HALF YEAR BNZ Income Securities 2 Limited

Transcription

1 HALF YEAR 2013 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements for the period ended 31 March 2013

2 Directory Directors Nicolette Lisa Fowler Craig Don Herbison Timothy John Main Registered office Level 4 80 Queen Street Auckland 1010 New Zealand Auditor Ernst & Young Ernst & Young Building 2 Takutai Square Britomart Auckland 1010 New Zealand Share registrar Computershare Investor Services Limited 159 Hurstmere Road Takapuna North Shore City 0622 New Zealand Managing your shareholding online: To change your address, update your payment instructions and to view your registered details including transactions, please visit: computershare.co.nz/investorcentre General enquiries can be directed to: Private Bag Auckland 1142 New Zealand E: enquiry@computershare.co.nz T: F: Please assist our registrar by quoting your CSN or shareholder number.

3 This half-year report is for the six months from 1 October 2012 to 31 March 2013, with comparative reporting period results for the six months ended 31 March 2012 and for the year ended 30 September Introduction The Directors of BNZ Income Securities 2 Limited (the Company ) are pleased to announce a net profit after tax of $8,517,600 for the six months ended 31 March Each perpetual non-cumulative share issued by the Company (each, a Share ) carries a non-cumulative dividend calculated at the Dividend Rate (payment being subject to certain dividend payment conditions). The Dividend Rate for the five-year period from (and including) 26 June 2009 to (but excluding) 30 June 2014 (as 28 June 2014 is not a business day) is 9.10% per annum, payable in arrears in equal quarterly instalments. Dividends are expected to be fully imputed (so that the imputation ratio of the dividend is the maximum imputation ratio permitted by law) and the cash amount of dividends will therefore be a proportion of the amount calculated using the Dividend Rate. On 28 December 2012, a quarterly dividend of $5,915,000 ( cents per Share), comprising $4,258,800 cash ( cents per Share) and $1,656,200 imputation credits ( cents per Share) was paid on the Shares held by the holders of such Shares registered on the share register at 5pm on 18 December On 28 March 2013, a quarterly dividend of $5,915,000 ( cents per Share), comprising $4,258,800 cash ( cents per Share) and $1,656,200 imputation credits ( cents per Share) was paid on the Shares held by the holders of such Shares registered on the share register at 5pm on 18 March The Directors have declared a quarterly dividend of cents per Share (including cash and imputation credits), to be paid on 28 June 2013 to holders of the Shares registered on the share register at 5pm on 18 June Nicolette Lisa Fowler Director 17 June 2013 Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 1

4 Income statement For the six months ended 31 March months 6 months 12 months Note $000 $000 $000 Interest revenue 2, 3 11,841 11,841 23,680 Other operating revenue Total operating revenue 11,994 11,982 23,987 Interest expense Operating expenses Operating profit before income tax expense 11,830 11,830 23,660 Income tax expense 3,312 3,312 6,625 Net profit attributable to shareholders of BNZ Income Securities 2 Limited 8,518 8,518 17,035 The accounting policies and notes form part of, and should be read in conjunction with, these interim financial statements. 2 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements 31 March 2013

5 6 Months 6 Months 12 Months $000 $000 $000 Net profit attributable to shareholders of BNZ Income Securities 2 Limited 8,518 8,518 17,035 Other comprehensive income, net of taxation Total comprehensive income attributable to shareholders of BNZ Income Securities 2 Limited 8,518 8,518 17,035 Statement of comprehensive income For the six months ended 31 March 2013 The accounting policies and notes form part of, and should be read in conjunction with, these interim financial statements. Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 3

