a shareholder s guide to trading Livestock Improvement Investment Shares

Transcription

1 a shareholder s guide to trading Livestock Improvement Investment Shares

2 As an existing Livestock Improvement Corporation Shareholder you will receive an allocation of Investment Shares as part of a share subdivision that will take effect on the 16th April Investment Shares will be listed on the New Zealand Alternative Exchange (the NZAX) on 19th April 2004 and from this time you will be able to sell some of the Investment Shares allocated to you or buy more, either by trading on the NZAX or privately. This brochure provides information on how to trade your Investment Shares on the NZAX in a question and answer format. We hope you find it useful. If you would like additional information on how to trade your Shares or personal advice on an appropriate level of Investment Shareholding for your personal circumstances, talk to your Sharebroker or call ABN AMRO Craigs toll free on what is the NZAX Market? The NZAX is an alternative sharemarket run by the New Zealand Exchange (NZX) the company that also operates New Zealand s main sharemarket. The NZAX is a new market especially for small to mediumsized companies, and businesses like Livestock Improvement who have a special structure. The NZAX has detailed rules designed to safeguard the interests of all Investment Shareholders. Because it is a respected, informed and regulated market you can buy and sell your Investment Shares on the NZAX with confidence. what is my shareholding in Livestock Improvement? On the 16th April 2004, two types of new Shares will replace your existing Livestock Improvement Shares, namely: Co-operative Control Shares that have voting rights, receive a priority fixed dividend if any is paid and can t generally be traded, and; 2

3 Non-voting Investment Shares that own the assets of Company, receive most of its profits and can be traded at market determined prices either on the NZAX or privately. You will receive 10 Investment Shares and 1 Co-operative Control Share for each Share you held prior to the subdivision on 16th April Further details on the share structure are contained in the Disclosure Document Information Pack which included this brochure. This information pack also includes a letter from the Chairman incorporating a Holder Statement that sets out the number of Co-operative Control and Investment Shares allocated to you on 16th April who can own and trade Investment Shares? Only Co-operative Control Shareholders can own and trade Investment Shares and only New Zealand dairy farmers, who trade with Livestock Improvement, can own Co-operative Control Shares. Co-operative Control Shares are issued by Livestock Improvement in proportion to purchases of Livestock Improvement s products and services. Cooperative Control Shares will not be listed on the NZAX and generally cannot be traded. Contact the Share Registrar at Livestock Improvement if you want to discuss your Cooperative Control Shares. who is the Livestock Improvement Share Registrar? Livestock Improvement is running its own Share Register. In July each year you will receive a statement from the Share Registrar, identifying changes in your Co-operative Control Shareholding and the level of Investment Shares held at that time, together with details on any dividends declared or paid. 3

4 how do I contact the Share Registrar? Contact details for the Share Registrar are: Share Registrar Livestock Improvement Corporation Limited Private Bag 3016 Hamilton Attention Murray Cobb Phone: mcobb@lic.co.nz are there any limitations on the number of Investment Shares I can or must own? Yes - the number of Investment Shares you can or must own is related to the number of Cooperative Control Shares you own. You must have: a) No more than 30 Investment Shares for every Cooperative Control Share you own, and; b) No less than 2 Investment Shares for every Cooperative Control Share you own. Livestock Improvement and the NZX have put in place measures that ensure that Shareholders are not able to buy or sell Shares that would put their Investment Shareholding outside these Investment Share to Co-operative Control Share ratios. These measures also ensure that only parties who hold Co-operative Control Shares can purchase Investment Shares. Special provisions are made for New Shareholders to purchase the minimum number of Investment Shares. These are detailed in the Disclosure Document Information Pack, which included this brochure. 4

5 what are my Investment Shares worth? Investment Shares have been issued to Shareholders without a face value. This means you will not know what your Investment Shares are worth until after they list on the NZAX and start to trade. To provide Shareholders with some guidance on the likely value of their Investment Shares, the Directors of Livestock Improvement engaged PricewaterhouseCoopers to prepare an independent assessment of market value. ABN AMRO Craigs has also undertaken a valuation as part of its independent client research on Livestock Improvement. A copy of each report is included in this Information Pack. what factors will influence the market price of Investment Shares? Like all Shares that are traded on a stock exchange, the price at which Livestock Improvement Investment Shares trade can go up and down. Many factors influence the Share price. These include: The market s view of Livestock Improvement s future profitability, The number of active buyers and sellers of Shares in the market at the time, The quality of the Board and management, Potential future dividends and distributions from Livestock Improvement, The outlook for the industry, and General investor sentiment. where can I check the price of Investment Shares once they are listed? Once Investment Shares are listed on the NZAX (i.e. from 19th April onwards) you will be able to check their last sale price and the buying and selling bids under the ticker code LIC. 5

