Annual Report 2019 WAIRARAPA MOANA INCORPORATION WAIRARAPA MOANA TRUST
Annual Report 2019
WAIRARAPA MOANA INCORPORATION
Message from the Chair E mihi kau ana ki a tātau katoa Me mihi atu ki a rātau mā ngā tini aitua kua riro rā ki Paerau, ki te huinga o te kahurangi, ki te takotoranga tē taea te whakakorikori. Nō reira, waihō ake ko te aka o te rangi ki a rātau, kua whetūrangitia. Ko te aka o te whenua ki a tātau nei te hunga ora. Tihei mauri ora. Ko te ripoata nei mō te mahi o te poari koporeihana mō te tau rua mano tekau ma iwa. Pēnā i a rātau mā, e mau tonu tātau ki ngā kōrero i timata mai ai i ngā atua, heke iho ki ō tātau mātua tī puna, heke iho anō mō a tātau, mā ngā uri whakatipuranga. Kingi Smiler
Nō reira, tēnā koutou ngā uri o Wairarapa Moana, ko Te Karu o te Ika a Maui. Āe, tēnā tātau katoa.
A recovery in milk price is forecast in 2020 ranging from $6.50 to $7.00. Milk prices declined from $6.53 in 2018 to $6.32 in 2019. At the beginning of the 2018/19 season the milk price futures were $6.50 declined through to December and then recovered to $6.32 by the end of the season compared to the 2017/18 season of $6.53. The Trump Trade War continues to impact on our key market in China. Current forecasts for the milk price are expected to increase to $6.50 - $7.00 as a result of supply shortages in world markets as well as continued strong demand from China. The dairy demand in China does not seem to be affected by the Trade War currently. The Coalition Government seems intent on making changes to policy regulations covering Green House Gas Emmissions (GHG), carbon zero targets and freshwater water quality. These policies will cause major changes to our dairy farm systems and result in higher costs, as well as restricting fertiliser use and the number of cows on farm. The timing of these changes will
2
ANNUAL REPORT 2019
be rolled out over the next 5 years but there is very little detail available at the moment on specifically what these changes will be. Overall the net profit after tax for 2019 is $8.14 million compared to $10.68 million in 2018. The reduction being the result of a lower milk price, forestry income less as currently no woodlots are ready to harvest, and one off costs incurred to reclaim our hydro land in the Waitangi Tribunal. The overall equity of WMI is $220 million in 2019, a net increase of appromximately $6 million compared to last year. The bank debt ratio has reduced further from 20.6% to 19.4% after further repayments during the year. The value per share for the incorporation has risen from $4.59 to $4.94. The Committee recommends the following distributions in 2019: Gross Dividend
$750,000
Wairarapa Moana Trust Grant
$120,000
Wai85 Waitangi Tribunal.
Waitangi Tribunal members, Wairarapa and Tūranganui a Kiwa Inquiries. L-R Dame Margaret Bazley, Dr Ruakere Hond, Judge Carrie Wainwright, Judge Stephanie Milroy, Dr Ann Parsonson, Tim Castle.
WAI 85 After many years of protracted opposition by the Treaty Settlement Trust, Ngāti Kahungunu ki Wairarapa Tāmakinui Ā Rua, and the Crown WMI finally commenced our Wai 85 claim proceedings in the Waitangi Tribunal on May 6th 2019 an important moment in our history. The Tribunal proceedings have been ‘live streamed’ which has enabled our shareholders to follow all of the witness presentations of evidence. This hearing process continued in late July with responses to the Economic Evidence commissioned directly by the Waitangi Tribunal. Closing submissions in relation to Wai 85 set down for September has now been deferred to 11-14 November 2019. We are hopeful of a positive outcome but it is very difficult to predict either the timetable or the result in these matters. Our expert witnesses Sir Kim Workman and Murray Hemi along with Dr Richard Meade (our economic advisor) have done a fantastic job of representing our claim and highlighting the key issues for the Waitangi Tribunal.
We endeavour to work with the Treaty Settlement Trust and Ngāti Raukawa to seek a solution where all the Māori claimants are working together for mutual benefit against the Crown and to reach a positive and better outcome for all of us. We remain hopeful that we can achieve this. The stakes are high now that everyone is clear how substantial the WMI claim is. To date though, the Tribunal hearings indicate that the Treaty Settlement Trust and Ngāti Raukawa are simply intent on supporting the Crown and spoiling the opportunity for our WMI whānau. All our WMI team, Committee members, employees and advisors continue to provide great service to our shareholders and I acknowledge their efforts on our behalf. Kingi Winiata Smiler chairman wairarapa moana incorporation
WAIRARAPA MOANA INCORPORATION
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Key Performance Measures
PEOPLE
64 Fulltime staff employed. 5 Staff employed for more than 10 years.
21
Staff achieved their Level, 2, 3 or 5 Primary ITO and overall 69 staff attended courses.
ENVIRONMENT
MILK
COWS
53ha
133,595 Average
6 week In Calf Rate.
Number of hectares (ha) replanted in pine trees.
–
104,000
Fenced areas now complete.
Lowest Average SCC – Farm 14.
58ltr Dairy shed water use,
2 Grade Free Farms.
58 litres per cow per day.
20
Group Training days held for the year.
3
Lost time time injuries totalling 23 days for the year.
4
Somatic Cell Count for all Farms.
ANNUAL REPORT 2019
1
Number of farms in Top 10 of Miraka for milk quality (Farm 14).
70%
405kg
Kilograms of milk solids – Average Production per Cow.
29%
Replacements reared as a percentage of peak cows.
10,380 Total cows (Managed Farms 8,549).
Committee of Management (L–R) Te Horipo Karaitiana, Sonya Rimene, Kingi Smiler, Anne Carter, Murray Hemi.
PROSPERITY MEASURES
83% Average WMI score in Te Ara Miraka 83 percent (17cents). Three WMI farms received 9th equal placing achieving 90 percent. Miraka average supplier score was 71.9 percent.
Dividends Paid (Financial Year) 2.0
2
1.5 1.25
1.0 0.75
$8.1m Net profit after tax – decreasing
0.5
from $10.6m in 2018 due to 21c reduction in milk price, lower profits earned by Miraka and no forestry harvest income this financial year.