6 Statement of changes in equity For the six months ended 31 March 2013 Perpetual non- Ordinary cumulative Retained capital capital profits Total Note $000 $000 $000 $000 Six months ended 31 March 2013 Unaudited Balance at beginning of period 6, , ,140 Comprehensive income Net profit attributable to shareholders of BNZ Income Securities 2 Limited - - 8,518 8,518 Total other comprehensive income Total comprehensive income - - 8,518 8,518 Dividends paid on perpetual non-cumulative shares (8,518) (8,518) Balance at end of period 6, , ,140 Six months ended 31 March 2012 Unaudited Balance at beginning of period 6, , ,136 Comprehensive income Net profit attributable to shareholders of BNZ Income Securities 2 Limited - - 8,518 8,518 Total other comprehensive income Total comprehensive income - - 8,518 8,518 Dividends paid on perpetual non-cumulative shares (8,514) (8,514) Balance at end of period 6, , ,140 Year ended 30 September 2012 Audited Balance at beginning of year 6, , ,136 Comprehensive income Net profit attributable to shareholders of BNZ Income Securities 2 Limited ,035 17,035 Total other comprehensive income Total comprehensive income ,035 17,035 Dividends paid on perpetual non-cumulative shares (17,031) (17,031) Balance at end of year 6, , ,140 The accounting policies and notes form part of, and should be read in conjunction with, these interim financial statements. 4 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements 31 March 2013

7 Note $000 $000 $000 Balance sheet As at 31 March 2013 Assets Call balances due from related entity ,184 Other amounts due from related entity Loan to related entity 3 260, , ,000 Total assets 260, , ,455 Liabilities Amounts due to related entity Current tax liability ,207 Other accounts payable Total liabilities ,315 Net assets 260, , ,140 Shareholders equity Contributed equity ordinary shareholder 4 6,936 6,936 6,936 Contributed equity perpetual non-cumulative shareholders 5 253, , ,064 Retained profits Total shareholders equity 260, , ,140 The accounting policies and notes form part of, and should be read in conjunction with, these interim financial statements. For and on behalf of the Board, who authorised the issue of these interim financial statements on 17 June Nicolette Lisa Fowler Director Timothy John Main Director Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 5

8 Cash flow statement For the six months ended 31 March Months 6 Months 12 Months Note $000 $000 $000 Cash flows from operating activities before income tax Cash was provided from: Interest revenue 11,841 11,841 23,680 Other operating revenue Cash was applied to: Interest expense (2) (2) (2) Operating expenses (205) (209) (344) Net cash flows from operating activities before income tax 11,793 11,815 23,680 Cash was applied to: Income tax payments (5,466) (5,624) (6,783) Net cash flows from operating activities 6,327 6,191 16,897 Cash flows from financing activities Cash was applied to: Dividends paid on perpetual non-cumulative shares 6 (8,518) (8,514) (17,031) Net cash flows from financing activities (8,518) (8,514) (17,031) Net movement in cash and cash equivalents (2,191) (2,323) (134) Cash and cash equivalents at beginning of the period 2,184 2,318 2,318 Cash and cash equivalents at end of the period (7) (5) 2,184 Cash and cash equivalents at end of the period comprised: Call balances due from related entity ,184 Cash amount due to related entity (20) (18) - Total cash and cash equivalents (7) (5) 2,184 6 Months 6 Months 12 Months Reconciliation of net profit attributable to shareholders of BNZ Income Securities 2 Limited to net cash flows from operating activities $000 $000 $000 Net profit attributable to shareholders of BNZ Income Securities 2 Limited 8,518 8,518 17,035 Changes in assets and liabilities: Net movement in accrued operating expenses (21) (35) (16) Net movement in non-cash amounts due to related entity (22) (24) (3) Net movement in current tax liability (2,153) (2,312) (158) Net movement in non-cash amounts due from related entity Net cash flows from operating activities 6,327 6,191 16,897 The accounting policies and notes form part of, and should be read in conjunction with, these interim financial statements. 6 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements 31 March 2013

