d3u195fnb8c781.cloudfront.net€¦ · learnings for the organisation but we have been encouraged by the enthusiasm with which our many stakeholders have embraced our vision. This

Māori Trustee

Annual Report 2014

E.37

ii Māori Trustee Annual Report 2014

Business snapshotat 31 March 2014

Number of trusts and other entities under administration 1,968Number of hectares under management 97,611

Number of owner accounts maintained 89,144Number of ownership interests 208,226

% of beneficial owners for whom contact details held 62.8%Client funds under management (market value) $89.6 million

Māori Trustee equity $123.7 millionNumber of staff 74Number of offices 6

Māori Trustee Annual Report 2014 1

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ContentsForeword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

From the Māori Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Our Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Statement of Responsibility . . . . . . . . . . . . . . . . . . . . . . . . 8

Financial Statements

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . 9

Statement of Service Performance . . . . . . . . . . . . . . . . .13

Statement of Comprehensive Income . . . . . . . . . . . . . 18

Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . .19

Statement of Financial Position . . . . . . . . . . . . . . . . . . . 20

Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Notes to the Financial Statements . . . . . . . . . . . . . . . . . 22

Statement of Trust Monies . . . . . . . . . . . . . . . . . . . . . . . . 49

2 Māori Trustee Annual Report 2014

ForewordKi te Minita mō ngā Take Māori

He hōnore ki ahau te tuku atu i te pūrongo

ā tau o Te Kaitiaki Māori mō te tau i mutu i

te 31 o Māehe 2014.

To the Minister of Māori Affairs

I am honoured to present the Annual Report

for the Māori Trustee for the year ended

31 March 2014.

Jamie Tuuta

Māori Trustee

25 July 2014

This report has been prepared to meet the requirements

of Section 150 of the Crown Entities Act 2004.


E.37

From the Māori Trustee

The 2013/14 year marked the first year of operation under our new brand – Te Tumu Paeroa. With a new team and a clear vision, this year was about laying a solid foundation so that we can deliver on the new strategy.

The year presented many challenges and new

learnings for the organisation but we have been

encouraged by the enthusiasm with which our many

stakeholders have embraced our vision. This has

translated into a wealth of support and offers to

collaborate, and also many approaches from parties

with new ideas to create greater prosperity for our

owners and Māori as a whole.

During the year we managed to translate some of

these ideas into reality and we have many others

at various stages of development. A key challenge

ahead will be to ensure we have sufficient resources,

a clear focus and robust processes so we can deliver

on the many opportunities we have before us.

Growth opportunities lie at the heart of our strategy

and we were pleased to progress a number of

collaborative dairy ventures and sector initiatives.

At the same time we also recognise the importance of

meeting our core obligations as a Trustee. During the

year we began the process of building our capacity

in terms of information, systems and processes to

establish a robust platform for the organisation.

This has assisted us in understanding our current

position and will ensure that we are able to deliver

on these obligations better than we have before.

In 2013/14 we made progress in relation to each

of our key strategic pillars.

Connect with our peopleIn order to connect with an ever increasing owner

base we have pursued a strategy of strengthening

our channels of engagement.

One of the most exciting developments in this area

is the implementation of My Whenua – an online

service that provides land owners with their own

website portal with information specifically about

their land. Through My Whenua owners will have

greater access to up-to-date information about their

land wherever they may live.

Our core website remains actively used by owners

and stakeholders with over 10,000 hits per month.

In August 2013 we established a Facebook page.

With over 2,000 ‘Likes’ this channel has proven to be

a useful way to reach out to people who would not

readily connect otherwise. Social media is a growing

channel for engagement which is popular with

Māori. It is providing us with a way of engaging with

the next generation of landowners and sharing our

passion for Māori land and economic development

with this important audience.

Capitalise the assetsOur newly established property team was successful

in adding $700,000 of increased rental to our rent

roll during the year. This came from a combination

of new leases and increased rents negotiated on

existing leases. It was also achieved in part through

wider advertising of properties to lease through our

website. On-line campaigns assisted our ‘Properties

for Lease’ page to become one of the most visited

pages on our website.

As well as increasing rents, we continued to focus

on collecting rent arrears and minimising vacancies.

Over the course of the period, we collected a total

of $1.1m worth of medium to long term rental debt,

putting a substantial amount of cash back in the

hands of our owners.


The market value of the Common Fund grew from

$85.0m to $89.6m in the 2013/14 year. Growth in

the Fund was due to a combination of investment

returns of just over 4.0%, retention of funds by Trusts

and inflows of new income to the Fund.

As at 31 March 2014, the Common Fund’s running

yield was 4.33% against the benchmark of 3.79%.

The Common Fund continues to be managed

conservatively and returns are benchmarked

against the Reserve Bank of New Zealand six month

term deposit rate. The investment returns on the

Common Fund were lower than previous years due

to uncommonly low global interest rates. As higher

yielding term investments matured during the

year the rates available for existing and new funds

were lower.

Distributable income is the income from the

Common Fund paid to client accounts in proportion

to the amount of money they have in the Common

Fund. In 2013/14 year, distributable income totalling

$3.4m was paid to 75,606 client accounts in the

Common Fund.

