Annual Report 2012
Mar 28, 2016
Parininihi ki Waitotara Annual Report 2012
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OUR STORY
Our story has always been about land.Once upon a time it was only about the loss of land, the loss of control of our resources and denied opportunity.But now our story is one of success and growth. It is about an intergenerational business that is seeking to continue the journey to; > regain our ancestral land > protect and grow our assets for current and future generations > balance our commercial and cultural responsibilities And importantly our story has evolved to be that of a business of innovative and sustainable farm management. This Annual Report is a celebration of our journey to date as we look to illustrate to our shareholders the stories behind the numbers.
Cover Kahurangi Pue (Ngāti Maru, Te Atiawa) Stella Lloyd-Strickland, 10 (Ngāti Te Whiti, Te Atiawa, Kuki Airani) with Kapene Phillips, 8 (Ngāti Moeahu, Taranaki) at Farm 6, Opua Road.
OUR KAUPAPA
The ambition of our kaumatua to build Parininihi ki Waitotara into an organisation dedicated to fulfilling the aspirations of our ancestors is now being truly realised. We recognise we have a duty to manage our lands and assets not just for our generation but for those that follow us. OUR VISION
He Whenua He Tangata He Oranga - Land People Prosperity OUR MISSION
Strengthening Our People Through Sustainable Business Excellence OUR VALUES
We will conduct our business with professionalism, integrity, transparency and respect
89 year old Edwina Rarawa White (nee Eriwata)(Te Atiawa, Taranaki) with her youngest great grand mokopuna 3 month old Riria Bedwell.
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PARININIHI KI WAITOTARA INCORPORATION
Chair’s Report 9
Chief Executive’s Report 12
Performance at a Glance 16
Meet The Board 20
Strategic Partnerships
Port Nicholson Fisheries 26
Fonterra 28
PARININIHI KI WAITOTARA TRUST
Chair’s Report 30
Grants and Donations 36
2012 Scholarship Recipients Profiles 38
PARININIHI KI WAITOTARA INCORPORATION ANNUAL FINANCIAL STATEMENTS
Contents 43
Auditor’s Report 44
Commitee’s Annual Report 45
Statement of Comprehensive Income 46
Statement of Financial Position 47
Statement of Changes in Equity 48
Statement of Cashflows 49
Notes to the Financial Statements 50
PARININIHI KI WAITOTARA TRUST ANNUAL FINANCIAL STATEMENTS
Auditor’s Report 88
Statement of Comprehensive Income 89
Statement of Financial Position 90
Notes to the Financial Statements 91
CONTENTS
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The newly acquired Tempsky Road lease before recent developments
He Whenua, He Tangata, He Oranga – Land People Prosperity. PKW’s strategy is firmly grounded in regaining control of our whenua and maximising the opportunities control of the land
brings for our shareholders and Taranaki whanui.
$8.6
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As the Chair of Parininihi ki Waitotara Incorporation (PKW) I am proud to report to shareholders on a positive year of change and growth for PKW and an end of year net profit after tax of $8.6 million (FY10/11: $12.6 million). Throughout the year we have grown PKW’s asset base, provided for shareholder dividend and strengthened PKW’s key decision-making policies and processes.
Change has come in the form of new members around the board table and new investment partners in one of our key business areas. Growth has come in the form of significant new business acquisitions and new staff joining our team to manage our growing active land portfolio.
Although the global economic outlook remained subdued during FY11/12, PKW has withstood this situation well due to its long term investment approach and diverse portfolio of business interests.
..........................................GOVERNANCE
Change came to the Committee table in October 2011 when former Chair Jamie Tuuta stepped down to take on the role of Māori Trustee. The Committee of Management thanks Jamie for his contribution to PKW and wishes him well in the future.
We welcomed Tokatumoana Walden to the Committee of Management at the 2011 Annual General Meeting. Toka has brought a diverse range of business and cultural skills to the Committee table and his lifetime of commitment to Taranaki Iwi and extensive business networks throughout the region are valuable additions to the Committee.
Tokorangi Kapea and Taari Nicholas were both re-elected at the 2011 AGM and the Committee is pleased to have their continued contribution at the decision-making table.
..........................................STRATEGY AND POLICY
It is appropriate to acknowledge that 2012 represents the 120th anniversary of the West Coast Settlement Reserves Act 1892. This archaic piece of legislation continues to loom large in the day to day business of PKW Incorporation as it underpins the perpetual leases which remain over 90% of PKW’s lands.
In consideration of this the Committee again reviewed our progress against our strategy He Whenua, He Tangata, He Oranga – Land People Prosperity. PKW’s strategy is firmly grounded in regaining control of our whenua and maximising the opportunities control of the land brings for our shareholders and Taranaki whanui.
As part of PKW’s commitment to extending active control over our whenua the year in review saw the Committee implement the first stage of PKW’s managed farms strategy. This active farming model involves PKW directly employing staff to run our farms and is a move away from our traditional 50/50 sharemilker approach. This involves additional cost and risk but also delivers additional reward.
Our investment decision-making framework also achieved a significant milestone during FY11/12 with the Committee’s approval of a formal Investment Policy to assist our management team in consideration of the many investment opportunities which present themselves to the Incorporation.
As part of this process maximum debt and distribution policies have been agreed ensuring that PKW’s debt to equity ratios are managed within acceptable risk tolerances while balancing shareholder expectation for an annual dividend distribution.
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HINERANGI RAUMATICHAIR’S REPORT
10..........................................CONSTITUTIONAL CHANGE
The Committee of Management’s commitment to improving transparency and accountability was demonstrated during FY11/12, when the Half Yearly Meeting of shareholders considered and passed resolutions amending the constitution regulations to set an annual cut-off date for nominations to the Committee of Management as at the last working day of August of every year. Shareholders also approved the option of postal posting.
These changes allow our management team sufficient time to compile transparent candidate profiles for shareholder information ahead of the Annual General Meeting and enables informed shareholder decision-making at voting time. This is increasingly important as the total number of owners reached over 9,000 during FY11/12 as a result of continued fragmentation of shares.
..........................................RELATIONSHIPS
PKW’s relationship with Fonterra has grown significantly over the past three years as we have become more active participants in the cooperative. This developed a step further in November 2011 when PKW Committee Member David MacLeod was elected to the Board of Fonterra.
PKW continues to ensure it works closely with its key funding partner Rabobank, a Dutch Banking cooperative and the world’s safest bank. The value of the PKW-Rabobank relationship was underscored in June 2012 when Rabobank invited PKW Chief Executive, Dion Tuuta to participate in the Rabobank Global Farmers Masterclass. This event gave PKW access to a global network of world leading farmers and agribusiness
experts and Rabobank’s world class agribusiness research continues to inform our agribusiness’ strategic decision-making.
The Committee also began an important new business relationship with the Iwi Collective Partnership (“ICP”) and Ngāti Mutunga o Wharekauri Asset Holding Company to collectively grow our crayfish interests over the long term.
The ICP is the largest voluntary collective of Iwi involved in the fisheries sector and includes Ngā Rauru, Ngaiterangi, Ngāti Awa, Ngāti Manawa, Ngāti Porou, Ngāti Ruanui, Taranaki Iwi, Ngaitai, Te Rarawa, Ngāti Tuwharetoa, Whakatohea and Te Arawa. Ngāti Mutunga o Wharekauri are based on the Chatham Islands and crayfishing forms a central part of their core business.
PKW saw benefit in working with ICP and Ngāti Mutunga o Wharekauri who shared our long term investment focus and common values. The Committee believes this partnership truly reflects PKW’s desire to partner with other like-minded Maori businesses for collective benefit.
Each of these relationships is important to PKW and adds significant value to our organisation. Relationship management remains a key focus for your Committee moving forward.
PEOPLE DEVELOPMENT
As part of our strategic plan PKW has committed itself to finding ways of using the whenua to empower our people through employment opportunity. Through the whenua it is our expectation that PKW can offer more meaningful economic opportunity for our people than just an annual dividend.
This year PKW has set in place its foundation for developing the next
generation of PKW kaitiaki whenua and land managers by entering into relationship agreements with Enviroschools Taranaki and Taratahi Agricultural Training Centre.
Through engagement with schools and kura kaupapa and supporting our tamariki and rangatahi to experience their whenua directly we hope to sow the seed of a lifelong connection with their whenua. By offering quality careers training in land-based industries we can truly fulfil our vision of He Whenua, He Tangata, He Oranga.
In addition to these initiatives PKW has worked with Ravensdown to develop a 3-year university scholarship focused on land-based studies. This award amounts to $5,000 per annum and includes guaranteed holiday work and job placement at the successful conclusion of the student’s studies. The Committee is hopeful these early initiatives will encourage more of our whanau to consider the benefits of a career with PKW in land management and agribusiness.
..........................................CONCLUSION
The work the Committee has undertaken over recent years has created a strong foundation for your Incorporation moving forward. Our balance sheet is strong and our various business interests help us to manage the risk of becoming isolated and dependent on a single revenue source.
Our land-based businesses continue to perform strongly and our growth prospects remain extremely positive. Our lobster business is establishing itself well with new partnersfocused on long term growth andfull participation in the lobster value chain.
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Your Committee has improved the level and quality of communication with shareholders regarding Incorporation activities through the production of our refreshed Whenua Magazine. We hope that shareholders enjoy receiving this quarterly information resource which, along with our refreshed website, is becoming a key resource for keeping shareholders abreast of the range of activities that PKW is undertaking.
Throughout all of our various activities your Committee remains mindful that shareholders expect quality business performance while managing costs and protecting our ancestral land interests. The lessons and learning from recent years continues to inform our decision making.
Looking forward the Committee will continue to focus efforts on consolidating our recent gains and focusing on ensuring our most recent investments’ performance delivers real shareholder value. In addition to this the Committee will continue evaluating opportunities to gain more control of our ancestral lands and grow our Taranaki-based business.
Noho ora mai raHinerangi RaumatiChair
This year PKW has set in place its foundation for developing the next generation of PKW kaitiaki whenua
and land managers by entering into relationship agreements with
Enviroschools Taranaki and Taratahi Agricultural Training Centre.
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Duane Luke (Ngāti Ruanui/Ngā Ruahine), Ngawharau Apaapa (Ngaiterangi/Ngāti Ranginui) with Bruce Bailey
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After a number of years of refocus and consolidation FY11/12 saw Parininihi ki Waitotara Incorporation acquire its first new dairy unit in over 5 years, implement its managed farms strategy, establish its first calf rearing unit and acquire a further 8 tonnes of lobster quota.
PKW has achieved an $8.6 million net profit after tax for the 2011/12 financial year (FY10/11: $12.6 million). While lower than the previous year’s result this was expected due to the increased costs associated with the implementation of our managed farms strategy and the previous year’s final result benefiting from a significant one-off exit from the Finistere investment combined with a higher FY10/11 Fonterra milk payout.
PKW management is pleased with the progress made over the past 12 months and confident that the changes and planning we have implemented over recent years have placed the Incorporation in a good position to capture value and grow the business for the long term.
..........................................REVENUE
Total group revenue for FY11/12 year was $20.2m representing a 10% increase on the previous year (FY10/11: $18.3m).
This result has been driven by the following:
• Continued stable lease land rental of $6.4m;
• Increased dairy revenue of $10.3m (FY10/11: $9.7m) as a result of increased milk production and livestock valuation in spite of Fonterra decreasing its milk payout from an opening forecast of $7.15 to a final $6.45 payout for FY11/12;
• 60% increase in crayfish revenue to $2.1m (FY 10/11: $1.3m) arising from greater Chinese demand for lobster and a profit share arrangement with Port Nicholson Fisheries; and
• Finistere Oceania achieving its third capital exit ($0.4m) from the successful sell down of one of its portfolio investments.
..........................................GROUP EXPENSES
Total group expenses of $9.7m represent a $2.1m increase on the previous year (FY10/11: $7.6m – see note 7 of the financial statements).
As outlined above the vast majority of this increase is accounted for by way of increased farm working expenses as a result of the first year transition to variable and managed farms on PKW
Farms 7, 11, 13 and 17. Total farm working expenses for the year were $6.3m (FY10/11: $4.3m)
Under the managed farms business model the Incorporation incurs 100% of costs for farm inputs such as pasture development and fertiliser, fencing, supplementary feed, animal health costs and salaries and wages. This also included a number of one-off costs in the establishment of our managed farms such as the DNA mapping of PKW’s dairy herds which will ensure genetic traceability and improve breeding into the future.
In addition to incurring the additional costs from pursuing the managed farms strategy the dairy industry as a whole faced an average 6% price increase for key farm inputs including fertiliser and supplementary feed.
Employee benefits (wages and salaries) for PKW Incorporation increased by approximately $200,000 as a result of the recruitment of additional staffing to meet the Incorporation’s growing business demands. Total salaries and wages for the year were $0.8m (FY10/11: $0.6m)
Other group costs such as auditor fees, depreciation, lease expenses, members fees and other expenses (including Finistere management fee, communication costs, legal costs and professional advisory) remained
DION TUUTACHIEF EXECUTIVE’S REPORT
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static or decreased. Management is conscious that cost management and efficiency remains a key concern for shareholders.
FINANCE EXPENSE
Total PKW net finance cost for FY11/12 was $2.0m (FY10/11: $1.4m). This increase in interest expense reflects an increase in borrowings to $40.6m as at 30 June 2012. The increased borrowing funded the new dairy acquisition, calf rearing unit establishment costs and purchase of Port Nicholson Fisheries and quota.
..........................................OPERATIONAL OVERVIEW
WHENUA
PKW’s lease rentals remained stable during FY11/12 generating revenue of $6.4m underpinned by the continuing strong performance of the dairy sector which much of PKW’s land is used for. Despite this the Incorporation regained control of two small lease blocks as a result of rental payment defaults. One block has since been re-leased with the Incorporation reviewing options for the second block.
FARMING
PKW Farms Ltd has had an extremely busy year with key activities for the year including implementing our first managed farms systems, acquiring a new 220 ha dairy unit and establishing the Incorporation’s first dedicated livestock breeding unit.
MANAGED FARMS
FY11/12 represented PKW Farms Ltd’s first steps into managed farms and we were proud to employ Robert Walden and Gary Fredrickson as our first dairy farm managers after two years research and consideration. Our managers and their teams have performed extremely well in their first year with both achieving well above per hectare district averages and our managed farms returning the highest
economic farm surplus (EFS) per hectare.
This strategy challenged established thinking within the wider Taranaki farming fraternity when first announced. However, PKW’s first year with managers has proved to be a positive one – albeit one which requires more resource to ensure our managers are supported appropriately. Management will continue to monitor implementation closely.
In December 2012 PKW was pleased to appoint Dallas McLean as our third dairy manager following the acquisition of PKW’s newest dairy unit on Tempsky Road.
NEW DAIRY UNIT
PKW’s newest dairy unit comprises 220 hectares of some of the finest land within PKW’s total land portfolio and will be capable of carrying approximately 600 dairy cows. The farm borders Umutahi and Inuawai hapu of Nga Ruahine Iwi located close to both Kanihi and Aotearoa Marae.
This $8 million dollar investment in land, new cowshed, plant and livestock represents PKW’s most significant single investment in over 5 years, and underscores PKW’s long term commitment to regaining control of its lands to benefit our shareholders and their whanau.
Gary Fredrickson has been entrusted with the management of this new unit which is aiming to produce 190,000 kgs/ms in its first season.
Livestock Strategy
Growth of PKW’s farming portfolio remains a key goal for the Incorporation requiring not only land but also dairy cows to stock our operations. Throughout FY11/12 the Committee reviewed options for growing PKW’s livestock numbers and ultimately resolved to establish a pilot calf-rearing unit on Farm 13.
Construction began on the pilot
shed in May 2012 and will begin full operation in the 2012/13 dairy season rearing 300 high quality calves under the management of Kathryn Kelly. Subject to successful operation of the pilot project the Committee will consider expanding this operation in the future giving our farming operation the potential to diversify its income streams further through livestock sales.
MILK PRODUCTION
PKW Farms Ltd surpassed the previous year’s record production level by achieving a staggering 2.558 million kilograms of milk solids (kgs/ms) for the FY11/12 dairy season (FY10/11: 2.393 million kgs/ms) – its highest ever production result.
This is worthy of celebration when we consider that Taranaki climatic conditions during FY11/12 ranged from snowfall at sea level and devastating weather bombs to some of the most prolific grass growing conditions in over a decade. Throughout it all PKW Farms Ltd’s staff and our sharemilking business partners have performed exceptionally and all team members’ efforts are greatly appreciated.
After an opening forecast total milk price of $7.15-7.25 (before retentions) Fonterra’s final milk price ended at a range of $6.45-$6.55 per kgs/ms. This payment comprises two parts – the first being the farmgate milk price of $6.05 per kg of milk solids and the second being a share dividend of 40-50 cents per share (before retentions).
FAREWELL TO GARY AND DONNA MELLOW
The end of the 2011/12 dairy season saw the departure of Gary and Donna Mellow from the PKW Farms Ltd sharemilking whanau. Gary and Donna worked with PKW for over 20 years and have moved on to their own farm. On behalf of the Incorporation I would like to thank them for their contribution to PKW’s development and wish them well for the future.
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..........................................CRAYFISH
The 2011/12 financial year marks a significant step forward for PKW’s lobster investment with the acquisition of 8 tonnes of CRA3 and 4 quota and the acquisition of 33% of Port Nicholson Fisheries processing factory with new business partners the Iwi Collective Partnership and Ngāti Mutunga o Wharekauri Asset Holding Company. PKW’s investment for this acquisition totalled $5.25m.
As a result of this investment PKW’s total quota ownership now stands at approximately 52 tonnes and is a key partner in a successful business with significant growth potential. PKW’s long-time partner George Stavrinos has remained a core part of the Port Nicholson Fisheries team in a strategic management capacity and this relationship will remain important for our future growth.
