate entities
on taxable profits under New Zealand tax law. There has been a change in the corporate tax rate from 33% to 30% from
1 January 2008. The deferred tax balance at 31 December 2007 is calculated using the new corporate tax rate, and the
adjustment above shows the effect of the change in rate of deferred tax.
33
3. Taxation CONTINUED
Current tax assets and liabilities

Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year – (Liability)/Asset (257) 154 (182) 154
Current year charge (4,685) (3,632) (4,443) (3,442)
Prior period adjustment 296 (203) 296 (204)
Tax paid 5,500 3,424 5,073 3,294

Loss offset from subsidiary - - 42 16
Balance at end of the year – Asset/(Liability) 854 (257) 786 (182)
Deferred tax
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year 516 451 526 410
Current year movement (13) (93) 20 (49)
Prior period adjustments (299) 158 (299) 165
Balance at end of the year 204 516 247 526
Deferred tax balance comprises:

Employee entitlements 339 167 324 149
Doubtful debts and impairment 5 29 2 29
Property Plant and Equipment (85) 337 (85) 338
Intangible assets (61) (27) - -

Other 6 10 6 10
204 516 247 526

Imputation credit account
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year 5,960 4,070 5,830 4,070
Income tax paid 5,500 3,424 5,073 3,294
Imputation credits attached to dividends paid (380) (1,534) (380) (1,534)
Balance at end of the year 11,080 5,960 10,523 5,830
4. Key management personnel compensation

The compensation of the Chief Executive Officer and his direct reports, being the key management personnel of NZX, is set
out below:
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Short-term employee benefits 3,183 3,095 3,183 3,095
Post-employment benefits 46 101 46 101
Termination benefits 17 - 17 -
Share-based payment * 302 83 302 83
3,548 3,279 3,548 3,279
* Share based payments in 2007 include $276,107 in relation to the new CEO Share Scheme and $26,153 in relation to the
previous CEO Share Scheme of, $82,851 in 2006, (see Note 13 for more details).
35
5. Remuneration of auditors
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Audit of the financial statements 89 99 55 58
Other audit related fees 5 - - -
Non-audit services - 81 - 54
94 180 55 112
The auditor of NZX Group is KPMG, effective 1 January 2007. Previously PricewaterhouseCoopers was the auditor. Other
audit related fees in 2007 relates to the audit of the registry for Smartshares funds. Non-audit services in 2006 relates to
attendance at AGM, IFRS transition workshops, and share option plan calculations.
6. Receivables and prepayments
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Trade receivables* 3,934 4,947 3,302 4,162
Allowance for doubtful debts (18) (121) (8) (121)
3,916 4,826 3,294 4,041
Prepayments 177 391 96 319

Accrued interest 36 75 6 75
Accrued income 2,030 2,228 580 1,965
6,159 7,520 3,976 6,400
*The average credit period on sales of services is 41 days. No interest is charged on overdue trade receivables.

Movement in allowance for doubtful debts
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year (121) (76) (121) (76)
Amounts written off during the year 62 - 62 -
Amounts recovered during the year 56 - 56 -

Decrease/(Increase) in allowance recognised in profit or loss (15) (45) (5) (45)
Balance at end of the year (18) (121) (8) (121)
7. Investments accounted for using the equity method
Country of Group Carrying value

Name of entity Ownership interest (iii)
Incorporation of asset
2007 2006 2007 2006
% % $000 $000
Associates
AXE ECN Pty Limited Australia 50 50 1,317 1,388
LINK Market Services Limited New Zealand 50 50 4,605 4,983

Appello Services Limited New Zealand 30 - 635 -
6,557 6,371
Amount of goodwill in carrying value of equity

664 213
accounted associates:
The reduction in the carrying value of Link Market Services includes the redemption by Link Market Services of $350,000 of
redeemable preference shares in 2007.
37
7. Investments accounted for using the equity method CONTINUED
Summarised financial information of associates

Group
2007 2006
$000 $000
Total Assets 13,489 13,628
Total Liabilities 1,165 1,377
Net assets 12,324 12,251
Revenue 4,284 3,062
Net loss (1,143) (1,116)
Summarised financial information of associates not adjusted for the percentage ownership held by the Group.
8. Property, plant and equipment

Group
Computer Furniture and Lease-hold Capital work

Total
equipment equipment improvements in progress
$000 $000 $000 $000 $000
Gross carrying amount
Balance at 1 January 2006 1,967 555 1,282 - 3,804
Additions 119 94 19 474 706
Balance at 31 December 2006 2,086 649 1,301 474 4,510
Additions 408 32 35 1,349 1,824
Disposals - (20) (39) - (59)
Balance at 31 December 2007 2,494 661 1,297 1,823 6,275
Accumulated depreciation
Balance at 1 January 2006 1,521 230 63 - 1,814
Depreciation expense 258 87 129 - 474
Balance at 31 December 2006 1,779 317 192 - 2,288
Disposals (5) (1) - - (6)
Net book value
As at 31 December 2006 307 332 1,109 474 2,222
As at 31 December 2007 426 258 976 1,823 3,483

Parent
Computer Furniture and Lease-hold Capital work

Total
equipment equipment improvements in progress
$000 $000 $000 $000 $000

Balance at 1 January 2006 1,967 555 1,282 - 3,804
Additions 84 44 10 474 612
Balance at 31 December 2006 2,051 599 1,292 474 4,416
Additions 392 58 5 1,349 1,804
Balance at 31 December 2007 2,443 657 1,297 1,823 6,220
Accumulated depreciation
Balance at 1 January 2006 1,521 230 63 - 1,814
Net book value

As at 31 December 2006 275 284 1,100 474 2,133
As at 31 December 2007 402 255 976 1,823 3,456
39
9. Goodwill
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year 714 - - -
Goodwill on acquisition 806 714 - -
Balance at end of the year 1,520 714 - -
Net book value

Balance at beginning of the year 714 - - -
Balance at end of the year 1,520 714 - -
The directors have tested the carrying value of goodwill and have assessed that no impairment charge is required. The basis
for the testing was a comparison between the forecast EBITDA multiple and the EBITDA multiple on original acquisition,
in each case the forecast EBITDA multiple was in excess of the original used in the purchase decision.