Our actively managed businesses were responsible

for generating 20.0% of our client fund portfolio

revenue. The agricultural ventures continued to

deliver strong performance – with all our dairy

ventures showing profitability above regional industry

benchmarks. Our kiwifruit enterprises face continued

challenges because of the Pseudomonas syringae

pv. actinidiae (Psa) outbreak, but the steps taken to

recovery are showing signs of positive results.

Grow the assetsThrough our strategy we have committed to using

the General Purposes Fund to help enable growth

opportunities involving Māori assets. We began to

see the realisation of this strategy in 2013/14.

We have entered into a partnership with the Māori

Education Trust to manage one dairy farm in the

Wairarapa and two in the Waikato region. Through

this arrangement we have used our equity and

expertise to invest in and manage the farm ventures

with a goal of improving the performance of the

farms. This has enabled the Māori Education Trust to

focus on its core business of providing scholarship

opportunities for Māori.

Another exciting initiative this year was a

collaborative dairy venture in Northland that could

be a model for other Māori land trusts. As a joint

venture partner we fulfilled an enabling role by

providing both equity and governance support to

a dairy farm conversion (called the Rangihamama

Dairy Limited Partnership). Our work supported the

vision of the trustees and owners of an Ahuwhenua

Trust who were seeking to manage their land more

actively and to unlock its potential.

We introduced new planning, performance

reporting and monitoring services to existing

business ventures we manage. The development of

‘scorecards’ has assisted in instilling the business

and governance disciplines required to maintain

strong performance. These tools have contributed

to the Board and Trustee understanding of the

influences and drivers of their businesses. In

line with this, a highlight this year has been the

nomination of Te Rua o Te Moko Ltd as a finalist in

The Ahuwhenua Trophy BNZ Māori Excellence in

Farming Awards 2014. Te Rua o Te Moko Ltd is a

dairy farm located in Taranaki on land combined

from four Ahuwhenua trusts (three of which are

administered by the Māori Trustee). It includes an

onsite farm training facility to build the capacity of

aspiring young farmers. The Māori Trustee facilitated

this collaboration back in 2009, provided an initial

start-up loan and continues to contribute to the

management of the enterprise.

A key focus over the period has been a review of the

legacy investments of the General Purpose Fund.

A significant amount of background work has been

undertaken to exit these investments in order to free

up equity for new growth initiatives more aligned

with the vision of the organisation. We expect the

fruits of these efforts to be realised in the next

financial year.


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Year aheadWe look to 2014/15 with much anticipation.

We will continue to focus on opportunities that

provide the greatest potential for growth. We have

a pipeline of opportunities ranging from ideas in

the early stage of consideration through to new

developments already underway. The opportunities

include potential new dairy collaborations, a new

social and affordable housing development, and

possibilities for getting involved in emerging agri-

business sectors such as dairy goats. We will make

use of our investment in project management

capabilities to ensure new initiatives deliver for our

stakeholders.

We will fully deploy new processes to ensure we

meet our compliance obligations to our owners in a

more comprehensive manner.

Finally, I reflect on some of the lessons I learnt from

the Māori Leaders Bootcamp, that I was fortunate

to be part of. The Bootcamp brought together key

leaders from across Māoridom to an intensive

developmental forum held at Stanford University.

It built on the concept of ‘Aotearoa Inc’ – that by

working together across sectors, and using leading

edge thinking, we can unlock the potential for

Māori and bring benefits for all in Aotearoa. The

programme reinforced the wonderful opportunities

that Māori have in front of us.

Overall this year has been a year of building the

foundation so that we are better prepared to deliver

on the compelling vision of mobilising Māori land to

create this generation’s legacy. We have made real

progress towards building capability and delivering

tangible results. With the exciting initiatives we have

planned next year, and a greater capacity to deliver

results, we maintain our unwavering commitment to

unlocking the potential of Māori land and assets.

Jamie Tuuta

Māori Trustee and Head of Te Tumu Paeroa


Our Organisation

The Māori Trustee is appointed by the Minister of Māori Affairs under the Māori Trustee Act 1953. The current Māori Trustee is Jamie Tuuta, who was appointed for a five-year term in August 2011. Te Tumu Paeroa is the organisation that supports the Māori Trustee to carry out his duties, functions and responsibilities.

Senior Management TeamTe Tumu Paeroa is led by the Senior Management Team. Members are:

Māori Trustee

Jamie Tuuta

Deputy Māori Trustee

Tiaki Hunia

General Manager

Funds Management &

Commercial Development

Debbie Birch

Chief Operating Officer

Nick McKissack

Manager Strategy

Basil Tapuke

Chief Financial Officer

Stuart Allan


E.37

Advisory BoardThe Māori Trustee established an Advisory

Board to offer advice and guidance to the Senior

Management Team. Board members are:

Keith Sutton Mark Tume

CommitteesSpecialist committees support the organisation’s

work.

Audit and Risk CommitteeProvides greater insight and independent advice

on robust internal control systems and the

management of risk across the organisation to

improve its risk management and organisational

performance. The members of this committee are

Pat Waite (Chair) and Keith Sutton.

Investment and Credit Committee Monitors the investment portfolio to ensure the best

return on the Common Fund and General Purposes

Fund while maintaining an acceptable level of risk for

the organisation. The independent members of this

committee are Mark Tume (Chair) and Keith Sutton.

