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NZ Post says ACC, NZ Super Fund claim over Kiwibank sale has no merit

Friday 24th August 2018

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New Zealand Post says a warranty claim by Accident Compensation Corp and the New Zealand Superannuation Fund over their investment in Kiwibank is without merit, but the state-owned entities are in talks to resolve the dispute. 

The Crown's mail service sold 47 percent of lender Kiwibank to the workplace insurer and pension fund in late 2016 for $494 million. The shareholders are now in dispute, with Stuff reporting yesterday that the Super Fund and ACC claim NZ Post should have disclosed risks around a major IT upgrade that have led to $101 million of impairment charges.

NZ Post today acknowledged the dispute as a contingency in its June 2018 financial statements, saying it had received notice of a "potential and unquantified warranty claim" from its fellow shareholders. 

"Based on the materials provided by ACC and NZSF Tui, and the company's legal advice, the company does not consider that the potential warranty claim has any merit and therefore no provision has been made in respect of this claim at 30 June 2018," NZ Post said. "However, the company remains in discussions with ACC and NZSF Tui about resolving the potential warranty claim." 

The accounts show NZ Post's core mail delivery still in decline as a 12 percent decline in letter volumes led to an operating loss of $39 million from the core mail business. NZ Post's share of Kiwibank's earnings was $52 million, down from $71 million a year earlier, which included a period when it owned the lender outright. 

As a result, NZ Post's net profit sank 86 percent to $13 million in the year ended June 30, with revenue down 1.5 percent to $877 million. 

"Our business continues to make commercial decisions in response to the changes in the postal services market, and in doing so we are very conscious of those who rely on our letter services," chief executive David Walsh said in a statement. "As a state-owned enterprise we take our social responsibilities very seriously, balanced with the need to operate a sustainable business that provides value to all New Zealanders."

NZ Post's board didn't declare a final dividend, having paid $2.5 million to the Crown from the first-half. The 2017 statement of corporate intent had targeted annual dividends of $5 million. Walsh has previously said the SOE was in talks with the Crown and Treasury about balancing a sustainable letters business against returns to the shareholder. 


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