..........................................OTHER INVESTMENTS
LACTANZ
In 2000 PKW participated in the LACTANZ-Scott River investment which focused on developing a number of dairy farms in the Margaret River area of Western Australia. The investment involved developing former cropping land into dairy farms using an irrigation-based system. The investment has experienced significant operational and financial difficulty and the Advisory Board managing the investment is presently seeking potential purchasers.
PKW originally invested $1 million into this project but realised approximately $500,000 of capital gains in 2008. The FY10/11 financial statements reflected a 50% write down in the value of the remainder of this investment due to uncertainty about the investment. Due to the continuing uncertainty surrounding this legacy investment management is no longer confident that PKW will recoup value from
the remaining investment and has recognised the value at $nil.
This is a disappointing outcome for what began as a promising venture and underscores the wisdom of the Committee’s policy of seeking active investments where PKW is actively involved in the business.
FINISTERE OCEANIA
On a more positive note the Finistere Oceania investment achieved its third exit with the sale of one of its portfolio companies for a return of $414,000. As noted at the half yearly meeting of shareholders the Committee of Management has extended its relationship with Finistere Partners to allow more time for Finistere to pursue the realisation of its remaining portfolio companies. This decision came after thorough review of the portfolio and discussion with Finistere Partners regarding the exit potential of the remaining investments. As part of this extension Finistere has agreed to a 50% reduction in management costs.
COMMERCIAL PROPERTY
PKW’s three commercial properties situated in Miranda St Stratford, Queen St Waitara and Powderham St New Plymouth remain under management with KCL Property Ltd. This modest commercial portfolio remains a small but stable investment providing an average 6.5% return on assets for the year. PKW will continue to retain these assets until such time as the market provides better opportunities to realise value.
PEOPLE DEVELOPMENT
The growth in PKW’s various business interests is requiring greater management oversight in order to capture the increasing opportunities which are being made available to the Incorporation. This growth is a positive sign for PKW and its shareholders but we are mindful that this cost must result in benefit to the Incorporation. In the coming year management intends reviewing W
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current staffing capacity and structure to ensure the Incorporation has the capacity to meet its operational requirements while delivering greater shareholder value.
Over the past 4 years PKW has grown from a predominantly outsourced operation with two farm employees to a 100% internally managed organisation with 23 full time employees and 36 full time equivalent positions on contract.
PKW remains committed to offering opportunity to qualified and experienced PKW shareholders interested in pursuing careers in the agribusiness industry and succession remains a key issue for the Incorporation moving forward. Our first steps towards addressing this have been established with a number of new relationships being established with educational providers Enviro-Schools and Taratahi to help train the next generation of PKW land managers and leaders.
..........................................CONCLUSION
PKW’s future growth prospects are very strong. We have grown our internal management capacity well over the past 12 months and put in place clear guiding policies to assist our decision-making moving forward.
We are currently piloting projects which we believe will deliver the Incorporation and its shareholders significant value over the coming years and place PKW in a very strong position to grow its business interests while regaining control of its ancestral lands and offering opportunity to its owners.
Mauriora
Dion TuutaChief Executive
2008/09 2009/10 2010/2011 2011/12
($ 000S) ($ 000S) ($ 000S) ($ 000S)
Financial Performance
Revenue 12,299 13,828 18,317 20,168
Operating Expenses (6,986) (6,537) (7,566) (9,679)
Finance cost (3,243) (1,601) (1,426) (1,988)
Net Gains/(Losses) From Investments (2,473) 1,950 1,097 1,131
Share of Profit From Joint Venture 401 805 470 0
Net Profit Before Tax and Other Items (2) 8,445 10,892 9,632
Tax (Expense) / benefit (6) (2,325) 1,672 (1,054)
Profit from Continuing Operations (8) 6,120 12,564 8,578
3% PKW INVESTMENTS
56%PKW WHENUA
35%PKW FARMS
5% PKW FISH
1% PKW TRUST
GROUP ASSETS BY BUSINESS
FOUR YEAR CONSOLIDATED PERFORMANCE TO 2011/12
FINANCIAL POSITIONEQUITY$166.55M IN 2011
INCREASE IN EQUITYOF $7.1M TO -
$173.62 M
FINANCIAL PERFORMANCENET PROFIT AFTER TAX AND OTHER ITEMS
$8,578 M
AT A GLANCE
GROUP PERFORMANCE
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2009 2010 2011 2012
($ 000s) ($ 000s) ($ 000s) ($ 000s)
Accounting Fees 272 103 31 11
Auditor Fees 55 74 55 55
Bank Fees 169 14 35 4
Communication Costs 120 112 118 91
Contractor Costs 240 243 58 5
Depreciation 699 700 679 660
Director Fees 88 45 22 20
Salaries & Wages 221 313 578 765
Facility Costs 53 52 59 68
Finistere Costs 0 38 5 5
Farm Operating Expenses 3,463 3,282 4,316 6,344
Grants 239 97 88 137
Insurance 52 82 102 132
Lease Expense 66 65 75 77
Legal Fees 133 173 412 173
Management Fee Finistere 454 406 383 310
Meeting Costs 32 26 23 22
Committee Member Fees 134 157 178 186
Miscellaneous Costs 47 84 57 149
Other Professional Fees 299 163 138 278
Rent Review Fees 0 167 0 0
SeaFic Levies 45 43 48 64
Travel & Accommodation 76 68 76 93
Treasury 30 30 30 30
$6,987 $6,537 $7,566 $9,679
PARININIHI KI WAITOTARA EXPENSES
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$47,644
$43,605
$50,499
TOTAL LIABILITIES
2008/09
2009/10
2010/11
2011/12
$47,341
$0 - $100,000,000
2008/09
2009/10
2010/11
2011/12
$37,149
$43,162
TERM LIABILITIES
$37,696
$32,912
$0 - $100,000,000
$202,334
$204,072
$210,152
$224,117
TOTAL ASSETS
2008/09
2009/10
2010/11
2011/12
$110,000,000 - $250,000,000
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Taane Tamehana, 22 Months (Te Atiawa)
TOKA WALDEN
Elected in 2011
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MEET THE BOARD
HINERANGI RAUMATI
Elected in 2006TAARINGAROA NICHOLAS
Elected in 2008
TOKORANGI KAPEA
Elected in 2005HINERANGI EDWARDS
Elected in 2007BEV GIBSON
Elected in 2009
DAVID MACLEOD
Elected in 2010DANIEL HARRISON
Appointed in 2010
TWO THOUSAND & TWELVE
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HINERANGI RAUMATI
Elected Chair in 2011. Chair PKW Farms Ltd and member of Human Resources Committee and PKW Trust.
ENTITY POSITIONPublic Trust Board MemberTe Ohu Kaimoana PortfolioManagement Ltd DirectorTe Ohu Kaimoana DirectorTe Wananga o Aotearoa Director of OperationsNgamiro Health Trust Chairman
TAARINGAROA NICHOLAS
Chair Audit and Risk Committee, Director PKW Farms Ltd and member of PKW Trust.
ENTITY POSITIONNgati Ruanui Holdings Ltd DirectorParininihi ki Waitotara Incorporation Shareholder & Committee MemberWellington Tenths ShareholderTe Awanui Huka Pak Ltd DirectorSeeka Kiwifruit Industries Ltd DirectorSouthern Pastures Ltd DirectorMiraka Milk Ltd DirectorTarit Holdings Ltd Director
TOKORANGI KAPEA
Chair PKW Investments Ltd, Director PKW Farms Ltd, member of Audit and Risk Committee and PKW Trust.
ENTITY POSITIONTuia Group Ltd DirectorTuia Legal PartnerOffice of Treaty Settlements ConsultantTuia Slipstream Ltd DirectorTaranaki Aquagardens Ltd DirectorTuia Investments Ltd DirectorNgati Apa Development Limited DirectorTuia Trading Ltd DirectorOra Solutions Ltd DirectorPort Nicholson Fisheries Ltd Director
HINERANGI EDWARDS
Chair PKW Trust Director, Director PKW Farms Ltd and member of Human Resources Committee.
ENTITY POSITIONAatea Consultants Ltd(t/a Aatea Solutions) DirectorNewlook Clinic South Taranaki Ltd Director/ShareholderNZ Group Investments Ltd Director/ShareholderWestern Institute of Technology Taranaki Council MemberR and R Edwards Whanau Trust TrusteeMāori Translation.Co.NZ Ltd DirectorWestern Institute of Technology Taranaki Appoint Advisory - Board MemberTaratahi Advisory Board Member
BEV GIBSON
Director PKW Farms Ltd, member of Audit and Risk Committee, Human Resources Committee and PKW Trust.
ENTITY POSITIONQuality Visions Ltd Managing DirectorBeauty Treats Ltd DirectorRobinson Whanau Trust TrusteeMahia Mai a Whai Tara Trust ChairmanNational Kaitiaki Group ConvenorAmiria Rangi Education Trust Trustee
DAVID MACLEOD
Director PKW Farms Ltd, Chair Human Resources Committee and member of PKW Trust.
ENTITY POSITIONAJ Greaves Electrical Ltd Owner/Managing DirectorTaranaki Regional Council ChairmanProperty Portfolio Investments Ltd DirectorLocal GovernmentNew Zealand (LGNZ) National CouncillorLGNZ - Regional Affairs Committee Deputy ChairmanPort Taranaki Ltd DirectorFonterra Director
Director PKW Farms Ltd, member of Audit and Risk Committee and PKW Trust.
ENTITY POSITIONToka Limited DirectorR N Horo Estate TrusteeTe Korimako o TaranakiCharitable Trust TrusteeTaranaki Māori Trust Board TrusteeTaranaki Iwi Trust Chairman
Appointed Associate Director in January 2012.
ENTITY POSITIONParihaka Management Trust TrusteeAUT School of Tourismand Hospitallity Advisory Group member
TOKATUMOANA WALDEN DANIEL HARRISON22
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COMMITTEEHinerangi Raumati (Chair)Taaringaroa NicholasTokorangi KapeaHinerangi EdwardsBev GibsonDavid MacleodTokatumoana Walden
ASSOCIATE DIRECTORDaniel Harrison (Appointed January 2012)
SECRETARY / CEODion Tuuta
COMMITTEE OF MANAGEMENT
PKW TRUSTHinerangi Edwards (Chair)Bev GibsonTokorangi Kapea David MacleodTaaringaroa NicholasHinerangi RaumatiTokatumoana Walden
PKW TRUST SHAREHOLDER REPRESENTATIVEDarryn Ratana
HUMAN RESOURCES COMMITTEEDavid Macleod (Chair)Hinerangi RaumatiHinerangi EdwardsBev Gibson
PKW AUDIT AND RISK COMMITTEETaaringaroa Nicholas (Chair)Bev GibsonTokatumoana WaldenTokorangi Kapea
PKW COMMITTEES
SUBSIDIARY COMPANIES
PKW FARMS LTDHinerangi Raumati (Chair)Hinerangi EdwardsBev GibsonTokorangi KapeaDavid MacLeodTokatumoana WaldenTaaringaroa NicholasPhilip Luscombe (Independent Director)
PKW INVESTMENTS LTDTokorangi KapeaDion Tuuta
TARANAKI AQUA GARDENS LTDTokorangi Kapea
JOINT VENTURE COMPANIES
PORT NICHOLSON FISHERIES LTD 2012GENERAL PARTNERDion Tuuta (Chair)Tokorangi Kapea
RETAIL DEVELOPMENT OPERATIONS PTY LTD(IN RECEIVERSHIP)Spencer CarrTokorangi KapeaArama Kukutai
BARRON PROPERTIES PTY LTD(IN RECEIVERSHIP)Spencer CarrTokorangi KapeaArama Kukutai
PKW LIMITED LIABILITY PARTNERSHIP(IN RECEIVERSHIP)Spencer CarrTokorangi KapeaArama Kukutai
MEET THE MANAGERS
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SHANE MILES
Farms Supervisor
Shane Miles joined PKW in early 2011 as the PKW Farms Supervisor. He holds a Bachelor of Applied Science Majoring in Agriculture, and has also completed the Advanced Sustainable Nutrient Management Courses, both were attained through Massey University.
Shane is a member of a farming family from Okato in Coastal Taranaki and prior to joining PKW spent a number of years involved in a technical nutrient management role as the Key Accounts Manager for a fertiliser company in the Lower North Island. He is married to Rebecca.
DION TUUTA
Chief Executive Officer
Dion Tuuta (Ngāti Mutunga and Ngāti Tama) originally joined PKW in February 2008 as the General Manager of Finance and Administration. He was appointed PKW Chief Executive Officer in October 2011.
Dion grew up in Taranaki and began his professional career as a historian for the Waitangi Tribunal after gaining a Masters Degree in History from Massey University. Dion subsequently moved into senior policy and communication roles in Wellington before returning to Taranaki in 2007 as the General Manager for Te Runanga o Ngāti Mutunga.
Dion also holds a number of governance roles including being Chair of Port Nicholson Fisheries, a Trustee of WOMAD New Zealand Charitable Trust and a Trustee of Urenui Marae. He is married to Rose and they have three children.
25DION MAAKA
Financial Controller
Dion Maaka (Ngā Ruahine) is a Chartered Accountant who graduated with a Bachelor of Business Studies majoring in Accounting from Massey University before beginning his professional career with New Plymouth Accounting Firm Stratagem.
Born and raised in Eltham, Dion was appointed the PKW Financial Controller in March 2009 after returning from 10 years working overseas for multi-national companies such as GlaxoSmithKline and AT&T. Dion held senior financial management roles in London, Melbourne and Dublin before returning to Taranaki in 2009 with his wife Claire and their two young children. He is currently competing post-graduate studies in agri-commerce.
RANALD GORDON
General Manager Land
Assets
Ranald Gordon joined PKW as the General Manger of Land
Assets in October 2010 but has had a relationship with PKW since
1988 as an outsourced contractor carrying out farm consultancy and valuation advice. From 2005 to 2010 he was contracted from Staples as the General Manager of PKW Farms Ltd. Ranald is a registered valuer, farm management consultant, licensed real estate agent and qualified arbitrator.
He graduated from Lincoln University in 1974 before taking up roles in Rural Banking and Finance, Valuation, Farm Management Consultancy, Property Management and Arbitration. Ranald initially became involved with PKW over the 1990 rent review. Ranald is married to Robyn and they have 3 adult children, Kate, Cameron and William and 2 grandchildren Georgiana and Henry.
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project initiated by the Māori Economic Development Taskforce called Koura Inc. This project brought together all major Māori quota owners to test whether there was an appetite for a collective approach to exporting Māori-owned lobster.
While the larger Koura Inc project did not eventuate, PKW, ICP and Ngāti Mutunga saw value in working together to gain a stronger collective position throughout the full lobster value chain. Through the developing relationship with PKW, Ngāti Mutunga and ICP agreed to lease their respective ACE packages to PNF for the 2011/12 fishing season while reviewing their future growth and development options.
In late 2011 George Stavrinos indicated a desire to exit PNF and invited PKW and our new partners to make an offer to acquire the company. PKW entered into a Memorandum of Understanding with Ngāti Mutunga and ICP to establish a collective vehicle to bring together new relationships, new skills and new
quota and this became the basis of PKW’s newest business relationship.
The PNF collective is committed to growing its business sensibly over the long term and is an excellent example of Māori business co-investing to participate in the full value chain for mutual long term benefit.
PKW HAS FACILITATED A
JOINT VENTURE WITH OVER
15 IWI INTERESTS UNDER THE
UMBRELLA OF PORT NICHOLSON
FISHERIES (PNF), A FULL VALUE
CHAIN LOBSTER OPERATION
THAT LEASES QUOTA, FISHES AND
PROCESSES THE LOBSTER FOR
THE CHINESE EXPORT MARKET.
In April 2012 PKW, along with new business partners – the Iwi Collective Partnership (ICP) and Ngāti Mutunga o Wharekauri Asset Holding Company – acquired Port Nicholson Fisheries from PKW’s long-standing business partner George Stavrinos. PKW also acquired an additional 8 tonnes of CRA3 and CRA4 quota as part of the purchase taking its total quota ownership to 52 tonnes.
The new PNF relationship and investment had its inception in a
PORT NICHOLSONFISHERIES
52 TONNESTOTAL OWNERSHIP OF LOBSTER
60 PERCENTINCREASED CRAYFISH REVENUE
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Port Nicholson Fisheries Operations Manager Shamoun Ishow
Maru Samuels (ICP) Tom McClurg (Ngāti Mutunga o Wharekauri) Toko Kapea and Dion Tuuta (PKW) directors of Port Nicholson Fisheries. Absent Robin Paige (Ngāti Mutunga) and Mark Ngata (ICP)
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THE RELATIONSHIP BETWEEN PKW INCORPORATION AND FONTERRA HAS GONE FROM STRENGTH TO STRENGTH OVER THE LAST THREE YEARS BUILT ON THE SIMILARITIES BETWEEN NEW ZEALAND’S LARGEST DAIRY COOPERATIVE AND THE INTER-GENERATIONAL NATURE OF PKW INCORPORATION. FONTERRA IS PROUD TO HAVE PKW AS THE LARGEST SHAREHOLDER AND SUPPLIER OF MILK IN TARANAKI, WITH A RECORD 2.5 MILLION KG OF MILKSOLIDS BEING PROCESSED FROM PKW’S FARMS LAST SEASON.
PKW use the Fonterra facility at Whareroa Hawera on occasions for Board meetings and this recently included a site tour. Senior Area Manager Paul Radich notes that hosting PKW on site is a great way of acknowledging the relationship between the two organisations. “Fonterra is
PKW’s cooperative, so our house is literally your house too.”
The last of these Fonterra hosted Board meetings was on 25 June 2012 following the Fonterra Special Meeting to consider Trading Amongst Farmers where all PKW Committee members were in attendance.
Fonterra is regularly represented at special PKW events such as the recent blessing of the new dairy farm on Little Tempsky Road in Okaiawa.
On the communication front, there is a close relationship with local Area Managers for sharemilkers on operational matters, and Paul Radich manages the relationship and communication between CEO Dion Tuuta, Financial Controller Dion Maaka and Land Assets Manager Ranald Gordon.