StaffThe team now numbers 74. The majority of the

team is based in Wellington, with a number of Trust

and Property specialists working from five regional

offices around New Zealand.

Good EmployerDuring the 2013/14 year we implemented new

performance and remuneration frameworks to help

link staff performance standards and rewards to the

achievement of the Business Plan.

We committed to a programme of staff

communication which includes bringing our people

together on a quarterly basis to review performance,

discuss organisational challenges and undertake

staff development. Our quarterly hui ensure that we

all remain focused on the overall vision and continue

to operate as one team.

We held our Korero Mai staff engagement survey

during the year with the results showing a continued

understanding and commitment to our strategies

from our people.

During the year we reached agreement with the New

Zealand Public Service Association (PSA) for a three

year collective employment agreement for those

staff who are members of the PSA.

Statement of ResponsibilityFor the year ended 31 March 2014

In terms of the Crown Entities Act 2004, the Māori Trustee is

responsible for the preparation of financial statements, the

statement of service performance, the statement of trust monies

and for the judgements made in them.

The Māori Trustee is responsible for the establishment and

maintenance of a system of internal controls designed to provide

reasonable assurance as to the integrity and reliability of financial

reporting.

In the Māori Trustee’s opinion these financial statements, the

statement of service performance and the statement of trust monies

for the year ended 31 March 2014, set out on pages 13 to 50, fairly

reflect the financial position and operations of the Māori Trustee.

Jamie Tuuta

Māori Trustee

25 July 2014



E.37

Independent Auditor’s Report

To the readers of the Māori Trustee and Group’s financial statements, statement of service performance

and statement of trust monies for the year ended 31 March 2014

The Auditor-General is the auditor of the Māori Trustee (the Trustee) and Group. The Auditor-General has

appointed me, Phil Kennerley, using the staff and resources of Audit New Zealand, to carry out the audit of

the financial statements, statement of service performance and statement of trust monies of the Trustee

and Group on her behalf.

We have audited:

» the financial statements of the Trustee on pages 18 to 48, that comprise the statement of financial

position as at 31 March 2014, the statement of comprehensive income, statement of changes in equity

and statement of cash flows for the year ended on that date and the notes to the financial statements

that include accounting policies and other explanatory information;

» the statement of service performance of the Trustee on pages 13 to 17; and

» the statement of trust monies on pages 49 to 50.

Qualified opinion – The scope of the audit was limited in respect of two of the associate entities

Reasons for our qualified opinionMiraka LimitedThe Group has included in the financial statements unaudited financial figures for the year ended 31 March

2014 relating to its associate, Miraka Limited. This includes the Group’s share of Miraka Limited’s surplus

for the year of $2,304,000 (2013: loss $572,000) included in share of associates’ net surplus/(deficit) of

$2,744,000 (2013: $293,000), other comprehensive income for the year of $921,000 (2013: expense $89,000)

included in share of associates’ other comprehensive income/(expenditure) of $921,000 (2013: expense

$3,056,000), net assets of $13,176,000 (2013: $8,717,000) included in investment in associates of $18,472,000

(2013: $34,136,000), and the detailed information disclosed in note 11 to the financial statements.

Miraka Limited has a balance date of 31 July and its most recent audited financial statements are for the

year ended 31 July 2013. As the equity accounted financial statements for Miraka Limited include unaudited

information for the eight month period 1 August 2013 to 31 March 2014, there were no satisfactory audit

procedures that we could adopt to obtain sufficient evidence to confirm the financial figures relating to Miraka

Limited. Any misstatement of these financial figures would affect the Group’s financial position and financial

performance for the year ended 31 March 2014.


In addition, any misstatement of Miraka Limited’s financial information may affect the carrying value of the

Trustee’s investment in Miraka Limited of $11,543,000 (2013: $10,000,000).

Putake Investments Limited Partnership As explained in Note 11 on page 34, there is uncertainty over the carrying value of one of the investments

made by Putake Investments Limited Partnership (the Partnership) and whether it should be impaired.

That investment comprises $400,000 of the Partnership’s equity-accounted value in the Māori Trustee’s

Group accounts of $3,794,000. Any adjustment to the value of that investment would affect the Group’s

financial position and financial performance for the year ended 31 March 2014.

In addition, any adjustment of the Partnership’s financial information may affect the carrying value of the

Trustee’s investment in the Partnership of $3,083,000.

Qualified opinion on statement of financial position and the statement of comprehensive incomeIn our opinion, except for the effects of the matters described in the “Reasons for our qualified opinion”

paragraphs above, the financial statements of the Trustee and Group on pages 18 to 48:

» comply with generally accepted accounting practice in New Zealand; and

» fairly reflect the Trustee and Group’s:

- financial position as at 31 March 2014; and

- financial performance for the year ended on that date.

Opinion on the statement of cash flowsIn our opinion, the statement of cash flows on page 21 complies with generally accepted accounting practice

in New Zealand and fairly reflects the Trustee and Group’s cash flows for the year ended 31 March 2014.

Opinion on the statement of service performanceIn our opinion, the statement of service performance of the Trustee and Group on pages 13 to 17:

» complies with generally accepted accounting practice in New Zealand; and

» fairly reflects for each class of outputs:

- its standards of delivery performance achieved, as compared with the forecast standards outlined

in the statement of forecast service performance adopted at the start of the financial year; and

- its actual revenue earned and output expenses incurred, as compared with the forecast revenues

and output expenses outlined in the statement of forecast service performance adopted at the start

of the financial year.