6 The price of Livestock Improvement Shares can be found: On the NZAX website Daily in the Business Section of the major newspapers. On the ABN AMRO Craigs website (if you are registered as a client). On page 209 of Teletext. By calling your nearest ABN AMRO Craigs office (see contact details at the end of this brochure). By calling your Investment Adviser or Sharebroker. what can I earn from holding on to my Livestock Improvement Investment Shares? There are two possible ways to make money from owning Livestock Improvement Investment Shares: From payments by Livestock Improvement to Shareholders. These are usually dividends paid by the Company to its Shareholders. Livestock Improvement s current dividend policy is to pay 50% to 70% of its annual after tax profits before biotechnology expenditure, to Shareholders. Special dividends or capital distributions might also be made if the Company receives a windfall profit or has surplus cash. From increases in the market price of Livestock Improvement Investment Shares. If market observers and those entitled to own Livestock Improvement Investment Shares believe the company is performing well, this will normally be reflected in the Share price. can Investment Shares be traded privately? Co-operative Control Shareholders can buy or sell Investment Shares privately between themselves without involving a Sharebroker. 6

7 As is the case with NZAX trades, off-market or private trades of Investment Shares can only occur between Co-operative Control Shareholders. These transfers will only be registered if both the buyer and seller are qualified to complete the transaction. To obtain the Share Transfer forms required for private sales please contact the Share Registrar at Livestock Improvement. do I need a Sharebroker to trade on the NZAX? Yes - you can only buy or sell Investment Shares on the NZAX by placing an order through a licensed Sharebroker working for an NZX Firm such as ABN AMRO Craigs. NZX Brokers are individual professionals with a wide knowledge of companies and market rules, and a commitment to serving both their investor-clients and the wider interests of the market. The work practices of both Brokers and firms, and their dealings with investors and each other, are governed by a professional code and by NZX Business Rules. what if I don t have a Sharebroker? If you do not have a Sharebroker and want to buy or sell Investment Shares on the NZAX, you will need to choose one. ABN AMRO Craigs has managed and co-sponsored Livestock Improvements listing on the NZAX and is the Co-operative s preferred Broker. It is also currently the only Broker researching the Co-operative. ABN AMRO Craigs Investment Advisers are happy to advise you on what to do with your Investment Shares and take your buying and/or selling instructions. If you would like to become a client of ABN AMRO Craigs or would just like them to sell your Investment Shares, please contact the nearest office to you from the branch list at the end of this brochure. If you would prefer to use another Sharebroker, a list of NZX Firms is found on the NZX website or you can contact the NZX on (04)

8 do I need to become a client of a Sharebroker if I want to do a one-off sale of Investment Shares on the NZAX? No - if you don t have a Sharebroker and just want to sell your Investment Shares down to your minimum holding and don t intend buying or selling Investment Shares or any other listed shares in future, you do not need to become a client and complete a Client Agreement Form. You will just need to provide the Sharebroker you choose to sell through, with 2 forms of identification such as your driver s licence and passport. If you wish to buy or sell Shares in future, you will be required to become a client of that Sharebroking firm and complete a Client Agreement Form. what is the process for buying or selling Investment Shares on the NZAX? You can place an order to buy or sell Shares on the NZAX with a Sharebroker in person or over the telephone. Some Brokers will also accept orders via their internet site. The Broker will request: The name of the Company you wish to trade (Livestock Improvement or any other NZAX or NZSX company). The number of Shares you want to trade. Whether you want to SELL or BUY Shares. The price at which you want to SELL or BUY Shares. Your CSN and FIN numbers. Always confirm each instruction with the Broker when you place the order. Some Brokers record your conversation as evidence of your trading instructions. what are FIN and CSN numbers? FIN stands for Faster Identification Number and is like a PIN number on an EFTPOS or credit card. Your FIN will be 8