0.0
0.8 0.4
3.2%
Return on Assets – reduced by 0.4 percentage points from the 2018 year.
19.4%
Bank Debt – Reduced by $2.5m to 19.4 percent of assets – 2018 – 20.6 percent.
0.4
0.4
0.4
2020 2019 2018 2017 2016 2015 2014 2013 2012 Values in million’s of dollars
3.5%
Return on equity – reduced by 0.7 percentage points from the 2018 year.
1.2
Net Profit (Loss) After Tax 16
15
14 12
10.7
10 8 6
6.3
8.1 6.6
4
$6.76m Net Equity – $6.76m increase
2
in equity from 2018.
-2
0
-4
-0.1
1.6
2020 2019 2018 2017 2016 2015 2014 2013 Budget
2012
-2.8
-1.8
Values in million’s of dollars
WAIRARAPA MOANA INCORPORATION
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Management Report
Tēna tātau katoa Ānei te pūrongorongo pāmu mō tēnei tau. He maha ngā kaupapa hēoi anō he kōrero ānō mō te tau e tū mai nei. Ngā mihi ki a tātau katoa. The 2018/2019 season was another busy year for Wairarapa Moana Incorporation (WMI). Mycoplasma Bovis disease has continued to provide major challenges for the industry, further levies will be paid by farmers in the plan to eradicate the disease. Water quality is still a high priority and WMI have been working with Miraka who are in the process of making a Healthy Rivers Plan 1 submission on behalf of all suppliers. Compliance, banking and regulatory issues are still major focus points for the industry as we continue to go through a steep period of environmental, business and consumer change. The farming season was a season of two halves. WMI had a very good start to the year with strong grass growth in spring which provided for excellent farming conditions. The months of February to April were completely the opposite with very dry and challenging conditions. Cows were dried off a little earlier than ideal which has impacted on the overall production achieved. With welcomed rain in May it was a case of a little too late to assist production for 2018/19 but has set up the farms well for the 2019/20 season.
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ANNUAL REPORT 2019
We welcome Michael Allan to the role of General Manager for the Incorporation. Michael has been a longstanding financial advisor to the Incorporation and he brings with him a wealth of business experience.
Nga Tangata PEOPLE
WMI is also excited to have appointed Trevor Hamilton as General Manager of farms. Trevor brings large scale farming knowledge owning multiple farms with wife Harriet. We also welcome Moana Puha as an Operations Manager. Moana has very broad agricultural knowledge, having studied agriculture at Massey University and having previously worked within the farm systems team at AgResearch and with DairyNZ. Alice Wichman was also appointed during the year as the financial controller for WMI. Alice has previously worked for the Incorporation back in 1994 . Alice has an extensive background in financial advisory.
Khardinn Wereta, Farm 6 Manager and Hillary Redeinghuys, AI technician from LIC.
There have been 5 new manager appointments on Farm 1 Cameron Blazek, Farm 2 Gavin Humphrey, Farm 8 Peter Borges, Farm 12 Joe McBride, Farm 15 Muhamad Ansori who was promoted from 2IC on Farm 14. Muhamad has been a dedicated employee to WMI and rewarded with this recent manager appointment through his willingness to learn and foster the WMI culture and values. Team training and development continues to be a focus for WMI. The last 12 months has been very busy with many individual and group training days across the farms to foster growth and capability within the team. Various staff achieved Primary ITO qualifications and 21 certificates were issued across the team during the season from training providers. Most of the farm managers who have left have continued to progress their careers in the industry and we thank them for their dedicated service to WMI and wish them all the best for their future endeavours.
The reproductive results were slightly below last years excellent result. The 6 week in calf rate was 70% across all farms which sits just outside the top 10% of the industry. Many farms have already reached the top 10% and with the continued focus and knowledge amongst the farms, all farms are aiming to be back inside the target.
Nga Kau COWS
Mycoplasma continues to be a focus for the industry and continues to add challenges on how we operate. Three years ago, WMI undertook a project to develop a biosecurity plan and that was enacted before mycoplasma was detected in New Zealand. The WMI herds continue to be tested and cleared and with stock movement protections and biosecurity fencing being constructed we are taking all practicable steps to continue to protect our herds and the prosperity of the business.
WMI would like to sincerely thank Rick and Nyree Bayliss for their 12 years as loyal and proactive sharemilkers to WMI. They have been an amazing part of the WMI farming team and we wish them well for the future.
WAIRARAPA MOANA INCORPORATION
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Tony Ngatai & ‘Buck’ Shelford hongi at WMI Awards.
Manager’s and 2IC’s at regular 10 day meetings at the Shearers Quarters.
WMI have teamed up with Miraka and continue to remain active in supporting the Waikato Regional plan change on improving water quality. Miraka will be lodging submissions on behalf of all Miraka suppliers on the Plan 1 change to help improve the water quality of the Waikato Region.
Te Taiao ENVIRONMENT
WMI are also continuing to plant trees as a part of the planting program. This plan was initiated with the October 2016 AGM farm visit. The Kaharoa farm has had a number of wetlands fenced off and protected with the planting nearing completion. The team has done an excellent job, the results are pleasing and will be a real asset to the business, living the values and protecting the environment for future generations. Shelter plantings and shade for the cows has also continued during the year along with 53ha of forest replanting. Murray Hemi has also been appointed to the Kaitaiki role with Miraka. Murray has already made significant contributions in this role and will continue to do so with further initiatives in place.
It was the second year of Te Ara Miraka (the Farming with Excellence Programme through Miraka Limited). WMI’s highest placings were farms 3, 9 and 14 sitting on 9th equal achieving 90 points out of 100. We have again set our standards high aiming to feature in the top placements. Te Ara Miraka supports and encourages a culture of excellence through the entire Miraka supply chain – from the farm to the customer. Te Ara Miraka has close links to WMI’s vision and values.
