Established INVESTMENT STATEMENT DATED 19 November 2015

Transcription

1 Established 1986 INVESTMENT STATEMENT DATED 19 November 2015 COMPETIVE INVESTMENT TERMS FOR THE ISSUE OF UP TO $20 MILLION OF SECURED DEBENTURE STOCK AND UNSECURED DEPOSITS Gold Band Finance Limited is not rated by a rating agency approved by the Reserve Bank of New Zealand

2 G O L D B A N D F I N A N C E INVESTMENT STATEMENT Gold Band Finance is not rated by a rating agency approved by the Reserve Bank under section 157J of the Reserve Bank of New Zealand Act 1989 Dated 19 November 2015 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: Page What sort of Investment is this? 7 Who is involved in providing it for me? 8-11 How much do I pay? 11 What are the charges? 12 What returns will I get? What are my risks? Can the Investment be altered? 18 How do I cash in my Investment? Who do I contact with enquiries about my Investment? 19 Is there anyone to whom I can complain if I have problems with this Investment? 19 What other information can I obtain about this Investment? In addition to the information in this document, important information can be found in the current 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 financial markets. For more information about investing, go to 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: the type of adviser you are dealing with; the services the adviser can provide you with; the products the adviser can advise you on. 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 1

3 You can also complain to the Financial Markets Authority if you have concerns about the behaviour of a financial adviser. No credit rating Gold Band Finance Limited is a deposit taker under the Non-bank Deposit Takers Act 2013 ( the Act ) which requires deposit takers to hold a credit rating, subject to certain exemptions. We are not rated by an agency approved by the Reserve Bank Act because we operate under an exemption (Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009 originally applicable pursuant to section 157G of the Reserve Bank of New Zealand Act 1989) from the requirement under the Act to have a credit rating. Further information about the Act and its requirements of deposit takers is contained on page 31 of Prospectus 31 relating to the offer of Secured Debenture Stock and Unsecured Deposits. 2

4 Contents Page Definitions 4 Summary of the Offer and Background to Gold Band Finance 5-6 Important questions and answers

5 Definitions Application Form means the application form for the Secured Debenture Stock and Unsecured Deposits offered under the Prospectus and referred to in this Investment Statement. Charging Group means Gold Band Finance Limited and its charging subsidiaries LoanCo Limited, Credit Protection Limited and Aurous Asset Holdings Limited. Also referred to as the Group and the Borrowing Group. The Company, Gold Band Finance, we and us refers to Gold Band Finance Limited. Directors means the directors of the Company. FMA means Financial Markets Authority. Investment means an investment in first ranking Secured Debenture Stock or Unsecured Deposits. Investor and you means the person or entity subscribing for an Investment. NBDT means Non-bank Deposit Taker as defined in the Reserve Bank of New Zealand Act 1989 and associated regulations supervised by the Reserve Bank of New Zealand. Prospectus refers to the current registered Prospectus for the issue of the Investment. Secured Debenture Stock means debenture stock offered under the Prospectus and issued, or to be issued, as secured debenture stock pursuant to the Trust Deed. Total Tangible Assets is as defined in the Trust Deed, a summary of which is included in the Prospectus. Trust Deed refers to the Trust Deed entered into between the Company and Perpetual Trust Limited dated 30 June 1993 (and modified on 5 March 1996, 17 December 1996, 10 November 1999, 13 November 2002, 1 February 2007, 16 December 2010 and 11 September 2012). Trustee means Corporate Trust Limited trading as Foundation Corporate Trust for the period of their appointment and any replacement trustee company licensed by the FMA. Unsecured Deposits means deposits offered under the Prospectus and issued, or to be issued, as unsecured deposits pursuant to the Trust Deed. 4

6 Summary of the Offer and Background to Gold Band Finance Key information This section contains a summary of the main terms of the investment under consideration. You are encouraged to read the entire Investment Statement and the additional information contained in the current registered Prospectus, available on request. Please refer to the definitions on page 4 for the meaning of various terms used in this Investment Statement. The offer The offer is for up to $20 million first ranking Secured Debenture Stock and Unsecured Deposits. You can apply to invest either of the two types of investment offered. It is a continuous offer remaining open until fully subscribed, is closed by our Directors or the Prospectus for the offer is no longer current (including any extensions of the Prospectus). The minimum investment amount is $500. For further information please refer to page 7. Gold Band Finance We lend to consumers and businesses across a range of industry sectors. All of our loans are secured and have fixed terms of up to five years. The proceeds of your Investment, together with shareholders funds, are used in our lending activities and for the maintenance of liquidity. For further information please refer to pages Security for your investment Secured Debenture Stock is secured by a first ranking security interest over all of the assets of the Charging Group in favour of the Trustee, subject to the following potential prior charges and claims: Permitted prior charges under the Trust Deed up to 7.5% of Total Tangible Assets Nil prior to and as at the date of this Investment Statement. Charges that could arise through the operation of law including employee wages, taxes and liquidation costs. Trustees fees costs and disbursements. Security stock ranks equally with Secured Debenture Stock. The amount of security stock issued at the date of this Investment Statement is Nil. Unsecured Deposits rank behind Secured Debenture Stock and equally with other creditors, but ahead of shareholders' claims. The Trustee does not guarantee your Investment. For further information please refer to page 7. Interest rates and payments The interest you earn on your Investment will be the interest we pay. Interest rates for the investment periods available and the applicable minimum investment amounts are recorded on the rate card for either Secured Debenture Stock or Unsecured Deposits that accompanies our Investment Statement, available by contacting our office or visiting our website: Interest rates may vary from time to time but the rate that applies to your fixed term investment once registered and accepted by us will not be affected by subsequent rate changes. Interest is paid to you or compounded in accordance with your instructions at the time of your application. For further information please refer to pages Applications Investment applications can be made on the form supplied with the Investment Statement, available at our website: or by contacting us at our office. For further information please refer to pages Transfers and amended terms You can transfer your Investment by using a properly completed security transfer form in a form commonly used for security transfers and which complies with applicable law. For further information please refer to pages