9 sent to you separately by NZX. This is your personal security code and must be kept confidential and in a safe, secure place. If you lose or forget your FIN please ring the NZX help desk on (04) CSN stands for Common Shareholder Number. This number links all the different Shares in listed Companies you own across different Share Registries. Your CSN is shown on the Share Details portion of the Holder Statement attached to the Chairman s letter in the information pack that accompanied this brochure. If you have not received a CSN (shown in the Share table in the Chairman s letter) please contact the Livestock Improvement Share Registrar. It is likely that the Registrar will need additional Shareholder details from you in order that the NZX can issue you with a CSN. If you have not been allocated a CSN number you will not receive a FIN. can I set a price at which I am prepared to buy or sell Investment Shares on the NZAX? Yes - you can trade Shares at the market price or you can instruct your Broker to trade at a price that is different to the market price. For example, you can instruct that you only want to sell Shares when the price rises to a certain level (possibly 5 or 10 cents above the current market price), or buy Shares when the price falls to a certain level. Your order will stay valid for several weeks, depending on your Broker. Your Broker can tell you the current price of Investment Shares. If you choose to sell or buy at the market price, your Broker will buy or sell Investment Shares for you at the nearest possible market price. If very few Shares are being traded when you place your order, it might be difficult to trade Shares at the market price. If you instruct your Broker to trade at a price different to the market price your Broker will only buy or sell Investment Shares when the price moves to the level that meets your instructions. 9

10 can I cancel my Buy or Sell Order on the NZAX? You can usually cancel your order IF the Broker has not yet completed the trade. if I sell Shares on the NZAX how long does it take to receive the sale proceeds? This depends on the Broker you use, but generally three business days after the trade, the funds are available for disbursement by cheque or deposit to a nominated bank account. if I buy Shares on the NZAX, when do I need to pay for them? You will be sent a contract note confirming the purchase. You should send a cheque (or arrange other means of payment) to arrive with the Broker within three business days of the purchase. does it cost to buy/sell Shares on the NZAX? Yes the Broker you trade through will charge you a Broker s fee, which generally ranges between 0.5% and 2.5% depending on the amount of business you conduct through your Broker. The NZX also charges a trade levy of $5 per trade. As Livestock Improvement s preferred Broker, ABN AMRO Craigs has agreed to charge Shareholders a standard reduced brokerage rate of 1% plus the $5 per trade NZX levy on any Investment Shares you buy and sell through ABN AMRO Craigs (subject to our normal minimum fee of $40 per trade). If you already have a better rate with ABN AMRO Craigs that arrangement will remain. You are free to deal with any Sharebroking firm and negotiate your own fees. 10

11 how will I know how many Shares I own once I have bought or sold some? Each time you buy or sell Livestock Improvement Investment Shares, you will receive a new Holder Statement showing trading details and the number of Shares you own. what information can I get on Livestock Improvement? A listing on the NZAX requires Livestock Improvement to keep its Investment Shareholders informed of profit results, business developments, payments to Shareholders and changes in its Board and senior management. As a Shareholder you will receive copies of the annual accounts and half-yearly interim accounts. These include Directors commentary, financial information on the company and the Auditor s report for the annual accounts. As a listed company, Livestock Improvement must have its accounts audited by an independent firm of Chartered Accountants. Livestock Improvement is also required to make announcements to the Sharemarket on any matters which may affect its Share price. You can check the company s profile on the NZAX website for recent announcements. You can also check the Co-operative s website for detailed information on its operations including new business developments. Clients of ABN AMRO Craigs will also periodically receive research reports with updated valuation and trading recommendations. A summary of ABN AMRO Craigs initial research report and valuation is included in the Information Pack that included this brochure. This is the only ABN AMRO Craig research report that will be given to all Livestock Improvement Shareholders. In future, only clients of ABN AMRO Craigs will receive our research updates, which will include updated valuations and trading recommendations. 11

12 where can I get advice on my Investment Shares or investing in the Sharemarket? Before you buy or sell Livestock Improvement Investment Shares you should get advice. You can obtain advice from your Sharebroker, or a qualified Investment Adviser. A list of NZX Sharebroking Firms is found on the NZX website at and contact details for each of ABN AMRO Craigs 13 branch offices and 2 affiliate offices are shown below. ABN AMRO Craigs Branch Offices Whangarei North Shore Auckland Hamilton Tauranga Rotorua Gisborne New Plymouth Wanganui Wellington Christchurch Gore Invercargill The free phone number to all 13 of ABN AMRO Craigs branches is ABN AMRO Craigs Affiliate Offices Blenheim Winstanley Dickson Timaru Munro Hubbard