Miraka MILK
Te Ara Miraka standards are considered best practice for people management, dairy farming, environmental management and business management. WMI have embraced the kaupapa of Te Ara Miraka and it has become the way we conduct our business interlinking it to the way we do things and using its format for everything we do in the business. WMI Somatic Cell Count (SCC) continues to reduce across the farms. This important health measure for WMI was 133,595. The minimum standard acceptable SCC is less than 400,000 cells/ml. Farms 11 and 14 were grade free for the year. This is the third time in a row that farm 11 has achieved grade free and the second time for farm 14. Going grade free is still a priority and encompasses the high standards set to achieve the Te Ara Miraka incentives.
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ANNUAL REPORT 2019
$ per Ha
Figure 1: 2018/2019 Managed Farm Results Compared to Benchmark 8000 7000 6000 5000 4000 3000 2000 1000 0 Income
EFS
Feed Costs
Bay of Plenty WMI
Wages
Enabling
Total Costs
Waikato New Zealand
Trevor Hamilton, General Manager of Farms.
Figure 2: 2018/2019 Sharemilked Farm Results Compared to Benchmark
The farm results have been compared to the Dairy New Zealand benchmark data for the regional trends. Within Figure 1 it can be seen that WMI’s farm surplus per hectare is $2,303 which is above the New Zealand average and the Waikato and Bay of Plenty averages Surplus. The two 50/50 sharemilkers during the season performed well above the benchmark (figure 2) for economic surplus per hectare. Comparing a managed farm to a sharemilked farm there is $1,000 per hectare additional economic farm surplus in favour of a managed farm. At the start of the 2019/2020 season WMI has taken Farm 15 back under the managed portfolio with Farm 9 the only farm remaining with a sharemilker. Te Ara Miraka continues to make a strong contribution to the bottom line. The average score for WMI farms was 83% or
Scale – $, MS per Cow or MS per Ha
2500 2000 1500 1000 500 0
EFS per Ha
Costs per Ha
MS per Cow
MS per Ha
WMI (2.46 cows/ha)
North Island 18/19 Average (2.75 cows/ha)
North Island 17/18 Average (2.74 cows/ha)
North Island 16/17 Average (2.74 cows/ha)
Source: Dairy New Zealand Economic Survey Data. Benchmark data for 2018/2019 regional trends.
Figure 3: Forest Lease Annuity Return Compared to Stumpage Returns Annuity ($nominal)/1000
Log price ($real 2019)
250 Log price ($/unit) and Annuity ($)
The farms contributed Taurikura PROSPERITY $8.8 million which was a decrease on the previous season of $9.9 million mainly driven by a decrease in milk price which was down by 20 cents per kilogram of milksolids to $6.32. Farm costs of production were $4.67 per kilogram. The dairy support units also made a strong contribution.
200 150 100 50 0 1999
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
WAIRARAPA MOANA INCORPORATION
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Simon McLachlan & Alastair de Thierry - Ford Road Farm.
17 cents out of the 20 cents on offer. This is slightly less than last year but still well above the Miraka supplier base average of 72%. We are now focussing on areas for improvement and we look forward to having more farms in the top quartile. The Farm Woodlot harvest was completed last year, with some remedial work this year. The annual forestry annuity contributed $1.54 million to the result. The annual forestry annuity continues to out-perform in comparison to a traditional stumpage return per hectare as shown in figure 3. WMI will also be taking over the direct management of the forestry lease for the third rotation. Miraka product volumes have continued to grow, this year Miraka faced some challenges that impacted on the overall performance. This is reflected in the Miraka equity accounted income. WMI’s share of profits was $0.9 million. Miraka paid a net cash dividend of $1.67 million during the year. Within other income the main additions are the livestock revaluations (there has been an increase in values of $0.7 million). The township assets increased in value by $2.6 million which reflects the buoyant local property market and we also saw the main forest increase by $2.1 million which is a reflection of the strong demand in these sectors. The balance sheet remains very strong and further debt has been paid during the year of $2.45 million. Debt for the Incorporation is well below others within the industry at under 20% of total assets.
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ANNUAL REPORT 2019
Looking Forward The budget for the coming season has been set and further on farm margin improvements are forecast. Budgeted milk price is $6.00 per kilogram of milksolids which is lower than the current milk price futures of $6.90 and the 2018/2019 actual of $6.32. A farm optimisation strategy plan lead by Trevor Hamilton has a focus that will continue to improve on farm efficiency. Milk production for the 2020 season is forecast to increase in excess of 10% of the 2019 result through this plan. The dairy support farms have also undergone a review in the last 2 years, this past 12 months saw the transition to the new model and we are very happy with the progress so far. This system change will continue to improve overall returns to WMI. With a lack of certainty in asset revaluations the comprehensive income and asset movements have not been included in the budget forecast for 2020. Management would like to thank the support and guidance of the Committee of Management throughout the year for their tireless work. Thanks, must also go to the Business Advisory Group for their input over the last 12 months. Finally, we would like to thank the team on the ground and in the offices at WMI, they are a committed team focused on delivering for the WMI owners. WMI key suppliers also play a big part and thanks must also go to them.
