Jamie Gray 's Opinion

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Stock Takes: Saver sign-ups slow

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Over 1.75 million have signed up for KiwiSaver but the rate is slowing. Photo / APN
Over 1.75 million have signed up for KiwiSaver but the rate is slowing. Photo / APN

June saw net total KiwiSaver sign-ups break out over 1.75 million members but the growth rates for new sign-ups have fallen since the May Budget.

Tower Investment's chief executive Sam Stubbs said anecdotal evidence indicated that public perceptions of KiwiSaver had turned "somewhat negative" since the Budget set out reduced government subsidies, increased taxation and larger employer and employee contribution minimums.

"Additionally, talk of making KiwiSaver compulsory has potentially demotivated some people from joining up voluntarily who believe they might be forced to belong later anyway," Stubbs said.

Total net monthly growth in new membership dropped from above 1.5 per cent in May to under 1.4 per cent in June, with opt-in via employer and opt-in via provider leading the trend down.

The only original group to show an increased monthly rate of sign-ups were KiwiSavers automatically enrolled by their employer, which lifted from about 1.4 per cent in May to about 1.5 per cent in June.

"It's too soon to tell whether the June downturn in new KiwiSaver sign-up rates marks a simple blip or else a significant turning point in public appetite for the scheme," Stubbs said.

If June's monthly membership growth rate continues for the rest of the year, there should be about 1.9 million KiwiSavers by year's end, he said.

THIRD TIME LUCKY?

Private hospital owner-operator Wakefield Health is having another go at taking over all the shares in unlisted Norfolk Investments, which will be its third attempt in a year.

Wakefield is offering $3.80 per Norfolk share, valuing Norfolk at $24.23 million, up from its last offer of $3.60 a share. The offer will remain open for 30 days, unless extended in accordance with the Takeovers Code. Norfolk is made up of a group of surgeons who work at the public Tauranga Hospital and at the private Grace Hospital. Norfolk owns 60 per cent of Grace.

Wakefield's shares have been under downward pressure over the past 12 months. They closed yesterday at $5.30, the lower end of its $5.03 to $6.82 range over the past year.

GOODMAN FACILITY

Goodman (NZ), which manages the Goodman Property Trust, said its $80 million syndicated debt facility, which was due to expire in October, has been extended to October 2016. The average remaining term across all the trust's debt facilities is now 3.7 years, compared to 3.4 years at March 31.

HEARTLAND ISSUE

Share purchase plans, which used to be called rights issues, are typically all about companies raising capital by offering shares at a discount to their current market price.

Oddly, the shares being offered in Heartland NZ's capital raising will be at a premium to its current market price, so the issue's backers could theoretically end up paying more for their shares than the going rate on the open market.

Heartland intends to acquire PGG Wrightson Finance and is raising $58 million of capital in order to maintain acceptable levels of capitalisation after that acquisition.

The capital raising is a combination of private placements which have been fully committed to by institutional and strategic investors, and the offer to Heartland shareholders under the fully underwritten share purchase plan. Pricing will be at a discount to the average end of day market price of Heartland shares over the five-day trading period from August 19 to 25, 2011, (but capped at 75c a share).

The discount will be at least 3 per cent and will be determined by the Heartland board before the August 8 opening date.

Any shortfall will be subscribed for by the underwriters at the higher of the share purchase plan price and 65c a share, compared with yesterday's closing price of just 64c.

"It's a strange sort of deal because normally a capital raising is done at a discount to the share price," said one financial market source.

"Here it is being done at a premium, so what it says is that there is a disconnect between the market perception of Heartland and the underwriter's view of the value and the future of Heartland," he said.

RELIEF IN SIGHT

Relief could be in sight for investors struggling with information overload in company financial statements and for those charged with producing these accounts.

The New Zealand Institute of Chartered Accountants and its Scottish counterpart, the Institute of Chartered Accountants for Scotland, have produced a report recommending big changes aimed at making financial statements more user-friendly, while continuing to comply with International Financial Reporting Standards (IFRS).

A major concern is the increasing requirement for detailed financial disclosures, especially since New Zealand's adoption of IFRS. Although some new disclosures have been introduced in response to calls from investors for more details in some areas, especially following the global financial crisis, many have been introduced in new or revised accounting standards during the past 10 years with no review of their impact on the length or usefulness of the resulting financial statements.

- NZ Herald

Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency. He has been a business journalist for 30 years, working for NZPA and, mainly, the Reuters news agency. He enjoys fast breaking business news stories but also likes to get to the bottom of complex issues. He is driven by telling readers what is going on but also has a soft spot for the occasional quirky business story which gets people talking. He has a special interest in Fonterra.

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