Opinion on the statement of trust moniesIn our opinion, the statement of trust monies on pages 49 to 50 fairly reflects:

» the account balances held by the Trustee for the Common Fund and Special Investment Accounts as

at 31 March 2014; and

» movements within the Common Fund and Special Investment Accounts for the year ended on that date.


E.37

Our audit was completed on 25 July 2014. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Māori Trustee

and our responsibilities, and we explain our independence.

Basis of opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate

the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical

requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial

statements, statement of service performance and statement of trust monies are free from material

misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judgement,

are likely to influence readers’ overall understanding of the financial statements, statement of service

performance and statement of trust monies We are unable to determine whether there are material

misstatements in relation to two of the associates, Miraka Limited and Putake Investments Limited

Partnership, because the scope of our work was limited, as we have referred to in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the

financial statements, statement of service performance and statements of trust monies. The procedures

selected depend on our judgement, including our assessment of risks of material misstatement of the

financial statements, statement of service performance and statement of trust monies, whether due to fraud

or error. In making those risk assessments, we consider internal control relevant to the preparation of the

Trustee’s financial statements and statement of service performance that fairly reflect the matters to which

they relate. We consider internal control to design audit procedures that are appropriate in the circumstances

but not for the purpose of expressing an opinion on the effectiveness of the Trustee’s internal control.

An audit also involves evaluating:

» the appropriateness of accounting policies used and whether they have been consistently applied;

» the reasonableness of the significant accounting estimates and judgements made by the Māori Trustee;

» the adequacy of all disclosures in the financial statements, statement of service performance and

statement of trust monies; and

» the overall presentation of the financial statements, statement of service performance and statement

of trust monies.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements,

statement of service performance and statement of trust monies. Also we did not evaluate the security and

controls over the electronic publication of the financial statements, statement of service performance and

statement of trust monies.

We did not receive all the information and explanations we required although we believe that we have

obtained sufficient and appropriate audit evidence to provide a basis for our qualified opinion.


Responsibilities of the Māori Trustee

The Māori Trustee is responsible for preparing financial statements and a statement of service performance

that:

» comply with generally accepted accounting practice in New Zealand;

» fairly reflect the Māori Trustee’s financial position, financial performance and cash flows; and

» fairly reflect its service performance achievements.

The Māori Trustee is also responsible for preparing the statement of trust monies that fairly reflects activities

within the Common Fund and Special Investment Accounts.

The Māori Trustee is also responsible for such internal control as he determines is necessary to enable the

preparation of financial statements, a statement of service performance and a statement of trust monies that

are free from material misstatement, whether due to fraud or error. The Māori Trustee is also responsible for

the publication of the financial statements, statement of service performance and statement of trust monies,

whether in printed or electronic form.

The Māori Trustee’s responsibilities arise from the Public Finance Act 1989 and the Māori Trustee Act 1953.

Responsibilities of the Auditor

We are responsible for expressing an independent opinion on the financial statements, statement of

service performance and statement of trust monies and reporting that opinion to you based on our audit.

Our responsibility arises from section 15 of the Public Audit Act 2001 and the Public Finance Act 1989.

Independence

When carrying out the audit we followed the independence requirements of the Auditor-General,

which incorporate the independence requirements of the External Reporting Board.

Other than the audit, we have no relationship with, or interests in, the Trustee, its subsidiaries or

its associates.

Phil Kennerley

Audit New Zealand

On behalf of the Auditor-General

Wellington, New Zealand


E.37

Statement of Service PerformanceFor the year ended 31 March 2014

The Māori Trustee is listed in schedule 4 of the

Public Finance Act 1989 requiring the preparation

of a Statement of Service Performance in

compliance with the requirements of the Crown

Entities Act 2004.

In a letter dated 5 August 2009, the Minister of

Finance, as empowered by section 45N (2) of the

Crown Entities Act, granted the Māori Trustee the

following exemptions from the provisions of the

Crown Entities Act:

» An exemption from providing “an assessment

against the intentions, measures and standards

set out in a statement of intent prepared at the

beginning of the financial year”. This exemption

recognises that the Māori Trustee is not required,

under schedule 4 of the Public Finance Act, to

prepare a statement of intent. However, the

annual report must provide the information that

is necessary to enable an informed assessment

to be made of the operations and performance

for the financial year.

» An exemption from preparing a statement of

service performance “in respect of any class of

outputs that is not funded (in whole or in part) by

the Crown”. This exemption addresses outputs

not directly funded in whole or part by the Crown.

This statement of service performance reports

against the outputs stated in the funding agreement

between the Minister of Māori Affairs (on behalf of

the Crown) and the Māori Trustee.

Targets have been excluded from the Statement of

Service Performance due to the fact that the funding

agreement does not have set targets. We will look to

develop internal commercially focused KPI’s that will

be the basis for reporting in the Statement of Service

Performance in the future.

The total cost of outputs for the year ended 31 March

2014 is summarised below.