7 Fees and costs There are no fees or charges to invest. An adjustment to the interest rate may apply in circumstances of early repayment. For further information please refer to pages 11, 18. Key (Charging Group) financial information for the year ending 31 August 2014 Net profit after tax $0.739m (2013 $0.767 Capital ratio 32.39% ( %) NBDT regulation minimum 10% Total assets were $15.6m, total liabilities were $9.6m and total shareholders funds were $6.0m Total cash reserves $3.9m Investment activities comprising lending and bank deposits were funded by Secured Debenture Stock and unsecured deposits of $8.7m (55% of total funding) and Shareholders funds of $6.0m (39% of total funding). For further information please refer to the financial statements in the Prospectus. No guarantee Your Investment is not guaranteed by any party. Withdrawal Call deposits are repayable on demand in accordance with the terms of the Prospectus. Fixed term deposits are repayable at maturity. Prior to maturity you will be notified of the reinvestment and repayment options available on maturity. We expect that your fixed term investment will continue to the maturity date although in limited circumstances early repayment requests will be considered. We have the right to redeem your Investment prior to maturity under the terms of the Trust Deed. 6

8 Important questions and answers The following information is provided in accordance with Schedule 13 of the Securities Regulations This information is important and should be read carefully before making an investment decision. What sort of Investment is this? This Investment Statement relates to the issue of first ranking Secured Debenture Stock (subject to permitted prior charges) and Unsecured Deposits, issued as debt securities under the Trust Deed. Investment options are set out as follows: 1) Secured Debenture Stock Secured Debenture Stock is issued under the Trust Deed and has the first ranking claim on our assets and undertakings, after permitted prior charges created by us and by law. The claim created under the Trust Deed is a practical alternative to granting security over our assets to every individual Investor. Secured Debenture Stock ranks equally with Security Stock, which can be issued to our bankers to secure overdraft and standby credit facilities. The Trust Deed restricts prior charges created by us to a maximum of 7.5% of Total Tangible Assets as defined in the Trust Deed. Prior charges that could arise by operation of law include taxes, employee wages, and costs of liquidation. There are no charges ranking prior to Secured Debenture Stock other than those created by law, nor have we created any prior charges since our establishment. First ranking Secured Debenture Stock is issued on the following basis: Fixed Term Competitive rates of interest are available on this type of investment and you may nominate a term ranging from six months to five years. Date of Maturity You may elect to have your Investment mature on a nominated maturity date. In that case it is necessary to enter the chosen maturity date in the space provided on the Application Form. The nearest shorter term determines the interest rate that will then be applicable. 2) Unsecured Deposits Unsecured Deposits are issued on the following terms: Call You may redeem on the day nominated provided that notification is received by 10.00am on that day, subject to allowing time for clearance of Investments paid by cheque. Other Terms You may nominate a term ranging from 30 days to five years. Funds accepted for an initial term of six months to five years will then revert to Call rates, pending your maturity instruction. Redemption of such Investments will be made on the terms applicable to Call Investments provided that the Investment has run the initial fixed term. Trust Deed In addition to restrictions of prior charges that may be created by us, the Trust Deed contains borrowing restrictions and various compliance obligations to the Trustee. The Securities Act 1978 requires that an independent trustee be appointed to look after your interests. It is a practical means by which the numerous Investors in the Company can be assured that their interests are being monitored by an organisation that is experienced and is able to act independently from us. A summary of the Trust Deed borrowing restrictions can be found in the Prospectus and the complete Trust Deed can be obtained free of charge as described in the section What other information can I obtain about this Investment? on pages Non-bank Deposit Taker regulations and credit ratings The Reserve Bank of New Zealand has introduced regulations to the Non-bank Deposit Taker ( NBDT ) sector as part of its prudential regulation regime. The regulations include credit rating requirements, minimum capital adequacy requirements, related party exposure restrictions, and liquidity requirements. We are not rated by a rating agency approved by the Reserve Bank under section 157J of the Reserve Bank of New Zealand Act Please refer to the paragraph "No credit rating" on page 2 for further information. Minimum capital ratio, related party exposure restrictions, and liquidity ratio requirements are included in the Trust Deed by way of amendment and are described in summary form in the Prospectus. We comply with the requirement to have at least two independent directors under the Non-bank Deposit Takers Act We are a registered Financial Service Provider under the Financial Service Providers Act 2008 (FSP no. FSP32185), and a member of the Insurance and Savings Ombudsman Scheme. 7