9 1. Principal accounting policies The Company is a company with limited liability incorporated in New Zealand. The Company is a special purpose company incorporated for the purpose of issuing the Shares to the New Zealand public, and lending the proceeds to BNZ Income Management Limited ( BNZIM ). These interim financial statements are general purpose financial reports prepared in accordance with the requirements of New Zealand International Accounting Standard 34 Interim Financial Reporting, and should be read in conjunction with the Company s Annual Report and Financial Statements for the year ended 30 September The accounting policies used in the preparation of these interim financial statements are consistent with the accounting policies used in the preparation of the Company s Annual Report and Financial Statements for the year ended 30 September Notes to and forming part of the interim financial statements The following amendment to standards relevant to the Company has been adopted from 1 October 2012 and has been applied in the preparation of these interim financial statements. Adoption of this amendment has not resulted in any significant impact on the Company s reported results or financial position. > NZ IAS 1 Amendments to NZ IAS 1 Presentation of Financial Statements was issued in August 2011 and is effective for periods beginning on or after 1 July It requires entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss in subsequent periods (reclassification adjustments). 6 Months 6 Months 12 Months 2. Interest revenue $000 $000 $000 Interest revenue from BNZIM 11,830 11,830 23,660 Interest revenue from Bank of New Zealand Other interest income Total interest revenue 11,841 11,841 23, Related party transactions The Company is a wholly owned controlled entity of National Equities Limited whose ultimate parent company is National Australia Bank Limited ( NAB ). National Equities Limited is the parent entity of National Australia Group (NZ) Limited ( NAGL ) which owns all the issued ordinary share capital of BNZIM and Bank of New Zealand ( BNZ ). During the reporting period ended 30 September 2009, the Company issued Shares to investors and, using the proceeds therefrom, made a loan to BNZIM. The Company receives interest (subject to certain interest payment conditions) on the loan to BNZIM on a quarterly basis. The Company applies the whole interest revenue, net of tax, as dividends to the perpetual non-cumulative shareholders, which are payable quarterly, subject to certain dividend payment conditions. The interest rate payable from time to time on the loan is the aggregate of a rate based on the five-year mid-market swap rate (adjusted as necessary to a quarterly rate) plus a margin of 4.09% per annum. The interest rate is fixed five-yearly, with the initial rate, from (and including) 26 June 2009 to (but excluding) 30 June 2014 (as 28 June 2014 is not a business day), being 9.10% per annum. The loan from the Company to BNZIM is a perpetual loan with no scheduled repayment date, although, following the occurrence of certain events, BNZIM has an obligation to repay the loan (which in some cases may be satisfied by transferring to the Company the perpetual preference shares issued by BNZ in 2009 ( BNZ PPS ) held by BNZIM). In addition, BNZIM may repay the loan (in whole but not in part) on or after the fifth anniversary of the date on which the loan was advanced by the Company (being 30 June 2014, as 28 June 2014 is not a business day), or on or after the occurrence of certain specified events. The loan from the Company to BNZIM is limited in recourse to the BNZ PPS held by BNZIM. BNZIM has invested the proceeds of the loan from the Company in the BNZ PPS. The BNZ PPS carry the right to a dividend payable quarterly in arrears, which is calculated and payable generally on the same basis as the dividends payable on the Shares. Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 7

10 Notes to and forming part of the interim financial statements continued 3. Related party transactions continued Other principal related entity transactions comprise the supply, as required, of settlement, accounting, tax, regulatory compliance and legal services from BNZ. The Company pays a quarterly administration fee to BNZ as consideration for the services received. BNZ has provided the Company with a $5 million committed cash advance facility for its liquidity management in the course of its normal activities. BNZ continues to provide, at the Company s request, a payment bond to NZX Limited of an amount in aggregate of $75,000. These transactions with BNZ were entered into at arm s length on normal commercial terms and conditions. Interest expense paid to BNZ is disclosed on the face of the income statement and included within the Transactions with related parties table below. BNZIM reimburses the Company for all operating expenses incurred by the Company. Reimbursement from BNZIM is shown as Other operating revenue in the income statement. Amounts in respect of such operating expenses charged to, and to be reimbursed by, BNZIM are unsecured, with cash settlement occurring regularly. Key management personnel are defined as being Directors of the Company and their related parties. During the six months ended 31 March 2013 key management personnel received no dividends (including cash and imputation credits) on Shares (six months ended 31 March 2012: nil; year ended 30 September 2012: nil). As at 31 March 2013 key management personnel held no Shares (31 March 2012: nil Shares; 30 September 2012: nil Shares). No compensation was paid by the Company to key management personnel during the six months ended 31 March 2013 (six months ended 31 March 2012: nil; year ended 30 September 2012: nil). The following tables provide information on the transactions with related parties for the relevant reporting period: Receivables and payable with related parties $000 $000 $000 Related party receivables BNZ ,184 BNZIM 260, , ,271 Related party payable BNZ There is no expected loss on the loan to BNZIM, other receivables due from BNZIM and bank account balances with BNZ. No provision has been made against the value of these assets. 6 Months 6 Months 12 Months Transactions with related parties $000 $000 $000 Revenue from related parties BNZ BNZIM 11,983 11,971 23,967 Expenses to related party BNZ Both BNZ and BNZIM are classified as Other related parties of the Company. 4. Contributed equity ordinary shareholder $000 $000 $000 6,935,531 fully paid ordinary shares (31 March 2012: 6,935,531 shares; 30 September 2012: 6,935,531 shares) 6,936 6,936 6,936 Total contributed equity ordinary shareholder 6,936 6,936 6,936 Each of the 6,935,531 ordinary shares entitles the shareholder to one vote at any meeting of shareholders and has no rights to dividends and surpluses on winding up. Shares do not have a par value. Ordinary share capital is not actively managed by the Company. 8 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements 31 March 2013