Financial Report Results in Brief WAIRARAPA MOANA INCORPORATION
NZIFRS NZIFRS NZIFRS NZIFRS NZIFRS Restated Budget 2020 2019 2018 2017 2016 12 Mths 12 Mths 12 Mths 12 Mths 12 Mths
STATEMENT OF COMPREHENSIVE INCOME (NZIFRS) / STATEMENT OF PROFIT AND LOSS (GAAP) Commodity Milk Price per kg milk solids $6.00 $6.32 $6.53 $5.57 $3.90
$000 $000 $000 $000 $000 29,951 (19,996)
28,170 (19,378)
29,362 (19,482)
24,591 (18,358)
18,380 (18,426)
Gross Profit (Loss) from Dairy Farm Operations
9,955
8,791
9,880
6,233
(46)
Total Other Income
2,332
2,071
2,936
3,356
1,875
Revenue from Dairy Farming Operations Cost of Production
Gross Profit 12,287 10,862 12,816 9,589 1,829 Administrative Expenses (1,419) (2,007) (1,309) (1,110) (940) 10,868 8,855 11,507 8,479 889 Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDAF) Finance Expense (3,200) (3,178) (3,687) (3,836) (3,406) Depreciation and Amortisation Expense (1,900) (2,013) (1,830) (1,727) (1,656) 5,768 3,664 5,990 2,916 (4,173) Operating Profit/(Loss) after Financing, Depreciation and Amortisation Costs Other Items Realised Gain on Sale of ETS Credits – – – 265 – Share of Profit (Loss) from Miraka Limited 1,682 890 2,400 265 453 Gain on Sale of New Zealand Communications Limited – – – 614 – – (2,079) – – – Gain /(Loss) on Sale of Investments – 349 – – – Realised Capital Gain on Sale of Township Properties (120) (10) – (85) – Grants – Wairarapa Moana Trust – 2,110 740 2,200 542 Revaluation of Forestry Asset – 2,607 903 324 (14) Revaluation (Devaluation) of Township Revaluation (Devaluation) of Livestock – 729 1,903 798 (1,462) Revaluation of Farm Woodlots – (20) (293) 560 906 Total Other Items 1,562 4,576 5,653 4,941 425 Net Profit/(Loss) Before Tax 7,330 8,240 11,643 7,856 (3,748) Income Tax Expense (Benefit) 988 102 963 1,228 (932) Net Profit After Tax/(Loss) for the year
6,342
8,138
10,680
6,629
(2,817)
WAIRARAPA MOANA INCORPORATION
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Results in Brief WAIRARAPA MOANA INCORPORATION Continued/ NZIFRS NZIFRS NZIFRS NZIFRS NZIFRS Restated Budget 2020 2019 2018 2017 2016 12 Mths 12 Mths 12 Mths 12 Mths 12 Mths
Net Profit After Tax /(Loss) for the year
6,342
8,138
10,680
6,629
(2,817)
Total Other Comprehensive Income/(loss) for the year Items that will not subsequently be reclassified to profit or loss:
Revaluation (Devaluation) of Property, Plant and Equipment Revaluation of Pre 1990 ETS Carbon Credits Income Tax Relating to Comprehensive Income Movements
– – –
(1,013) 686 551
(352) 756 (47)
6,325 265 554
(9,924) 2,810 (483)
–
224
357
7,144
(7,597)
Movement in Cash Flow Hedges Share of Other Comprehensive Income from Miraka Limited Revaluation of Financial Assets available for Sale Reclassifications to Profit and Loss Income Tax Relating to Comprehensive Income Movements
– – – – –
(548) (1,473) 3 1,429 50
139 (832) (1,337) 106 (61)
512 1,384 (92) (767) (108)
(1,444) 2,398 767 – 253
Items that may subsequently be reclassified to profit or loss:
– (540) (1,985) 929 1,974 Total Other Comprehensive Income/(loss) net of income tax – (316) (1,628) 8,073 (5,623) Total Comprehensive Income (Loss) for the Year
6,342
7,822
9,052
14,702
(8,440)
Note :Budget Other Income and Comprehensive Income for Budget 2019/ 2020 has not been calculated due to lack of certainly in asset revaluations.
STATEMENT OF CHANGES IN EQUITY Opening Shareholders’ Equity 221,005 214,242 205,868 191,904 200,822 Net Profit/(Loss) for the year 6,342 8,138 10,680 6,629 (2,817) Total other comprehensive income – (316) (1,628) 8,073 (5,623) Total comprehensive income for the year
6,342
7,822
9,052
14,702
(8,440)
Contributions by and distributions to shareholders Movements in Reserves – – – – – Dividend Declared (750) (1,059) (678) (400) (478) Total contributions by and distributions to shareholders Closing Shareholders’ Equity
(750)
(1,059)
226,597 221,005
(678)
(400)
(478)
214,242 206,206 191,904
Closing Shareholders’ Equity is made up of the following components: Share Capital 46,739 46,739 46,739 46,739 46,739 Retained Earnings 55,601 50,009 42,931 34,770 27,253 Reserves 124,257 124,257 124,572 124,696 117,912 Closing Shareholders’ Equity
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ANNUAL REPORT 2019
226,597 221,005 214,242 206,205 191,904
Results in Brief WAIRARAPA MOANA INCORPORATION Continued/ NZIFRS NZIFRS NZIFRS NZIFRS NZIFRS Restated Budget 2020 2019 2018 2017 2016 12 Mths 12 Mths 12 Mths 12 Mths 12 Mths
Biological Assets – Livestock Other Current Assets
22,880 10,010
21,380 9,200
17,456 9,754
15,355 10,637
13,693 5,010
32,890 30,580 27,210 25,992 18,703 Current Assets Property, Plant and Equipment 176,773 176,773 178,471 178,154 172,324 (Wairarapa Moana Farms and House) Investments – Miraka 34,350 32,669 34,913 33,850 30,757 1,025 1,025 2,331 3,666 3,909 Investments – Other Investment Property (Mangakino Township and Forestry Lands) 38,370 38,370 32,865 31,248 28,740 4,377 4,377 3,692 2,936 4,300 Intangible Assets (Carbon Credits) Biological Assets – Farm Woodlots 826 826 752 2,175 3,090 Non-Current Assets 255,722 254,040 253,024 252,029 243,120 Total Assets 288,612 284,620 280,234 278,021 261,823 Current Liabilities 4,000 4,120 3,539 5,028 3,219 53,957 55,437 57,887 62,887 62,887 BNZ Bank Debt 4,058 4,058 4,566 3,901 3,813 Deferred Tax and Financial Instruments Non Current Liabilities
58,015
59,495
62,453
66,788
66,700
Total Liabilities 62,015 63,615 65,992 71,816 69,918 Shareholders’ Equity 226,597 221,005 214,242 206,205 191,904 KEY PERFORMANCE INDICATORS Growth/(Reduction) in net worth on opening balance $ 5,592 6,764 8,037 14,301 (8,918) 2.5% 3.2% 3.9% 7.5% -4.4% Growth/(Reduction) in net worth on opening balance % Return on Closing Equity 2.8% 3.5% 4.2% 7.1% -4.4% Return on Closing Assets 2.2% 2.7% 3.2% 5.3% -3.2% Closing Bank Debt as a % of total Closing Assets 18.7% 19.4% 20.7% 22.6% 24.0% STATEMENT OF CASH FLOWS Cash Flow from Operating Activities 4,630 2,909 8,016 1,326 (5,485) (1,900) 458 (2,421) (418) (8,293) Cash Flow from Investing Activities Cash Flow from Financing Activities ( 2,230) (3,377) (6,593) 531 12,532 Net Increase in Cash and Cash Equivalents 500 (10) (998) 1,439 (1,246) Add Cash and Cash Equivalents at Start of Year
212
222
1,220
(219)
1,027
Cash and Cash Equivalents at End of Year 712 212 222 1,220 (219)
WAIRARAPA MOANA INCORPORATION
13
Policies A summary of the Wairarapa Moana Ki Pouakani Incorporation (“the Incorporation”) audited financial statements for the year ended 31 May 2019 is shown in the Financial Summary section of this annual report, also shown is the summarised 31 May 2020 budget which has been drawn from the full 31 May 2020 budget approved by the Committee of Management on the 8th April 2019. The summary financial statements have been prepared in accordance with FRS-43 Summary Financial Statements. The 31 May 2020 Budget does not include estimates for the revaluations of assets. These estimates have not been made with the lack of certainty when estimating asset movements in active markets. The Committee will obtain formal valuations at year end to report in the Financial Statements. The Committee of Management have chosen to use $6.00 as the budget milk price based on current market conditions. The Fixed Asset Register policies were reviewed in the current financial year and as a result, an adjustment for accounting depreciation of approximately $1,840,000 was made to prior period earnings. The review has aligned the treatment of assets for depreciation with the Incorporations accounting policies. The full financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (“NZ GAAP”). They comply with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities.