9 Who is involved in providing it for me? Issuer: Gold Band Finance Limited Unit 2, 6 Sir William Pickering Drive PO Box 713 Christchurch admin@goldbandfinance.co.nz Web: The Directors of the Issuer are Robin Charles Standage, Robin Wales, John Philip Thompson and Paul Alexander Rogers. Martin Brennan is the Chief Executive. The Directors and the Chief Executive are principally resident in Christchurch and can be contacted at our office address (above) or registered office (485 Papanui Road Christchurch). Trustee: Corporate Trust Limited (Trading as Foundation Corporate Trust) Level 1, 148 Victoria Street PO Box 4 Christchurch 8013 Following the introduction of the Securities Trustees and Supervisors Act 2011 trustees are required to be licenced by the Financial Markets Authority (FMA). Trustees are required to be licenced to act as a trustee for the issue of a range of financial products including the investments offered under the Prospectus. Foundation Corporate Trust is fully licensed by the FMA and has been appointed as Trustee. Further information about the Trustee s license and terms of appointment is available at the following websites: and Company background and performance Gold Band Finance Limited was established initially to meet the finance requirements of taxi owners. Since then we have implemented a strategy of diversifying our asset base through lending to a broad range of clients that operate in a range of industry sectors, against a broad range of security types. Our office premises are located at Unit 2, 6 Sir William Pickering Drive, Christchurch. We have three wholly owned subsidiary companies: LoanCo Limited (established 2005), Credit Protection Limited (established 2004) and Aurous Asset Holdings Limited (established 2008). LoanCo Limited was established to operate and develop our existing consumer loan business, primarily through broker originated enquiry. Credit Protection Limited is one of our wholly owned subsidiaries and provided guarantee facilities for loans to our personal loan customers, in consideration of payment of a guarantee fee, which was included in the Group s operating revenue in previous financial years. Credit Protection Limited is at the date of this Prospectus not actively operating, There are currently no assets or liabilities within the company as it is in the process of being wound up. Aurous Asset Holdings Limited is another of our wholly owned subsidiaries. Aurous Asset Holdings Limited was established for the purpose of investing and or trading in assets that may include receivables, primarily to provide the opportunity to retain the value of assets that secure the Group s receivables that could otherwise be lost, in circumstances that the directors consider appropriate. The company did not trade in the last financial year and as at the date of this Investment Statement is not presently trading. There are currently no assets or liabilities within the company as it is in the process of being wound up. Further information about the activities of the subsidiary companies is contained in the Prospectus. We have established and developed operating systems and processes, highly skilled staff, and governance practice that contribute to our objective of maintaining high levels of customer satisfaction while achieving consistent and sustainable operations and profitability. Group Assets ($m) 31 August ,000,000 Group Assets 10,000, NZ 2013 NZ 2012 NZ 2011 NZ 2010 NZ 2009 NZ 8

10 Group Liabilities ($m) 31 August ,000,000 Group Liabilities 10,000, NZ 2013 NZ 2012 NZ 2011 NZ 2010 NZ 2009 NZ Group Equity ($m) 31 August 2014 Group Equity 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, NZ 2013 NZ 2012 NZ 2011 NZ 2010 NZ 2009 NZ Activities Our principal activities comprise: Borrowing money from Investors through the issue of first ranking Secured Debenture Stock and Unsecured Deposits. Providing loan facilities to individuals, companies and other entities for a variety of purposes, described in more detail below. We have engaged in the activity of borrowing money from Investors for a period of approximately 22 years. Our lending is funded by the proceeds of Investment from the issue of first ranking Secured Debenture Stock and Unsecured Deposits, and the capital and retained earning contributed by shareholders. 9

11 Group Asset Analysis at 31 August 2014 Funded by (at 31 August 2014) Other assets Other liabilities Bank deposits Loan receivables Shareholders' funds Debenture stock and deposits Group assets as at 31 August 2014: Loan receivables 73% Bank deposits 25% Other assets 2% 100% Funded by: Debenture stock and deposits 55% Shareholders' funds 39% Other liabilities 6% 100% A large proportion of our lending activity involves customers that have specific finance requirements unsatisfied by traditional trading bank sources, for a number of reasons, including the unavailability of a specific bank product, the small scale of a transaction or the term required, the time taken and the complexity of the application process, the applicants not meeting all of the trading bank credit criteria, and the applicant s requirement for the flexibility of a personalised solution. Self-employed and small business owner applicants are an example of the customers we could lend to that may not satisfy bank lending criteria. We have sought to maintain and develop our expertise in a number of lending markets, and combined with providing a personal and timely response to loan applications, and the flexibility to develop specific lending solutions, have been established as a competitive alternative to trading banks and other financial institutions. We provide a broad range of loan facilities, including loans ranging from $500 to over $1 million in certain cases. We have been lending to personal and commercial loan customers since establishment in 1986, with customer categories presently broken down as shown in the Customer Type analysis below. Customer Type Analysis at 31 August 2014 (Personal/Commercial) Commercial Personal Personal / Commercial Analysis Personal 61% Commercial 39% 100% Loan terms generally range from less than one month to three years. Loans secured by land based (mortgage or caveat security) may in certain situations be advanced for terms of up to five years. Loan facility types range from facilities requiring the repayment of principal (fully amortised) and interest over the term of the loan, to capitalised interest facilities, and include facilities with partial amortisation of principal repayments followed by a residual balloon payment, and revolving credit type facilities. We lend solely within New Zealand in the industry and economic sectors shown in the Asset Sector Analysis graph below. A further graph is included so show the regional analysis of where our loans have been made to. 10