10. Other intangible assets
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Additions – acquisitions 946 3,497 - 627
Additions - other 3,776 76 3,699 40

Disposals (13) (850) (13) (850)
Accumulated amortisation and impairment

Amortisation expense 542 423 393 344
Disposals (5) - (5) -

Reversals of impairment losses charged to profit - (586) - (586)
Net book value 8,355 4,183 4,126 828
Comprising of:
Other intangibles – definite life 2,936 1,212 2,040 201
Other intangibles – indefinite life 5,419 2,971 2,086 627
Net book value 8,355 4,183 4,126 828
Amortisation expense is included in the line item ‘depreciation and amortisation expense’ in the income statement. When
testing the indefinite life intangibles for impairment a comparison between the forecast EBITDA multiple and the EBITDA
multiple on original acquisition was made. In each case the forecast EBITDA multiple was in excess of the original used in
the purchase decision and on this basis it was determined that no impairment charge is required.
41
11. Current trade payables
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Trade payables 1,159 128 640 109
Goods and services tax payable 241 287 213 237
Accrued expenses 5,296 2,822 6,348 2,570
6,696 3,237 7,201 2,916
12. Other liabilities
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Employee benefits 407 491 355 451
Unearned income 4,600 3,524 4,340 3,339
5,007 4,015 4,695 3,790
13. Share capital and reserves
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Share capital 4,419 3,724 7,747 4,246
4,419 3,724 7,747 4,246

Group Parent
2007 2006 2007 2006
Number Number of Number Number of
of shares shares of shares shares
000 000 000 000
Fully paid ordinary shares
Issues of shares – CEO Share Scheme 222 222 572 222
Issue of ordinary shares – Distribution Plan 319 - 319 -
Issue of ordinary shares – Employee Share Plan 208 153 208 153
Share option exercised - 148 - 148
Fully paid CEO shares (2003 – 2007)

Balance at beginning of the year - - 222 444
Vested during the period - - (222) (222)
Balance at end of the year - - - 222
All issued shares are fully paid and have no par value, all shares carry one vote per share and carry the right to dividends. The
convertible shares and shares issued under the CEO Share Scheme are treated as treasury stock and are eliminated at a
group level.
As at 31 December 2007 there were 24,612,245 ordinary shares issued and fully paid (2006: 23,512,777). All ordinary shares
rank equally with one vote attached to each fully paid ordinary share.
Foreign Currency Translation Reserve

Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Balance at beginning of the year - - - -
Total recognised income and expense (37) - - -
Balance at end of the year (37) - - -
CONTINUED OVER 43
13. Share capital and reserves CONTINUED
Executive share plan and CEO share scheme
Current CEO Share Scheme (2007)

Following the cessation of the previous Scheme, a new CEO Share Scheme (“New Scheme”) was introduced. The New
Scheme was approved by NZX shareholders at a special meeting held on 6 September 2007. The New Scheme is a two-part
equity-based long-term incentive (LTI) scheme with a three and a half year duration, extendable to a four and a half year
duration at Board discretion, with a start date of 4 June 2007 and expiry date of 31 December 2010 (or 31 December 2011
if extended).
The two parts to the New Scheme are:
a Standard LTI; and
an Out-performance LTI.
Standard LTI
The Standard LTI consists of 222,276 shares (173,780 shares for 3.5 year duration, and a further 48,496 shares if the Board
extends the duration to 4.5 years). These were issued to the CEO, Mr Weldon, in December 2007 at an issue price of $10.31
(the VWAP for the 20 days to 3 June 2007, being the expiry date of the previous scheme). These shares are held by the
Nominee on behalf of Mr Weldon until such time as they vest, or are redeemed by NZX if vesting criteria are not met. The
vesting criteria for these Standard LTI shares is a compound 15% earnings per share growth over the period, with a start date
for assessment of EPS growth of 1 January 2008, and that Mr Weldon remains in the employment of NZX over the vesting
period. Assessment is based upon EPS at the end of 2007 which was 36.17 cps. If vesting criteria are met for the full 4.5
years Mr Weldon will receive a bonus equivalent to $2,291,666 being the $10.31 issue price of the relevant shares. NZX has
extended financial assistance to Mr Weldon in the form of an interest free loan of $2,291,666 to fund the acquisition of these
Standard LTI Shares.
Although the Standard LTI Share Scheme shares were issued at $10.31, IFRS 2 requires recognition of the shares for
reporting purposes to be measured at the grant date (grant date is when approval for the New Scheme was obtained) being
6 September 2007. At this date the 20 day VWAP was $9.76. Accordingly the total value that will be recognised in the
income statement if vesting criteria are met is $2,169,414. At 31 December 2007 the Board of NZX determined that
$276,107 be recognised in the income statement as an employee expense in respect of this scheme.
Out-performance LTI (OPLTI)

The OPLTI consists of 127,381 shares (102,381 shares for 3.5 year duration, and a further 25,000 shares if the board extends
the duration to 4.5 years). These were issued to Mr Weldon in December 2007 at an exercise price of $10.31 (the VWAP for
the 20 days to 3 June 2007). These shares are held by the Nominee on behalf of Mr Weldon until such time as they vest, or
are redeemed by NZX if vesting criteria are not met. The vesting criteria for these OPLTI shares is a compound 22.5% EPS
growth over the period, with a start date for assessment of EPS growth of 1 January 2008 and that Mr Weldon remains in the
employment of NZX over the vesting period. Assessment is based upon EPS at the end of 2007 which was 36.17 cps. NZX

has extended financial assistance to Mr Weldon in the form of an interest free loan of $1,313,298 to fund the acquisition
of these OPLTI Shares. There is no bonus paid to Mr Weldon in relation to the OPLTI so this part of the New Scheme
is treated as an option scheme for accounting purposes. These options were valued by Deloitte, using the Black Scholes
valuation model, at $2.51 and $2.96 per share for the period to December 2010 and December 2011 respectively. The Black
Scholes valuation assumed a risk free interest rate based on Government bonds for the relevant periods, dividend yield was
assumed to be nil, and expected volatility of 25%. The expected volatility was estimated by assessing the long run volatility
for New Zealand shares (assessed as 20%) and adjusting for NZX’s relative volatility since listing. Accordingly the total value
that will be recognised in the income statement if vesting criteria are met is $330,976. At 31 December 2007 the Board of
NZX determined that there is no need to recognise any expense at this time.
Previous CEO Share Scheme (2003 – 2007)

