| Investment Statement |
|
Updated 27 September 2011 IMPORTANT INFORMATION (The information in this section is required under the Securities Act 1978.) Investment decisions are very important. They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself.
CHOOSING AN INVESTMENT When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below:
In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request.
THE FINANCIAL MARKETS AUTHORITY REGULATES CONDUCT IN FINANCIAL MARKETS The Financial Markets Authority regulates conduct in New Zealand’s financial markets. The Financial Markets Authority’s main objective is to promote and facilitate the development of fair, efficient, and transparent markets. For more information about investing, go to http://www.fma.govt.nz
FINANCIAL ADVISERS CAN HELP YOU MAKE INVESTMENT DECISIONS Using a financial adviser cannot prevent you from losing money, but it should be able to help you make better investment decisions. Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide advice on a limited range of products. When seeking or receiving financial advice, you should check:
A financial adviser who provides you with personalised financial adviser services may be required to give you a disclosure statement covering these and other matters. You should ask your adviser about how he or she is paid and any conflicts of interest he or she may have. Financial advisers must have a complaints process in place and they, or the financial services provider they work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a dispute over an investment, you can ask someone independent to resolve it. Most financial advisers, or the financial services provider they work for, must also be registered on the financial service providers register. You can search for information about registered financial service providers at http://www.fspr.govt.nz You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser.
CREDIT RATING The Napier Building Society (Permanent) (“Napier Building Society “) does not have a credit rating issued by an agency approved by the Reserve Bank of New Zealand (“Reserve Bank”) under section 157J of the Reserve Bank Act 1989. That is because it is operating under an exemption from the requirement to have a credit rating. This is explained further under the heading “Credit Rating Exemption” on page 6 below.
WHAT SORT OF INVESTMENT IS THIS? This statement relates to interest bearing call and term investments with The Napier Building Society. Both types of investment are redeemable building society shares, which in formal terms are as follows:
Call Deposits: A Call Deposit has no fixed term of investment, and has a variable interest rate. The principal sum invested is repayable by the Napier Building Society to you when requested by you. Term Investments: Term Investments may be for terms of three, six or twelve months, as selected by you. The Society may change those terms from time to time at its discretion, but that will not affect investments already made. The monies received by the Napier Building Society from investments, whether on call or term investments, can be borrowed by members for the provision of residential, commercial and rural loans secured to the Society by way of a registered first mortgages, subject to the borrower meeting the Napier Building Society’s credit criteria. Any funds held that at any time are not so invested in registered first mortgages are invested the Napier Building Society with New Zealand registered banks or other Board approved entities which carry an investment grade or better rating.
WHO IS INVOLVED IN PROVIDING IT FOR ME ? The Issuer The Napier Building Society (Permanent), 86 Station Street, Napier.
The Directors of Napier Building Society at the date of this investment statement are as follows: Martin Roger Doole, of 134 Thompson Road, Napier Gerard John Sullivan, of 14 Ferguson Avenue, Westshore, Napier Robert William Goffin Brady, of 7 D’Arcy Place, Taradale, Napier Morris Wayne Williams, of 91 Churchill Drive, Taradale, Napier The Trustee is Trustees Executors Limited, Level 5, 10 Customhouse Quay, Wellington. It is possible that the names and / or addresses shown above for the directors of Napier Building Society and for the Trustee may change after the date of this Investment Statement. The correct names and addresses of the directors of Napier Building Society and of the Trustee at any time can be obtained on request from Napier Building Society, as set out under “WHAT OTHER INFORMATION CAN I OBTAIN ABOUT THIS INVESTMENT?” below.
Activities of Napier Building Society: The Napier Building Society was established in 1887 and since that time has provided both savings services and loan services, including residential, commercial and farm mortgage finance, to its members and those in the community it serves. The principal activities of the Napier Building Society are:
HOW MUCH DO I PAY? The Directors of the Society may set a minimum investment amount from time to time as they see fit. Otherwise, investors may select the amount they wish to invest. There are currently no minimum investment amounts. Cheques for the full sum selected, crossed "non transferable" and made payable to The Napier Building Society, must accompany a duly completed application form if sent by post or through a third party. Payment may be lodged in cash or by cheque with the Napier Building Society, PO Box 236, Napier. There is no “cooling off” period for any investments with the Napier Building Society.
WHAT ARE THE CHARGES? Apart from the early termination fee disclosed below, investors pay no fees or charges of any sort in relation to this investment unless costs are incurred by the Society as a consequence of accepting an investment. In these circumstances the costs would be passed on to the investor. However, if early repayment of a term investment is agreed to by Napier Building Society, an interest rate reduction may apply. With regard to early repayments, see also the section under the heading “HOW DO I CASH IN MY INVESTMENT?” on page 6 below.