Fonterra has also offered top-level support on legislative matters on land issues with central government, particularly in relation to PKW’s consideration of the Māori Reserved Lands Act.
Strategically the Committee of Management has taken a much more active interest in the cooperative’s performance acknowledging that Fonterra’s business performance has a significant impact on PKW’s business performance. PKW Board Member David MacLeod was recently appointed by Fonterra shareholders onto the Fonterra Board, thus strengthening the PKW-Fonterra bond.
PKW’s farms are seen by the Fonterra team as models of best practice, with high standards set on health and safety, people management, animal welfare, and milk quality, with the farms being regular recipients of grade free and gold grade free awards.
With the recent emphasis on high standards of environmental stewardship, Fonterra will be looking to PKW for leadership with their proven performance and focus on kaitiakitanga.
FONTERRA
BY PKW FARMS LAST SEASON
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Paul Radich - Fonterra Senior Area Manager, North Taranaki with PKW CEO Dion Tuuta
30..........................................REVENUE AND EXPENSES
PKW Trust generates its income from investments in New Zealand Government bonds and interest charged against a loan to Parininihi ki Waitotara Incorporation. PKW Trust also receives funds from PKW Incorporation in the form of an annual grant distribution subject to the Incorporation’s business performance.
During 2011/12 PKW Trust generated total income of $331,752 (2010/11 $314,000).
From this income PKW Trust made total grant allocations of $138,451 (2010/11 $99,000) supporting a range of individuals and community groups in their various aspirations. Total funding allocated represented a 39% increase in support offered to the shareholder community on the previous year and was underpinned by improving financial performance of PKW Incorporation and improved returns from both PKW’s government bond and interest.
As always PKW Trust appreciates the financial support it receives from PKW Incorporation and thanks shareholders for their foresighted decision to establish the Trust 29 years ago to support the wider social aspirations of shareholder whanau and the wider Taranaki Māori community.
..........................................EDUCATION GRANTS
The Trust has again continued with its mission of supporting educational excellence and achievement amongst shareholders whanau and Taranaki whanui in accordance with our educational funding policy set in 2010.
Applications for education are received all year round with
applications closing on 31 March of each year with Trustee decisions on educational awards being made at the Trust’s April meeting. We continue to work on the efficient processing of applications while maintaining timely communication with applicants.
In accordance with our policy PKW Trust provides a set number of scholarships and educational grants per year reflecting the Trust’s focus on promoting and rewarding excellence. The year in review represents the second year of PKW Trust’s multi-year scholarship programme.
During 2011/12 the Trust awarded 1 additional Charles Bailey Scholarship to Nikau Hindin, 4 additional post-graduate scholarships to James Berry, Brendan Laurence, Levi Rona and Matariki Williams, and 7 new undergraduate scholarships to Lisa Fairclough, Ruawai Laura Hamilton, Wiremu McFater, Rongomai Smith, Moerangi Tamati, Ashleigh Wilsonvan Duin and Merryn Wilsonvan Duin.
During 2011/12 PKW Trust made the following educational funding distributions:
• 2 Charles Bailey Scholarships totalling $10,000 per annum;
• 6 Post-graduate Scholarships totalling $18,000 per annum; and
• 10 Under-graduate Scholarships totalling $20,000 per annum.
• 70 tertiary education grants totalling $32,500.00; and
• 10 NCEA school grants totalling $576.90
All PKW scholars are expected to perform at a high level of academic excellence to retain their multi-year awards and are also expected to report back to PKW Trust and Trust beneficiaries on progress with their studies and how they might contribute
HINERANGI EDWARDS
CHAIR’S REPORT
On behalf of the trustees of the Parininihi ki Waitotara Trust I am pleased to present our report on activities for the 2011/12 financial year.
PKW Trust was established in 1983 to support the educational and community development aspirations of Māori within the Taranaki region with special regard for the shareholders of PKW Incorporation. The establishment of the Trust represented a farsighted decision by PKW Incorporation shareholders and was an act of generosity which continues to benefit our people today.
Over the past 29 years the Trust has been steadfast in its commitment to providing quality support to shareholders and more recently the wider Taranaki Māori community which the vast majority of PKW’s shareholders affiliate to. The year in review has very much continued this legacy.
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back to the wider PKW and Taranaki whanau.
Trustees and beneficiaries were extremely pleased to receive progress reports from Dennis Ngawhare, Max O’Brien and Tere Rei at the 2011 AGM and Jemaima O’Brien, Campbell Hooker, and Lewin Husband at the 2012 Half Yearly Meeting of Shareholders.
The timing of PKW Trust’s annual general meeting often coincides with university exams meaning that this can be a difficult requirement for some of our scholars to achieve. Trustees are keen to ensure that our reporting requirements do not negatively impact on our scholars studies and will review ways in which our scholars account to PKW’s beneficiaries for the support they generously make available.
..........................................COMMUNITY GRANTS
The Trust was pleased to approve 14 community grant applications during 2011/12 (FY10/11: 6 applications) which included the following kaupapa:
• Ramanui School
• Taranaki Māori Sports Awards
• Taranaki Tu Mai Festival Trust
• Waipapa Marae Trust
• Manukorihi Intermediate School
• Te Kura Kaupapa Māori o Ngāti Ruanui
• Te Reo o Taranaki Trust
• Ngārongo Marae
• Potaka Marae
• Taranaki Māori Teachers Ass
• Opunake High School
• Pariroa Marae Trust
• Taranaki Art Awards
• Tangahoe Tribal Trust Urupa Fencing Awhi
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$139,0002012 GRANTS PAID
$17,0002012 ADMIN EXPENSES
$99,0002011 GRANTS PAID
$25,0002011 ADMIN EXPENSES
$211,0002012 REVENUE
$193,0002011 REVENUE
$3.163M2012 ASSETS
$2.973M2011 ASSETS
32..........................................SPORTING AND CULTURAL GRANTS
The Trust continued to support beneficiaries achieving sporting excellence at the national and international levels. During 2011/12 the Trust provided a total of $4,500 in funding assistance to 9 promising sportspeople including Heneti Davis, Meikura Williams, Leila Blackburn, Roimata Blackburn, Liam Whareaitu, Kayla Williams, Kayla Manuirirangi,Te Akonga Pihama and Te Rei Bigham-Dudley.
Our sportspeople are extremely appreciative of the support provided by PKW Trust as exemplified by 16 year old Te Rei Dudley-Bigham who provided an inspirational presentation on his sporting achievements and development as part of the 2012 Half Yearly Meeting at Taiporohenui marae. We wish Te Rei and all of our aspiring sportspeople well in their future endeavours.
..........................................LOOKING FORWARD
PKW Trust administration is presently conducted through the PKW Office with education grant applications being processed online with a closing date set for 31 March of each year. During FY11/12 the Trust’s administration was primarily undertaken by PKW Registrar Nedina Hohaia and PKW CEO Dion Tuuta. The increasing demand on Trust assistance has required further consideration of the most appropriate way of delivering Trust services.
The Trust remains committed to its core service offering of supporting the educational aspirations of shareholders and Taranaki whanui but is exploring ways in which this might be expanded upon with additional resourcing. Looking ahead the Trust expects to increase its offerings to shareholders and the wider Taranaki Māori community through working
closer with PKW Incorporation and other key Taranaki stakeholders such as educational providers and other charitable organisations.
As part of this we expect to appoint a dedicated full time manager to lead the future development of the Trust’s strategic direction and operational activities. We believe this step, coinciding with PKW Trust’s 30th anniversary, is a necessary building block to making the Trust a more active part of the PKW-group and therefore able to make more meaningful progress to growing inter-connectivity between our scholars and the Trust for longer term benefit.
..........................................GOVERNANCE
The Trust was pleased to welcome Darryn Ratana as the new ‘shareholder representative’ who was elected at the 2011 Annual General Meeting following the retirement of Te Aroha Hohaia. The Trustees are extremely appreciative of Te Aroha’s contribution as shareholder representative on the Trust over the past three years and wish her every success in her work towards achieving her PhD.
Te Aroha’s commitment to improving community outcomes combined with her focus on individual excellence were hallmarks of her time as shareholder representative which came to be reflected throughout the Trust’s vision and mission of Seeding Taranaki Potential – Building Success.
Darryn Ratana (Ngā Rauru Kitahi) comes to the Trust with significant governance experience as a member of Te Kāhui o Rauru. Darryn’s time with the Trust to date has demonstrated his strong commitment to developing closer working relationships with Iwi and we look forward to his contribution to the Trust’s ongoing development.
..........................................CONCLUSION
As Trustees we are conscious of the increasing demand for Trust support. As PKW Incorporation’s business success and profile increases, so too has demand for PKW Trust assistance increased. Trustees are continually considering ways in which this assistance can be improved and built upon.
Trustees are united in our desire to provide assistance which empowers beneficiaries and the Taranaki Māori community to become more self-sustaining and empowered rather than just focusing on stop-start short term funding grants.
As we enter the Trust’s 30th anniversary year the Trustees of Parininihi ki Waitotara Trust remain committed to seeding Taranaki potential for the benefit of Taranaki whanui and the wider PKW whanau so that we all might achieve our goals and grow stronger together.
Nga mihiHinerangi EdwardsChair
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Leila Blackburn (Ngāti Ruanui) NZ Under 15’s Basketball Representative
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TE RIPOATA-Ā-TAU 2011-2012
HE RIPOATA NĀ TE TIAMANA O TE TARATI O PARINĪNIHI KI WAITŌTARA
Ka nui taku tīkoakoa i a au ko te māngai mo ngā katiaki o Parinīnihi ki Waitōtara e taea ana e au te māhora atu i te ripoata mo te tau pūtea 2011/12.
I tatū ai te tarati o Parinīnihi ki Waitōtara i te tau 1983 hei tautoko ake i te hapori me hō rātou moemoeā kia whanake ai te mātauranga me te hapori anō ki roto it e rohe o Taranaki, ā, kei reira te tautoko mā te hunga o te kōporeihana o Parinīnihi ki Waitōtara. He mea tohu ko te tatūtanga o te tarati it e tirohanga roa o ngā kaipupuru hea, ka mutu, i puta mai tēnei taonga it e whakaaro manaaki a ngā kaipupuru hea o te kōporeihana o Parinīnihi ki Waitōtara, ā, kei te whai hua tonuhia tēnei taonga i tēnei rā.
Mai i ngā tau e rua tekau mā iwa kua hipa ake nei kua mārō te tū o te tarati ki te manaaki i ngā kaipupuru hea, ā, i ngā tata nei kua hora te manaaki ki te hapori Māori whānui tonu, ka mutu, he tokopae tonu ngā kaipupuru hea e whai pānga ana ki a rātou. E mou tonu ana te tarati ki tēnei wairua manaaki.
..........................................TE MANA KĀWANATANGA
E mihi ana te tarati ki a Darryn Ratana me tana kuhunga mai hei māngai mā te hunga pupuru hea i pōtitia ai it e hui-ā-tau 2011 i muri mai i te wehenga o Te Aroha Hohaia. Kei te tino mihi atu te tarati ki a Te Aroha mōna i whakapau kaha nei hei māngai mo te tarati i roto i nga tau e toru kua pahemo ake nei, ā kei te ngākau arohā tonu ki a Arohā i a ia e mahi ana i tana tohu kairangi.
Nā te kaha o Te Arohā ki te whanake haere i ngā hua mā te hapori ki ōna pūmanawa ake i waitohua nuitia ai i te wā ki a ia hei māngai mā ngā kaipupuru hea e whakaaata ana i te pae tawhiti e
whāia ana e te tarati arā, ko te onokia atu i te purapura o te mana tangata kia pūāwai ai.
I tae mai a Darryn Ratana (Ngā Rauru Kītahi) ki te tarati me ōna pūmanawa mana kāwanatanga i pūāwai mai hei mema o Te Kāhui o Rauru. Ma i te wā i piri mai ai a Darryn ki te tarati nei kua kitea i tōna kaha whakaū i a ia ki te mahi tahi me te Iwi, ā, ka nui tō mātou kaikā kia kite atu i tōna āwhina i te whanaketanga o te tarati.
..........................................Ngā Tahua Pūtea me ngā Nama
E tupu ake ai ngā pūtea i ngā mahi haumi o te Tarati o Parinīnihi ki Waitōtara ki ngā pūtea nama a te Kāwanatanga me ngā initarete i whiua reretia ki te pūtea tārewa ki te Kōporeihana o Parinīnihi ki Waitōtara. Ia tau, ia tau ka whiwhi pūtea te tarati mai i te Kōporeihana o Parinīnihi ki Waitōtara ā, ko te momo pūtea i whakawhiwhia ai ko tētehi karahipi-ā-tau, ā, kei runga i te kaha o ngā mahi pākihi e taea ai tēnei.
I tēnei tau 2011/12 i whakatupuria ai e te tarati te tahua pūtea: $331,752 (2010/11 $314,000).
Mai i tēnei pūtea i tohaina ai e te tarati o Parinīnihi ki Waitōtara ngā karahipi e eke ana ki te $138,451 (2010/11 $99,000), ka mutu, i kaha tautokona ai i te tini o ngā rōpū me ngā tāngata takitahi me hō rātou moemoeā. Ko te tōpū tahua pūtea i tohaina kei te tohua i te pikitanga o te tautoko ki te hapori pupuru hea mai i te tau kua pahure ake nei me te pakari o ngā mahi whai pūtea o te kōporeihana me te piki o ngā hua i ahu mai i ngā moni hua o ngā pūtea nama kāwanatanga me ngā initarete.
E kore rawa e mutu te mihi a te Tarati ki ngā pūtea tautoko i whakawhiwhia ai e te Kōporeihana o Parinīnihi ki Waitōtara me ngā kaipupuru hea i whai wāhi ai ki te whakatū i te Tarati i ngā tau e rua tekau mā iwa kua pahure ake nei, ā, kei te tutuki i te moemoeā kia manaaki i te
hapori whānui o te rohe o Taranaki.
..........................................Ngā Karahipi Mātauranga
Kāore anō i mutu noa te kaupapa nui a te Tarati kia tautoko ake i ngā taumata huarewa mō te mātauranga hei whaiwhatanga ake mā ngā whānau kaipupuru hea me Taranaki whānui e hāngai tonu nei ki ngā kaupapa here mātauranga i whakaritea ai i te tau 2010.
Ia tau ia tau ka tae mai ngā tono karahipi, ā, ka kati atu te wā tono i te 31 o Maehe ia tau, ia tau, ā, ka whakatauria e ngā kaitiaki ko ēhea o ngā karahipi ka tohua i te hui ki te marama o Apereira. Kei te rite tonu kē tā matou kaha ki te whakahaere i tēnei, ā, kei te tūwhera tonu te kuaha ki ngā kaitono ki te hiahia kōrero mai rātou ki a mātou.
Ko tō mātou whakaū i hō mātou kaupapa here e pā ana ki ngā karahipi me ngā karaati mātauranga i ia tau i ia tau e whakaata ana i te tirohanga kia whakatairangahia i te toi o ngā mahi o tēnā me tēnā. Kei te tohua te tau nei i te tau tuarua e whai wāhi ana te Tarati ki te tuku i te tini o ngā karahipi mo te hōtaka karahipi.a te Tarati.
I te tau 2011/12 i whakawhiwhia ai e te Tarati tētehi anō karahipi o Charlie Bailey ki a Nikau Hindin, e whā ngā karahipi taumata paerua ki a James Berry, Brendan Laurence, Levi Rona me Matarik Williams me nga karahipi hou o te taumata paetahi ki a Lisa Fairclough, Ruawai Laura Hamilton, Wiremu McFater, Rongomai Smith, Moerangi Tamati, Ashleigh Wilsonvan Duin me Merryn Wilsonvan Duin.
I te tau 2011/2012 i tohaina ai e te Tarati hēnei tahua pūtea.
• 2 Charles Bailey Scholarships totalling $10,000 per annum;
• 6 Post-graduate Scholarships totalling $18,000 per annum; and
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• 10 Under-graduate Scholarships totalling $20,000 per annum.
• 70 tertiary education grants totalling $32,500.00; and
• 10 NCEA school grants totalling $576.90
Me eke rawa ko ngā tohunga ki tētehi taumata huarewa kia mou ai i a rātou hā rātou karahipi, ka mutu, ka riro mā rātou e whakahoki korero mai ki te tarati me ngā kaiwhiwhi o te Tarati e pēhea ana ngā mahi whai i te mātauranga, ā, ka pēhea tō rātou tautoko i a Parininihi ki Waitōtara whānui me te whānau o Taranaki.
Kātahi te harikoa o ngā kaitiaki me ngā kaiwhiwhi o te Tarati kia whakawhiwhia i ngā ripoata o Dennis Ngawhare, Max O’Brien and Tere Rei ki te hui-ā-tau, me te tae mai o Jemaima O’Brien, Campbell Hooker, and Lewin Husband i te hui tuatahi o te tau me ngā kaipupuru hea o 2012.
E āhua tukituki ana te hui-ā-tau ki ngā whakamātautau o te whare wānanga, no kona i āhua uaua ai mā ētehi tohunga ki te whakatutuki. Kei te kaha hiahia te Tarati kia kaua rawa ngā mahi ripoata e pā kinohia ki ngā mahi whai i te mātauranga mā ngā tauira, ka mutu, ka arotakengia i ētehi huarahi e āhei ai ngā tauira ki te whakahoki korero mai ki a ngā kaitiaki o Parinīnihi ki Waitōtara i ngākau marae ki a rātou.
..........................................NGĀ KARĀTI HĀKINAKINA ME NGĀ KARĀTI AHUREA
Kei te tautoko tonu ake te Tarati i ngā kaiwhiwhi i eke pānuku ki te taumata-ā-motu ki te taumata-ā-ao. I te tau 2011/12 i tohaina ai e te Tarati i ngā tahua pūtea ki ngā kaitākaro e Iwa, arā ko Heneti Davis, Meikura Williams, Leila Blackburn, Roimata Blackburn, Liam Whareaitu, Kayla Williams, Kayla Manuirirangi, Te Akonga Pihama raua ko Te Rei Bigham-Dudley.