12 Asset Sector Analysis at 31 August 2014 Property Transport Vehicles Commerci al Hosp & Tourism Personal Loan industry sectors Commercial 11% Hospitality & Tourism 7% Personal 9% Vehicles 44% Property 29% Transport 1% 100% Regional Analysis at 31 August 2014 West Coast Otago/Sthl Canterbury Auckland / Northland Central North Wellington Island Nelson / Marlb. Loan regions (as at 31 August 2014): Auckland/Northland 5% Central North Island 3% Wellington 6% Nelson/Marlborough 8% Canterbury 72% West Coast 5% Otago/Southland 1% 100% We have been lending to the hospitality and tourism sector and farming sector for approximately 16 years and to all other identified sectors for approximately 29 years. Traditionally focused on the Canterbury and surrounding South Island regions, we have diversified our regional exposure to include other regions within New Zealand. This has proven to be a prudent strategy in the light of recent events that have impacted on regional economies, as evidenced by the Canterbury earthquakes, which although they have to date not significantly affected our asset quality, had the potential to do so. Gold Band Finance is proud of its Canterbury based heritage established over two decades, and intends to maintain the primary focus of its principal activities within Canterbury and surrounding South Island regions. Despite the large credit concentration (72%) to the Canterbury area, we have not experienced any rate of loan defaults materially different from the rates in other areas. Further information about our activities is contained in the Prospectus. How much do I pay? You are required to pay to us the amount to be invested in Secured Debenture Stock or Unsecured Deposits in full at the time of your Investment. The Application Form and Investment Rate Card are available with this Investment Statement. You should fill in the details provided for in the Application Form selecting the desired term and the corresponding interest rate from the Investment Rate Card. The minimum amount accepted for Investment is $500, or such other minimum as we may from time to time agree. You must select the amount of your Investment subject to the minimum amount and should complete the Application Form accordingly. We reserve the right to decline any application and to withhold the issue of a stock certificate until payments by cheque are cleared. Your application should be lodged, together with payment for the amount to be invested, with: Gold Band Finance Limited Freepost , PO Box 713, Christchurch if payment is by cheque. 11

13 Cheques for the full amount to be invested should be made payable to Gold Band Finance Limited and crossed not transferable. If you pay by direct credit our bank account details will accompany the Application Form and please provide sufficient information in the electronic deposit details so we can identify your money. What are the charges? No charges or fees apply to you when making an Investment in Secured Debenture Stock or Unsecured Deposits. In the event that we agree to early repayment of an Investment there is no charge, however an adjusted rate of interest may apply to funds withdrawn before maturity (refer to Early Repayment in the section How do I cash in my Investment? ). Fees are payable to the Trustee for administering the Trust Deed and are paid for by us. During the term of the Investment we cannot introduce any new fees or charges that could affect the return on the Investment or the amount payable on maturity. What returns will I get? We set the interest rates applicable to new Investments from time to time, with reference to prevailing market conditions and our requirements. The new rates do not affect the rates applicable to existing fixed term investments. Interest rates are directly related to specific investment terms, as recorded on the Investment Rate Card available with this Investment Statement and applicable to this Investment. The returns on your Investment will be determined by a number of key factors, namely the term and applicable interest rate selected, the amount of your Investment, the tax deducted, and the interest payment option selected. We may vary the interest rates applicable to new Investments at any time. Once we have accepted an Investment of a fixed term, we cannot change the interest rate for the duration of that Investment, provided that the original investment term is completed. The interest rate applying to existing at Call Investments can be varied by us at any time. In the event of early repayment, as described in the section How do I cash in my Investment?, we may reduce the interest rate to the rate that would have applied for the reduced term. Interest is calculated and accrues on a daily basis (on the basis of a 365 day year) and will accrue from the date the Investment application is accepted and we have received cleared funds. Interest on Investments of fixed terms of six months or greater is credited to the Investment on the last business day at the end of each quarter ended 31 March, 30 June, 30 September, and 31 December, and on maturity, unless otherwise stated on the Application Form and accepted by us. Interest on shorter fixed term Investments is calculated on maturity. As an alternative we may from time to time offer the option of paying interest at the end of each calendar month, when this option appears on the Application Form for your new investment. The monthly payment option may appeal to you if you require regular income from your Investment. You may choose to obtain the return from your Investment from the following methods: 1) Compounding interest If you have no requirement for interest to be paid out regularly and choose in your Application Form to have the amount of an Investment built up, the compound interest option can be nominated. In this way interest is earned on interest and the effect is a higher overall return on the initial Investment. If the compounding option is selected interest is calculated on the Investment balance comprising the initial Investment and interest accumulated when credited to the Investment at the end of each quarterly interest period, for the remainder of the Investment term. If this option is chosen then a Quarterly Interest Advice will be sent to you after interest is calculated at the end of each quarter, giving details of the interest earned during the preceding quarter and the current balance of your Investment. 2) Regular Income Payment by cheque You may elect to have interest paid by cheque, posted at the end of each quarter for Investments of a fixed term of six months or greater, and at maturity. 3) Regular Income Payment by Direct Credit You can elect to have interest paid direct to a nominated bank account. Details of the interest earned and paid by Direct Credit or cheque will be recorded on the Quarterly Interest Advice, sent to you each quarter and on maturity. The Application Forms contain provision for nominating the respective interest options and corresponding terms. Gold Band Finance is the entity legally liable for the payment of your interest and, at maturity, the repayment of your initial Investment. 12