11 5. Contributed equity perpetual non-cumulative shareholders $000 $000 $ ,000,000 fully paid perpetual non-cumulative shares (31 March 2012: 260,000,000 shares; 30 September 2012: 260,000,000 shares) 260, , ,000 Deduct: Issue expenses* 6,936 6,936 6,936 Total contributed equity perpetual non-cumulative shareholders 253, , ,064 * The issue expenses were incurred during the reporting period ended 30 September Notes to and forming part of the interim financial statements continued Each Share carries a non-cumulative dividend calculated at the Dividend Rate (payment being subject to certain dividend payment conditions). The Dividend Rate for the five-year period from (and including) 26 June 2009 to (but excluding) 30 June 2014 (as 28 June 2014 is not a business day) is 9.10% per annum, payable in arrears in equal quarterly instalments. Dividends are expected to be fully imputed (so that the imputation ratio of the dividend is the maximum imputation ratio permitted by law) and the cash amount of dividends will therefore be a proportion of the amount calculated using the Dividend Rate. Holders of the Shares have no right to receive notice of, attend, participate in or vote at the meetings of shareholders of the Company, except in respect of amendments relating to the rights, privileges, limitations and conditions attaching to the Shares, meetings convened in relation to the commencement of the liquidation of the Company in certain circumstances, and meetings convened to consider a resolution proposed to be passed for a purpose referred to in the security trust deed entered into by the Company, BNZIM and New Zealand Permanent Trustees Limited on 19 May 2009 or the deed entitled Deed Poll (BNZIS 2 Deed Poll) issued by the Company on 19 May On liquidation of the Company, each perpetual non-cumulative shareholder will have the right to participate in all of the surplus assets of the Company after all creditors of the Company have been repaid, in priority to, and to the exclusion of, the holders of other classes of shares of the Company (including any ordinary shares), other than shares expressed to rank equally in a liquidation of the Company with the claims of perpetual non-cumulative shareholders. Perpetual non-cumulative shareholders rank equally with each other upon liquidation of the Company. Call option With the prior consent of the Australian Prudential Regulation Authority ( APRA ), any member of the NAB Group (other than the Company) has the right to acquire the Shares for their issue price (plus any accrued but unpaid distributions) on any dividend payment date on or after 28 June 2014, or at any time after the occurrence of certain specified events. Capital management When managing capital, management s objective is to ensure the Company continues as a going concern and to maintain optimal returns to perpetual non-cumulative shareholders. As the market is constantly changing, management may change the capital structure through the issue of new shares. 6. Retained profits $000 $000 $000 Balance at beginning of period Net profit attributable to shareholders of BNZ Income Securities 2 Limited 8,518 8,518 17,035 Dividends paid on perpetual non-cumulative shares (8,518) (8,514) (17,031) Balance at end of period On 28 December 2012, a quarterly dividend of $5,915,000 ( cents per Share), comprising $4,258,800 cash ( cents per Share) and $1,656,200 imputation credits ( cents per Share) was paid on the Shares held by the holders of such Shares registered on the share register at 5pm on 18 December On 28 March 2013, a quarterly dividend of $5,915,000 ( cents per Share), comprising $4,258,800 cash ( cents per Share) and $1,656,200 imputation credits ( cents per Share) was paid on the Shares held by the holders of such Shares registered on the share register at 5pm on 18 March There is no dividend or distribution reinvestment plan in place. For the six months ended 31 March 2013, there were no foreign sourced dividends or distributions (six months ended 31 March 2012: nil; year ended 30 September 2012: nil). Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 9