Ka nui te whakamihi a te hunga kaitākaro ki te Tarati o Parinīnihi ki Waitōtara e whakatauirahia nei e te tamaiti 16 noa iho te pakeke a Te Rei Dudley-Bigham i whakamīharotia ai te hunga whakarongo mo ana mahi hākinakina i te hai tuatahi o te tau ki te marae o Taiporohēnui. Ka nui tō mātou tautoko i a Te Rei me nga kaitākaro huhua e tūmanakotia ana kia eke hoki ko rātou.
..........................................NGĀ KARĀTI HAPORI
Tekau mā wha ngā tono karāti i whakaaehia e te Tarati i tēnei tau 2011/12 e whai ana hoki i ēnei kaupapa:
• Ramanui School • Taranaki Māori Sports Awards• Taranaki Tu Mai Festival Trust• Waipapa Marae Trust • Manukorihi Intermediate School• Te Kura Kaupapa Māori o Ngāti
Ruanui• Te Reo o Taranaki Trust • Ngārongo Marae • Potaka Marae • Taranaki Māori Teachers Ass • Opunake High School • Pariroa Marae Trust • Taranaki Art Awards• Tangahoe Tribal Trust Urupa
Fencing
..........................................TE TIROHANGA WHAKAMUA
I tēnei wā kei roto i te tari o Parinīnihi ki Waitōtara ngā mahi o te tari, ā, ka whakahaerehia ngā tono ki runga i te ipurangi kia tae rā anō ki te 31 o Maehe ia tau ia tau. I te tau pūtea mō 2011/12 i whakahaerehia ai ngā mahi tari e te kairēhita a Nedina Hohaia me te Tumu whakarae o Parinīnihi ki Waitōtara a Dion Tuuta. Nā te kaha hiahia o ētehi ki ngā mahi whakaratonga o te Tarati
kei te kaha wānangahia e Te Tarati me pēhea e tika ai hāna mahi.
Kei te ū tonu te Tarati ki ana mahi ake, otirā ko te tautoko ake i ngā āwhero o ngā kaipupuru hea me Taranaki whānui, heoi kei te rapu tonu i ētehi huarahi e taea ai te whakarahi ake ngā rauemi. E taea ai ko tēnei mā roto mai i te kaha mahi tahi o te Tarati me Kōporeihana me ētehi rōpū manaaki i te Iwi.
Ko tētehi wahanga o tēnei ko te hiahia kia tohua i tētehi kaiwhakahaere tūranga pūmou hei arataki i te haere o te Tarati ki roto anō i hōna rautaki me ngā mahi whakapakari i ngā ringaringa me ngā waewae o te Tarati. E whakapono ana mātou ka haere ngātahi ēnei rautaki me te huritau toru tekau hei āwhina ki te whakatupu i te noho tahi o te Tarati me te Kōporeihana kia āta tūhonotia ai ki ngā tohunga me te Tarati kia whai hua ai tēnei mo ake tonu.
..........................................WHAKAKAPI.
He mōhio nō mātou ko ngā kaitiaki kei te piki te hiahia a te Iwi mo ngā whakaratonga a te Tarati. Ka piki ana te nui o ngā mahi pākihi a te Kōporeihana ka pēra hoki te te tupu o te hiahia ki te Tarati E kore rawa e mutu te whakaarohia e ngā kaitiaki me pēhea e taea ai te manaaki i a rātou.
Kei te kotahi te whakaaro a ngā kaitiaki kia manaakihiam kia whakamanahia ngā kaiwhiwhi me te hapori whānui o Taranaki kia taea ai e rātou te tiaki anō i a rātou e pai noa ake ai i te toha karahipi noa iho
I a mātou e kuhu nei ki te huritau toru tekau kei te ū tonu ngā kaitiaki kia pūāwai mai ngā uki o Taranaki ki runga i te tikanga e kotahi ai te hoe o te whānau whānui o Parinīnihi ki Waitōtara me Taranaki whānui.
Nga mihiHinerangi EdwardsTiamana.
36NGĀ KAIWHIWHI TAUTOKOGRANTS AND DONATIONS Nikau Hindin
Dennis Ngawhare
CHARLES BAILEY
James BerryBrendan LaurenceJemaima O’BrienAcushla O’CarrollLevi RonaMatariki Williams
POSTGRADUATE
Lisa FaircloughCampbell HookerLewin HusbandLaura Ruawai-HamiltonWiremu MacFaterMax O’BrienRongomai SmithMoerangi TamatiAshleigh Wilsonvan DuinMerryn Wilsonvan Duin
UNDERGRADUATE
Ruiha AndersonIsaac BennettRachel BennettTihirangi BrightwellJamie BroadmoreMarama BroughtonPristine BurkeMatekitawhiti CarrBrook ChamberlainOriwia DavisLewis EnglandDaniel FakeKendyl FakeDanielle GardinerMoana GargiuloHeather HansenSarahlee HansenLawrence HintonKeepa HipangoCharmaine HoetaRoimata HohaiaTe Aroha HohaiaMyles JohnstonNorton Kahu Tarikura Kapea
TERTIARY
Moana Robertson (Tuwharetoa, Ngāti Maniapoto) undernew walkway covering built at Ngārongo Marae
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Aaron KarenaBryce KihiriniMaria KnowlesJennifer LoperScott LoperJordon LukePeggy Luke-NgahekeHoani MacFaterBen ManuKathryn NicholasBaylee NiwaAroha NukuVincent NukuDeidre OtenePua Moe Awa PhillipsElijah PueGeraldine Pullen Fredrick RatanaKaramea RatanaMaia RatanaJesse ReadingManupiri RikihanaNopera RikihanaJustice RomaSannaMaree RongonuiAni RuwhiuHannah SchraderSam ShortShane TaiwhatiNita TakiariAroha TaurimaTe Waikapoata TamatiMoana Lyn Te WhataRia WaikerepuruMitchell WaiwiriKelsey WaitereMariah WakefieldMiaana WaldenBrittany WalshShayl WestonRaquel WhaleAndrew WhiteEreti WilliamsNeisha WilsonTe Wehi Wright
James AyresBryda ChamberlainLiam ChamberlainJavaana Karaitiana Sumer Karaitiana Kaylani MillerKayla WilliamsErana TamatiJana TopiaPerry West
NCEA
Te Rei Bigham-DudleyHeneti DavisMeikura WilliamsLeila BlackburnRoimata BlackburnLiam WhareaituKayla WilliamsKayla ManuirirangiTe Akonga Pihama
SPORTS GRANTS
Ramanui School Taranaki Māori Sports AwardsTaranaki Tu Mai Festival TrustWaipapa Marae Trust Manukorihi Intermediate SchoolTe Kura Kaupapa Māori o Ngāti RuanuiTe Reo o Taranaki Trust Ngārongo Marae Potaka Marae Taranaki Māori Teachers Ass Opunake High School Pariroa Marae Trust Taranaki Art AwardsTangahoe Tribal Trust Urupa Fencing
COMMUNITY GRANTS
Enterprise Scheme winning two National Excellence awards, One for Excellence in Leadership and the Other For Excellence in Māori Business. I was also a National finalist for the Young Enterprise in action competition. I am now currently in my 2nd year of studying towards my degree in Applied Hospitability and Tourism Management. As part of this course we have two 6 month Industry Placements, one in our first year and one in the second. I’m currently living in Sydney carrying out my second industry placement at the Novotel Sydney on Darling Harbour. In the future I plan on returning to New Plymouth and becoming involved in the event management industry.
NIKAU HINDIN
Kia ora,
Ko Nikau toku ingoa. I go to the University of Auckland. I am in my second year of a conjoint Bachelors of Fine Arts and Bachelor of Arts in Māori Studies and Film TV
Media Studies. I also work as a freelance photographer and run a blog called fashionphotos.co.nz. I love studying Māori Studies and this is my main source of inspiration for art making. I would like to utilise my creativity and get involved with the media. My ultimate goal would be to change the way Māori are represented in the media. I have applied to do an exchange next year at the University of Hawaii, Manoa. I am really interested in our pacific cousins and other indigenous cultures. I am looking forward to exploring traditional Hawaiian art making practices and culture.
WIREMU MACFATER
My name is Wiremu MacFater and I am a 5th Year Medical student currently on the rural medical programme with Northland DHB called Pukawakawa. I have spent a majority of the year at Whangarei hospital cycling through the various different specialties. I have also spent a bit of time working in the Far North community of Kaitaia where I have been getting some great experience working in rural GP settings and rural hospital medicine. It has also been great to work under a Māori GP who is very passionate about his work.
JAMIE BERRY
Ngāti Mahuta, Ngāti Maniapoto, Ngāti Ruanui,
Te Iwi Morehu - Te Hāhi Rātana
Kei aku nui, kei aku rahi tēnā koutou katoa e rāmemene
mai nei i runga i te whakaaro kotahi.
To our highly esteemed hosts compliments are extended to you all who have assembled here with one focus in mind.
Parininihi ki Waitotara ngā mihi uruhau ki a koutou katoa.
I am a motivated, adaptable and responsible mokopuna from the flowing ocean currents of Kawhia Moana, the majestic glow worm caves of Waitomo and the spiritual mountain of Taranaki. Each specific line of my taura whakapapa has shaped my life from birth to present.
I am currently working for CYF Learning Capability and Development department as an advisor and senior trainer. My wife and I have endeavoured to pursue post graduate studies through Te Whare Wānanga o Awanuiārangi focusing on Masters of Indigenous studies. I believe this study will further entrench my foundation as tangata whēnua and will further support my ability to manaaki whānau, hapū and iwi towards transformative change from an indigenous standpoint.
My whānau and I would like to thank you all for your support in this journey.
Ngā mihi kia tatou katoa
LISA FAIRCLOUGH
My Name is Lisa Fairclough and I am currently studying Hotel Management at the Pacific International Hotel Management School in New Plymouth. I was born and grew up in New Plymouth, Attending Vogeltown Primary, Highlands Intermediate and then New Plymouth Girls’ High School. Whilst at Girls High I excelled in the Young
2012 SCHOLARSHIPRECIPIENT PROFILES
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RONGOMAI SMITH
Tēnā tātou,
Ko Rongomai Smith tōku nei ingoa. He uri tēnei nō Taranaki, o te whānau Ruakere, Ngā Mahanga-ā-Tairi, Pūniho Pā. I tipu ake au i Porirua, ā, i haere au ki te kura tuarua o Porirua. Mohoa nei, e noho ana au ki waengapū i te tāone o Te Whanganui-ā-Tara ki te taha o tāku tau. Kei te haere au ki te whare wānanga o Wikitōria, arā ko Victoria University. Kei taku tau tuarua au i taku tohu paetahi. E rua aku kaupapa matua, ko te reo Māori tētahi me te mātauranga Māori. Āmuri ake i taku tohu, kei te haere au ki Tūranga ki te whakaako i tētahi kura, ne i ko te tūmanako, āmuri ake ka hoki mai au ki taku tūrangawaewae, ki te ako i te reo o Taranaki, ā, ki te tū hei kaiako hoki. Ko tētahi atu o ōku manako nei, ki te noho ki waenganui i ngā hāpori katahi ka taungatia au e koutou. Nō reira nei rā te mihi.
MOERANGI TAMATI
Kia ora, my name is Moerangi Tamati and I am currently in my first year of my medical degree. I am studying as a post-graduate student - I graduated with my nursing degree in 2010, and worked last year in
Taranaki Base Hospital as a postnatal nurse. While I absolutely enjoyed my time studying and working as a registered nurse, I want to go further in the medical field, especially from a Māori perspective. Becoming a Māori doctor will hopefully allow me to have more influence on Māori health issues at both ends of the spectrum, that is, not only direct interaction with Māori patients but also implementing targeted health strategies for Māori. I would ultimately like to work in women’s health (obstetrics and gynaecology) or become a general practitioner.
MATARIKI WILLIAMS
Kia ora my name is Matariki Williams. This year I began my Masters in Museums and Heritage Studies at Victoria University in Wellington. As part of this Masters programme I undertook a five-week placement working alongside a Taonga Māori Curator at Te Papa Tongarewa. The scholarship I received from PKW enabled me to pay
LEVI RONA
Kia ora
Ko Levi Rona tōku ingoa. Nō Waitara ahau. Nō ngā iwi o Te Āti-awa me Taranaki. I am in my sixth and final year of my studies at the University of
Otago. I graduated last year with a BSc (Chemistry) and a BA (Māori Studies). Last year I was accepted into the Master of Planning programme where I learned about the theories, practices and processes pertinent to the planning discipline. This year I am currently completing my thesis relating to Māori participation in freshwater management in Taranaki. After residing in Dunedin for the past six years I wanted to frame a research problem in order to reengage and maintain a connection with my iwi, hapū and whānau. Such a research project will also help benefit them and the wider Taranaki region.
LAURA RUAWAI-HAMILTON
Kia Ora,
My name is Laura Ruawai-Hamilton from Ngā Rauru and Ngāti Ruanui (Aperahama and Broughton whanau). I am currently completing my 5th of 6 years of Medical school at the University of Auckland.
During the last few years our study is entirely clinically based which is both challenging and interesting. We are rotated through a variety of specialties which show us variation and different forms of medicine.
I enjoy what I do and am grateful for the continuing support I receive from PKW. It is a great help while I am studying. Next year I am moving to Rotorua to complete my final year, I am looking forward to being within a smaller centre with a greater population of Māori patients to work with. I am also looking forward to the great lakes and outdoor lifestyle that Rotorua has to offer.
Again I would like to extend my thanks to the trust for the support. And I hope I have made iwi members and shareholders proud through my achievements, which are largely due to the tautoko of you all.
Mihi nui ano,Laura Ruawai-Hamilton
40 Education majoring in Exercise Science and Exercise Prescription. Through my Physical Education degree I was lucky enough to have the opportunity to work in an exercise prescription setting, working one on one with clients with green prescription referral, and also in the Beyond Pink Programme which involves physical activity with women who have experienced living with breast cancer. This year I was successful in gaining a place in second year medicine and surgery in Dunedin which I will complete in 2016.
BRENDAN ARIKI LAURENCE
From an early age I have always possessed an inherent curiosity. I always remember a story my mother tells me about a young Ariki staring at a beautiful fish tank. At first he looked from the front, then the back, then the left and right, and above and below, before triumphantly sitting down, a satisfied look of understanding filling the young boys face. This fascination with how things work, with how things fit together, and how things are made, has lead me down the pathway to Architecture. The complexity involved with the design of a building is a challenge I can’t turn away from. Architecture is the culmination of fantasy and reality, concepts and pragmatics, narrative and articulation. Architecture is the ultimate form of art, one that can be seen and interacted with, occupied and lived in, by generation after generation. Architecture is a legacy, one that sits lightly upon the earth.
for my daughter to be in childcare fulltime during this period. The alternative to this would have been to spread the placement over a longer period, affecting timelines for other university projects. In this respect the scholarship was invaluable, and assisted in my completing a successful and fulfilling placement that lead to the building of many professional relationships.
ASHLEIGH
WILSON-VAN DUIN
Kia ora e te whanau whanuiKo Taranaki te maungaKo Waiaua te awaKo Kurahaupo te wakaKo Taranaki, Te Atiawa ratou ko Ngāti Ruanui nga iwiKo Ngāti Kahumate te hapūKo Orimupiko te maraeKo Valerie Roach toku kuiaKo Ashleigh Wilson-van Duin ahau.
I am a second year student at the University of Otago studying towards a Bachelor of Science double majoring in Zoology and Genetics. My major area of interest is within the protection of Aotearoa by improving both environmental sustainability and animal biodiversity. As such, I wish to work in an area which involves the conservation of the native species of Aotearoa. There are currently many work opportunities within scientific research organisations which involve partnerships and collaboration with iwi in order to achieve common goals for the benefit of Aotearoa. This is what I aim to achieve and hope to be able to work with iwi in order to protect the unique biota and environs that we have here in Aotearoa.
MERRYN
WILSON-VAN DUIN
Kia ora e te whanau whanuiKo Taranaki te maungaKo Waiaua te awaKo Kurahaupo te wakaKo Taranaki, Te Atiawa ratou ko Ngāti Ruanui nga iwiKo Ngāti Kahumate te hapūKo Orimupiko te maraeKo Valerie Roach toku kuiaKo Merryn Wilson-van Duin ahau.
I am currently in my 5th year at the University of Otago, in which I graduated in May with a Bachelor of Physical
PARININIHI KI WAITOTARA INCORPORATION FINANCIAL STATEMENTSfor the year ended 30 June 2012
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Auditors’ report 44
Committee’s annual report 45
FINANCIAL STATEMENTS
Statement of comprehensive income 46
Statement of financial position 47
Statement of changes in equity 48
Statement of cash flows 49
Notes to the financial statements
1 Corporate information 50
2 Summary of significant accounting policies 50
3 Financial risk management 58
4 Critical accounting estimates and judgements 65
5 Revenue 66
6 Other gains/(losses) 66
7 Expenses 66
8 Finance income and expenses 67
9 Income tax (expense)/benefit 67
10 Māori authority credit account 68
11 Discontinued operations 68
12 Current assets - Receivables 68
13 Biological assets 70
14 Property, plant and equipment 71
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15 Intangible assets 73
16 Interests in joint venture 74
17 Investments 75
18 Investments in subsidiaries 75
19 Equity instruments 76
20 Investment properties 77
21 Current liabilities - payables 77
22 Derivative financial instruments 77
23 Term liabilities 78
24 Deferred tax assets 79
25 Share capital 80
26 Reserves and retained earnings 81
27 Dividends 81
28 Contingencies 82
29 Commitments 82
30 Related party transactions 83
31 Subsequent events 85
32 Reconciliation of profit after income tax to
net cash inflow from operating activities 85
33 Statement of estimated current market
value assets 86
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Chartered Accountants
Independent Auditor's Report
To the shareholders of Parininihi ki Waitotara Incorporation (the “Incorporation”) and its controlled entities (the “Group”)
Report on the Financial Statements
We have audited the financial statements of the Incorporation and Group on pages 46 to 85, which comprise the statement of financial position of the Incorporation and Group as at 30 June 2012, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the shareholders of the Incorporation and Group, as a body, in accordance with the Te Ture Whenua Maori Act 1993 and other relevant legislation and law. Our audit has been undertaken so that we might state to the shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Incorporation and the Incorporation’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Committee of Management’s Responsibility for the Financial Statements The Committee of Management are responsible for the preparation of the financial statements, in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate, and for such internal control as the Committee of Management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). These auditing standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected, depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the entity’s preparation of the financial statements that give a true and fair view of the matters to which they relate in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.