WHAT RETURNS WILL I GET? Interest will be paid to investors, or will be compounded, on the basis, at the rates, with the frequency and on the dates relating to the investment option selected by the investor. Interest will accrue from the date of receipt, and is calculated on a daily basis, excluding the date on which the investment is repaid. The interest rate applicable to call investments is not fixed, and may change during the period of your investment. Interest will be paid, or accrued, net of Government Resident Withholding Tax at the appropriate rate required by law, unless an IRD exemption certificate is provided. For overseas investors Non Resident Withholding Tax will be deducted unless approved issuer arrangements apply.
WHAT ARE MY RISKS? General Money invested with The Napier Building Society is repayable in full on maturity. Funds may be reinvested. Interest, appropriate to the term and investment selected, is also payable in full subject to the deduction of Government Resident Withholding Tax described in the preceding paragraph. The principal risk of your investment not being recovered by you, and of not receiving the returns summarised above, is if the Society is unable to make satisfactory alternative arrangements for the repayment of the investment and as such commits an act of insolvency. The Society reviews its funds on an ongoing basis to ensure that all its commitments can be met. In the event that the Society becomes insolvent investors have no additional liability to the Society whatsoever.
Consequences of Insolvency Should Napier Building Society become insolvent, your claim will rank behind unsecured creditors, because investments with Napier Building Society are technically shares.
Other Risks A financial institution like Napier Building Society is also exposed to various other types of risk. These risks include:
Geographic Exposure: The Napier Building Society lends principally in the Hawkes Bay region. As a result any serious deterioration in the economy of the Hawkes Bay region may adversely affect the ability of some borrowers to repay their loans, which could in turn adversely affect the financial position of the Napier Building Society.
Credit Risk and Exposures to Large Borrowers Credit risk is the risk that a borrower will fail to discharge their obligations resulting in the Napier Building Society incurring a financial loss. The impact of such a loss on the Napier Building Society will be greater if the defaulting loan is one of Napier Building Society’s larger loans. In that regard, as at 31 March 2011 Napier Building Society had 8 loans that were each greater than 10% of its net assets. If a significant number of those loans were not repaid in full, the financial position of the Napier Building Society would be adversely affected. The Napier Building Society does however consider that an unlikely scenario given that all of those loans are secured by first registered mortgages.
Advances on Mortgage The Society has a lending policy that requires lending only secured by first mortgage security. The risk of losses from the loans undertaken is primarily reduced by the nature and quality of the security taken. All loans require collateral security which the Society can enforce by disposing of the secured assets in the event of default. Regular reports monitor the loan repayments to detect delays in repayments and recovery action is taken. Despite that, there is a risk that the mortgaged property may not be able to be sold for sufficient to repay the amount owed to the Napier Building Society, which may adversely affect the ability of Napier Building Society to repay your investment.
Sector Exposure Sector Exposure is the risk that a particular sector of the New Zealand economy may suffer hardship to such an extent that borrowers from that sector may not be able to repay their loans from Napier Building Society when they are due. To manage its exposure to such risks the Napier Building Society seeks to spread its loans across different sectors of the New Zealand economy. As at 31 March 2011, the exposure of the Napier Building Society to different sectors of the New Zealand economy was as follows:
Bank Deposits and Investment Securities The policy of the directors of Napier Building Society is to place other investments either with New Zealand registered banks or other Board approved entities which have an investment grade or better credit rating. Despite that, there is a risk that such entities may fail which may adversely affect the ability of Napier Building Society to repay your investment.
Property Market The Napier Building Society lends to borrowers on registered first mortgage security over residential, commercial and rural properties based only in New Zealand (predominantly in the Hawkes Bay). Any deterioration of the property market, in particular in the Hawkes Bay region, could adversely affect the values of properties and may also adversely affect the ability of the Napier Building Society to recover its loans. The Society manages its exposure to such risks through on-going management of loans and ensuring that adequate loan to value ratios are monitored.
Interest Margin Risk Interest Margin Risk is the risk that interest rates will change, thereby increasing or decreasing the cost of borrowing or lending. The Napier Building Society is exposed to this risk, as its profitability depends on maintaining an appropriate margin between the cost of funds it raises from the public and the interest it receives from borrowers. To mitigate interest margin risk, interest margins are constantly managed and monitored by the Napier Building Society.