14 Withholding Tax Resident Withholding tax ( RWT ) is required by current legislation to be deducted by us from payments of interest made during the year to New Zealand Resident Investors. An exception applies to those investors who hold a Certificate of Exemption issued by the Inland Revenue Department. You should supply an IRD number on the Application Form. We issue regular statements containing details of tax deducted. The default rate of RWT for individuals that have supplied their IRD number is 17.5%. Alternatively investors can elect to have RWT deducted at either 10.5%, 30%, or 33%. These rates, with the exception of the 10.5% rate, are available to trustees, including company trustees. The 10.5% rate is available only to trustees of testamentary trusts. The current rate of RWT for company investors is 28%. Investors should note that failure to supply an IRD number requires the Company to deduct RWT at the higher no-notification rate of 33%. Non Resident Withholding Tax will be deducted from overseas resident Investors at the rate applicable to their country of residence, unless Approved Issuer arrangements apply. Overseas resident Investors may be able to elect to have an Approved Issuer Levy of 2% deducted from interest paid or credited, as an alternative to Non Resident Withholding Tax. If you have concerns about tax matters you should consult a suitably qualified independent adviser. Further information is available at the Inland Revenue website at What are my risks? Risk management is an important part of our operations, and consequently the success with which we manage risk is significant to investors. Before making an Investment of this type with a finance company, an investor should consider the risk of such Investment having regard for the interest rate returns. The following section contains information about the risk that your initial Investment may not be recovered in full and the risk that you will not receive the interest returns due on your Investment. You could be exposed to the risk that we become insolvent for any reason, and the amounts recovered from our assets prove to be insufficient to meet our obligations to you, notwithstanding the prior ranking of Secured Debenture Stock. Investment in Secured Debenture Stock represents a lower risk than investing in Unsecured Deposits. There is no risk that you will be required to pay any money in addition to your initial Investment. Principal risks that apply to the finance company sector generally and to Gold Band Finance are set out below. A description of the risks that Gold Band Finance faces is set out in the Prospectus, together with details of how we mitigate the relevant risk. Further mitigation occurs by adopting a lending and credit policy. A summary of our Lending and Credit Policy is set out at the end of this section. Credit Concentration Risk Loan exposures that are large in relation to our size present a risk in the event of defaults, where one event could impact upon us to a greater extent than would be the case with a larger company. Credit concentration risk can also contribute to Compliance risk which is referred to later in this section under the heading Compliance and operational risk. A consequence of non-compliant credit concentrations (aggregate loan exposures to a client or group of related clients exceeding the permitted 10% of Total Tangible Assets prescribed in the Trust Deed) could, in the absence of a waiver from the Trustee, result in us withdrawing our offer of securities. A withdrawal of the offer of securities could, if not reinstated, affect our financial performance or our financial position or reputation. As at 31 August 2014 our largest loan represented 11.3% of Total Tangible Assets. In the past the large loan has caused a breach of the Trust Deed because the amount owing to us under the loan exceeded 10% of Total Tangible Assets. The loan went into default in April In May 2013, the Trustee refused to extend an existing waiver in respect of the 10% requirement. This caused us to withdraw the prospectus at the time and cease offering new securities or deposits. A new breach of the Trust Deed occurred due to further capitalisation of interest on the loan resulted in the single loan exposure requirement in the Trust Deed again exceeding 10% of Total Tangible Assets the Trustee would not agree to waive the breach. In May 2014 the Company elected to withdraw its then current prospectus so it could manage excess liquidity levels following the repayment of a number of high value loans. In February 2015 $1 million of the loan has been partially sold by us to Cup Investments under a related party transaction. At the date of the Prospectus the single loan exposure is under the 10% of Total Tangible Assets prescribed in the Trust Deed. As at 28 February 2014, this loan represented 7.4% of Total Tangible Assets. Refer to the section Related party lending below for a summary of the partial sale of the loan. 13

15 There are some uncertainties with the possible recovery of the loan through a mortgagee sale process. Uncertainties with the sale process may arise if those with interests in relevant land seek to protect those interests by caveat or other proceedings and the Company is unable to remove the caveats through the courts or satisfactorily deal with the interests by negotiation or other proceedings. There is currently litigation underway where the Company has sought the removal of caveats lodged by neighbours of the land subject to the Company's mortgage. The neighbours have claimed an interest in the borrower's land because the borrower granted the neighbours certain rights relating to access and services when land was sold to the neighbours. The High Court, in its judgment released on 30 September 2015, made a finding in favour of the Company. This means that the Company may commence a mortgagee sale with an expectation that the caveats by the neighbours will not prevent the Company transferring the relevant land. However, on 27 October 2015 the neighbours lodged an appeal with the Court of Appeal. The notice of appeal does not contain any issues that were not considered by the High Court in its judgment in the Company's favour. Until the appeal is heard uncertainty remains. If, following the appeal process, the court does not agree with the Company's position and the High Court decision, or the Company or the borrower is unsuccessful with further efforts to remove the caveat (including possible further litigation), then the land will not be able to be sold by way of mortgagee sale without the Company satisfying the neighbours' concerns. Despite those uncertainties, the Directors remain satisfied that the loan is not impaired and is fully recoverable. Our auditors confirmed this position at the time of the last audit for the period ended 31 August Similar risk exposures can be presented by geographic and industry sector concentrations. We manage credit concentration risk through maintaining diversity across geographic location and industry sectors. Please refer to the graphs on pages for an analysis of our asset sectors and regions we lend to. Credit Risk Credit risk is the risk that the amounts loaned by us are not repaid in part or in full or any security taken for the relevant loan is proved to be inadequate for any reason. An increase in credit risk could increase impairment expenses and as a consequence materially affect our financial performance and financial condition. We actively manage credit risk through compliance with the requirements of the Trust Deed, the management of credit concentration risk and compliance with our lending and credit management policies and procedures. Funding and Liquidity Risk Our lending activities are funded from investors through the issue of Secured Debenture Stock and Unsecured Deposits and from shareholders funds. A material change in the availability of funding from investors could materially affect our financial performance and financial condition. Funding available from investors is subject to the level of reinvestment and new investment, either of which could be affected by a change to market conditions or demand from investors. Market conditions could change as a consequence of economic factors beyond our control, and demand from investors could be affected by a change to our financial performance or financial condition or our reputation. Liquidity risk is also presented by 1) a mismatch between the scheduled amounts due from loan payments and the amounts due to investors, and 2) variations between the amounts due to be repaid under loan contracts and the amounts actually paid, particularly when large amounts of principal are concerned. We actively manage liquidity risk in accordance with our risk management policy. The following table records that as at the last audited financial balance date, the amount of cash reserves and loans contractually due for repayment within twelve months exceeded the amounts due to Investors during the same period by approximately 3.1 times. Our experience is that loan repayments are not always received in accordance with contractual arrangements, and our assumptions regarding expected cash flows are adjusted accordingly. Company Liquidity Profile ($m) at 31 August 2014 Company Liquidity Profile Due to Investors (-) Financial Assets (+) 10,000,000 8,000,000 6,000,000 4,000,000 2,000, ,000,000-4,000, Mths 6-12 Mths Mths Mths 14 Loan Receivables Bank deposits Deposits & Debentures