2014 2013

Actual Budget Actual

$000 $000 $000

Crown appropriation 10,347 10,347 10,347

Administration of trusts 5,226 5,082 5,219

Share registry 979 1,050 1,333

Lease administration 2,540 2,431 2,659

Land and business development 501 601 1,469

Common Fund management 1,012 854 1,666

Distributions to owners 432 422 551

Total output expenditure 10,690 10,440 12,897

The total output expenditure includes restructure costs of $117,000 which was not budgeted for the year

(2013 $1,514,000).


Output 1 – Administration of Trusts

Quantity

Performance measures Actual 2014 Actual 2013

Entities administered 1,968 1,985

Owner meetings held 287 234

Trustee meetings held 295 138

The number of entities administered remained fairly

static throughout the year with a net decrease of 17.

There were eleven new entities administered

during the year with the loss of one entity. In

addition work has been undertaken on ensuring

all entities reported within our systems still had a

business relationship with us. This translates into 27

entities being removed from the number of entities

administered.

The number of owner meetings and trustee

meetings held increased from last year as

engagement with owners and trustees improved.

During the year the Māori Trustee undertook a

review of trust functions to improve services to

owners and trusts. The objective of the review is

to improve the way in which we fulfil compliance

activities and develop value added service offerings

to support owners achieve improved land utilisation.

As part of this project, the Māori Trustee rolled

out the My Whenua product which delivers more

complete and timely information to owners through

secure websites. This service will become a primary

channel for delivering many of our communication

and compliance requirements in the future.

The increased level of activity aligns well with our

strategic pillar of connecting with our people. We will

continue to increase engagement with owners to

better meet their needs.

Quality


Customer satisfaction levels 52% 59%

Customer satisfaction monitorThe majority of clients were satisfied with the Māori

Trustee, though satisfaction has decreased over the

last two years.

Prompted awareness of services the Māori Trustee

provides remains relatively high, though levels

are generally lower than they were last year.

Performance ratings for attributes relating to

general service and business and advice services

remained consistent with those given last year;

ratings for administration and information services

decreased overall. Similar to previous years, clients

were more likely to give neutral or unsure ratings for

services rather than rate them as performing poorly,

resulting in positive ratings on the whole.

Improving communication was a recurring theme

throughout the survey – under half were satisfied

with information they received from the Māori

Trustee. When asked what the Māori Trustee could

do to improve its service, almost all suggestions

centred around improving communication and

engagement. In essence we believe owners are

still uncertain as to what our service delivery

standard should entail. In response to the need to

improve communications, the Māori Trustee has

developed an innovative new information service

that will provide owners with easier access to more

information than ever before. Called My Whenua,

it will provide owners with a secure website with

information specifically about their land. It will also

include a notification service with news and updates

so owners can stay connected with their land no

matter where they live. During the year a Facebook

page was created to make communication with a

segment that we may not otherwise engage with.


E.37Output 2 – Share Registry

Quantity


Owner accounts 89,144 95,701

Ownership interests 208,226 204,341

New interests added 3,885 5,431

Owner accounts reduced during the year due mainly

to the merging of duplicate accounts for existing

owners. This increased merging activity has been

undertaken as part of the data integrity programme

currently underway. Even with the reduced number

of owner accounts, the number of ownership

interests has continued to grow primarily through

fragmentation due to succession.

Quality


Contact details held for live owners (%) 62.8% 65.7%

The percentage of owner accounts with contact

details decreased during the year. This was primarily

due to the large number of duplicate accounts

that have been merged, thereby impacting on the

number of addresses held for merged accounts. This

process has, however, resulted in a more accurate

dataset with a significant decrease in duplication

across the database.

We have recently been measuring the proportion of

shareholding interests we have addresses for. This

takes into account that one client account may have

multiple shareholdings for different blocks of land.

Since we started recording this figure we have seen

the percentage of addresses for shareholdings grow

from 69.5% (October 2013) to 71.0% in the last six

months of the year.

The retention and growth of client contact details

held continues to be a priority and we are continually

seeking improvements to the channels we use to

obtain this data. Client contact channels such as

meetings of owners for individual blocks as well as

our roadshow hui, improvements to our website to

make both searching and responding easier, data

supply agreements with external organisations, as

well as our 0800 phone number, have all contributed

to the inflow of data.

Output 3 – Lease Administration

Quantity


Total leases administered 2,098 2,148

New leases 130 191

Lease renewals 106 84

A review of the total number of blocks administered

has seen a number of deactivated blocks removed

from the system, being those blocks where we no

longer have a role. The new property administration

processes in place have dealt with the majority of

backlogs during the year.

A number of new leases were also signed during the

year, thereby reducing the vacancy rate for the total

number of blocks administered.

QualityPerformance measures Actual 2014 Actual 2013

Lease inspections 638 452

Total debtors $1,297,000 $1,300,000

Debtor arrears > 90 days $583,000 $400,000


Total debtors at 31 March were $1.3 million, of

which 33% related to current debtors (2013 54%).

We are currently reviewing our billing practices to

reduce the level of arrears. A project to improve the

receipting and billing processes has been initiated.

A lease inspection is carried out by a third party

assessing the condition of the property against the

obligation of a lessee under the lease. The inspector

will highlight any breaches against the lease so the

lessee can remedy them.