Liquidity Risk Liquidity risk is the risk that the Napier Building Society may encounter difficulty in meeting commitments associated with financial liabilities, for example its call and term borrowing, and future commitments, for example, loan draw downs. The Napier Building Society manages its exposure to liquidity risk by maintaining sufficient funds to meet its commitments based on historical and forecasted cash flow requirements. The Napier Building Society monitors its liquidity on a daily basis.
Regulatory Environment The Napier Building Society faces increasing levels of regulation. In particular in recent years new regulations have been made in respect of matters such as minimum capital requirements, restrictions on related party transactions, and a requirement to develop and comply with risk management programmes appropriate for the financial institution. The Board of the Napier Building Society is confident that each of these compliance requirements are, and will be, complied with. The Napier Building Society risk management programme has been reviewed and approved by the Society’s Trustee in accordance with the requirements of the Reserve Bank of New Zealand Act 1989.
Credit Rating Exemption The Reserve Bank of New Zealand Act 1989 now requires every non-bank deposit taker (unless otherwise exempted), including Building Societies, to have a current credit rating given by an approved rating agency. The Napier Building Society is not required to obtain a credit rating as it operates under the exemption contained in the Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009. The creditworthiness of the Napier Building Society is therefore not rated by an approved rating agency under the above Act. The Exemption Notice applies to the Napier Building Society because it has liabilities less than $20 million and it would be unduly onerous and burdensome for Napier Building Society to comply with the requirement to have a credit rating. The exemption is conditional on the Napier Building Society providing to the Reserve Bank annually prior to March in each year, a statement from the Directors that the Napier Building Society meets the requirements of the exemption for that forthcoming year. Figures supporting the Directors’ statement must be attached to that statement.
CAN THE INVESTMENT BE ALTERED? As outlined above, the directors of the Napier Building Society may vary the interest rate applicable to call investments from time to time. Except in the case of hardship on early repayment to the satisfaction of the directors of the Napier Building Society, dealt with below, the interest rate applicable to term investments cannot be altered before maturity. The Society will consider requests for early repayment of term investments at its discretion. If the Society agrees to early repayment of your term deposit, the Society may reduce the interest rate payable on your Term Deposit to reflect the withdrawal and the actual term of the investment, except where the directors of the Napier Building Society are satisfied that to do so would cause hardship. Except in that respect, the main terms of your investment cannot be altered without your agreement. However -
HOW DO I CASH IN MY INVESTMENT? On maturity you can withdraw your investment or reinvest it for a further term. You will be contacted by mail prior to maturity of your investment. The investment will be reinvested for a similar term unless alternative instructions are received by maturity date. In case of hardship or death investments may be repaid early, at the discretion of the Society, as outlined above. If early repayment is agreed to, this may be subject to an interest rate reduction appropriate to the shorter term. Investments may technically be transferable, but in practice this does not occur. In the opinion of the directors of the Napier Building Society, there is no established market for sale of investments with Napier Building Society.
WHO DO I CONTACT WITH ENQUIRIES ABOUT MY INVESTMENT? Enquiries about these investments should be directed to The Secretary, The Napier Building Society (Permanent), 86 Station Street, PO Box 236, Napier. Tel (06) 831-0230
IS THERE ANYONE TO WHOM I CAN COMPLAIN IF I HAVE PROBLEMS WITH THE INVESTMENT? As required by the Financial Service Providers (Registration and Dispute Resolution) Act 2008, the Napier Building Society belongs to a disputes resolution scheme approved under that Act, to which complaints about investments with Napier Building Society may be made. The approved disputes resolution scheme to which Napier Building Society belongs is Financial Services Complaints Limited. Its address is – Financial Services Complaints Limited PO Box 5967, Lambton Quay, Wellington 6145, Telephone (04) 472-3725
Complaints about investments can also be made to:
In addition, the Napier Building Society is a member of the Financial Services Federation (Inc), which is the industry association of building societies and other non-bank financial organisations. Its address is – The Executive Director, Financial Services Federation (Inc), 6th Floor, Wakefield House, 90 The Terrace, PO Box 10-053, Wellington, Telephone 04-472 1731
WHAT OTHER INFORMATION CAN I OBTAIN ABOUT THIS INVESTMENT? Other information about The Napier Building Society and these investments is contained in the latest registered prospectus. A copy of the prospectus and most recent financial statements is available free of charge from The Secretary, The Napier Building Society , PO Box 236, Napier. A copy of the prospectus, financial statements and other documents are filed with the Companies Office of the Ministry of Commerce at Commercial Affairs Division, Northern Business Centre, Auckland available for public inspection. In addition other information about this investment is available as follows:
This information is available for inspection at the office of the Society. A copy will be sent on request. All requests should be made to The Secretary, The Napier Building Society, PO Box 236, Napier, Tel 06-831 0230. |