We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Other than in our capacity as auditor we have no relationship with, or interest in the Incorporation or the Group.
Opinion In our opinion, the financial statements on pages 46 to 85:
► comply with generally accepted accounting practice in New Zealand;
► comply with International Financial Reporting Standards; and
► give a true and fair view of the financial position of the Incorporation and Group as at 30 June 2012 and their financial performance and cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements
In accordance with the Te Ture Whenua Maori Act 1993, we report that:
► We have obtained all the information and explanations that we have required.
► In our opinion proper accounting records have been kept by the Incorporation and Group as far as appears from our examination of those records.
Wellington 31 August 2012
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REVIEW OF OPERATION
Net profit of the Group for the year ended 30 June 2012 8,578
Less provision for dividend (1,205)
Add retained earnings as at 1 July 2011 137,535
Retained earnings as at 30 June 2012 144,908
It is not proposed to make any transfer to reserves.
THE STATE OF THE GROUP’S AFFAIRS AT 30 JUNE 2012 WAS:
Assets totalled 224,117
THESE WERE FINANCED BY:
Shareholder’s equity 173,618
Liabilities 50,499
Total equity and liabilities 224,117
The business of the Incorporation is managing the interests of its Māori shareholders under the Te Ture Whenua MāoriAct 1993. The nature of the Incorporation’s business has not changed during the year.
The financial report was authorised for issue and signed on behalf of the Committee, dated 31 August 2012.
HINERANGI RAUMATI TAARINGAROA NICHOLAS Chair Committee Member31 August 2012 31 August 2012
STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2012
Includes sales mainly relating to milk proceeds, lease income received from our whenua and income from our crayfish.
Group Parent 2012 2011 2012 2011 Notes $’000 $’000 $’000 $’000
Revenue 5 20,168 18,317 8,662 8,667
Other gains 6 1,131 1,097 1,736 2,173
Expenses 7 (9,679) (7,566) (2,174) (2,294)
Finance costs income/(expenses) 8 (1,988) (1,426) 590 920
Share of profit from joint venture 16 - 470 - -
Profit before income tax 9,632 10,892 8,814 9,466
Income tax (expense)/benefit 9 (1,054) 1,672 (422) 2,093
Profit from continuing operations 8,578 12,564 8,392 11,559
Loss from discontinued operations 11 - (1,003) - (1,003)
Profit for the year 8,578 11,561 8,392 10,556
Cash flow hedges 26(a) (366) (295) (366) (295)
Income tax relating to components of other
comprehensive income 26(a) 64 58 64 58
Other comprehensive income/expense for the
year, net of tax (302) (237) (302) (237)
Total comprehensive income for the year,net of tax 8,276 11,324 8,090 10,319
For and on behalf of the Committee of Management these FinancialStatements are authorised for issue on 31 August 2012.
HINERANGI RAUMATI TAARINGAROA NICHOLAS Chair Committee Member31 August 2012 31 August 2012
Includes gains on the fair value of our whenua
Includes costs mainly relating to farming operations and administration costs of PKW
Costs from our financier Rabobank
Our share of PKW Wakatu Ltd surplus for the year
* The above statement of comprehensive income should be read in conjunction with the accompanying notes.
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* The above statement of comprehensive income should be read in conjunction with the accompanying notes.
47STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2012
* The above statement of financial position should be read in conjunction with the accompanying notes.
Group Parent 2012 2011 2012 2011 Notes $’000 $’000 $’000 $’000
ASSETSCurrent assetsCash and cash equivalents 432 589 329 466Trade and other receivables 12 2,565 2,435 470 52Biological assets 13 6,530 3,336 - -Total current assets 9,527 6,360 799 518
Non-current assetsProperty, plant and equipment 14 42,194 38,345 272 245Intangible assets 15 11,813 9,051 - -Investment in joint venture 16 1,201 605 1,211 15Loan to joint venture 16 864 173 864 173Investments 17,18,19 20,279 18,873 75,771 65,928Investment properties- Unimproved lease land 20 135,242 133,380 135,242 133,380Investment properties- Commercial 20 2,150 2,160 2,150 2,160Deferred tax assets 24 847 1,205 847 1,205Total non-current assets 214,590 203,792 216,357 203,106
Total assets 224,117 210,152 217,156 203,624
LIABILITIESCurrent liabilitiesTrade and other payables 21 4,099 3,610 2,719 2,445Current tax liabilities (246) 310 (6) -Derivative financial instruments 22 652 619 652 619Total current liabilities 4,505 4,539 3,365 3,064
Non-current liabilitiesTerm liabilities 23 43,162 37,149 43,162 37,149Derivative financial instruments 22 1,116 783 1,116 783Deferred tax liabilities 24 1,716 1,134 307 307Total non-current liabilities 45,994 39,066 44,585 38,239
Total liabilities 50,499 43,605 47,950 41,303
Net assets 173,618 166,547 169,206 162,321
EQUITYShare capital 25 5,549 5,549 5,549 5,549Reserves 26,(a) 23,161 23,463 26,308 26,610Retained earnings 26,(b) 144,908 137,535 137,349 130,162 Total equity 173,618 166,547 169,206 162,321
Livestock owned by PKW
Crayfish quota ownedby PKW
Investment in PNF (2011) Ltd, crayfish processor
Money owed by PNF (2011) Ltd to PKW
Includes borrowings from Rabobank and Unclaimed dividends
Money owed to our suppliers
Includes shares in Fonterra Co-operative, NZ Government Bond and Finistere Venture Capital Fund
Accounting value of our whenua tupuna
Money owed to PKW by our customers
The net worth of PKW Incorporation as measured in the Group Financial Statements
Represents unrealised losses on interest rate hedges
Attributable to equity holders of the Incorporation
Cash Flow Share Capital Hedge Retained Total Capital Reserve Reserve Earnings EquityGroup Notes $’000 $’000 $’000 $’000 $’000
Balance at 1 July 2010 5,549 24,591 (891) 127,179 156,428
Profit or loss for the year - - - 11,561 11,561Cash flow hedges, net of tax 26,(a) - - (237) - (237)Total comprehensive income - - (237) 11,561 11,324
Dividends provided 27 - - - (1,205) (1,205)Total transactions with owners - - - (1,205) (1,205)Balance as at 30 June 2011 5,549 24,591 (1,128) 137,535 166,547
Balance as at 1 July 2011 5,549 24,591 (1,128) 137,535 166,547
Profit or loss for the year - - - 8,578 8,578Cash flow hedges, net of tax - - (302) - (302)Total comprehensive income - - (302) 8,578 8,276
Dividends provided - - - (1,205) (1,205)Total transactions with owners - - - (1,205) (1,205)Balance as at 30 June 2012 5,549 24,591 (1,430) 144,908 173,618
Parent
Balance at 1 July 2010 5,549 27,738 (891) 120,811 153,207
Profit for the year - - - 10,556 10,556Cash flow hedges, net of tax 26,(a) - - (237) - (237)Total comprehensive income - - (237) 10,556 10,319
Dividends provided 27 - - - (1,205) (1,205)Total transactions with owners - - - (1,205) (1,205)Balance as at 30 June 2011 5,549 27,738 (1,128) 130,162 162,321
Balance at 1 July 2011 5,549 27,738 (1,128) 130,162 162,321
Profit for the year - - - 8,392 8,392Cash flow hedges, net of tax - - (302) - (302)Total comprehensive income - - (302) 8,392 8,090
Dividends provided - - - (1,205) (1,205)Total transactions with owners - - - (1,205) (1,205)Balance as at 30 June 2012 5,549 27,738 (1,430) 137,349 169,206
STATEMENT OF CHANGES IN EQUITYFOR THE THE YEAR ENDED 30 JUNE 2012
* The above statement of changes in equity should be read in conjunction with the accompanying notes.
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STATEMENT OF CASH FLOWSFOR THE THE YEAR ENDED 30 JUNE 2012
Group Parent
2012 2011 2012 2011 Notes $’000 $’000 $’000 $’000
Cash flows from operating activitiesReceipts from customers 22,284 19,691 8,859 9,117Interest received 171 117 (58) 15Income tax paid (3,378) - (1,255) -Payments to suppliers (11,268) (7,209) (1,448) (3,161)Payments to employees (765) (565) (536) (434)Interest paid (2,159) (1,729) (2,257) (1,812)GST paid 2,009 - 192 -Net cash inflow from operating activities 32 6,895 10,305 3,497 3,725
Cash flows from investing activitiesPayments for property, plant and equipment (5,878) (2,211) (73) (110)Payments for investment (2,170) (1,395) (807) (1,224)Investment in joint venture (1,201) - (1,196) -Advances to joint venture (864) - (864) -Payments for biological assets - (2,194) - -Payments for intangible assets (3,176) - - -Payments for UCIS settlement - (10,211) - (10,211)Capitalised interest (46) (38) - -Proceeds from sale of investments 363 959 384 959Advances from joint venture 113 796 444 796Advances from subsidiaries - - (6,935) 2,061Sale of joint venture 395 - - -Net cash outflow from investing activities (12,465) (14,294) (9,047) (7,729)
Cash flows from financing activitiesProceeds from borrowings 17,514 16,670 17,514 16,670Repayment of borrowings (11,801) (12,570) (11,801) (12,570)Dividends paid (300) (68) (300) (68)Net cash inflow from financing activities 5,413 4,032 5,413 4,032
Net increase / (decrease) in cash and cash equivalents (157) 43 (137) 28Cash and cash equivalents at the beginning of the financial year 589 546 466 438Cash and cash equivalents at end of year 432 589 329 466
* The above statement of cashflow should be read in conjunction with the accompanying notes.
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Statement of Cash flows shows where cash has been paid and received. The statement shown is split in three parts; Operational activities, Investing activities and financing activities.
50NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2012
..........................................1 CORPORATE INFORMATION
Parininihi ki Waitotara Incorporation (the Parent) is registered under the Te Ture Whenua Maori Act 1993 and was incorporated in New Zealand.
The Parent and its subsidiaries are included in the Parininihi ki Waitotara Incorporation Group (PKW Incorporation or the Group). The main business activities of the Group are land and property management, farming and fisheries interests.
..........................................2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements include separate financial statements for PKW Incorporation as an individual entity and the consolidated entity consisting of PKW Incorporation and its subsidiaries.
(a) Basis of preparation
The Group financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand and Section 276 of Te Ture Whenua Maori Act 1993.
The Group financial statements have been prepared on an historical cost basis except for biological assets, certain investments, investment properties and derivative financial instruments which have been measured at fair value.
The information is presented in New Zealand dollars and all values are rounded to the nearest thousand.
Compliance with IFRS
The separate and consolidated financial statements of PKW Incorporation comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS).
Entities reporting
The consolidated financial statements for the Group include PKW Incorporation and its subsidiaries. The financial statements for the Parent are for PKW Incorporation as a separate legal entity.
Critical accounting estimates
The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.
(b) New accounting standards and
interpretations
Changes in Accounting Policy and Disclosure
The accounting policies adopted are consistent with those of the previous financial year except as follows. The Group has adopted the following
new and amended New Zealand equivalents to International Financial Reporting Standards, (NZ IFRS) and interpretations as at 1 July 2011.
• Amendments to NZ IFRSs arising from the Annual Improvements Project (2010) [NZ IFRS 1, 7, NZ IAS 1]
Emphasises the interaction between quantitative and qualitative NZ IFRS 7 disclosures and the nature and extent of risks associated with financial instruments.
Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.
Provides guidance to illustrate how to apply disclosure principles in NZ IAS 34 for significant events and transactions.
• NZ IAS 24 Related Party Disclosures (Revised 2009)
The revised NZ IAS 24 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including: (a) The definition now identifies a subsidiary and an associate with the same investor as related parties of each other (b) Entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other (c) The definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
over a third party, the second and third entities are related to each other. The amendment explicitly adds disclosure requirements for commitments (including executory contracts) with related parties.
• FRS-44 New Zealand additional disclosures
FRS-44 New Zealand Additional Disclosures is a consequence of the joint Trans-Tasman Convergence project of the Australian Accounting Standards Board (AASB) and Financial Reporting Standards Board (FRSB). This standard relocates New Zealand specific disclosures from other standards to one place and revises disclosures in the following areas: (a) Compliance with NZ IFRS (b) The statutory basis or reporting framework for financial statements (c) Audit fees (d) Imputation credits (e) Reconciliation of net operating cash flow to profit/(loss).
• Harmonisation Amendments
Amendments to NZ IFRS to Harmonise with IFRS and Australian Accounting Standards: (a) Remove the disclosures which have been relocated to FRS 44 (b) Harmonise audit fee disclosure requirements in NZ IAS 1 with AASB 101 (c) Harmonise imputation/franking credits’ disclosure requirements in NZ IAS 12 with AASB 101 (d) Introduction of the option to use the indirect method of reporting cash flows in NZ IAS 7 (e) Introduce an accounting policy choice to use the cost model for investment property under NZ IAS 40 (f) Remove the requirement to use an independent valuer and the related disclosure requirements currently in NZ IAS 16 and NZ IAS
40 (g) Remove some NZ-specific disclosures.
The adoption of the above amendments resulted in changes to accounting policies but had no significant impact on the financial position or performance of the Group.
Accounting standards, amendments and interpretations to existing standards that are not yet effective
NZ IFRS Standards and interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the annual reporting period ending 30 June 2012, are outlined below.
• NZ IAS 12 Amendments to NZ IAS 12 Income Taxes — Deferred Tax: Recovery of Underlying Assets (applicable date of standard 1 January 2012, effective for Group from 1 July 2012).
These amendments update NZ IAS 12 to include:
The amendments incorporate NZ SIC-21 Income Taxes — Recovery
of Revalued Non-Depreciable Assets into NZ IAS 12 for non-depreciable assets measured using the revaluation model in NZ IAS 16 Property, Plant and Equipment.
• NZ IAS 1 Amendments to NZ IAS 1 Presentation of Financial Statements — Presentation of Other Comprehensive Income (effective from 1 July 2012, effective for Group 1 July 2012).
This Standard requires entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss in subsequent periods (reclassification adjustments).
• NZ IAS 27 Separate Financial Statements (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IAS 27 Separate Financial Statements (as amended in 2011) removes the accounting and disclosure requirements for consolidated financial statements, as a result of the issue of NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 12 Disclosures of Interests in Other Entities, which establish new consolidation and disclosure standards.
NZ IAS 27 (as amended in 2011) contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements.
• NZ IAS 28 Investments in Associates and Joint Ventures (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IAS 28 Investment in Associates and Joint Ventures (as amended in 2011) supersedes NZ IAS 28 Investments in Associates (2004), as a result of the issue of NZ IFRS 11 Joint Arrangements
• A rebuttable presumption that deferred tax on investment property measured using the fair value model in NZ IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.
• A requirement that deferred tax on non-depreciable assets, measured using the revaluation model in NZ IAS 16, should always be measured on a sale basis.
52 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and NZ IFRS 12 Disclosure of Interests in Other Entities.
NZ IAS 28 (as amended in 2011) prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. Disclosure requirements relating to these investments are now contained in the NZ IFRS 12.
• NZ IFRS 7 Amendments to NZ IFRS 7 Financial Instruments: Disclosures — Offsetting Financial Assets and Financial Liabilities (effective from 1 January 2013, for Group effective 1 July 2013).
These amendments introduce disclosures, which provide users with information that is useful in evaluating the effect or potential effect of netting arrangements on an entity’s financial position.
• NZ IFRS 7 Amendments to NZ IFRS 7 Financial Instruments: Disclosures — Transition Disclosures (effective from 1 January 2013, effective for Group 1 July 2013).
These amendments to NZ IFRS 7 remove the requirement for the restatement of comparative period financial statements upon initial application of the classification and measurement requirements of NZ IFRS 9.
Instead, the amendments introduce additional disclosures on transition from the classification and measurement requirements of NZ IAS 39 Financial Instruments: Recognition and Measurement to those of NZ IFRS 9.
For entities adopting NZ IFRS 9 from 2013 onwards, these disclosures are required even if they choose to restate the comparative figures for the effect of applying NZ IFRS 9.
• NZ IFRS 10 Consolidated
Financial Statements (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IFRS 10 establishes a new control model. It replaces parts of NZ IAS 27 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities.
The new control model broadens the situations when an entity is considered to control another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This could lead to more entities being consolidated.
• NZ IFRS 11 Joint Arrangements (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IFRS 11 replaces NZ IAS 31 Interest in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Ventures. NZ IFRS 11 uses the principle of control in NZ IFRS 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition NZ IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation.
Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves are accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets are accounted for using the equity method. This may result in a change in the accounting for joint arrangements.
• NZ IFRS 12 Disclosure of
Interests in Other Entities (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IFRS 12 includeds all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structure entities. New disclosurers have been introduced about the judgement made by management to determine whether control exists, and to require summaried information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.
• NZ IFRS 13 Fair Value
Measurement (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IFRS 13 establishes a single source of guidance under NZ IFRS for determining the fair value of assets and liabilities. NZ IFRS 13 does not change when an entity is required to use fair value, but rather, provide guidance
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on how to determine fair value under NZ IFRS when fair value is required or permitted by NZ IFRS. Application of this guidance may result in different fair values being determined for the relevant assets.
NZ IFRS 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This included information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.
• Amendments to NZ IFRSs arising from the Annual Improvements Project (2009-2011) [NZ IFRS 1, NZ IAS 1, 16,
32] (effective from 1 January 2013, effective for Group 1 July 2013).