12 Notes to and forming part of the interim financial statements continued 7. Segment information The Company operates in New Zealand in one industry segment. Its primary business is funding. Financial information for the segment is available to the Board of Directors of the Company for the purpose of evaluating performance and resource allocation, and is the same information presented in these interim financial statements. The Company derives over 99% of its revenue from interest earned from the loan to BNZIM. Refer to note 3 for further details. 8. Contingent liabilities and commitments The Company had no contingent liabilities and commitments as at 31 March 2013 (31 March 2012: nil; 30 September 2012: nil). 9. Risk management policies The Board of Directors of the Company is committed to the management of risk. During the six months ended 31 March 2013, there has been no material change in the Company s policies for managing credit, interest rate and liquidity risks. During the six months ended 31 March 2013 the Company had not become exposed to any new category of risk to which the Company was not previously exposed. 10. Other information Credit rating During the six months ended 31 March 2013, there was no change to the Moody s Investors Service credit rating of the Shares of Baa1(hyb). During the six months ended 31 March 2013, the Standard & Poor s credit rating of the Shares was upgraded from BBB to BBB+ on 5 October Tangible assets As at 31 March 2013, the Company had financial assets of $260,278,922 (31 March 2012: $260,278,922; 30 September 2012: $262,455,546) comprising Call balances due from related entity, Other amounts due from related entity and a Loan to related entity. As at 31 March 2013, the Company had no tangible assets in the form of property, plant, equipment or inventory (31 March 2012: nil; 30 September 2012: nil). Directors The Directors of the Company as at 31 March 2013 were Nicolette Lisa Fowler, Craig Don Herbison, Paolo Roberto Suma and Timothy John Main. Paolo Roberto Suma resigned as a Director on 14 June Details of associates, joint venture entities and entities over which the Company has control The Company has no investment in associates or joint venture entities, and there are no entities over which the Company has control. This has not changed since 31 March Major changes or trends in the Company s business subsequent to 31 March 2013 Nil. Amount of any unrealised gains resulting from the revaluation of assets of the Company and unrealised net changes in values or development margins of investment assets Six months ended 31 March 2013: nil (six months ended 31 March 2012: nil; year ended 30 September 2012: nil). 10 BNZ Income Securities 2 Limited Half-Year Report and Interim Financial Statements 31 March 2013

13 Auditor s independent review report Review Report to the Shareholders of BNZ Income Securities 2 Limited We have reviewed the interim financial statements on pages 2 to 10. The interim financial statements provide information about the past financial performance of the company and its financial position as at 31 March This information is stated in accordance with the accounting policies set out in the company s annual financial statements dated 7 December This report is made solely to the company s shareholders, as a body, in accordance with our engagement letter. Our review has been undertaken so that we might state to the company s shareholders those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s shareholders as a body, for our review work, for this report, or for our findings. Directors Responsibilities The directors are responsible for the preparation of interim financial statements which comply with generally accepted accounting practice in New Zealand and which present fairly the financial position of the company as at 31 March 2013 and the results of its operations and cash flows for the six month period ended on that date. Reviewer s Responsibilities We are responsible for reviewing the interim financial statements presented by the directors in order to report to you whether, in our opinion and on the basis of the procedures performed by us, anything has come to our attention that would indicate that the interim financial statements do not present fairly the matters to which they relate. Basis of Statement A review is limited primarily to enquiries of company personnel and analytical review procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, do not express an audit opinion. We have reviewed the interim financial statements of the company for the six month period ended 31 March 2013 in accordance with the Review Engagement Standards issued by the External Reporting Board. These standards require that we plan and perform the review to obtain moderate assurance as to whether the statements are free of material misstatement whether caused by fraud or error. We also evaluated the overall adequacy of the presentation of information in the interim financial statements. Other than in our capacity as auditor we have no relationship with, or interest in, the company. Statement of Review Findings Based on our review nothing has come to our attention that causes us to believe that the accompanying interim financial statements, set out on pages 2 to 10, do not fairly present the financial position of the company as at 31 March 2013 and its financial performance and cash flows for the six month period ended on that date in accordance with generally accepted accounting practice in New Zealand as it relates to interim financial statements. Our review was completed on 17 June 2013 and our findings are expressed as at that date. Auckland Half-Year Report and Interim Financial Statements 31 March 2013 BNZ Income Securities 2 Limited 11

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