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ANNUAL REPORT 2019
The Incorporation has adopted External Reporting Board Standard A1 Accounting Standards Framework (for-profit Entities Update) (“XRB A1”). For the purposes of complying with NZ GAAP, the Incorporation is eligible to apply Tier 2 For-Profit Accounting Standards (New Zealand equivalents to International Financial Reporting Standards – Reduced Disclosure Regime (“NZ IFRS RDR”)) on the basis that it does not have public accountability and is not a large for-profit public sector entity. The Incorporation has elected to report in accordance with NZ IFRS RDR and has applied disclosure concessions. The summary financial statements are presented in New Zealand dollars and amounts are rounded to the nearest thousand dollars ($000). The amounts stated in the summary financial statements have been extracted from the full financial statements of the Incorporation, which were authorised by the Committee of Management on 19 July 2019, of which an unqualified opinion has been issued by our auditors. Unqualified audit opinions have been issued by our auditors for all years presented in the summary financial statements. Copies of the full financial statements are available from the Incorporation. The summary financial statements do not include all disclosures provided in the full financial statements and cannot be expected to provide as complete an understanding as provided by the full financial statements of the Incorporation. The summary financial statements should be read in conjunction with the statement of accounting policies and notes to the full audited financial statements.
Disclosures RELATED PARTY RELATIONSHIPS, TRANSACTIONS AND BALANCES
2019 2018 $000 $000
Committee Members Committee member fees paid for the year Committee member expenses paid for the year including Wai85 Hui (mainly travel and accommodation) Indemnity Insurance M Hemi – Environmental Planning and Strategy Development K Smiler (Chairman) – Executive Director Fees and Costs K Smiler (Chairman) – Special Services Fees
42
41
74 8 6 218 168
52 7 10 251 –
517
361
139
206
Key Management Personnel Remuneration paid during the year
Associates The Incorporation owns 33.63% (2018 : 33.63%) of Miraka Limited, a milk processing company located in Taupo with a balance date of 31 July. During the year milk sales to Miraka Limited accounted for 88% (2018: 84%) of the Incorporation’s revenue.
2019 2018 $000 $000
Cash Dividends Received from Miraka during the year
1,661
505
Owed by Miraka at 31 May May milk proceeds Retrospective payments for the season
1,958 4,227
1,765 5,240
6,184
7,005
–
86
Owed to Miraka at 31 May 2019
No debts from Miraka have been written off or forgiven during the year. All transactions with Miraka occur on an arm’s length basis. There are no commitments or contingent liabilities relating to the investment in Miraka.
WAIRARAPA MOANA INCORPORATION
15
Joint Venture
The Incorporation is a 33%, equal interest, limited partner of Whai Huia Limited Partnership, established for the purpose of developing and researching milk proteins to develop higher value products. The partnership has a 30 June balance date. 2019 2018 $000 $000 Funding contribution
–
131
Payable to Whai Hua Limited Partnership at 31 May
–
–
No debts to Whai Huia Partnership Limited have been written off or forgiven during the year. All transactions with Whai Huia Partnership Limited occur on an arm’s length basis. There are no commitments or contingent liabilities relating to the investment in Whai Huia Limited Partnership.
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ANNUAL REPORT 2019
Annual Report 2019
WAIRARAPA MOANA TRUST
Message from the Chair Ngā mihi nui ki a koutou. Tēnā koutou ngā uri o ngā ti¯puna o te moana tapu ko Wairarapa.
Deborah Davidson
Deborah Davidson
During the past few years the Trust has updated all portfolios policies; education, marae development and Wairarapa moanatanga. This has allowed the Trust, shareholders and descendants to know the business and be clear about the purpose of the Trust. The main task for Trustees has been one of an administrative role now that we have clear policies. This has driven a review of the Trust and how the Trust can best serve shareholders and descendants from a social aspect. Murray Hemi met with Trustees to discuss this proposal. We look forward to the outcome of this review but for now it is business as usual. At the AGM in 2017, due to a surplus of $200,000+, the Trust agreed it would not draw down any further funding until the surplus had been distributed. Annually the Trust receives funds from the Incorporation therefore there is no need to hold surplus funds. The surplus held allowed the Trust to increase its usual spend; this was distributed across all portfolios, education, Wairarapa Moanatanga for the waiata project and also the Marae Development portfolio with a new look Marae Development fund application.