This scheme ceased on June 3 2007. The history of the scheme and the 2007 activity prior to the termination of the scheme is
detailed below.
In 2003, as part of the NZX CEO Share Scheme (“Scheme”) financial assistance was provided to the CEO, Mr Weldon. The
financial assistance was in connection to the acquisition by a nominee company (“Nominee”) of 634,275 shares (“Scheme
Shares”) in NZX, to be held by the Nominee on behalf of Mr Weldon in accordance with the terms of the Scheme. A
disclosure document was provided to all shareholders on 15 September 2003 setting out details of the proposal and was
approved by members of NZX’s predecessor, the New Zealand Stock Exchange, at the time of demutualisation. The proposal
was also fully described in the NZX Prospectus and Investment Statement registered on 3 June 2003.
The directors of NZX authorised NZX to provide financial assistance to Mr Weldon to fund the acquisition of the Scheme
Shares, by way of a loan of $2,132,433 (the aggregate issue prices of the 634,275 ordinary shares to be issued under the
Scheme). As at July 2006 a total of 507,420 Share Scheme shares had qualified under the scheme and Mr Weldon had
repaid $1,609,790 to NZX, reducing his financial assistance to $522,643. The remaining 126,855 shares were subject to the
court-approved capital reconstruction of all NZX shares that occurred in July 2006. Under the reconstruction there was
a mandatory share cancellation of 1 in 8 shares held, followed immediately by a two-for-one share split. This resulted in
221,996 Scheme Shares at December 2006 (with the loan / financial assistance still being $522,643).
In December 2006 NZX introduced a Distribution Plan. Under the Plan shareholders had the option of receiving:
one bonus share for every 60.73 shares held at a strike price of $9.72; or
a dividend payment of $0.16 fully imputed per share.
Mr Weldon opted to receive the bonus shares which resulted in an additional 3,656 Scheme Shares being issued on 31 May
2007, bringing the total Scheme Shares to 225,652. On 3 June 2007 this last tranche of shares qualified and, following the
repayment of $522,643, were transferred from the Nominee to Mr Weldon. At this point the Scheme ceased.
Employee Share Plan

NZX Executive Share Plan shares are offered to selected employees at the market price of the shares on the date of issuance.
The Directors of NZX authorised NZX to give financial assistance to some NZX employees to assist them in the acquisition
of NZX ordinary shares under the NZX Executive Share Plan. The aggregate financial assistance provided under the NZX
Executive Share Plan at December 2006 was $833,487. As at December 2007 NZX employees had repaid $575,884, and
there has been no additional financial assistance provided during the period. The balance of the financial assistance provided
to employees under the NZX Executive Share Plan at December 2007 is $257,603.
45
13. Share capital and reserves CONTINUED
Employee Share Capital Movements

Number of shares
Number of shares issued Price per share issued in transferred out of
Date of issue
in that year that year ($) nominee company to
NZX employees
December 2007 - - 202,918
December 2006 208,576 6.798 142,758
December 2005 152,513 3.971 64,750
December 2004 125,125 5.109 -
Shares were transferred out in accordance with the terms of the NZX Executive Share Plan. As at 31 December 2007 75,788
shares were held under the Executive Share Plan making up 0.3% of total shares.
14. Retained earnings
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Net profit attributable to shareholders 8,714 6,500 8,818 6,641
Cash dividends paid (815) (3,507) (815) (3,507)

15. Dividends
2007 2006
Cents per Total Cents per Total
share $000 share $000
Recognised amounts
Fully paid ordinary shares 16.0c 815 25.0c 3,507
In December 2006 NZX gave shareholders their dividend in the form of one bonus share for every 60.73 shares held at a
strike price of $9.72 or a cash dividend payment of $0.16 fully imputed per share. A total of 85 holders with a combined
shareholding of 4,611,444 shares opted for a dividend payment, and the remaining shareholders with a combined
shareholding of 19,429,148 shares opted for the bonus shares. The total distribution for 2007 was $3,917,807.
16. Earnings per share
Group
2007 2006
000 000
Diluted earnings per share (cents per share) 36.17c 27.91c
Undiluted earnings per share (cents per share) 36.33c 28.32c
Diluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Group
2007 2006
000 000
Earnings $8,714 $6,500
Weighted average number of ordinary shares for the purpose of earnings per share 24,089 23,291
Diluted earnings per share (cents per share) 36.17c 27.91c
47
16. Earnings per share CONTINUED
Undiluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of undiluted earnings per share
are as follows:
Group
2007 2006
000 000
Earnings $8,714 $6,500
Weighted average number of ordinary shares for the purpose of earnings per share 23,988 22,951
Undiluted earnings per share (cents per share) 36.33c 28.32c
When calculating the weighted daily average number of undiluted ordinary shares an adjustment has been made for Standard
LTI shares issued under the CEO Share Scheme. The weighted daily average number of diluted ordinary shares has not been
adjusted for OPLTI shares issued under the CEO Share Scheme as these are considered anti-dilutive for the period.
17. Commitments for expenditure
Capital expenditure commitments

Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Trayport Limited contract 1,300 3,000 1,300 3,000
The Group has no exposure to capital commitments of Associates.

Lease commitments
Finance lease liabilities and non-cancellable operating lease commitments are disclosed in note 19 to the financial statements.
18. Contingent liabilities

On 6 September 2005 Access Brokerage Limited was put into liquidation. There is no provision held in the Balance Sheet
at 31 December 2007 (Dec 2006: nil). A contingent liability of $9,555,297 plus interest and costs has arisen from legal
proceedings against NZX brought by Access Brokerage Limited for $4,310,594 plus interest and costs (in Liquidation), and
Bank of New Zealand Limited for $5,244,703 plus interest and costs. NZX has received assurance that the insurer will meet
all cost for this matter after the policy excess of $100,000, which was paid in 2005. The contingent liability arises in the event
that the insurer does not meet any costs that may arise.
NZX has entered into a sales and purchase agreement with Greta Valley Holdings Limited, the vendor of Agri-Fax Limited,
that includes an earn out provision whereby NZX pays up to $375,000 in excess of the amount already provided for in the
financial statements if revenue targets for the year ended 31 March 2009 are met. NZX does not expect these elevated
earnings revenue targets to be met.
19. Leasing
Operating leases
The rental lease for NZX’s premises commenced on the 1 September 2005 and has a final expiry date of 28 February 2015,
subject to the right of renewal on 1 September 2008. There is no contingent rent payable.
Group Parent
2007 2006 2007 2006
$000 $000 $000 $000
Up to 1 year 665 665 665 665
1 – 2 years 665 665 665 665
2 – 5 years 1,995 1,995 1,995 1,995