16 Interest Rate and Margin Risk Interest rate risk can arise where there is a change to market interest rates that could influence the interest rates we offer to investors in the event that we are unable to increase the interest rates payable on our loans. The risk is mitigated by our management of loan and investment portfolios both of which feature fixed interest rates and mostly fixed terms of similar duration (up to a maximum of 5 years). A significant movement to interest rates if not satisfactorily managed could materially impact our financial performance and financial condition. Related Party Lending Related party transactions present the risk that objective consideration of transactions could be compromised, which could materially affect our financial performance and condition. Related party borrowing proved to be a significant feature in some of the finance company failures that have occurred in recent years. We manage related party risk through compliance with our Trust Deed and Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations 2010, both of which limit related party borrowing, and our risk management policies. Related party loans as at 31 August 2014 represented 1.1% of Capital and at the date of the Prospectus 2.5% of Capital. The maximum permitted by regulations is 15% of Capital. Capital is calculated in the manner required by the regulations. Loans to related parties represented 0.41% of Total Tangible Assets as at 31 August 2014 and as at the date of the Prospectus 1.12% of Total Tangible Assets. The maximum amount allowed under our Trust Deed is 10% of Total Tangible Assets. From 28 February 2015 we have adopted a more conservative approach of assessing related party exposures based on approved limits, or actual amounts owing, whichever is greater. Adopting this formula, the related party loans at 28 February 2015 represented 4.10% of Capital and 1.9% of Total Tangible Assets John Lindsay and Robin Wales are both directors of Cup Investments Limited and have a direct or indirect shareholding in that company. John has a substantial interest in us as a shareholder and Robin is a shareholder and director of us. Opawa Garage Limited has borrowed $250,000 from us to assist (via on-lending to Opawa Racing Limited) with the capitalisation of Cup Investments Limited so that it could purchase wholly in cash $1.0m of part a loan due to us. The relevant loan is the largest single loan owing to us and is discussed in more detail above in the section "Credit Concentration Risk". The transactions between us and Opawa Garage Limited and between us and Cup Investments Limited are related party transactions. Those transactions comply with the relevant ratios in the Trust Deed and Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations The amount of Capital has been calculated at 31 August 2014 under the Deposit Takers (Credit Ratings, Capital Ratios, and Related Party Exposures) Regulations The loan of $250,000 was made on our usual lending terms and conditions and complies with our credit policies. As at the date of the Investment Statement the loan is drawn to $150,000. Compliance and operational risk Operational risks include the risks of system failure, natural disaster, reputational damage, loss of key personnel and the impact of political or regulatory changes, all of which could materially affect our financial performance and financial condition. In addition, failure to comply with regulations or Trust Deed requirements could materially affect our financial performance and financial condition if, as a consequence, funding was restricted by our withdrawal of the offer of securities or enforcement action by the Trustee or Regulators. Economic risk A downturn in the economy can create risk as it has the ability to adversely affect the interest rates and margins charged to borrowers, which in turn may affect the ability of borrowers to make loan repayments to us. We manage economic risk by continually monitoring the economic environment and amending internal policies to reflect the current economic environment. 15