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ANNUAL REPORT 2019
The waiata project is complete and positive feedback has been received. The aim was to record 20-25 waiata, the end result was 23 waiata recorded. Waiata that was written for Wairarapa or seen as the anthem of marae and the wider Wairarapa whānau, for example, Kotiro Māori e. I had the privilege of working closely with Makuini Kerehi, Warren Maxwell, Paascalino Schaller and Will Moore. Such an energetic and talented team. They had the privilege of working with groups and individuals to capture these waiata. They were respectful and professional in dealing with all of those involved. It was decided to release one waiata per week, providing each waiata the attention they deserve. If you haven’t seen or heard any of these waiata please check out the Wairarapa Moana Facebook page, the Wairarapa Moana YouTube channel and Spotify to watch and listen to this beautiful waiata.
Te Rangiura o Wairarapa.
Whakakaha paepae programme An allocation of $6,000 to each tīpuna Marae was targeted to host their own whaikōrero wānanga. Papawai Pa has hosted 4 wānanga with one yet to be held and Pouākani have hosted one. We encourage the four other tīpuna marae to utilise this fund to increase the capacity of kaikōrero on each marae paepae. Please contact the Trust if you need support or guidance for your proposal and/or wānanga.
Marae Development The 2018 funding round saw applications from Pouākani, Papawai and Te Ore Ore Marae. All were successful. The funding round closes the 30th April each year. This is my last year on the Trust. I have learnt so much and I’m grateful to have had this opportunity. It has been a privilege to be in this position and do the best we can for whānau and tīpuna marae with the funds provided by the Incorporation. My brothers and I succeeded to our mums shares this year so I will still be heavily involved with Wairarapa Moana.
WMT Trustees. L-R Raumahora Waata, Rutu Namana, Deborah Davidson, Anaru Smiler, Tiraumaera Te Tau.
I would like to thank my fellow trustees; Uncle Rutu Namana, Anaru Smiler, Raumahora Waata, Tiraumaera Te Tau. Thanks for your passion and determination to do what is best for the shareholders, descendants and whānau of Wairarapa Moana. I would also like to thank the office, in particular Charmaine Kawana and Dallas Gillies.
Manaaki whenua, Manaaki tangata, haere whakamua. Deborah Davidson chairperson wairarapa moana trust
WAIRARAPA MOANA TRUST
19
Kohunui whānau, waiata, Kei hea ngā tuna.
Scholarship Recipients This financial year saw 33 successful recipients in the following categories. Ngā Kete o Te Wānanga, Tertiary 30; Ngā Mahi ā-Rehe, Trades & Apprenticeships 3. Of the 19 female and 14 male recipients, three are undertaking double degrees. Reflected in the graph are the fields of study being undertaken followed by a full list of 2019 scholarship recipients. Funding was also provided to one recipient through Te Kete Uruuru Tau with a focus on our core business.
Hurunui-o-Rangi whānau, waiata, Ngā iwi, ngā reo.
In the 2019 academic year 33 scholarships were provided to tertiary, trade and apprenticeship recipients. Graph 1: Current Areas of Study for Scholarship Recipients 2019 FIELDS OF STUDY
Electrician
1
Plumbing
1 2
Engineering
3
Law Science
7
Arts
7
Business & Commerce Education & Teaching
4 5
Health Māori (Te Reo/Culture)
2 2
Environment
1
Agriculture
1
Masters
4
0
1
2
3
4
5
NUMBER OF STUDENTS
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ANNUAL REPORT 2019
6
7
8
9
Wairarapa Moana Trust would like to congratulate the following successful recipients of scholarships for 2019. TERTIARY RECIPIENTS
PROGRAMME OF STUDY
Shannon Bentley Sarah Pringle Andrea Rutene Tukohirangi Pini Wayne Pitau Daniel Tauru Jesse Gray Aroha Geange Liam Shackleton Riata Maynard Chelsea Kenny Tereinamu Hakopa Manaia Riwai-Couch Olivia Luff Angela Wilson Faith Ray Jordan Fox Scarlett Travers Ngahuia Huirama Kaea Taylor Mikayla Te Whaiti-Smith Jareth Fox Amber Te Tau Gemma Green Karangawai Paringatai-Hare Te Aowhiungarangi Cooper Karepa Maynard Rukuwai Te Weri Tawera Manaena Joseph Teofilo
Masters – Ecology Masters – Science Masters – Business Administration Masters – Physical Education Diploma Māori & Indigenous Art Diploma Te Kunenga o Te Ao Bachelor of Creative Technologies Bachelor of Nursing Bachelor of Management Bachelor of Business Bachelor of Business Bachelor of Social Services Bachelor of Teaching Bachelor of Teaching – ECE Bachelor of Teaching – ECE Diploma in ECE & Care Bachelor of Arts – Honours Bachelor of Arts Bachelor of Commerce / Bachelor of Arts – Conjoint Bachelor of Laws Bachelor of Laws Bachelor of Laws / Bachelor of Arts – Conjoint Bachelor of Science Bachelor of Science Bachelor of Science Bachelor of Social Sciences Bachelor of Science / Bachelor of Arts – Conjoint Bachelor of Engineering – Honours Bachelor of Engineering – Honours Diploma in Architectural Technology
TRADE RECIPIENTS
TRADE AND APPRENTICESHIP
Corban Mita Mose Ray Ruatapu Rimene
Apprenticeship in Gasfitting and Plumbing Certificate in Industrial Measurement & Control Certificate in Dairy Farming TE KETE URUURU TAU – AGRIBUSINESS
Jefferson Dew
PhD – Energy Use in Farming
WAIRARAPA MOANA TRUST
21
WAIRARAPA MOANA TRUST
Entity Information (Unaudited) As at 31 May 2019
Legal name of Entity
Wairarapa Moana Trust
Type of Entity and Legal Basis
Incorporated as a Charitable Trust under the Charitable Trusts Act 1957. Registered as a Charity (registration number CC37635) under the Charities Act 2005.
Entity’s Purpose or Mission Statement
Cultural, social and educational scholarships and marae grants.