Output 4 – Land and Business Development

Quantity


Ventures administered 6 19

There is a reduction in the number of ventures

administered in the current year compared to last

year, as the previous year included some entities

where the Māori Trustee was custodian trustee and

the current year includes entities where the Māori

Trustee is the responsible trustee only; actively

providing management solutions and governance

decision support.

VenturesThese are ventures where trusts have moved

from passive leasing of land to having more active

agribusiness ventures on the land. Current ventures

include dairy, sheep and beef and kiwifruit.

KiwifruitPseudomonas syringae pv. actinidiae (Psa) continues

to pose challenges to our orchards. Although the

worst of Psa would seem to be behind us, constant

vigilance and focused orchard management

practices are essential. Our orchards are now

regaining ground with recent harvests closer to 80%

of original production targets. On a positive note

Gold G3 has begun to stabilise, with high orchard

gate returns expected this season because of a

good early start, and taste premiums for green fruit

offsetting reduced production.

DairyDairy has been a success story this year. Our farms

have to date set records for production and at a high

pay-out will make larger profits than predicted at the

beginning of the season. All have been benchmarked

and are outperforming their respective benchmarks,

some significantly. This has allowed for debt

repayment and capital development to occur at a

higher rate than anticipated out of cash surpluses.

One of our farms, Te Rua o Te Moko Ltd, is a finalist

in the Ahuwhenua Dairy awards with the Business

Performance team at Māori Trustee project

managing the run into the finals with two judging

rounds and an open day. This has been a fantastic

result.

Sheep & beefHereheretau Station, the key asset of the Māori

Soldiers Trust, continues to perform solidly and

recently completed the acquisition of a general title

farm property on the Whakaki flats. This will enable

an increase in tertiary scholarships. The purchase

followed on from a pilot study the previous year

which identified stock finishing limitations. Addition

of this land provides the scope to finish all wintered

stock as well as trade stock when timing proves

advantageous.

Governance decision support processesThe Business Performance team has developed

a new approach to managing farming assets

utilising a five year governance scorecard. Through

interlinking lead and lag indicators we are able to

provide governors with a more effective way of both

understanding the key drivers of their business,

while providing the ability to make more effective

and timely decisions. The framework is a key part of

the Te Rua o Te Moko Ltd governance structure, with

the Ahuwhenua competition judges commenting on

the effectiveness of this approach. All active entities

that we manage are now using scorecards in their

businesses.

Other projectsOther projects included a joint venture arrangement

with the Māori Education Trust to improve the

financial performance of the farms.

In October 2013, the Minister of Housing announced

approval of the Tamaki Makaurau Community

Housing Consortium’s proposal for the Waimahia

community housing project in Weymouth. Auckland

Onehunga Hostels Endowment Trust (AOHET), which


E.37is administered by the Māori Trustee, is one of three

limited partners in this project and has also achieved

accreditation as a social housing provider.

During the year, Māori Trustee also commenced a

Trust review project to improve services provided

and the way in which we deliver on compliance

activities and to develop value added services to

support owners. Refer comments on output 1 on

page 14.

Output 5 – Common Fund Management

The Common Fund contains monies received by the

Māori Trustee under sections 23 and 25 of the Māori

Trustee Act 1953 that are held in trust for the persons

entitled to receive the monies.

Quantity


Investments managed (market value) $89,600,000 $85,000,000

Quality

Performance measures Actual 2014 Benchmark Actual 2013

Common Fund Return (Benchmark Reserve Bank of NZ 6 month deposit rate) 4.00% 3.79% 5.01%

The Māori Trustee’s Investment and Credit Committee

meets four times during the year. The funds

management performance is reviewed quarterly.

The Common Fund performed above the nominated

benchmark for the last twelve months as shown

above. The Common Fund return of 4.00% above is

the twelve month rolling cash return compared to

4.33% running yield of the fund referred to on page 4.

New Zealand’s economic performance continues

to outperform the OECD average and all major

indicators suggest the growth is sustainable in the

medium term. There is a very high probability New

Zealand has seen the bottom of the interest rate

cycle and interest rates are expected to increase

over the next two years. Helping to soften sudden

rate increases in the relatively benign inflationary

outlook which is underpinned by a high NZ dollar.

The Common Fund is well positioned to increase its

holdings of higher income generating bonds relative

to cash in a rising interest rate environment.

Output 6 – Distributions to Owners

Quantity


Number of payments to owners 25,842 25,598

Value of payments to owners $6,288,000 $6,294,000

Percentage of payments effected 75% 73%

The value of payments to owners reported above

and the value reported as client payments in the

Statement of Trust Monies differs mainly due to

reversal of stale cheques and direct credits of

$216,000 (2013 $162,000).

Quality

Distributable income is calculated and paid in

accordance with section 26 of the Māori Trustee Act

1953. See note (ii) on page 50 in the Statement of

Trust Monies.

The Māori Trustee continues to meet all reporting

requirements to owners in respect of the Common

Fund and distributable income, in accordance with

regulation 10 of the Māori Trustee Regulations 2009.