17 Competition risk We face competition from other financial institutions when attracting deposits and making loans. We manage this risk by creating a sustainable competitive advantage through our marketing and product development to fit the markets we operate in. These matters form part of or annual business plan. Given our relatively small size we can proactively maintain relations with our investors and customers. Changes to laws and licensing requirements Laws governing lenders are currently undergoing considerable reform. These new laws create a shift of responsibility in consumer lending from the borrower to the lender. Lenders will have to ensure that those they are lending to meet a number of requirements, particularly relating to the circumstances of the borrower and the borrower's ability to repay the loan. This creates risks for us as it may restrict the number of qualifying borrowers to lend to and create unrecoverable administration costs for us. We manage this risk by monitoring and researching the borrowing market to target more qualifying borrowers and we carry out greater scrutiny of borrowers and the appropriateness of the lending for the relevant borrower. A recent example is the introduction of anti-money laundering laws resulting in the need for more administration of loans, particularly to satisfy the legal requirement to "know your customer" in the manner prescribed by the new laws. We must be licensed as a non-bank deposit taker by the Reserve Bank of New Zealand no later than 1 May The licence application is currently being processed by the Reserve Bank. If the licence is not granted we will not be able to fund our operations from investor deposits. Lending and Credit policy We have established policies as a key component of our risk management strategy, comprising the following: Application assessment comprising: The applicant s capacity to meet repayments The credit worthiness and motivation of the applicant to make payments Market conditions for the loan applied for Equity contribution the amount of financial commitment of the applicant Security available for the loan Credibility and certainty of the exit strategy. Most loans are repaid in equal instalments over the loan term but in limited alternative circumstances we assess the means by which we are to be repaid. Loans of this type would include, for example, a bridging facility to be repaid from a defined transaction in the future. The Trust Deed requires compliance with defined maximum levels of total liabilities as a proportion of assets, the proportion of Company assets in each category defined in the Trust Deed, prior charges, the exposure to one entity (or related entities), and the value of loans to related parties and described in more detail in the Prospectus and the Trust Deed. The Trust Deed also contains minimum capital requirements based on prescribed risk weights for different lending categories in accordance with the Deposit Taker Regulations referred to in the section headed What sort of investment is this? Cash reserves are lodged with Trading Banks on interest bearing deposit. All loans are secured and we do not participate in equity sharing arrangements. Loan managers have lending authority to predetermined levels, beyond which senior management approval is required. Loan exposures in excess of $100,000 require the approval of independent directors. Applicants are required to provide comprehensive personal and financial information, which is then crossreferenced and independently verified by lending staff. Supporting detail is required to satisfy our requirements and analysis of credit worthiness, affordability, and security requirements. Where it is considered prudent, we require life insurance cover over the life of key personnel employed in the operation of a commercial borrower. Personal loan borrowers are not required to purchase payment protection insurance. We do not benefit from the insurance over consumer loans that could be available from payment protection insurance products. Guarantees are required from the directors or principals of corporate borrowers, from entities whose operations are required to support the security or servicing of a loan to a principal borrower, and in instances where it is considered necessary for a personal loan borrower to meet our lending criteria. Commercial and property based loans are subject to further comprehensive analysis, and in circumstances where the loan is not fully amortised over the term of the loan, we must be satisfied with a reasonable and credible exit strategy. Independent registered valuations satisfactory to and addressed to us are required on property sector loans. All loans are advanced on the basis of comprehensive legally compliant and enforceable documentation. 16

18 Compliance with a comprehensive pre-payout verification process ensures that loans are not advanced prior to registration of securities on terms consistent with the loan documents. Loan performance is closely monitored on a daily basis in accordance with our policies. Credit staff work closely with non-performing loan customers to explore solutions that can accommodate their circumstances where possible. Non-performing loans are categorised to assist credit staff to monitor and manage the loans in accordance with the specific process for each monitor category. Recovery action is initiated where a satisfactory arrangement has not been established or maintained to our satisfaction, and payments in arrears are in excess of 90 days old, or at any earlier time we consider it prudent to exercise remedies in respect of non-performing loans. We instruct solicitors or external recovery agents to assist with the recovery of arrears and or the security property. Doubtful debt provisioning is reviewed regularly to establish the likely doubtful debt expense that could arise from both non-performing loans and loans operated within credit terms. We comply with accounting standards and compliance requirements, and our financial statements are subject to interim and annual audit. We manage that risk by careful compliance with current legislation, consideration of proposed changes to the regulatory environment, and the use of professional advisers with the appropriate expertise. We manage the risk of reduced margins as a consequence of increased competition within the finance industry, and the risk of adverse market sentiment toward the finance industry generally as the result of an adverse event concerning another company within that industry, with a consequent impact on profitability and our ability to raise funds from Investors, through the following strategy: Diversifying exposure across various industry segments. Continuing to evaluate new market opportunities and products. Developing best practices in operating procedures. Establishing and maintaining long term commercial relationships. Developing specific expertise in core activities. Maintaining the characteristics that differentiate us from competitors. We operate from our Christchurch office premises and make extensive use of information technology in its operations. We manage the risk of the loss of information and or operating capability with a consequent impact on profits by the following means: The security procedures and systems in place and the insurance cover arranged. The maintenance, development, and upgrade of information systems and information security processes, including comprehensive information and hardware backup. Secure remote access capability and the maintenance of a Dunedin based backup server. The Trust Deed prescribes a number of financial ratios that must be satisfied, as part of our compliance obligation to the Trustee. We regularly monitor compliance with the ratios prescribed in the Trust Deed. We comply with the ratios prescribed in the Trust Deed as at the date of this Investment Statement. In the event that we fail to comply with the financial ratios in the Trust Deed, the Trustee could suspend the Prospectus, which would prevent the issue of debenture stock and unsecured deposits during the period of any such suspension. A suspension of the Prospectus could materially affect our profitability, as a consequence of being unable to meet commitments as they fell due, and or the failure to secure lending opportunities, if alternative funding could not be arranged. In addition, we are required to comply with securities legislation and the Non-bank Deposit Taker regulations referred to in more detail in the Prospectus. The board of directors, management, and staff represent a broad range of skills and experience and collectively comprise key personnel. The risk to our future profitability through the loss of one or more of these people is managed through the absence of hierarchy in the management structure, and with knowledge sharing, documentation of procedures, and staff retention practices. Credit ratings The Reserve Bank of New Zealand introduced regulations to the Non-bank Deposit Taker ( NBDT ) sector as part of its prudential regulation regime. The regulations include credit rating requirements, minimum capital adequacy requirements, related party exposure restrictions, and liquidity requirements. Complying with these laws assists us managing our risks. The Non-bank Deposit Takers Act 2013 ( the Act ) requires deposit takers to hold a credit rating, subject to certain exemptions. We are not rated because we operate under an exemption (Deposit Takers (Credit Ratings Minimum Threshold) Exemption Notice 2009 originally applicable pursuant to section 157G of the Reserve Bank of New Zealand Act 1989) from the requirement under the Act to have a credit rating. The exemption applies because the Company and the Group has liabilities of less than $20 million, making it unduly onerous and burdensome to comply with the requirement under the Act to have a credit rating. 17