Entity Structure & Governance
The trust is governed by a trust board of five (5) trustees. The trust has no audit committee. On the trust board: Chairperson Deborah Davidson
Main Sources of Cash & Resources
Trustee
Anaru Smiler
Trustee
Tiraumaera Te Tau
Trustee
Rutu Namana
Trustee
Raumahora Waata
The trust receives cash or resources from: • Grants from various organisations • Investment income
Main Methods Used by the Entity to Raise Funds
The trust applies for grants from various organisations.
The Entity’s Reliance on Volunteers The trustees on the governing body are all and Donated Goods or Services volunteers. The trust does not receive donated goods.
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ANNUAL REPORT 2019
WAIRARAPA MOANA TRUST
Statement of Service Performance (Unaudited) For the year ended 31 May 2019
Description of the Entity’s Outcomes: To improve the success rate in education, specifically tertiary, trade training, apprenticeships and training for employment, by succeeding in chosen fields with a clear focus on long term goals and aspirations. To accept that whakapapa and associated philosophies are a vital cultural resource for Wairarapa Moana Trust members. To support the physical and spiritual wellbeing of t¯i puna Marae.
DESCRIPTION AND QUANTIFICATION (TO THE EXTENT PRACTICABLE) OF THE ENTITY’S OUTPUTS:
ACTUAL THIS YEAR
BUDGET THIS YEAR
ACTUAL LAST YEAR
Waiata CD Recipients – sold 5
5 CD’s
6 CD’s
Wairarapa Moana: The Lake and Its People – book purchased by shareholders and whānau
43 books
23 books
Gifted to shareholders and whānau
724 books
7 books
Scholarship Recipient Wānanga 2018
63
New
Te Pou Pūmau Wānanga – participants at two wānanga
24
43
48 people
48 people
33 students
37 students
6,400+ people
6,400+ people
T¯i puna Marae Development – work with governing and operational personnel to support Marae development Scholarship Recipients Quarterly newsletters (1,600 x 4) Moana Mailer is distributed by post and via website
Additional Information: “Great to see where the money is generated from for the scholarships” – SCHOLARSHIP RECIPIENT
“‘Awesome to have the support of the Trust for marae trustee training” – TĪPUNA MARAE TRUSTEE
“A boost for Marae morale” – TE POU PŪMAU WĀNANGA PARTICIPANT
WAIRARAPA MOANA TRUST
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Financial Report WAIRARAPA MOANA TRUST
Statement of Financial Position As at 31 May 2019
2019 2018
$ $
Current Assets BNZ Cheque account 1,563 7,294 BNZ Call account 27,271 59,590 BNZ Education account 216 77,811 GST Receivable 1,438 0 BNZ short term deposit 62,000 62,000 WBS short term deposits 30,000 80,000 7,443 7,436 Treaty Claims account Accrued Interest 622 1,366 Inventories 10,675 29,350 Total Assets Current Liabilities Accounts Payable Scholarship Grants committed not yet paid GST payable
141,228
324,847
0 2,500 0
551 41,000 4
2,500
41,555
Total Liabilities
138,728 283,292 Net Assets Accumulated Funds (Note 5)
Accumulated Surpluses / (Deficits) 131,285 275,856 Reserves 7,443 7,436 138,728 283,292 Total Accumulated Funds
For and on behalf of the Board:
Deborah Davidson
Anaru Smiler
Date: 24/7/2019
Date: 24/7/2019
The statement of accounting policies and notes to the performance report form part of and should be read in conjunction with this performance report.
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ANNUAL REPORT 2019
WAIRARAPA MOANA TRUST
Statement of Cash Flows For the year ended 31 May 2019
2019 2018
$ $
Cashflows from Operating Activities Cash was provided from Grants Funding – – Scholarship Funding 10,000 – Interest 4,728 6,007 Sundry Income 1,154 331 GST (net) – – 15,882 Cash was disbursed to 9,809 Payments to Suppliers and Employees 133,026 Grants paid 37,250 Scholarships 1,442 GST (net)
6,338 16,853 46,467 39,500 3,979
181,527
106,799
Net Cash provided from/(used in) Operating Activities
(165,645)
(100,461)
Cashflows from Investing Activities
Cash was disbursed to Fixed Assets purchased – – Net Cash provided from/(used in) Investing Activities
–
–
Cash was provided from Restricted Funds 7
7
Cashflows from Financing Activities
7 7 Cash was disbursed to Restricted Funds – – – – Net Cash provided from/(used in) Financing Activities
7
7
Net Increase/(decrease) in cash held Opening cash brought forward
(165,638) 294,131
(100,454) 394,585
Closing cash carried forward
128,493
294,131
The statement of accounting policies and notes to the performance report form part of and should be read in conjunction with this performance report.
WAIRARAPA MOANA TRUST
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WAIRARAPA MOANA TRUST
Statement of Cash Flows For the year ended 31 May 2019
2019 2018
$ $
Cash is made up of: BNZ Cheque Account No. 00 1,563 7,294 BNZ Autocall Account No. 25 27,271 59,590 BNZ Education Account No. 03 216 77,811 BNZ Term Deposit 62,000 62,000 WBS Short Term Deposits 30,000 80,000 Treaty Claims Accounts 7,443 7,436
128,493
294,131
The statement of accounting policies and notes to the performance report form part of and should be read in conjunction with this performance report.
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ANNUAL REPORT 2019
WAIRARAPA MOANA TRUST
Statement of Financial Performance For the year ended 31 May 2019
2019 2018
$ $
Revenue Interest Received BNZ 2,099 2,294 WBS 1,892 2,818 3,991 5,112 Grants Received Future Leaders Scholarship Grant 10,000 0
10,000
0
The Lake and its People Book Lake Book Sales 1,100 279 (29,350) (29,925) Less Opening Lake Books on hand Plus Closing Lake Books on hand 10,675 29,350 (17,575) (296) Sundry Income Waiata CD Sales 54 52
54 52
(3,530) 4,868 Total Revenue Less Expenditure
Accountancy Bank fees General Grants (Note 4) Meeting expenses Scholarships (Note 4)
2,950 79 86 94,526 6,144 37,250
2,800 40 343 46,467 7,022 42,250
Total Expenditure 141,035 98,922 Net Surplus/(Deficit) for the period
(144,565)
(94,054)
The statement of accounting policies and notes to the performance report form part of and should be read in conjunction with this performance report.