NZ IAS 32
Clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with NZ IAS 12 Income Taxes.
• Amendments to NZ IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities (effective from 1 January 2014, effective for Group 1 July 2014).
These amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the NZ IAS 32 offsetting criteria to settlement systems (such as central clearing house systems)
which apply gross settlement mechanisms that are not simultaneous.
• NZ IFRS 9 (2010) Financial
Instruments (effective from 1 January 2015, effective for Group 1 July 2015).
NZ IFRS 9 (2010) supersedes NZ IFRS 9 (2009).
The requirements for classifying and measuring financial liabilities were added to NZ IFRS 9 as issued in 2009. The existing NZ IAS 39 Financial Instruments: Recognition and Measurement requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities, the change in fair value is accounted for as follows:
The change attributable to changes in credit risk are presented in other comprehensive income (OCI);
The remaining change is presented in profit or loss; and
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk is also presented in profit or loss.
• NZ IFRS 9 (2009) Financial
Instruments (effective from 1 January 2015, effective for Group 1 July 2015).
NZ IFRS 9 (2009) includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace NZ IAS 39.
These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of NZ IAS 39. The revised Standard introduces a number of changes to the accounting for financial assets, the most significant of which includes:
• Two categories for financial assets being amortised cost or fair value;
• Removal of the requirement to separate embedded derivatives in financial assets;
• Strict requirements to determine which financial assets can be classified as amortised cost or fair value. Financial assets can only be classified as amortised cost if (a) the contractual cash flows from the instrument represent principal and interest and (b) the entity’s purpose for holding the instrument is to collect the contractual cash flows;
• An option for investments in equity instruments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profit or loss on derecognition;
• Reclassifications between amortised cost and fair value no longer permitted unless the entity’s business model for holding the asset changes; and
• Changes to the accounting and additional disclosures for equity instruments classified as fair value through other comprehensive income.
54 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Parent and the results of all subsidiaries as at and for the period ended 30 June each year (the Group).
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a Group controls another entity.
The financial statements of the subsidiaries, except for Taranaki Aqua Gardens Limited which has a 31 March balance date, are prepared for the same reporting period as the Parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries which form part of the Group are consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Investments in subsidiaries held by the Parent are accounted for at cost in the seperate financial statements of the Parent entity less any impairment charges.
(ii) Joint ventures - Jointly controlled entities
The Group’s investment joint ventures are accounted for using the equity method of accounting in the consolidated financial statements and at cost in the parent.
Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. Goodwill relating to a joint venture is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in joint ventures. Goodwill included in the carrying amount of the investment in joint venture is not tested separately; rather the entire carrying amount of the investment is tested for impairment as a single asset. If impairment is recognised, the amount is not allocated to the goodwill of the joint venture.
The Group’s share of its joint venture post-acquisition profits or losses is recognised in profit or loss, and its share of postacquisition movement in other comprehensive income is recognised in other comprehensive income. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from joint ventures are recognised in the parent entity’s statement of comprehensive income as a component of other income.
When the Group’s share of losses in an associate equals or exceeds its interest in the joint venture, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.
(d) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of PKW Incorporated and its New Zealand subsidiaries is New Zealand dollars ($). Australian subsidiaries functional currency is Australian dollars.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
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(e) Income tax
The income tax expense charged to the Statement of Comprehensive Income includes both the current year’s provision and the income tax effect of:
• Taxable temporary differences, expect those arising from initial recognition of goodwill and other assets that are not depreciated; and
• Deductible temporary differences to the extent that it is probable that they will be utilised.
Temporary differences arising from transactions, other than business combinations, affecting neither accounting nor taxable profit are ignored.
Deferred income tax is not recognised on temporary differences associated with investments in subsidiaries, joint ventures and associates because:
• The Parent entity is able to control the timing of the reversals of the differences; and
• They are not expected to reverse in the foreseeable future.
Tax effect accounting is applied on a comprehensive basis to all timing differences using the liability method.
A deferred tax asset is only recognised to the extent that it is probable there will be future taxable profit to utilise temporary differences.
Following the changes to subpart HI of the Income Tax Act 2004, an election was made to become a Mãori Authority, for tax purposes, with effect
from 1 July 2004. The income tax rate applicable from the date of election is 17.5%.
Distributions to Incorporation members are no longer deductible for tax purposes. Any distribution of post 1 July 2004 reserves will include Mãori Authority Credits of up to 17.5% of the gross taxable amount in the hands of members. Any distribution of pre 1 July 2004 reserves is tax free in the hands of members.
(f) Goods and Services Tax (GST)
The profit and loss component of the Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the balance sheet are stated net of GST, with the exception of receivables and payables, which include GST invoiced.
(g) Revenue recognition
Sales of goods are recognised when they have been delivered and accepted by the customer.
Rental income is recognised upon issue of invoices that are issued six months in advance.
Milk proceeds are recognised in alignment with the processor Fonterra on a per dollar per kilogram basis.
Interest income is recognised using the effective interest method.
Dividend income is recognised when the right to receive payment is recognised.
(h) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
(i) Impairment
At each reporting date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
If the recoverable amount of a cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash generating unit is reduced to its recoverable amount.
An impairment loss is recognised immediately in the Statement of Comprehensive Income. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased
56 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset. The reversal of an impairment loss is recognised immediately in income.
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand and short term deposits with an original maturity of three months or less plus bank overdrafts. Bank overdrafts are shown within current liabilities in the Statement of Financial Position.
(k) Trade and other receivables
Trade and other receivables, which have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using effective interest method, less allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect.
(l) Biological assets
(i) Valuation of livestock
Livestock at balance date includes dairy cattle, beef cattle and sheep and they are valued at a fair value. Subsequent fair value changes are recognised in profit or loss.
(m) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:
Buildings 7-66 yearsLeashold improvements 12-35 yearsPlant and machinery 5-10 yearsFurniture and fittings 4-10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 2).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statements of Comprehensive Income.
(n) Intangible assets
(i) Fishing quota
The fishing quota is initially recognised at cost. The quota is regarded as having an indefinite useful life because there is no foreseeable limit to the period over which they are expected to be useful. They are
subsequently not amortised, but tested annually for impairment.
(o) Investments and other financial
assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its assets at initial recognition and re-evaluates this designation at every reporting date, but there are restrictions on reclassifying to other categories when financial assets are recognised initially, they are measured at fair value, plus in the case of assets not at fair value through profit or loss, directly attributable transactions costs.
Recognition and derecognition
All regular purchases and sales of financial assets are recognised on trade date i.e., the date that the Group commits to purchase the asset. Financial assets are derecognised when the right to receive cashflows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the assets if it has transferred control of the assets.
Subsequent measurement
(i) Financial assets at fair value through profit or loss
This category has two sub categories: financial assets held for trading, and
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those designated at fair value through profit or loss on initial recognition. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.
(ii) Loans and receivables
Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method.Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets except for those with maturities greater than 12 months after balance date, which are classified as non-current.
(iii) Financial assets at cost
Financial assets at cost cannot be prescribed a reliable fair value.
(p) Investment properties
Commercial investment property, which includes land and buildings
that earn rental income or appreciate in value, are initially measured at cost and subsequently measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in the statements of comprehensive income in the period in which they arise.
The fair value of the unimproved leased land is calculated by using a discounted cash flow model. The assumptions of the model are as follows:
• Discount rate of 6.5%
• Cash flows to increase at the rate of inflation (2.4%) however is only uplifted every seven years into the cash flow periods in line with the rental reset periods determined by legislation;
• The time horizon is thirty years.
(q) Trade and other payables
Trade and other payables are carried at cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
(r) Derivatives
The Group uses derivative financial instruments to hedge its risks associated with foreign currency, and interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured to fair value.
Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. The fair values of interest rate swaps are determined using a valuation technique based on cash flows discounted to present value using current market interest rates.
Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges are taken directly to profit or loss for the year.
Cash flow hedges are used when they hedge the exposure to variability in cash flows that is attributable either to a particular risk associated with a recognised asset or liability or to a forecast transaction. The Group currently has cash flow hedges attributable to payment of interest on borrowings. The effective proportion of the gain or loss on the hedging instrument is recognised in other comprehensive income, while the ineffective portion is recognised in profit or loss.
The Group tests each of the designated cash flow hedges for effectiveness on a quarterly basis both retrospectively and prospectively using regression analysis. A minimum of 30 data points is used for regression analysis and if the testing falls within the 80:125 ranges, the hedge is considered highly effective and continues to be designated as a cash flow hedge.
At each balance date, the Group measures ineffectiveness using the dollar offset method. For foreign currency cash flow hedges if the risk is over-hedged, the ineffective portion is taken immediately to profit or loss.
58 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
For interest rate cash flow hedges, any ineffective portion is taken to other expenses in the statement of comprehensive income.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to it being ineffective), amounts previously accumulated in reserves remain in reserve until the forecast transactions occurs.
(s) Term liabilities
Borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
All borrowing costs are recognised as an expense in the period they are incurred.
(t) Share capital
Ordinary shares are classified as equity.
(u) Employee benefits
(i) Wages and salaries, annual leave and sick leave
The provision for employee entitlements is recognised as a liability in the Statement of Financial Position. These benefits include salaries, wages and annual leave. Where the payment is expected to be longer than 12 months of balance date, the liability is recorded at its present value. Where
the payment is expected to be less than 12 months, the provision is the amount expected to be paid.
(v) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
(i) Group as a lessee
Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when recieved and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.
(ii) Group as a lessor
Leases in which Group retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as rental income.
(w) Dividends
Provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date.
Dividend distribution to the Parent shareholders is recognised as a liability in the Parent’s and the Group’s
financial statements in the period in which the dividends are approved by the Parent’s shareholders.
..........................................3 FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, term debt and overdrafts, investments, cash and short term deposits, and derivatives. The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, aging analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Committee of Management and Management team. The Committee of Management reviews and agrees policies for managing each of the risks identified below, including the setting
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of limits for trading in derivatives, hedging cover of foreign currency and interest rate risk, and future cash flow forecast projections.
(a) Market risk
(i) Foreign exchange risk
The Group has an investment denominated in USD $4.15m at 30 June 2012 (2011: $3.75m). This investment is not hedged and should the USD increase or decrease by 1 cent against the NZD, profit and loss and equity would increase or decrease by $0.06m (2011: $0.05m).
The Group has a commitment denominated in USD of approximately $0.5m at 30 June 2012 (2011: $1.6m). This commitment is not hedged and should the USD increase or decrease by 1 cent against the NZD the NZD commitment would increase or decrease by $0.01m (2011: $0.02m)
The sensitivity is based on the foreign currency purchases that are firm commitments, extending to May 2014.
Significant assumptions used in the foreign currency sensitivity analysis include:
• Reasonably possible movements in foreign exchange rates were determined based on a review of the last two year’s historical movements and econmonic forecaster’s expectations.
The reasonably possible movements were calculated by taking the USD spot rate as at balance date, moving this spot rate by the reasonably possible movements and then re-converting the USD into NZD with the “new spot-rate”. This methodology
reflects the translation methodology undertaken by the Group.
(ii) Price risk
The Group’s exposure to commodity and equity securities price risk is significant.
The Group has exposure to unlisted shares in Fonterra at 30 June 2012 $12.21m (2011: $10.82m). The value per share is $4.52 (2011: $4.52), if the share price was to increase or decrease by $1 per share the investment value would increase or decrease by $2.7m (2011: $2.39m). An increase or decrease would impact directly on profit and equity to an equal value of gain or loss.
Significant assumptions used in investment exposure sensitivity analysis include:
• Reasonably possible movements in share price or investment value based on a review of the last two year’s historical movements and economic forecaster’s expectations.
(iii) Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
An analysis by maturities is provided in (c) below and a summary of the terms and conditions is in note 23.
The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative
financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss and equity of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interestbearing positions. Based on the simulations performed, the impact on profit or loss and equity of a 100 basis-point shift would be a maximum increase of $0.4m (2011: $0.34m) or decrease of $0.4m (2011: $0.34m) respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.
Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.
Generally the Group raises long term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional prinicpal amounts.
Significant assumptions used in the interest rate sensitivity analysis include:
• Reasonably possible movements in interest rates were determined based on the Group’s relationship with its financiers, the level of debt as well as a review of the last
60 3 FINANCIAL RISK MANAGEMENT (CONTINUED)
two year’s historical movements and economic forecaster’s expectations;
• The fair value sensitivity analysis of derivatives has been based on a reasonably possible movement of interest rates at balance date by applying the change as a parallel shift in the forward curve;
• The effect on equity is the effect on the cash flow hedge reserve.
(b) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, investments, derivative financial instruments and the granting of financial guarantees. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of the financial assets (as outlined in each applicable note).
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables.
In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s experience is bad debts has not been significant.
(c) Liquidity risk
Liquidity risk arises from the Group’s financial liabilities and the Group’s subsequent ability to meet obligations
to repay financial liabilities as and when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying businesses, management aims at maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties.
Maturities of financial liabilities
The tables below analyse the Group’s and the parent entity’s financial liabilities, net and gross settled derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, except for interest rate swaps where the cash flows have been estimated using forward interest rates applicable at the reporting date.
Non derivative financial liabilities
The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from recognised financial liabilities and financial guarantees as of 30 June 2012. For the other obligations the respective undiscounted cash flows for the respective upcoming financial years are presented. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.
However, where the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Group can be required to pay. When the Group is committed to make amounts available in installments, each installment is allocated to the earliest period in which the Group is required to pay.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of nonderivative financial instruments. Trade payables and other financial liabilities mainly originate from the financing of assets and working capital cost of the Group.
Derivative financial liabilities
Due to the unique characteristics and risks inherent to derivative instruments, the Group seperately monitors the liquidity risk arising from transacting in derivative instruments.
The table below details the liquidity risk arising from the derivative liabilities held by the Group at balance date. Net settled derivative liabilities comprise interest rate swap contracts that are used to mitigate fluctuations in interest rate risk on the Group’s term debt.
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3 FINANCIAL RISK MANAGEMENT (CONTINUED)
Less than 6 - 12 Greater Total 6 Months Months Than 12 Contractual Months Cash FlowsGroup - At 30 June 2012 $’000 $’000 $’000 $’000
Non-derivativesTrade creditors 1,750 - - 1,750Term liabilities - - 43,162 43,162 1,750 - 43,162 44,912
DerivativesDerivative financial instruments 326 326 1,116 1,768 326 326 1,116 1,768
Group - At 30 June 2011
Non-derivativesTrade creditors 1,184 - - 1,184Term liabilities - - 37,149 37,149 1,184 - 37,149 38,333DerivativesDerivative financial instruments 323 296 783 1,402 323 296 783 1,402
Parent - At 30 June 2012
Non-derivativesTrade creditors 212 - - 212Term liabilities - - 43,162 43,162 212 - 43,162 43,374DerivativesDerivative financial instruments 326 326 1,116 1,768 326 326 1,116 1,768
Parent - At 30 June 2011
Non-derivativesTrade creditors 217 - - 217Term liabilities - - 37,149 37,149 217 - 37,149 37,366DerivativesDerivative financial instruments 323 296 783 1,402 323 296 783 1,402
62 3 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Fair value risk
Effective 1 January 2009, the group adopted the amendment to NZ IFRS 7 for financial instruments that are measured in the Statement of Financial Position at fair value, this requires disclosure of fair value
measurements by level of the following fair value measurement hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices) (level 2);
• Inputs for the asset or liability that are not based on observable market data (that is,unobservable inputs) (level 3).
The following table presents the Group’s and Parent’s assets and liabilities that are measured at fair value.
Level 1 Level 2 Level 3 Total balanceGroup - At 30 June 2012 $’000 $’000 $’000 $’000
AssetsFonterra investment - 12,213 - 12,213 - 12,213 - 12,213
LiabilitiesInterest rate swaps - 1,768 - 1,768 - 1,768 - 1,768
Group - At 30 June 2011
AssetsFonterra investment - 10,819 - 10,819 - 10,819 - 10,819
LiabilitiesInterest rate swaps - 1,402 - 1,402 - 1,402 - 1,402
Parent - At 30 June 2012
LiabilitiesInterest rate swaps - 1,768 - 1,768 - 1,768 - 1,768
Parent - At 30 June 2011
LiabilitiesInterest rate swaps - 1,402 - 1,402 - 1,402 - 1,402
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as
active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory
agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price
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3 FINANCIAL RISK MANAGEMENT (CONTINUED)
used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Specific valuation techniques used to value financial instruments include:
• Quoted market prices or dealer quotes for similar instruments.
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
Assets at Fair Available Value For Sale Cashflow Through Loans and Financial Hedge Profit or Loss Receivables Assets TotalFinancial assets as per balance sheet $’000 $’000 $’000 $’000 $’000
At 30 June 2012Investments - 12,213 1,466 6,600 20,279Interest rate swaps 1,768 - - - 1,768Trade and other receivables - - 1,983 - 1,983Net advance to joint venture - - 864 - 864Cash and cash equivalents - - 432 - 432 1,768 12,213 4,745 6,600 25,326
At 30 June 2011Investments - 10,819 1,420 6,634 18,873Interest rate swaps 1,402 - - - 1,402Trade and other receivables - - 2,256 - 2,256Net advance to joint venture - - 173 - 173Cash and cash equivalents - - 589 - 589 1,402 10,819 4,438 6,634 23,293
Parent
At 30 June 2012Investments - - - 6,333 6,333Interest rate swaps 1,768 - - - 1,768Trade and other receivables - - 52 - 52Net advance to joint venture - - 864 - 864Cash and cash equivalents - - 329 - 329 1,768 - 1,245 6,333 9,346
At 30 June 2011Investments - - - 6,429 6,429Interest rate swaps 1,402 - - - 1,402Trade and other receivables - - 35 - 35Net advance to joint venture - - 173 - 173Cash and cash equivalents - - 466 - 466 1,402 - 674 6,429 8,505
(e) Financial instruments by category
64
Other Financial Liabilities Measured at Amortised Cost TotalFinancial liabilities as per balance sheet $’000 $’000
Group
At 30 June 2012Term liabilities 43,162 43,162Trade creditors 1,750 1,750 44,912 44,912
At 30 June 2011Term liabilities 37,149 37,149Trade creditors 1,184 1,184 38,333 38,333
Parent
At 30 June 2012Term liabilities 43,162 43,162Trade creditors 212 212 43,374 43,374
At 30 June 2011Term liabilities 37,149 37,149Trade creditors 217 217 37,366 37,366
3 FINANCIAL RISK MANAGEMENT (CONTINUED)
(e) Financial instruments by category(Continued)
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4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be responsible under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources.