> 5 years 1,663 2,328 1,663 2,328
4,988 5,653 4,988 5,653
49
20. Subsidiaries
Ownership interest and

Name of entity Country of Incorporation
voting rights
2007 2006
% %
Agri-Fax Limited New Zealand 100 100

FundSource Limited New Zealand 100 100
Smartshares Limited New Zealand 100 100
NZX Newsroom Limited New Zealand 100 -
TZ1 Limited New Zealand 100 -
Mandela Investments Limited New Zealand 100 100
NZX Executive Share Plan Nominees Limited New Zealand 100 100
NZ Fox Limited New Zealand 100 100

Tane Nominees Limited New Zealand 100 100
21. Acquisition of businesses and investments
Proportion of Cost of
Name business shares acquired Principal activity Date of acquisition acquisition
(%) $000
2007
NZX Newsroom Limited 100 Data Sales 31 May 2007 1,181
Appello Services Limited 30 Funds Management Services 30 November 2007 650
2006
FundSource Limited 100 Data & Research 30 September 2006 920
Agri-Fax Limited 100 Data Sales 1 April 2006 2,166
On May 31 the Group acquired NZX Newsroom Limited for $1,181,000. The company compiles and delivers news to
customers that is tailored to the customer’s requirements.

NZX Newsroom Limited Appello Services Limited
Asset Fair Value on acquisition Fair value on acquisition
$000 $000
Cash - 199
Fixed assets 4 -
Intangibles 946 -
Goodwill 231 451
Total 1,181 650
There was no fair value adjustment on the book value for NZX Newsroom Limited or Appello Services Limited. Goodwill is
included in the carrying value of the associates. NZX has increased goodwill and the acquisition value of Agri-Fax Limited
by $575,000 to reflect the earnout provision, based on revenue targets, in the sales and purchase agreement entered with Greta
Valley Holdings Limited.
51
22. Related party disclosures
Related parties
Related party categories
(i) Equity interests in related parties
Equity interests in subsidiaries

Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 21 to the financial statements.
Equity interests in associates

Details of interests in associates are disclosed in note 7 to the financial statements.
(ii) Transactions with related parties
Transactions involving the parent entity

Amounts receivable from and payable to related parties at balance date are disclosed below.
Sales to related Purchases from Amounts owed by Amounts owed to

Related Parties
parties related parties related parties related parties
2007 2007 2007 2007

$000 $000 $000 $000
Parent
New Zealand Exchange Limited 1,825 86 4,186 232
Subsidiaries
Smartshares Limited - 307 - 715
Agri-Fax Limited - - 229 -
FundSource Limited 13 - 2 53
NZX Newsroom Limited - - - 13
Tane Nominees Limited - - - 3,329
Associates
LINK Market Services Limited 192 118 25 22
AXE ECN Pty Limited - 1,519 - 78

Sales to related Purchases from Amounts owed by Amounts owed to
Related Parties
parties related parties related parties related parties
2006 2006 2006 2006

$000 $000 $000 $000
Parent
New Zealand Exchange Limited 1,537 103 2,305 581
Subsidiaries
Smartshares Limited - 187 - 481
Agri-Fax Limited - - 480 -
FundSource Limited 11 - 98 -
Tane Nominees Limited - - - 523
Associates
LINK Market Services Limited 103 239 3 311
AXE ECN Pty Limited - 1,122 - 990
During the period, NZX’s subsidiary Smartshares Limited managed the NZX MidCap Index Fund (MIDZ), NZX
Australian MidCap Index Fund (MOZY), NZX 10 Fund (TENZ) and NZX 50 Portfolio Index Fund (FONZ). At 31
December 2007, Smartshares Limited had an intercompany debt with NZX of $676,595 (2006: $480,845).
No amounts owed by related parties have been written off or forgiven during the period.
53
23. Notes to the cash flow statement
A. Reconciliation of cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments
in money market instruments, net of outstanding overdrafts. Cash and cash equivalents at the end of the financial year as
shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:
Group Parent
2007 2006 2007 2006

Interest rates Maturities
$000 $000 $000 $000
Cash at bank 7.75% - 8.05% Call 6,976 1,893 4,772 1,233

Bank deposits 8.75% - 8.87% 30 Days 6,000 3,638 6,000 3,638
12,976 5,531 10,772 4,871
B. Reconciliation of profit for the period to net cash flows from operating activities
Group Parent
2007 2006 2007 2006
Note
$000 $000 $000 $000
Profit after tax for the period 8,714 6,500 8,818 6,641
Loss/(gain) on revaluation of fair value through profit or
2 3 (59) 3 (59)
loss financial assets
Share of associates’ profit (less dividends) 562 384 - -
Depreciation and amortisation of non-current assets 2 1,052 897 874 813
Loss on disposal of fixed assets 59 - - -
10,390 7,722 9,695 7,395
Impairment of non-current assets - 264 - 264
(Increase)/decrease in current tax balances (1,111) 411 (968) 336
Decrease/(increase) in deferred tax balances 312 (65) 279 (116)
Decrease/(increase) in current receivables 1,361 (4,104) 2,424 (3,490)
10,952 4,228 11,430 4,389
Increase in current payables 4,451 2,636 5,190 2,495
Current provisions 15,403 6,864 16,620 6,884
Non-operating payables (1,027) - (1,027) -
Non-operating provisions (1,221) (260) (2,472) (260)
Other non-operating liabilities (2,248) (260) (3,499) (260)
Net cash from operating activities 13,155 6,604 13,121 6,624

24. Financial instruments
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Board of NZX reviews the capital structure on a semi-annual basis. As a part of this review the Board considers the
cost of capital and the risks associated with each class of capital. Based on recommendations of the Board the Group will
balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the
issue of new debt or the redemption of existing debt.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 1 H to the financial statements.
Financial risk management objectives