Statement of Comprehensive IncomeFor the year ended 31 March 2014

Group ParentNotes 2014 2014 2013 2014 2013

Actual Budget Actual Actual Actual$000 $000 $000 $000 $000

RevenueFees and commissions 1,967 1,658 2,639 1,977 2,654Revenue from Crown 1 10,347 10,347 10,347 10,347 10,347Investment income 2 3,947 3,955 4,400 3,945 4,397Farm revenue 2,922 - - - -

Revenue from operations 19,183 15,960 17,386 16,269 17,398

ExpenditureEmployee benefits 3 7,005 6,053 6,505 6,496 6,505Depreciation 14 310 341 324 252 324Amortisation 15 318 354 112 318 112Restructuring costs 117 - 1,514 117 1,514Farm expenses 4 3,297 - - 29 -Other expenditure 5 4,740 4,808 5,319 10,914 7,747Total operating expenditure 15,787 11,556 13,774 18,126 16,202

Net surplus/(deficit) from operations 3,396 4,404 3,612 (1,857) 1,196

Other incomeOther income 87 380 180 242 160Dividend income 15 - 14 476 195Impairment of investment in associates (6,352) - - - -Gain on investment property revaluation 2,127 - - 2,127 -

Share of associates’ net surplus/(deficit) 11 2,744 - 293 - -Total other income (1,379) 380 487 2,845 355

Net surplus/(deficit) before tax 2,017 4,784 4,099 988 1,551Income tax expense 6 - - - - -Net surplus/(deficit) after tax 2,017 4,784 4,099 988 1,551Net surplus/(deficit) attributable to:Māori Trustee 2,568 4,784 4,099 988 1,551Non-controlling interest (551) - - - -

Other comprehensive incomeShare of associates’ other comprehensive income/(expenditure)

11 921 - (3,056) - -

Gain on asset revaluation (44) - 44 (44) 44Total comprehensive income 2,894 4,784 1,087 944 1,595Total comprehensive income attributable to:Māori Trustee 3,445 4,784 1,087 944 1,595Non-controlling interest (551) - - - -

Explanations of major variances against budget are provided in note 26.

These financial statements should be read in conjunction with the accompanying notes.


E.37

Statement of Changes in EquityFor the year ended 31 March 2014

Group Parent

2014 2014 2013 2014 2013

Actual Budget Actual Actual Actual

$000 $000 $000 $000 $000

Equity at beginning of year

General Purposes Fund 115,211 119,018 111,981 115,797 112,059

Appropriation Account 4,994 4,993 7,181 4,994 7,181

Land revaluation reserve 44 - - 44 -

Non-controlling interest - - - - -

Total equity at beginning of year 120,249 124,011 119,162 120,835 119,240

Transfers from statement of comprehensive incomeGeneral Purposes Fund 3,564 4,786 3,230 1,063 3,738

Appropriation Account (75) (2) (2,187) (75) (2,187)

Land revaluation reserve (44) - 44 (44) 44

Non-controlling interest (551) - - - -

Total comprehensive income 2,894 4,784 1,087 944 1,595

Equity at end of year

General Purposes Fund 118,775 123,804 115,211 116,860 115,797

Appropriation Account 4,919 4,991 4,994 4,919 4,994

Land revaluation reserve - - 44 - 44

Non-controlling interest 2,338 - - - -

Total equity at end of year 126,032 128,795 120,249 121,779 120,835




Statement of Financial PositionAs at 31 March 2014



AssetsCurrent assetsCash and cash equivalents 7 7,208 8,371 16,209 7,711 15,985Debtors and other receivables 8 1,386 1,842 1,211 776 1,188Term deposits 23,300 16,930 8,000 23,300 8,000Held-to-maturity investments 9 13,654 8,000 7,581 13,654 7,581Loans and receivables 10 635 500 580 635 580Stock 2,027 - - - -Non-current assets held for sale 12 14,250 23,057 - - -Total current assets 62,460 58,700 33,581 46,076 33,334

Non-current assetsHeld-to-maturity investments 9 29,796 45,609 43,823 29,796 43,823Loans and receivables 10 2,392 3,469 3,426 16,642 24,028Investments 2,633 - - - -Investments in subsidiary - - - 2,889 -Investments in associates 11 18,472 14,244 34,136 16,065 14,331Investment property 13 10,879 - - 10,879 -Property, plant and equipment 14 716 5,211 4,047 325 4,047Intangible assets 15 2,780 2,625 2,979 2,780 2,979Total non-current assets 67,668 71,158 88,411 79,376 89,208

Total assets 130,128 129,858 121,992 125,452 122,542

Liabilities and equityCurrent liabilitiesCreditors and other payables 16 1,747 702 1,257 1,288 1,221Income in advance - - - 36 -Employee benefits 17 533 361 457 533 457Total current liabilities 2,280 1,063 1,714 1,857 1,678

Non-current liabilitiesEmployee benefits 17 14 - 29 14 29Other non-current liabilities 13 1,802 - - 1,802 -Total non-current liabilities 1,816 - 29 1,816 29Total liabilities 4,096 1,063 1,743 3,673 1,707

EquityTotal equity attributable to Māori Trustee 123,694 128,795 120,249 121,779 120,835Non-controlling interest 2,338 - - - -Total equity 126,032 128,795 120,249 121,779 120,835