Management has identified the following critical accounting policies for which significant judgments, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.
(a) Critical accounting estimates
and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Unimproved lease land
The Parent recognises unimproved lease land in its statement of financial position. The land is valued internally by management using a discounted cash flow model. The cash flow model applies assumptions of a post tax discount rate of 6.5%, 2.4% increment per year but cash flow effected at 7 year intervals and a 30 year time horizon.
Impairment finistere investment
Management rely on the management team of the Finistere investment to provide accurate and timely financial information to assess the performance of the investment. Impairment is tested as and when the individual stocks of Finistere pass through milestone liquidity positions. The stock is assessed as impaired when the entity does not pass to the next phase of liquidity.
Impairment Scott River
Management have relied on the information of the governing body of Scott River which detailed that the fair value of the property, plant and equipment were substantially less than prior year $26m AUD (2011: $28m). Based on this information management has impaired this investment by $0.5m (2011: $0.5m).
(b) Critical judgements in applying
the entity’s accounting policies
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Significant management judgement is required to determine
the amount of deferred tax assets that can be recognised.
Taxation
The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangments considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the Statement of Financial Position. Deferred tax assets, including those arising from un-recouped tax losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future.
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on Management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgments and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and
66 deferred tax liabilities recognised on the statements of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit
or charge to the statements of comprehensive income.
Operating lease commitments -Group as a lessor
The Group has entered into commercial property leases on its investment property portfolio. The
Group has determined that it retains substantially all the significant risks and rewards of the ownership of these properties primarily as the lease does not transfer ownership of the asset at the end of the lease term. Thus the Group has classified the leases as operating leases.
5 REVENUE Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Rental income 6,652 6,698 8,012 8,057Dairy proceeds 10,274 9,738 - -Fisheries lease income 2,083 1,302 - -Other income 1,159 579 650 610 20,168 18,317 8,662 8,667
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Reversal of prior year joint venture advance impairment - 1,128 - 1,128Net gain on sale of available-for-sale financial assets 65 1,775 65 1,775Fair value adjustment to investment property 1,852 826 1,852 826 Impairment of available for sale financial assets (500) (1,049) (500) (1,049)Impairment of joint venture advance (274) (495) 331 (495)Impairment of investment in joint venture - (1,076) - -Foreign exchange loss (12) (12) (12) (12) 1,131 1,097 1,736 2,173
6 OTHER GAINS / (LOSSES)
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Auditors’ remuneration 55 55 55 55Depreciation 660 679 46 58Employee benefits 765 565 536 434Farm operating expenses 6,344 4,316 - -Lease expense 77 75 72 65Members fees 206 201 175 168Other expenses 1,572 1,675 1,290 1,514 9,679 7,566 2,174 2,294
7 EXPENSES
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Finance costs 2,159 1,728 2,257 1,812Finance income (171) (302) (2,847) (2,732) 1,988 1,426 (590) (920)
8 FINANCE INCOME AND EXPENSES
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
(a) Income tax expense
Current tax:Current tax on profits for the year 50 430 - 57Tax losses utilised 1,286 - 1,286 -Adjustments in respect of prior years (623) (906) (856) (906)Deferred tax expense / (benefit) 341 (1,196) (8) (1,244)Total income tax expense 1,054 (1,672) 422 (2,093)
Amounts charged to other comprehensive incomeNet loss on revaluation of cash flow hedges (64) (57) (64) (57)Income tax expense 990 (1,729) 358 (2,150)
Profit from continuing operations before income taxexpense 9,632 10,892 8,814 9,466Tax at the New Zealand tax rate # 1,781 2,124 1,543 1,636Tax effect of amounts which are not deductible (taxable)in calculating taxable income: Temporary differences - (1,878) - (1,788) Other permanent differences 40 432 30 370 Changes in fair value of livestock (77) (87) - - Changes in fair value of investments (125) (161) (294) (161) Over provided in prior years (507) - (857) - Income not subject to tax (58) - - -Income tax expense 1,054 430 422 57
# PKW Incorporation (the parent) is taxed at the maori authority tax rate of 17.5% and PKW’s subsidiaries are taxed at the corporate tax rate of 28%.
9 INCOME TAX (EXPENSE)/BENEFIT
68 Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
The imputation credits available to the shareholders atbalance date were:Through direct shareholding 1,381 1,375 1,381 1,375 Movements
Māori authority credit accountBalance 1 July 1,375 1,378 1,375 1,378Resident witholding tax deductions 6 - 6 -Tax payments, net of refunds - (3) - (3)Balance 30 June 1,381 1,375 1,381 1,375
10 MĀORI AUTHORITY CREDIT ACCOUNT
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Revenue - - - -Expenses - (1,003) - (1,003)Income tax expense - - - -Loss after income tax of discontinued operations - (1,003) - (1,003)
The Parent’s wholly owned subsidiaries investment in the development and construction of the Gabba Central propertydevelopment Brisbane, Australia were placed in receivership on 30 October 2008 by its lender Uniting Church Investments Service (UCIS).
The financial statements of the Australian subsidiaries represented by PKW Limited Liability Partnership (In Receivership), Barron Properties Pty Limited (In Receivership) and Retail Development Operations Pty Limited (In Receivership) have not been consolidated with the financial statements of the Parent. All certain liabilities related to those events have been recognised at 30 June 2012.
11 DISCONTINUED OPERATIONS
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Accounts receivable 2,018 2,282 87 61Provision for doubtful receivables (35) (26) (35) (26) 1,983 2,256 52 35
Prepayments 582 179 418 17 2,565 2,435 470 52
12 CURRENT ASSETS - RECEIVABLES
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
0-30 days 1,653 1,953 39 1131-60 days 6 2 - -61-90 days 4 - - -90+ days 44 28 44 24 1,707 1,983 83 35
An impairment of $0.04m (2011: $0.03m) has been booked for specific debtors included within 90 days. Other balances within trade and other receivables do not contain impaired assets and are not passed due. It is expected that these other balances will be received when due.
(a) Impaired receivables
(i) An allowance has been made for impairment loss.
The ageing of these receivables is as follows:
(b) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value approximates their fair value.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables mentionedabove. The Group does not hold any collateral as security.
70 Group 2012 2011 $’000 $’000
Livestock
Dairy cattle
Balance at the beginning of the year 3,293 850Increase due to purchases 2,518 2,336Decreases due to sales (191) (85)Changes in fair value 824 192Balance at the end of the year 6,444 3,293
Sheep
Balance at the beginning of the year 44 30Increase due to purchases 71 11Decreases due to sales (20) (51)Changes in fair value (9) 54Balance at the end of the year 86 43Balance at the end of the year 6,530 3,336
2012 2011 Units Units
Quantity of dairy cattle on hand
Rising 1 year heifers 491 255Rising 2 year heifers 386 382Cows 2,448 1,384Rising 1 year bulls 40 31Rising 2 year steers - - 3,365 2,052
Quantity of sheep on hand
Ewe hoggets 155 235/6 year ewes 417 316Two tooth rams - 4Breeding rams 6 3 578 346
The Parent engages in sophisticated dairy farm management to preserve the value of stock.Biological assets of the Group comprise dairy cattle and sheep.
13 BIOLOGICAL ASSETS
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13 BIOLOGICAL ASSETS (CONTINUED)
(a) Financial risk management
strategies
Environmental and climatic risks
The Group is exposed to climatic and other environmental risks. The Group’s geographic spread of farms allows a high degree of mitigation against adverse climatic (eg: drought and flooding) and environmental (eg:
disease) effects at a regional level.
The Group has environmental practices aimed at compliance with environmental and other laws in New Zealand.
Commodity price risk
The Group is exposed to risks arising from fluctuations on the price and sales volume of livestock and dairy produce.
Financing risk
The nature of livestock farming means that most of the Group’s agricultural revenue is received in the second half of the financial year, whereas financial expenses are incurred throughout the year. The Group manages this risk through budgeting and actively managing working capital requirements, as well as maintaining credit facilities at levels sufficient to meet working capital requirements.
Freehold Plant and Fixtures and Leasehold land Buildings equipment fittings improvements Total $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2010Cost 26,752 9,177 1,978 372 2,429 40,708Accumulated depreciation - (1,880) (1,074) (301) (622) (3,877)Net book amount 26,752 7,297 904 71 1,807 36,831
Year ended 30 June 2011Opening net book amount 26,752 7,297 904 71 1,807 36,831Additions - 43 603 110 1,437 2,193Depreciation charge - (325) (169) (54) (131) (679)Closing net book amount 26,752 7,015 1,338 127 3,113 38,345
At 30 June 2011Cost 26,752 9,221 2,581 482 3,866 42,902Accumulated depreciation - (2,206) (1,243) (355) (753) (4,557)Net book amount 26,752 7,015 1,338 127 3,113 38,345
Year ended 30 June 2012Opening net book amount 26,752 7,015 1,338 127 3,113 38,345Additions - 1,207 1,131 72 2,166 4,576Disposals - (36) (9) - (22) (67)Depreciation charge - (241) (242) (41) (136) (660)Closing net book amount 26,752 7,945 2,218 158 5,121 42,194
At 30 June 2012Cost 26,752 10,391 3,705 551 6,010 47,409Accumulated depreciation - (2,446) (1,487) (393) (889) (5,215)Net book amount 26,752 7,945 2,218 158 5,121 42,194
14 PROPERTY, PLANT AND EQUIPMENT
72 Freehold Freehold Fixtures and Land Buildings Fittings Total $’000 $’000 $’000 $’000
At 1 July 2010Cost 56 92 369 517Accumulated depreciation - (24) (299) (323)Net book amount 56 68 70 194
Year ended 30 June 2011Opening net book amount 56 68 70 194Additions - - 109 109Depreciation charge - (6) (52) (58)Closing net book amount 56 62 127 245
At 30 June 2011Cost 56 92 479 627Accumulated depreciation - (30) (352) (382)Net book amount 56 62 127 245
Year ended 30 June 2012Opening net book amount 56 62 127 246Additions - - 72 72Depreciation charge - (4) (41) (46)Closing net book amount 56 58 158 272
At 30 June 2012Cost 56 92 551 699Accumulated depreciation - (34) (393) (427)Net book amount 56 58 158 272
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
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TotalGroup $’000
At 1 July 2010Cost 7,462Accumulated amortisation and impairment -
Year ended 30 June 2011Opening net book amount 7,462Additions 1,589Closing net book amount 9,051
At 30 June 2011Cost 9,051Accumulated amortisation and impairment - 9,051
Year ended 30 June 2012Opening net book amount 9,051Additions 2,762Closing net book amount 11,813
At 30 June 2012Cost 11,813Accumulated amortisation and impairment - 11,813
There have been additions of $2.76m during the year (2011: $1.6m). There have been no disposals or impairment losses requiring recognition during the year. The fair value of the quota at 30 June 2012 is $23m (2011: $19.7m) as supplied by industry specialist Quota Management System Limited.
15 INTANGIBLE ASSETS
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Investment in joint venture 1,201 605 1,211 15Advances to joint venture 864 173 864 173 2,065 778 2,075 188
74 16 INTERESTS IN JOINT VENTURE
(a) Investments
(b) Share of profits Group 2012 2011 $’000 $’000
Balance 1 July 605 1,211Share of profits after income tax - 470Repayment (395) -Impairment (210) (1,076)Balance 30 June - 605
(c) Summarised financial informationThe following tables illustrate summarised financial information relating to the Group’sinvestment in joint venture:Revenue - 16,879Expenses - (15,940)Profit after tax - 939
Current assets (507) 4,596Non-current assets 3,940 3,881Total assets 3,433 8,477
Current liabilities (223) 4,769Non-current liabilities - 3,715Total liabilities (223) 8,484Net assets 3,656 (7)
Advances to joint venture 864 1,218Net assets 4,520 1,211
Share of joint ventures net assets 1,201 605
(d) Advances to joint ventureBalance 1 July 173 1,222Reversal of prior year impairment - 1,128Quota transfer - (1,589)Lease income - 703Repayments (113) (246)Advances 864 -Impairment (60) -Advances to joint venture at 31 March 864 1,218Impairment - (495)Repayments - (550)Advances to joint venture at 30 June 864 173
PKW Incorporation entered into a joint venture arrangement on the 19th April 2012 to purchase PNF (2011) Ltd a crayfish processing plant. Capital invested in this joint venture amounted to $1.2m which is proportionate to the other joint venture partners.
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Fonterra Co-operative Group Limited 12,213 10,819 - -Scott River - 500 - 500Finistere 6,322 5,831 6,322 5,831New Zealand Government inflation indexed bond 1,466 1,420 - - 7,788 7,751 6,322 6,331
Advances to subsidiaries (note 18) - - 69,438 59,499Other financial assets carried at cost 278 303 11 98 278 303 69,449 59,597 20,279 18,873 75,771 65,928
17 INVESTMENTS
16 INTERESTS IN JOINT VENTURE (CONTINUED)
The liabilities of the joint venture include advances from the Incorporation. Advances due from the joint venture as at 30June 2012 are $0.86m (2011: $0.17m).
PNF (2011) Ltd has a balance date of 31 March which is different to the Group’s balance date of 30 June.
PKW Incorporation divested its interest in PKW Wakatu Limited at December 2011.
PKW-Wakatu Limited has a balance date of 31 July which is different to the Group’s balance date of 30 June.
Finistere is an unlisted equity instrument that cannot be prescribed at fair value. The Finistere investment is recognised at a cost of $6.32m (2011: $5.83m) and is related to an investment of USD $3.75m (2011: USD $3.75m) that was unhedged at 30 June 2012.
Fonterra Co-operative Group Limited is measured at fair value using independent valuation. The fair value is $12.21m(2011: $10.82m).
Scott River is a unit trust investment based in Western Australia; this investment is carried at impaired cost. The Scott River investment is recognised at a carrying value of nil (2011: $0.5m).
18 INVESTMENTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries inaccordance with the accounting policy described in note 2(c): Equity Holding 2012 2011 Incorporated in Balance Date % %
PKW Farms Limited New Zealand 30 June 100 100Taranaki Aqua Gardens Limited New Zealand 31 March 100 100JSP Limited New Zealand 31 March 100 100PKW Investments Limited New Zealand 30 June 100 100Retail Development Operations Pty Limited(In receivership) Australia 30 June 100 100PKW Limited Liability Partnership (In receivership) Australia 30 June 100 100Barron Properties Pty Limited (In receivership) Australia 30 June 100 100
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
MovementsBalance 1 July 5,830 5,886 5,830 5,886Add capital contributions 841 1,225 841 1,225Deduct investments sold (349) (731) (349) (731)Deduct investment impaired - (549) - (549) 6,322 5,831 6,322 5,831Finistere investment derecognisedProceeds from sale 414 2,506 414 2,506Investment cost (349) (731) (349) (731)Gain on sale 65 1,775 65 1,775
19 EQUITY INSTRUMENTS
18 INVESTMENTS IN SUBSIDIARIES (CONTINUED)
PKW Farms Limited is in the business of farming. Taranaki Aqua Gardens Limited is in the business of fishing.JSP Limited is non-trading.PKW Investments Limited is non-trading.Retail Development Operations Pty Limited (in receivership) is in the business of property development.PKW Limited Liability Partnership (in receivership) is in the business of property development.Barron Properties Pty Limited (in receivership) is in the business of property development.Taranaki Aqua Gardens Limited and JSP Limited have different balance dates to the Parent entity because 31 March suits the nature of their business.
The Group has an investment in a Venture Capital fund called “Finistere Oceania Fund”. The Finistere investment is valued at cost as the fair value cannot be determined as the fund invests in various start up companies. These start up companies are private companies and due to their nature are only revalued at different liquidity phases. None of these companies are listed with readily available fair value information.
The majority of the fund’s investment are with start up ventures in the Medical Devices Industry.
The Group relies on the management team of the Venture Capital fund to invest in companies that will provide the Group with a significant return on each investment. This return is realised when the start up companies are acquired by an investor.
Impairment testing is based on entities within the portfolio meeting liquidity milestones.
The carrying amount of the investment as at 30 June 2012 is $6.32m (2011: $5.83m). The table above shows the movement in the Finistere investment.
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Unimproved leased landBalance at beginning of year 133,380 132,499 133,380 132,499Net gain in fair value 1,862 881 1,862 881 135,242 133,380 135,242 133,380Commercial propertyBalance at beginning of year 2,160 2,215 2,160 2,215Net gain/(loss) in fair value (10) (55) (10) (55) 2,150 2,160 2,150 2,160 137,392 135,450 137,392 135,450
20 INVESTMENT PROPERTIES
The Parent has used a discounted cash flow model to assess the fair value of the land. Refer to significant accountingestimates and assumptions for estimates and assumptions applied in calculating fair value.
Commercial properties are carried at fair value, which have been determined based on valuations performed by TelferYoung as at 30 June 2012. Telfer Young is an industry specialist in valuing these types of commercial properties in theTaranaki region.
The fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arms length transaction at the date of valuation. In determining fair value, the expected net cash flows applicable to each property have been discounted to their present value using a market determined, risk adjusted, discount rate applicable to the respective asset.
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Trade creditors 1,750 1,184 212 217Other payables 1,334 940 1,184 915Provision for dividend 1,205 1,205 1,205 1,205GST payable (190) 281 118 108 4,099 3,610 2,719 2,445
21 CURRENT LIABILITIES - PAYABLES
Fair value
Due to the short term nature of these payables, their carrying value approximates their fair value.