The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies, hence exposure to exchange rate
fluctuations arise. The foreign currencies in which transactions are primarily denominated are USD (market information
sales and IT infrastructure purchases), and AUD (market information sales and IT operating costs). With the
shareholding in the AXE ECN in Australia there is translation exposure to AUD for investments. Exchange rate
exposures are managed within approved policy parameters.
Interest rate risk

NZX is exposed to interest rate risk in that future interest rate movements will affect cash flows and the market value
of fixed interest and other investment assets. NZX currently does not use any derivative products to manage interest
rate risk.
Credit risk
The maximum credit risk associated with the financial instruments held by NZX is considered to be the value reflected in
the Balance Sheet. The risk of non-recovery of these amounts is considered to be minimal.
NZX does not require collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk arise where NZX is exposed to the risk that a party may fail to discharge an obligation
in the normal course of business. NZX Treasury policy is to limit the exposure to counterparties to $10 million for
registered banks and to $3 million for other institutions with a minimum credit rating of A-.
Liquidity risk management

The Group entity manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities.
55
25. Segmented reporting

NZX has elected to early adopt NZ IFRS 8: Operating Segments, NZX has determined that there is only one segment
being operation of the registered exchange and data business.
26. Impacts of the adoption of New Zealand equivalents to

International Financial Reporting Standards
The Group entity changed its accounting policies on 1 January 2007 to comply with NZ IFRS. The transition to NZ IFRS
is accounted for in accordance with NZ IFRS-1: First-time Adoption of New Zealand Equivalents to International Financial
Reporting Standards, with 1 January 2006 as the date of transition.
An explanation of how the transition from superseded policies to NZ IFRS has affected NZX and NZX Group’s financial
position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.

Effect of NZ IFRS on the Balance Sheet as at 1 January 2006
Group Parent
Effect of Effect of
Super-seded Super-seded
transition NZ IFRS transition NZ IFRS
policies* policies*
to NZ IFRS to NZ IFRS
$000 $000 $000 $000 $000 $000
Current assets
Cash and cash equivalents 21,645 - 21,645 20,817 - 20,817
Receivables and prepayments 3,416 - 3,416 2,841 - 2,841
Intercompany receivables - - - 70 - 70
Total current assets 25,061 - 25,061 23,728 - 23,728
Non-current assets
Advances 154 - 154 1,146 - 1,146
Investments accounted for using the 3,179 58 3,237 3,213 - 3,213
equity method
Other financial assets 3,580 - 3,580 6,580 - 6,580
Property, plant and equipment 2,453 (463) 1,990 2,453 (463) 1,990
Deferred tax assets 438 13 451 397 13 410
Goodwill 808 (808) - 306 (306) -
Other intangible assets - 1,297 1,297 - 769 769
Total non-current assets 10,612 97 10,709 14,095 13 14,108
Total assets 35,673 97 35,770 37,823 13 37,836
Current liabilities
Trade and other payables 4,920 39 4,959 4,612 39 4,651
Current tax payable (154) - (154) (154) - (154)
Total current liabilities 4,766 39 4,805 4,458 39 4,497
Total liabilities 4,766 39 4,805 4,458 39 4,497
Net assets 30,907 58 30,965 33,365 (26) 33,339
Equity
Share capital 16,381 920 17,301 17,372 920 18,292
Retained earnings 14,526 (862) 13,664 15,993 (946) 15,047
Total equity attributable to
30,907 58 30,965 33,365 (26) 33,339
shareholders
* Reported financial position for the financial year ended 31 December 2005.
57

International Financial Reporting Standards CONTINUED
Effect of NZ IFRS on the Income Statement for the financial year ended
31 December 2006
Group Parent
Effect of Effect of
transition to NZ IFRS transition to NZ IFRS
policies* policies*
NZ IFRS NZ IFRS
$000 $000 $000 $000 $000 $000
Revenue 25,026 1,176 26,202 22,341 1,173 23,514

Other income (including interest) 1,176 (1,176) - 1,173 (1,173) -
Share of profits of associates accounted

(446) 62 (384) - - -
for using the equity method
Employee benefit expense (7,916) (109) (8,025) (7,119) (101) (7,220)
Depreciation and amortisation expense (1,033) 136 (897) (856) 43 (813)

Other expenses (6,625) - (6,625) (5,326) - (5,326)
Profit before income tax expense 10,182 89 10,271 10,213 (58) 10,155
Income tax expense (3,779) 8 (3,771) (3,520) 6 (3,514)
Profit attributable to shareholders 6,403 97 6,500 6,693 (52) 6,641
* Reported financial performance for the year ended 31 December 2006.

Effect of NZ IFRS on the Balance Sheet as at 31 December 2006
Group Parent
Effect of Effect of
transition to NZ IFRS transition to NZ IFRS
policies* policies*
NZ IFRS NZ IFRS
$000 $000 $000 $000 $000 $000
Current assets
Cash and cash equivalents 5,531 - 5,531 4,871 - 4,871
Receivables and prepayments 7,520 - 7,520 6,400 - 6,400
Other financial assets - 499 499 - 1,022 1,022
Total current assets 13,051 499 13,550 11,271 1,022 12,293
Non-current assets
Investments accounted for using
6,251 120 6,371 6,926 - 6,926
the equity method
Investments in subsidiaries - - - 6,062 310 6,372
Other financial assets 833 (499) 334 1,356 (1,022) 334
Property, plant and equipment 2,446 (224) 2,222 2,334 (201) 2,133
Deferred tax assets 495 21 516 507 19 526
Goodwill 2,932 (2,218) 714 304 (304) -
Other intangible assets 1,579 2,604 4,183 590 238 828
Total non-current assets 14,536 (196) 14,340 18,079 (960) 17,119
Total assets 27,587 303 27,890 29,350 62 29,412
Current liabilities
Trade and other payables 3,237 - 3,237 2,916 - 2,916
Intercompany payable - - - 97 - 97
Provisions 3,950 65 4,015 3,733 57 3,790
Current tax payable 257 - 257 182 - 182
Total current liabilities 7,444 65 7,509 6,928 57 6,985
Total liabilities 7,444 65 7,509 6,928 57 6,985
Net assets 20,143 238 20,381 22,422 5 22,427
Equity
Share capital 2,721 1,003 3,724 3,243 1,003 4,246
Retained earnings 17,422 (765) 16,657 19,179 (998) 18,181
Total equity attributable to
20,143 238 20,381 22,422 5 22,427
shareholders
* Reported position for the financial year ended 31 December 2006.
59

