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Annual Report of the Treasury for the Year Ended 30 June 2014

Implementation of Mixed Ownership Model (Multi-year Appropriation)

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve a deepening of capital markets, an enhancement of capital market disciplines and reduced pressure on the Crown to borrow for capital projects.

Scope of Appropriation

This appropriation is limited to expenses incurred in the following:

  • Implementation of Mixed Ownership Model – This appropriation is limited to the policy, operational and transactional work to implement the MOM. Commenced on 15 December 2011 and expires on 30 June 2015.
  • Direct Sale Costs for Implementing the Mixed Ownership Model – This appropriation is limited to the direct sales costs of implementing the MOM. Commenced on 15 December 2011 and expires on 30 June 2015.
  • Loyalty Bonus Scheme Related to Initial Public Offers – This appropriation is limited to expenses incurred by allocating shares under a loyalty bonus scheme to eligible investors in initial public offers. Commenced on 1 March 2013 and expires on 30 June 2016.

Significant Work Completed

During 2013/14, the Treasury:

  • completed the Meridian Initial Public Offer (IPO) on schedule and within budget. The IPO met the Government's objectives of widespread New Zealand ownership and raised $1.88 billion for the Crown's Future Investment Fund. Over 62,000 New Zealanders subscribed for shares in the company representing a New Zealand ownership level of 86.5%
  • completed the sale of 20% of the shares in Air New Zealand, raising $370 million for the Crown's Future Investment Fund and reducing the Crown's ownership of the company to 53%. The shares were sold at no discount to the market price at close of business immediately before the transaction, and
  • completed the Genesis IPO on schedule and within budget. The IPO met the Government's objectives of widespread New Zealand ownership and raised $730 million for the Crown's Future Investment Fund. Over 68,000 New Zealanders subscribed for shares in the company representing a New Zealand ownership level of 88%.
Performance Measure Target for 2013/14 Performance for 2013/14 Forecast for 2014/15
Technical quality of operational advice papers regarding ownership, performance monitoring and governance as assessed through the general Treasury policy advice quality assessment process. At least an average of 70% Achieved - Average of 70% At least an average of 70%
Sufficient domestic demand is created such that 85% to 90% of shares are held by New Zealanders. Achieved Achieved Achieved
The process for each IPO exceeds an agreed reserve value. Achieved Achieved Achieved
The costs of the sale programme do not exceed 2% of the sale proceeds. Achieved Achieved Achieved
2013
Actual
$000
Implementation of Mixed Ownership Model 2014
Actual
$000
2014
Main Estimates
$000
2014
Supp. Estimates
$000
2015
Unaudited Forecast as per BEFU 2014
$000
10,345 Expenses 10,042 15,313 12,333   -
 

Funded by:

       
10,345 Revenue  Crown 10,042 15,313 12,333   -

Expenditure is $2.291 million under the Supplementary Estimates budget. The Government Share Offer Programme has completed.

Appropriations, Adjustments and Use $000
Implementation of Mixed Ownership Model
Commenced on 15 December 2011 and expires on 30 June 2015
 
Original Appropriation 46,802
Adjustments to 2012/13 -
Adjustments for 2013/14 (17,485)
Adjusted Appropriation 29,317
Actual to 2012/13 Year End 16,984
Actual to 2013/14 Year End 10,042
Estimated Actual for 2014/15 -
Estimated Appropriation Remaining 2,291
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