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Current liabilitiesInterest rate swaps - fair value hedges 652 619 652 619
Non-current liabilitiesInterest rate swaps - fair value hedges 1,116 783 1,116 783 1,768 1,402 1,768 1,402
22 DERIVATIVE FINANCIAL INSTRUMENTS
78 22 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate swap contracts - cash flow hedges
Interest bearing loans of the Group currently bear a variable interest rate of 4.3%. In order to protect against rising interest rates the Group has entered into interest rate swap contracts under which it has a right to receive interest at fixed rates and to pay interest at fixed rates. Swaps in place cover approximately 49% (2011: 57%) of the principal outstanding. The fixed interest rates range between 5.85% to 5.99% (2011: 5.85% to 5.99%) and the variable rate between 1.37% to 1.62% above the 90 day bank bill rate, which at balance date was 2.50% (2011: 2.50%).
The interest rate swaps require settlement of net interest receivable or payable each 90 days. The settlement datescoincide with the dates on which the interest is payable on the underlying debt. All swaps are matched directly against the appropriate loans and interest expense and as such are considered highly effective. They are settled on a net basis.
The swaps are measured at fair value and all gains and losses attributable to the hedged risk are recognised in othercomprehensive income. Interest expense is recognised in profit or loss.
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Rabobank facility 40,613 34,900 40,613 34,900Unclaimed dividends 2,549 2,249 2,549 2,249 43,162 37,149 43,162 37,149
23 TERM LIABILITIES
The Parent utilises an interest only finance facility of $46 million (2011: $46 million) from Rabobank New Zealand Limited. This facility expires on 25 February 2024. The interest charge on the drawn facility is currently at a variable rate based on an agreed margin over the BKBM rate (daily interbank rate). At 30 June that rate approximated 4.24% per annum (2011: 4.5%). Loan fee on the undrawn amount of the facility is 0.25% per annum.
The facility is secured by first mortgage over certain leasehold and freehold interest in property, a registered first security agreement over all present and subsequently acquired personal property with a priority sum of $60 million and unlimited guarantees from PKW Farms Limited, PKW Investments Limited and Taranaki Aqua Gardens Limited. Carrying value of financial assets pledged as collateral as at 30 June 2012 $69.45m (2011: $57.15m).
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Property, Investment Plant and Properties Equipment Livestock Tax Losses Other TotalGroup $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2010 (346) (755) (21) - - (1,122)Charged/(credited) to thestatement ofcomprehensive income 39 (27) (23) 1,200 5 1,194At 30 June 2011 (307) (782) (44) 1,200 5 72
At 1 July 2011 (307) (782) (44) 1,200 5 72Charged/(credited) to thestatement ofcomprehensive income - - (222) (365) (354) (941)At 30 June 2012 (307) (782) (266) 835 (349) (869)
InvestmentParent Properties Tax Losses Other Total
At 1 July 2010 (346) - - (346)Charged/(credited) to the statementof comprehensive income 39 1,200 5 1,244At 30 June 2011 (307) 1,200 5 898
At 1 July 2011 (307) 1,200 5 898Charged/(credited) to the statementof comprehensive income - (365) 7 (358)At 30 June 2012 (307) 835 12 540
24 DEFERRED TAX ASSETS
80 Group/Parent Group/Parent 2012 2011 2012 2011Group and Parent Shares Shares $’000 $’000
Share authorised, issued and fully paid 1,205,071 1,205,071 5,549 5,549
25 SHARE CAPITAL
(a) Capital risk management
The Group and the Parent entity’s objectives when managing capital are to safeguard their ability to continue as a goingconcern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Management are constantly reviewing the capital structure to take advantage of favourable costs of capital or high return on assets.
Management monitor capital through the gearing ratio (net debt/total capital). The target for the Group’s gearing ratio is40% as this is the covenant prescribed by Rabobank New Zealand Limited. The gearing ratios based on continuingoperations at 30 June 2012 and 2011 were as follows:
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Total borrowings 50,499 43,605 47,950 41,303Less: cash and cash equivalents (432) (589) (329) (466)Net debt 50,067 43,016 47,621 40,837Total equity 173,618 166,547 169,206 162,321Total capital 223,685 209,563 216,827 203,158
Gearing ratio 22% 20% 22% 20%
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Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
(a) Reserves
Capital reserve 24,591 24,591 27,738 27,738Cash flow hedge reserve (1,430) (1,128) (1,430) (1,128) 23,161 23,463 26,308 26,610
Movements:
Capital reserveBalance 1 July 24,591 24,591 27,738 27,738Charge to other comprehensive income - - - -Balance 30 June 24,591 24,591 27,738 27,738
Cash flow hedge reserveBalance 1 July (1,128) (891) (1,128) (891)Charge to other comprehensive income (366) (295) (366) (295)Income tax on other comprehensive 64 58 64 58Balance 30 June (1,430) (1,128) (1,430) (1,128)
Capital reserve
The capital reserve represents capital contributions that have been recognised and accounted for since establishment of the Incorporation.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
(b) Retained earnings
Movements in retained earnings were as follows:
26 RESERVES AND RETAINED EARNINGS
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Balance 1 July 137,535 127,179 130,162 120,811Net profit for the year 8,578 11,561 8,392 10,556Dividends (1,205) (1,205) (1,205) (1,205)Balance 30 June 144,908 137,535 137,349 130,162
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Declared and paid during the year:Dividend proposed 2012: $1 (2011: $1) 1,205 1,205 1,205 1,205
27 DIVIDENDS
82 28 CONTINGENCIES
(a) Contingent liabilities
Gabba Central Property Development
In 2010 an agreement was reached between United Church Investments Services (“UCIS”) and the Incorporation to settle any remaining liabilities in relation to the development for $7.5m AUD ($9.2m NZD). This provision was paid during the 2011 financial year.
Due to certain conditions of the debt agreement there is an additional potential liability of $19.5m. The Incorporationobtained a legal opinion from Bell Gully to address the potential liability and its tax implications.
The legal opinion advises that the Incorporation will never be required to settle the $19.5m liability as UCIS will never have the ability to demand repayment. Based on this advice management have not recognised a liability in the 30 June 2012 Statement of Financial Position.
There were no contingent liabilities as at 30 June 2012.
29 COMMITMENTS
(a) Capital commitments
As at 30 June 2012 the Group was committed to spend USD $0.5m (NZD $0.62m) for an investment in a United States of America based venture capital fund (2011: USD4.6m (NZD6.3m).
The Parent entered an agreement to purchase certain land for $1.4m (2011: $1.4m). The completion of thistransaction is subject to rezoning consents.
The Parent entered an arrangement to purchase shares in crayfish quota for $2.3m. The completion of this transaction is scheduled for September 2012.
The subsidiary ‘PKW Farms Ltd’ entered an arrangement to purchase leasehold improvements of $3.7m. The completion of these transactions will be performed by 1 June 2014.
(b) Lease commitments: as lessee
(i) Operating leases
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Within one year 80 65 65 65Later than one year but not later than five years 139 180 139 180Total minimum lease payments 219 245 204 245
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29 COMMITMENTS (CONTINUED)
(c) Lease commitments: as lessor
Gabba Central Property Development
The Group has entered into commercial property leases on its investment property portfolio consisting of the Group’ssurplus office.
These non-cancellable leases have remaining terms of between two and three years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals receivable under non-cancellable operating leases at 30 June are as follows:
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Later than one year and not later than five years 195 195 195 195Later than five years 253 449 253 449 448 644 448 644
30 RELATED PARTY TRANSACTIONS
(a) Parent entities
During the year, the Parent has charged interest at 6.56% (2011: 6.7%) on inter-entity loans that it has made to its wholly owned subsidiaries, PKW Farms Limited of $2.35m (2011: $2.1m). It has also charged PKW Farms Limited rental of $1.36m (2011: $1.36m) on the unimproved value of the land that it is leasing. These inter-entity transactions have been eliminated on consolidation.
The Parent has charged a management fee to its wholly-owned subsidiaries PKW Farms Limited of $0.52m (2011:$0.47m) and Taranaki Aqua Gardens Limited $0.05m (2011: $0.08m). This charge represents the share of the Parentsoverhead costs that are attributable to the subsidiaries and is the first year this fee was charged. These inter-entitytransactions have been eliminated on consolidation.
The Parent has an equity interest in Port Nicholson Fisheries (2011) Limited. Taranaki Aqua Gardens Limited, a wholly owned subsidiary of the Parent, leased crayfish quota to Port Nicholson Fisheries (2011) Limited. The amount due to Taranaki Aqua Gardens Limited at 30 June 2012 was $9.1m (2011: $6.53m). The Parent has charged interest at 6.56% (2011: 6.7%) on the inter-entity loan that it has made to Taranaki Aqua Gardens Limited of $0.44m (2011: $0.45m). The current account due from PNF (2011) Limited at 30 June 2012 was $0.86m (2011: Nil).
The Parent at December 2011 sold its interest in PKW Wakatu Limited. The current account due from PKW Wakatu Limited at 30 June 2012 was nil (2011: $0.17m).
During the year, the PKW Trust has charged interest at 6.56% (2011: 6.7%) on inter-entity loans that is made to PKWIncorporation of $0.1m (2011: $0.09m).
No related party debts have been written off or forgiven during the year and all transactions were conducted on an arms basis.
84 30 RELATED PARTY TRANSACTIONS (CONTINUED)
(b) Directors
David MacLeod is a director and has a one share holding of PKW Farms Limited. David MacLeod is also a director of the Cooperative, Fonterra Co-operative Group Limited.
PKW Farms Limited independent director Philip Luscombe is also a director of a major supplier Allied Farmers Limited.
Taaringaroa Nicholas is a committee member and a shareholder of Parininihi ki Waitotara Incorporation.
(c) Key management and personnel compensation
Short term employee benefits (salaries) paid to key management personnel was $0.4m (2011: $0.37m).
Committee Members and Directors remuneration and value of other benefits received from the Group for the year ended 30 June 2012 were:
Director PKW Trust Honoraria Fees Daily fees Honoraria Total $’000 $’000 $’000 $’000 $’000
Gibson, Bev 20 - - - 20Nicholson, Claire - - 2 - 2Harrison, Daniel - - 2 - 2MacLeod, David 20 - - - 20Edwards, Hinerangi 20 - - 10 30Raumati, Hinerangi 43 - - - 43Tuuta, Jamie 17 - - - 17Luscombe, Philip - 20 - - 20Nicholas, Taaringaroa 22 - - - 22Hohaia, Te Aroha - - - - -Walden, Tokatumoana 10 - - - 10Kapea, Tokorangi 20 - - - 20Total 172 20 4 10 206
In 2008 shareholders approved total Committee remuneration fees of $0.25m. In December 2010 the Committee ofManagement engaged PricewaterhouseCoopers to undertake an independent review of Committee remuneration. As aresult of this review the Committee has approved a total remuneration approach to governance fees based on thefollowing:
• Chairman $0.05m honorarium per annum.• Chair of Audit and Risk Committee $0.03m honorarium per annum.• Other Committee Members receive $0.02m honorarium per annum.• Chairperson of the PKW Trust receives $0.01m honorarium per annum.• Independent Directors of PKW subsidiaries receive Director’s fees of $0.02m per annum.• PKW Management appointed to subsidiary directorships do not receive Director’s fees.
(i) Other transactions and balances
There was a loan receivable at 30 June 2011 from the PKW Wakatu joint venture of $0.17m which was repaid in 2012.
There was a loan receivable at 30 June 2012 from the PNF (2011) Ltd joint venture of $0.86m.
No related party balances were written off or forgiven during the year.
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31 SUBSEQUENT EVENTS
The Group and the Parent have had no known significant events occur after balance date (2011: nil).
Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000
Profit for the year 8,578 11,561 8,392 10,556
Add (Less) non cash items and non operatingitems:Depreciation 660 679 46 58Other income (3,696) 161 - (1,028)Discontinued actvities - 1,002 - 1,002Gain on fair value of investments - (1,775) - (1,775)Reversal of prior year joint advance impairment - (1,128) - (1,128)Impairment on investments 774 2,619 500 1,544Derivative financial instrument (366) (295) - -Fair value adjustment to investment property (1,852) (826) (1,852) (826)Finance income - - (2,847) (2,539)Other income - management fees from subs - - (592) (549)Share of profits of joint venture - (470) - -Increase/(decrease) in deferred tax payable 940 (1,193) 358 (1,244)
Movements in working capital: Decrease (Increase) in trade receivables (130) (599) (418) 1 Increase (decrease) in trade creditors 960 801 274 77 Increase (decrease) in other liabilities 471 - (358) - Increase in provision for income taxes payable 556 (714) (6) (906) Increase (decrease) in dividend payable - 482 - 482Net cash inflow from operating activities 6,895 10,305 3,497 3,725
32 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
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Group $’000
AssetsCurrent assets 432Investments 98,353Property, plant and equipment 272Investment properties 137,392Total assets 236,449
Less liabilitiesAccounts payable and accruals 3,853Term loans 40,613Unclaimed dividends 2,549Total liabilities 47,015
Equity 189,434
Schedule of assetsInvestment propertiesUnimproved land value 135,242Powderham Street, New Plymouth 1,200Queen Street, Waitara 450Miranda Street, Stratford 400 137,392
InvestmentsFinistere venture capital fund 6,322PKW Farms Limited 64,400PKW-Wakatu Limited 2,065Taranaki Aqua Gardens Limited - Quota 23,000Scott River partnership 500Mangaoapa Forest Partnership 1,100Government Inflation Indexed bond 1,466 98,353
33 STATEMENT OF ESTIMATED CURRENT MARKET VALUE ASSETSas at 30 June 2012
AS REQUIRED BY SECTION 276 (4) (C) OF TE TURE WHENUA MAORI ACT 1993 30 June 2012
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PARININIHI KI WAITOTARA TRUSTFINANCIAL STATEMENTSfor the year ended 30 June 2012
88
Chartered Accountants
Independent Auditor’s Report
To the beneficiaries of Parininihi ki Waitotara Charitable Trust (the “Trust”)
Report on the Financial Statements
We have audited the financial statements of the Trust on pages 89 to 92, which comprise the statement of financial position of the Trust as at 30 June 2012, statement of comprehensive income, and statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the beneficiaries, as a body, in accordance with the trust deed. Our audit has been undertaken so that we might state to the beneficiaries those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust’s beneficiaries as a body, for our audit work, for this report, or for the opinions we have formed.
Trustees’ Responsibility for the Financial Statements The trustees are responsible for the preparation and fair presentation of the financial statements, in accordance with generally accepted accounting practice in New Zealand, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). These auditing standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected, depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the Trust’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.
We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Other than in our capacity as auditor we have no relationship with, or interest in the Trust.
Opinion In our opinion, the financial statements on pages 89 to 92:
► comply with generally accepted accounting practice in New Zealand; and
► present fairly, in all material respects, the financial position of the Trust as at 30 June 2012 and its financial performance for the year then ended.
Wellington 31 August 2012
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STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2012
2012 2011 Note $’000 $’000
Grants 121 121Interest 211 193Income 332 314 Expenses (4) 17 25Grants (5) 139 88Expenses 156 113Net surplus and total comprehensive income 176 201
Statement of Movements in Equity
Balance at beginning of year 2,973 2,772Total comprehensive income for the year 176 201Balance at end of year 3,149 2,973
* The accompanying notes form part of these financial statements.
90STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2012
2012 2011 Note $’000 $’000
ASSETSCurrent AssetsBank (3) 56 59Accounts receivable 1,641 1,494Total Current Assets 1,697 1,553
Non Current AssetsInvestments (2) 1,466 1,420Total Non-Current Assets 1,466 1,420
Total Assets 3,163 2,973
LIABILITIESCurrent LiabilitiesAccounts payable 14 -Total Current Liabilities 14 -NET ASSETS 3,149 2,973
EQUITYTrust capital 1,283 1,283Retained surplus 1,866 1,690TOTAL EQUITY 3,149 2,973
For and on behalf of the Trustees these financial statements are authorised for issue, dated 31 August 2012.
Trustee Trustee
* The accompanying notes form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2012
..........................................1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
Parininihi ki Waitotara Trust is a Trust established by a trust deed dated 22 June 1983.
These financial statements have been prepared in accordance with generally accepted accounting practice.
Measurement Base
The accounting principles recognised as appropriate for the measurement and reporting of financial performance and financial position on an historical cost basis are followed.
Specific Accounting Policies
The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied:
• Accounts receivable are stated at their estimated net realisable value.
• The Trust is a charitable entity and is not liable for income tax.
• Investments are stated at cost
• The Trust is not registered for goods and services tax.
• Website costs are stated at cost and will be amortised over 4 years.
The Trust qualifies for differential reporting as it is not publicly accountable and is not large as defined under the framework for differential reporting. The Trust has taken advantage of all available reporting exemptions.
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.
..........................................2. INVESTMENTS 2012 2011 $’000 $’000
New Zealand Government Indexed Bond 1,466 1,420 1,466 1,420
2012 2011 $’000 $’000
Westpac – general account 1 6Westpac – term deposit 55 53 56 59
3. BANK
2012 2011 $’000 $’000
Chairman’s Honorarium 10 10Administration costs 7 14Amortisation of website - 1 17 25
4. EXPENSES
2012 2011 $’000 $’000
Marae 42 20Education and Sport 82 73Community Grants 17 6Approved but unpaid - (11) 139 88
5. GRANTS
92
During the year the Trust received interest income from, and invested funds with, its parent entity Parininihi ki Waitotara Incorporation as follows:
2012 2011 $’000 $’000
Cost 3 3Less Amortisation 3 3Book Value - -
6. WEBSITE
2012 2011 $’000 $’000
Interest Income 99 90
7. RELATED PARTIES
2012 2011 $’000 $’000
Accounts Receivable 1,641 1,494
The amounts outstanding with Parininihi ki Waitotara Incorporation at balance date were:
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NOTES
94NOTES
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