International Financial Reporting Standards CONTINUED
Effect of NZ IFRS on the cash flow statement for the financial year ended 31 December 2006
There are no material differences between the cash flow statement presented under NZ IFRS and the cash flow
statement presented under the superseded policies.
Notes to the reconciliations of income and equity

Record CEO Share Scheme
NZX has elected to retrospectively apply NZ IFRS 2 to all employee share schemes. The only Scheme that falls
under the scope of NZ IFRS 2 is the CEO Share Scheme which has been classified as an equity settled scheme
in accordance with the requirements of the standard. The fair value of the Scheme was independently valued by
Deloitte for the purpose of reliance at $1,029,149 at its grant date. The adjustment detailed above recognises the
portion of this fair value that has been charged to the income statement in previous years.
Employee sick leave provision

In line with the requirements of NZ IAS 19 a provision has been made for any employees with non-vesting
accumulated sick leave.
Deferred taxation
Under IFRS deferred taxation is provided in full using the liability method on temporary differences between the
tax bases of assets and the carrying amounts in the financial statements rather than the comprehensive method.
Amortisation of indefinite life intangibles and goodwill

Management rights to the three Smartshares funds that have been acquired are considered to be indefinite life
intangibles under NZ IAS 38. The above entry reverses accumulated amortisation on these assets. They will be
tested for impairment at least annually in accordance with the impairment accounting policy. In addition the
amortisation of goodwill in 2006 has been reversed.

Audit report
To the shareholders of New Zealand Exchange Limited
We have audited the financial statements on pages 21 to 60. The financial statements provide information about the past financial
performance and financial position of the company and group as at 31 December 2007. This information is stated in accordance
with the accounting policies set out on pages 25 to 31.
Directors’ responsibilities
The Directors are responsible for the preparation of financial statements which give a true and fair view of the financial position of
the company and group as at 31 December 2007 and the results of their operations and cash flows for the year ended on that date.
Auditors’ responsibilities
It is our responsibility to express an independent opinion on the financial statements presented by the Directors and report our
opinion to you.
Basis of opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also
includes assessing:
 the significant estimates and judgements made by the Directors in the preparation of the financial statements;
 whether the accounting policies are appropriate to the company’s and group’s circumstances, consistently applied and
adequately disclosed.
We conducted our audit in accordance with New Zealand Auditing Standards. We planned and performed our audit so as to obtain
all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain
reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In
forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Other than in our capacity as auditors we have no relationship with or interests in the company.
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
 proper accounting records have been kept by the company as far as appears from our examination of those records;
 the financial statements on pages 21 to 60:
– comply with New Zealand generally accepted accounting practice;
– give a true and fair view of the financial position of the company and group as at 31 December 2007 and the results of their
operations and cash flows for the year ended on that date.
Our audit was completed on 14 February 2008 and our unqualified opinion is expressed as at that date.
Wellington
STATUTORY INFORMATION
1. Business operations
There have been no changes in the core business undertakings of the Company, subsidiaries and associates during the year.
However, the Company has invested in several additional businesses:
the data business assets of Investment Research Group Limited – this now operates as a division of the Company known as the
‘Company Research Centre (CRC);
Newsroom Limited – a fully owned subsidiary of NZX which monitors news and provides archive services; and
a 30% shareholding in Appello Services Limited - a funds management services business.
Additionally the Company has:
Established TZ1 Limited, to provide a market infrastructure for carbon markets which began operating as a separate business
unit of NZX from 21 December 2007; and
Begun work on the new clearing and settlement infrastructure platform which will provide a Central Counterparty and a
Central Securities Depository.
2. Interests register
The Company is required to maintain an Interests Register in which particulars of certain transactions and matters involving
the Directors must be recorded. No matters were recorded in the Interests Register in 2007.

3. Directors’ interests
The Directors have declared interests in the following entities:
Director Interest Entity

S.C.Allen Director ABN AMRO New Zealand Limited
Director ABN AMRO Group Companies in New Zealand
Director ABN AMRO Craigs Limited
Director Xylem Investments Limited
Director NZX Executive Share Plan Nominees Limited
Chairman Innoflow Technologies Limited
A.W.Harmos Partner Harmos Horton Lusk
Director Westfield New Zealand Group
Director Elevation Capital Management Limited
N.Paviour-Smith Director Forsyth Barr Group Limited and Associated Companies
Director Forsyth Barr Limited
Director Leveraged Equities Finance Limited
Director Global Equity Market Securities Limited
Director Global Corporate Credit Limited
Director NZX Executive Share Plan Nominees Limited
N Williams Director Airlie Investments Limited
Director Alos Holdings Limited
Director ANZ Capital NZ Limited
Director ANZ Securities (NZ) Limited
Director ANZMAC Securities (NZ) Nominees Limited
Director Arawata Capital Limited
Director Arawata Trust Company
Director Arawata Finance Limited
Director Arawata Holdings Limited
Director Arawata Securities Limited
Director Arawata Funding Limited
63
STATUTORY INFORMATION CONTINUED
Director Interest Entity

Director AUT Business School Advisory Board
Director BHI Limited
Director Control Nominees Limited
Director Cortland Finance Limited
Director Culver Finance Limited
Chairman City Art Gallery Foundation
Director Endeavour Finance Limited
Director Endeavour Securities Limited
Director Harcourt Corporation Limited
Director Harcourt Investments Limited
Director Interchange & Settlement Limited
Director NBNZ Finance Limited
Director Rural Growth Fund Limited
Director Samson Funding Limited
Director Sefton Finance Limited
Director Trillium Holdings Limited
Director Tui Endeavour Limited
Director Tui Securities Limited
H van der Heyden Director Fonterra Co-operative Group Limited
Director King St Advertising
Director Elevation Capital Management Limited
Director Independent Egg Producers Co-Op Limited
Trustee Asia : NZ Foundation
Member Rabobank ANZ Food & Agribusiness Advisory Board
M R Weldon Chairman Link Market Services Limited
Director Smartshares Limited
Director Agri-Fax Limited
Director NZ Fox Limited
Chairman AXE ECN Pty Limited
Chairman TZ1 Limited
Director MXF Nominees Limited
Director Mandela Investments Limited
Member University of Auckland School of Business Advisory Board