WAIRARAPA MOANA TRUST
27
WAIRARAPA MOANA TRUST
Statement of Accounting Policies For the year ended 31 May 2019 GENERAL ACCOUNTING POLICIES Reporting Entity Wairarapa Moana Trust has elected to apply PBE SFR-A (NFP) Public Benefit Entity Simple Format Reporting – Accrual (Not for profit) on the basis that it does not have public accountability and has total annual expenses of equal to or less than $2,000,000. Measurement System The measurement base adopted is that of historical cost. Reliance is placed on the fact that the Trust is a going concern. Accrual accounting is used to match revenues earned and expenses incurred. Specific Accounting Policies The following specific accounting policies which materially affect the measurement of earnings and the financial position have been applied: a Accounts Receivable Accounts receivable are stated at expected realisable value. b Goods and Services Tax All amounts are recorded exclusive of GST, except for Debtors and Creditors which are stated inclusive of GST. c Taxation Wairarapa Moana Trust is a registered charitable entity under the Charities Act 2005, and accordingly is exempt from income tax under sections CW41 and CW42 of the Income Tax Act 2007.
28
ANNUAL REPORT 2019
d Inventories Inventories are valued at cost. e Bank Accounts & Cash Bank accounts & cash in the Statement of Cash Flows comprise cash balances and and bank balances (including short term deposits) with original maturities of 90 days or less. f Revenue From Sale of Goods Revenue is recorded when the goods are sold. If the purchaser pays before they receive their goods, the trust records a liability. If the purchaser does not pay on receipt of the goods, the trust records a debtor. g Revenue From Sale of Services Revenue is recorded based on the stage of completion of the service at balance date. h Accounting Estimates & Provisions The preparation of performance reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates. i Changes In Accounting Policies There have been no changes in accounting policies. All other policies have been applied on bases consistent with those used throughout the period (Last year – Nil).
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2019 1.
Capital and Operating Commitments As at balance date there were no Capital or Operating Lease Commitments (2018: nil).
2.
Contingent Liabilities As at balance date there were no Contingent Liabilities (2018: nil).
3.
Reconciliation Of Net Surplus With Cash Flow From Operating Activities 2019
$
Net Surplus/(Deficit) for the year (Increase) / Decrease in Inventories (Increase) / Decrease in Interest Accruals Increase / (Decrease) in Payables & Accruals Increase / (Decrease) in Provision for Grants Increase / (Decrease) in GST Increase / (Decrease) in Grants Committed Increase / (Decrease) in Restricted Funds
4.
2018
$
(144,565)
(94,054)
18,675 744 (550) 0 (1,442) (38,500) (7)
575 902 (6,648) 0 (3,979) 2,750 (7)
(165,645)
(100,461)
Grants & Scholarships Paid 2019
2018
4,000 5,791 51,278 20,473 12,984
4,000 11,455 0 31,012 0
94,526
46,467
37,250
42,250
131,776
88,717
$
Grants Wairarapa Moanatanga – Golden Shears – Whakakaha Paepae – Waiata Whakangahau Marae Development Education Wananga Expenses Scholarships Future Leaders Scholarships Total Grants and Scholarships
$
WAIRARAPA MOANA TRUST
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WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2019 5. Changes In Accumulated Funds Accumulated
This Year
Surpluses or (Deficits)
Reserves
Total
Trust Funds are represented as follows: Opening Balance Surplus / (Deficit) Transfer to Reserves
275,857 7,436 (144,565) (7) 7
283,293 (144,565) –
Closing Balance
131,285
138,728
7,443
Accumulated
Last Year
30
Surpluses or (Deficits)
Reserves
Total
Trust Funds are represented as follows: Opening Balance Surplus / (Deficit) Transfer to Reserves Transfer from Reserves
342,088 35,258 (94,054) (7) 7 27,829 (27,829)
377,346 (94,054) – –
Closing Balance
275,856
283,292
Nature and purpose of each reserve
2019
2018
Reserve 1 Nga Hapū Karanga o Wairarapa Fund
7,443
7,436
Total
7,443
7,436
ANNUAL REPORT 2019
7,436
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2019 6. Analysis of Expenses 2019 2018
Expense Item
$
$
Volunteer and employee related costs Meeting expenses
6,144
7,022
7. Related Party Transactions 2019 2018
$ $
Description of relationship Transactions with trustees Description of transaction Trustees were paid for attending meetings
4,170
3,330
8. Events After Balance Date There are no events that have occurred after balance date that would have a material impact on the Performance Report (Last Year: $40,459).
Disclosures Board of Trustees MEETINGS ATTENDED
2019 2018
Deborah Davidson
8
9
Anaru Smiler
6
9
Tirau Te Tau
8
9
Rutu Namana
7
3
Raumahora Waata
8
3
WAIRARAPA MOANA TRUST
31
Wairarapa Moana Trust Independent Review Report For the year ended 31 May 2019 Accountants Report to the trustees of the Wairarapa Moana Trust We have reviewed the financial statements of the Wairarapa Moana Trust for the year ended 31 May 2019 in accordance with the Review Engagement Standards issued by Chartered Accountants Australia New Zealand. A review is limited primarily to enquiries of the entity’s personnel and analytical review procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements do not give a true and fair view. Our review was completed on 25 July 2019.
AMY KERR and ASSOCIATES LIMITED 38 Bannister Street Chartered Accountants Masterton
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ANNUAL REPORT 2019
To contact the Wairarapa Moana Incorporation web www.wairarapamoana.org.nz email info@wairarapamoana.org.nz Masterton Office
PO Box 2019, Kuripuni, Masterton 5842 Wairarapa Moana House, 4 Park Avenue, Masterton 5810 Telephone 06 370 2608 Fax 06 370 2609 Taupo Office
PO Box 1347, Taupo 3351 Level 1, 14 Ruapehu Street, Taupo 3330 Telephone 07 213 2275 Fax 07 377 6156 Cover Photos:
Maraetai Dam