19 The exemption will apply for the period during which we meet the exemption criteria, and will have the effect of allowing us to maintain a lower cost structure than would be the case if rated. In general terms the exemption provides for diversity within the Non-bank Deposit Taker sector, by accommodating smaller issuers that would otherwise be disadvantaged by the cost of credit rating, reducing the risk that the sector consolidates to comprise a small number of similar large scale issuers. In addition, investors will be unable to use credit ratings as a basis for comparing rated issuers with unrated issuers. We are not rated by a rating agency approved by the Reserve Bank. The requirements of the Act relating to minimum Capital ratio, related party exposure restrictions, and liquidity ratio requirements are included in the Trust Deed, and are described in summary form under the Borrowing restrictions sub heading of the Provisions of the Trust Deed section in the Prospectus. We comply with the requirement to have at least two independent directors under section 25 of the Act. Financial Service Provider Registration We are a registered Financial Service Provider under the Financial Service Providers Act 2008 (FSP no. FSP32185), and we are a member of the Insurance and Savings Ombudsman Scheme. Registration and complying with the 2008 Act assists us managing our risks. Consequences of Insolvency Investors would not be liable to pay any money if we became insolvent. The following claims on our assets would or may rank ahead of the claims of Investors in first ranking Secured Debenture Stock (and Security Stock holders) if we were placed into liquidation: Payments given statutory priority (such as liquidation costs, wages and taxes, as prescribed by the Seventh Schedule of the Companies Act 1993). Any prior charges we create (presently nil and limited by the Trust Deed to a maximum of 7.5% of Total Tangible Assets) The claims of the Trustee or any receiver appointed by the Trustee under the Trust Deed for liabilities, costs, and remuneration The claims of Investors in Unsecured Deposits would rank behind the prior charges and the claims of Secured Debenture Stock holders and Security Stock holders referred to above, and rank equally with all other unsecured creditors. Can the Investment be altered? Once an Investment is made terms cannot generally be altered. The Trust Deed, which governs the Investment, does however provide for alteration of its terms: By the Trustee but only in circumstances and provided that any such changes would not be likely to prejudice the security of Investors. Where a change is required for compliance with securities or financial reporting legislation. By extraordinary Resolution of Investors requiring a 75% majority vote. We may only alter the interest rate, maturity date, and other investments terms by prior arrangement with you. In such circumstances a replacement certificate recording the amended terms would be issued. The process concerning early repayment requests is described in the section below under the heading Early Repayment. How do I cash in my Investment? Maturity We will contact you by post (or agreed alternative means) shortly before the maturity date of your Investment, including details of your maturing investment, a Reinvestment application / Maturity response form, and the current Investment Statement. You should then return your certificate together with your completed Reinvestment application / Maturity response form, either confirming reinvestment and nominating the terms, or instructing us to repay your initial investment on maturity by direct credit to your nominated bank account or by posted cheque. If no instructions are received, we will reinvest on the same security at call and interest will be paid at the current call interest rate. We can arrange reinvestment of part or all of your maturing Investment, should you not have an immediate requirement for repayment. The Reinvestment application / Maturity response form provides for a variety of reinvestment options and investment terms. Transfer of Securities You may sell or transfer your Investment to another person by completing properly executed commonly used transfer forms, provided that the transferee satisfies the requirements that would be required of a new Investor, and 18

20 the residual Investments of the transferee and transferor comply with the minimum amount that would be applicable to new Investments. We are not aware of any established market for your Investment and the Investments are not quoted or traded on any securities market. Early Repayment You should be aware that our expectation is that your Investment will remain available to us for the full term that you have nominated. That understanding assists us with our commitment to lend funds for specific terms. We recognise however that emergencies can arise, and where evidence of real hardship exists and our lending commitments permit, we may at our discretion upon your request redeem your Investment prior to maturity. In the event that we accept an early repayment request we will adjust the interest rate to the rate applicable to the nearest shorter investment term consistent with the amended date of maturity. Who do I contact with enquiries about my Investment? Enquiries should be made to: The Investments Manager Gold Band Finance Limited Unit 2, 6 Sir William Pickering Drive PO Box 713 Christchurch Tel: or admin@goldbandfinance.co.nz Web: Is there anyone to whom I can complain if I have problems with this Investment? Complaints regarding Investments should be made in the first instance to: The Chief Executive Gold Band Finance Limited Unit 2, 6 Sir William Pickering Drive PO Box 713 Christchurch Tel: or If you are still unhappy you may contact the Trustee directly: Regional Manager Corporate Trust Limited (Trading as Foundation Corporate Trust) Level 1, 148 Victoria Street, Christchurch 8013 PO Box 3, Christchurch 8140 Tel: Or you can contact the Dispute Resolution Service that the Company belongs to under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 under FSP no. FSP by contacting: Insurance & Savings Ombudsman PO Box Wellington 6143 Tel: Or go to You can also take advice concerning your complaint from one of your advisers, such as your lawyer, accountant or financial adviser. There is no other Ombudsman to complain to. What other information can I obtain about this Investment? Disclosure Statement and Financial Statements Other information about the first ranking Secured Debenture Stock and Unsecured Deposits of Gold Band Finance Limited is contained or referred to in the Prospectus and in our Financial Statements. These documents can be obtained, free of charge, from our registered office at Unit 2, 6 Sir William Pickering Drive, Christchurch, or online at our website at The audited annual and interim financial statements, the Prospectus, and other documents of or relating to the Company are filed on a public register at the Companies Office of the Ministry of Business, Innovation and Employment (MBIE) and are available for public inspection on the Companies Office website at or by telephoning the Ministry of Business, Innovation and Employment on