4. Information used by Directors
There were no notices from Directors of the Company requesting to disclose or use Company information received in their
capacity as Directors which would not otherwise have been available to them.
5. Directors holding office and their remuneration

The Directors holding office during the year are listed below. The total amount of the remuneration and other benefits
received by each Director during the year, and responsibility held, is listed next to their names.
Directors Remuneration Special Responsibility
S C Allen $100,000 Chairman and Independent Director
A W Harmos $50,000 Independent Director
N Paviour-Smith $50,000 Independent Director
N Williams $50,000 Independent Director
H van der Heyden $50,000 Independent Director
M R Weldon $899,375 (1) CEO
6. Indemnification and insurance of Directors and Officers

During the year, the Company paid insurance premiums in respect of Directors’ and Officers’ liability insurance. The policies
do not specify the premium for individuals.
This insurance provides cover against costs and expenses involved in defending legal actions and any resulting payments
arising from a liability to persons (other than the Company or a related body corporate) incurred in their position as
Director or Officer unless the conduct involves a willful breach of duty or an improper use of inside information or
position to gain advantage.
Note: During 2007, Mr Weldon received options under the old CEO Share Scheme. These options were valued by Deloitte as having a
(1)
cost in 2007 of $26,153.
65
7. Subsidiary companies Directors

Smartshares Limited NZX Agri-Fax Limited
Mr Mark Weldon Mr Mark Weldon
Mr Geoffrey Brown Ms Rachael Cross
Mr Don Trow
Fund Source Limited
Mr Don Trow was paid Director fees of $12,500
Mr Columba Cryan
in relation to this Directorship.
NZ FOX Limited
Tane Nominees Limited
Mr Mark Weldon
Ms Elaine Campbell
Ms Elaine Campbell
NZX Executive Share Plan Nominees Limited
TZ1 Limited
Mr Simon Allen
Mr Mark Weldon
Mr Neil Paviour-Smith
NZX Newsroom Limited

AXE ECN Pty Limited
Mr Columba Cryan
Mr Mark Weldon (Chair)
Ms Elaine Campbell MXF Nominees Limited
Mr Malcolm Sinclair Ms Elaine Campbell
Mr Dan Ritchie
Mandela Investments Limited
Mr Roy Laidlaw
Mr Mark Weldon
Mr David Hancock
Mr Simon Rothery Appello Services Limited
Ms Elaine Campbell
LINK Market Services (NZ) Limited
Mr Timothy Jones
Mr Mark Weldon (Chair)
Mr Jason McCracken
Mr Saki Hannah
Mr Craig Stobo
Mr John Hawkins
Mr John McMurtrie
The remuneration of employees acting as Directors of subsidiaries is disclosed in the relevant banding of remuneration
set out under Employee Remuneration.

8. Employee remuneration
During the year a number of employees or former employees (excluding Directors) received remuneration and other
benefits, including non cash benefits and NZX shares in accordance with the NZX Executive Share Plan, in their capacity as
employees of the Company. The value of which exceeded $100,000 per annum were as follows:
Remuneration Ranges Employee

$110,000 – 119,999 3
$120,000 – 129,999 2
$140,000 – 149,999 1
$150,000 – 159,999 2
$160,000 – 169,999 2
$170,000 – 179,999 2
$270,000 – 279,999 2
$340,000 – 349,999 1
$360,000 – 369,999 1
$470,000 – 479,999 1
9. Director Transactions in Securities of the Parent Company
No. of securities Securities held Non-

Securities held Beneficial as at
Director Date acquired/ Beneficial as at 31
31 December 2007
(disposed) December 2007
S C Allen 88,958
A W Harmos 37,059
N Paviour-Smith 46,174
N Williams 17,789
H van der Heyden -
M R Weldon 1,601,789 2
2
1,252,132 shares and 349,657 CEO Share Scheme Shares
67
10. Auditors
The auditor of the parent company and group is KPMG. They provide audit and other services for which they are
remunerated.
Parent Group
$000 $000
Audit of the financial statements 55 89
Other audit related fees - 5

SECURITY HOLDER INFORMATION
1. Top 20 security holders

The following table shows the names and holdings of the 20 largest holdings of securities in the Company as at 31
December 2007.
Shares Held %
NZ Central Securities Depository Limited 7,518,926 30.55
Forbar Custodians Limited 1,266,636 5.15
ASB Nominees Limited 1,252,132 5.09
Custodial Services Limited 987,978 4.01
Peter Hanbury Masfen & Joanna Alison Masfen 682,128 2.77
Nigel Babbage & Philippa Babbage 665,594 2.7
David Mitchell Odlin 505,000 2.05
Tane Nominees Limited 349,657 1.42
Leveraged Equities Finance Limited 278, 078 1.13
Michael Walter Daniel & Nigel Geoffrey Burton & Michael Murray Benjamin 195,000 0.79
FNZ Custodians Limited 141,178 0.57
Forbar Custodians Limited 132,455 0.54
Somerset Smith Partners Limited 128,963 0.52
Michael Walter Daniel & Elizabeth Beatty Benjamin & Michael Murray Benjamin 100,000 0.41
ASB Nominees Limited 98,826 0.4
Forbar Custodians Limited 92,951 0.38
NZX Executive Share Plan Nominees Limited 91,287 0.37
Total 15,075,344 61.25
69
SECURITY HOLDER INFORMATION CONTINUED
12. Spread of ordinary shareholders as at 31 December 2007
Shareholders Shares
Size of Holding
Number % Number %
1 to 1,000 962 39.27 600,777 2.44
1,001 to 5,000 1,074 43.84 2,463,900 10.01
5,001 to 10,000 199 8.12 1,392,795 5.66
10,001 to 20,000 101 4.12 1,426,331 5.80
20,001 to 30,000 27 1.10 655,893 2.66
30,001 to 40,000 35 1.43 1,203,247 4.89
40,001 to 50,000 10 0.41 457,531 1.86
> 50,001 42 1.71 66.68
2,450 100.00 100.00
Shareholders Shares
Domicile of Holders
Number % Number %
New Zealand 2,396 97.80 24,307,978 98.76

Australia 32 1.31 169,425 0.69
Other 22 0.990 134,842 0.55
2,450 100.00 24,612,245 100.00
13. Substantial security holders

The following information is given pursuant to section 26 of the Securities Markets Act 1988. According to the file kept
by the Company under section 25 of the Securities Markets Act 1988 the following were substantial security holders in the
Company as at 31 December 2007. The total number of voting securities on issue as at 31 December 2007 was 24,612,245,
comprising 24,262,588 ordinary shares and 349,657 CEO Share Scheme Shares.
Relevant Interest %
Fisher Funds Management Limited 2,373,540 9.64
M R Weldon 1,601,789 6.51
ING NZ Ltd 1,514,849 6.20
Forsyth Barr Custodians Limited 1,266,636 5.15

14. Waivers from the Listing Rules
Various waivers were set out in the Prospectus and Investment Statement dated 3 June 2003. These waivers related to the
previous CEO share scheme in effect until June 2007. These waivers are:
A waiver from the application of Listing Rule 7.3.1(a) to allow NZX to issue shares where under the terms of the CEO
Scheme, it is obliged or entitled to do so, and to allow NZX to issue shares under the CEO Scheme.
A waiver from the application of Listing Rule 7.6.1 to allow NZX to purchase its own shares where, under the terms of the
CEO Scheme it is obliged or entitled to do so.
A waiver from the application of Listing Rule 7.6.3 to allow NZX to redeem its own shares where, under the terms of the
CEO Scheme, it is obliged to do so.
A waiver from Listing Rule 7.6.5 to allow NZX or a wholly owned subsidiary to provide financial assistance to Mr
Weldon for the purposes of implementing the CEO Scheme.
A waiver from the application of Listing Rule 7.6.6 to exempt any share acquisitions or redemptions by NZX, and
the provision of financial assistance given for the purposes of the CEO Scheme from the requirement that any such
acquisition, redemption or financial assistance to be made or given within 12 months (for acquisition).
The following waiver was granted in 2007 following shareholder approval of the new CEO Share Scheme at the NZX Special
Meeting in September 2007:
A waiver from the application of Listing Rule 7.6.6A to exempt the financial assistance given for the purposes of the new
CEO Scheme from the requirement that it be given within 12 months of the passing of the resolution to implement the
new CEO Scheme.
15. Securities issued by NZX

NZX’s ordinary shares (including the remaining shares under the previous CEO Share Scheme Shares that converted to
ordinary shares in July 2007) are quoted on the NZSX Market. Those Share Scheme Shares issued pursuant to the new CEO
Share Scheme (approved by shareholders at the Special Meeting on 6 September 2007) have not qualified and are not quoted
on any market and will not do so until such time as they qualify.
71
DIRECTORY
Registered Office Auditors

New Zealand Exchange Limited KPMG
Level 2 10 Customhouse Quay
NZX Centre WELLINGTON
11 Cable Street Tel: +64 4 816 4500
PO Box 2959 Fax: +64 4 816 4600
WELLINGTON
Tel: +64 4 472 7599 Share Registrar
info@nzx.com
www.nzx.com LINK Market Services Limited
PO Box 91976
AUCKLAND 1030
Board of Directors
Simon Allen Investor Enquiries +64 9 375 5998
Nigel Williams Fax +64 9 375 5990
Andrew Harmos lmsenquiries@linkmarketservices.com
Neil Paviour-Smith www.linkmarketservices.com
Henry van der Heyden
Mark Weldon
The Directors can be contacted at NZX’s

registered office.

NOTES
73

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2 0

NEW ZEALAND EXCHANGE LIMITED ANNUAL REPORT

4. Performance Summary and Outlook

15. Board of Directors

62. Statutory Information

15 February 2008 Preliminary Full Year Financial Results issued

11 March 2008 2007 Annual Report issued

July 2008 Preliminary Half Year Announcement issued

September 2008 2008 Half Year Report issued

31 December 2008 2008 Financial Year end

Simon Allen, Chairman

A pivotal point in our evolution

• Emerging international business exposure in a couple of global niches in which we can be

Mark Weldon, Chief Executive Officer

2 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

Accordingly, NZX will produce a detailed report at Full and

Half Year result periods that comprises four sections:

I. NZX Group: 2007 Performance Summary

II. NZX Group: 2008 Outlook

III. NZX Group: Key Operating Metrics

IV. NZX Group: Statement of Financial Performance 2007

EBITDA: $14.74 million versus $10.44 million in 2006, an increase of 41%.

EBITDA margin: 47% versus 42% in 2006, an increase of 12%.

NPAT: $8.71 million versus $6.50 million in 2006, an increase of 34%.

NPAT margin: 27.7% versus 26% in 2006, an increase of 6.5%.

NZX Markets Business: 2007 Performance

Trading, clearing and settlement revenue was up 3% on 2006 at $4.85 million.

4 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

NZX Subsidiaries and Strategic Investments: 2007 Performance

NZX Capital Management

6 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

Smartshares expects to deliver significant productivity

Financial Attributes Number of Retail Unit Holders 15,011 2%

Smartshares has a scalable business model. Smartshares Financial Highlights 2007

8 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

Financial Attributes Operating Metrics 2007

Business Overview Financial Attributes

market. NZX has earned its spot on the AXE ownership

10 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

The risks to AXE centre around potential stalling by ASX in

The prospect of volatile markets in Australia is not

AXE’s business model – based on providing a technological

12 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

The Appello business model addresses a gap in the

Equally, once a fund manager changes (or selects for

NZX Markets Business – Operating Metrics AXE ECN – Operating Metrics

Average daily trades Number of shares

Total value traded Value traded

Average daily value traded

Smartshares – Operating Metrics Compliance market trades (forward)

Total Funds under Management (retail and wholesale) Open interest

Number of retail unit holders

Note: NZX Operating Metrics - Full Year 2007 are available on

14 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

Simon Christopher Allen – Chairman BSc, BCom, FCSAP

Nigel Williams – DEPUTY Chairman BCom

Andrew William Harmos LLB (Hons), BCom

Neil Paviour-Smith BCA, CA, ACIS, FCFIP

Henry William van der Heyden BEng (Agr) Hons

of Fonterra Co-operative Group in September 2002 and is a founding director of the

16 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT

2007 NZX DIRECTORS’ ATTENDANCE RECORD

Director NZX Board/Committees

18 NEW ZEALAND EXCHANGE LIMITED 2007 ANNUAL REPORT