Total liabilities and equity 130,128 129,858 121,992 125,452 122,542



E.37


Statement of Cash FlowsFor the year ended 31 March 2014



Cash flows from operating activitiesFees and commissions 2,045 1,659 2,884 2,044 2,899Revenue from Crown 10,347 10,347 7,760 10,347 7,760Investment income 3,879 3,954 4,374 3,877 4,371Other income 740 384 400 930 160Farm revenue 2,687 - - - -Employee benefits (6,987) (6,034) (6,486) (6,496) (6,486)Suppliers (4,970) (5,508) (4,133) (4,872) (4,106)Farm expenses (4,852) - - (29) -Restructure cost (56) - (2,008) (56) (2,008)Goods and services tax (GST) (net) (80) (2) (444) (47) (444)Net (payments)/receipts for Ahuwhenua

242 - (182) 242 (182)

Net cash flows from operating activities

18 2,995 4,800 2,165 5,940 1,964

Cash flows from investing activitiesLoans and receivables repaid 2,189 240 743 2,289 743Held-to-maturity investments matured or sold

13,780 - 12,018 13,780 12,018

Term deposits matured/(invested) (15,300) (3,430) 4,200 (15,300) 4,200Investments (3,011) - - - -Disposal of property, plant and equipment

2,817 - - 2,817 -

Investment property purchased (6,950) - - (6,950) -Property, plant and equipment purchased (648) (220) (240) (199) (240)Intangible assets purchased (118) (525) (2,528) (118) (2,528)Loans and receivables advanced (390) - (165) (390) (165)Investment in subsidiary - - - (2,889) -Investment in associates (1,734) - - (1,734) -Held-to-maturity investments purchased (5,520) (3,000) (8,193) (5,520) (8,193)Non-controlling interest 2,889 - - - -Net cash flows from investing activities (11,996) (6,935) 5,835 (14,214) 5,835

Net increase/(decrease) in cash (9,001) (2,135) 8,000 (8,274) 7,799Cash at beginning of year 16,209 10,506 8,209 15,985 8,186Cash at end of year 7 7,208 8,371 16,209 7,711 15,985


The GST (net) component has been presented on a net basis, as the gross amounts do not provide

meaningful information for financial statement purposes. For the same reason, cash flows arising from the

investment and maturity of term deposits have been reported on a net basis.


Notes to the Financial StatementsFor the year ended 31 March 2014

Statement of accounting policies

Reporting entityThe Māori Trustee is a corporation sole defined

under the Māori Trustee Act 1953 (the Act) and is

domiciled in New Zealand. The fundamental role of

the Māori Trustee is to work with Māori landowners

to protect and build their assets for now, and for

future generations. Accordingly, the Māori Trustee

has designated itself as a public benefit entity for the

purposes of New Zealand equivalents to International

Financial Reporting Standards (NZ IFRS).

These financial statements have been prepared

in terms of section 23 of the Act for the General

Purposes Fund and the Appropriation Account. The

Māori Trustee operates and manages trust accounts

on behalf of clients under section 23 of the Act. The

trust account transactions and balances are not

included in the Māori Trustee’s financial statements.

These are included in the Statement of Trust Monies.

The General Purposes Fund represents funds

held by the Māori Trustee in its own right. The

Appropriation Account was established on 1 July

2009 under the Māori Trustee Amendment Act 2009

to account for revenue received from the Crown.

The financial statements for the Māori Trustee are

for the year ended 31 March 2014 and were approved

by the Māori Trustee on 25 July 2014.

Basis of preparationStatement of complianceThe financial statements have been prepared in

accordance with New Zealand Generally Accepted

Accounting Practice (NZ GAAP). They comply with

NZ IFRS, and other applicable Financial Reporting

Standards, as appropriate for public benefit entities.

Budget figuresThe budget figures were approved by the Māori

Trustee. The budget figures were prepared in

accordance with NZ GAAP and are consistent with

the accounting policies adopted by the Māori Trustee

for the preparation of the financial statements.

Measurement baseThe financial statements have been prepared on

a historical cost basis, except where modified by

revaluation of certain items of property, plant and

equipment, investment property, held-to-maturity

investments and non-current assets held for sale.

The methods used to measure fair value are detailed

in the specific accounting policies.

Functional and presentation currencyThe financial statements and notes are presented in

the Māori Trustee’s functional currency, which is New

Zealand dollars, and all values are rounded to the

nearest thousand dollars ($000).

New standards and interpretations The Minister of Commerce has approved a new

Accounting Standards Framework (incorporating a

Tier Strategy) developed by the External Reporting

Board (XRB). Under this Accounting Standards

Framework, the Māori Trustee is classified as a

Tier 1 reporting entity and it will be required to apply

full Public Benefit Entity Accounting Standards (PAS).

The effective date for the new standards is for the

reporting periods beginning on or after

1 July 2014. The Māori Trustee will transition to

the new standards in preparing its 31 March 2016

financial statements. The adoption of these new

standards and interpretations will not have

any material impact, with the exception of PBE

IPSAS 9 Revenue from exchange transactions.

The standard prescribes the accounting treatment

of revenue arising from rendering of services, sales

of goods and the use by others of entity assets

yielding interest, royalties, and dividends or

similar distributions.


E.37Basis of consolidationInvestments in subsidiariesThe consolidated financial statements comprise

the financial statements of the Māori Trustee, its

wholly owned subsidiaries, Te Māori Lodges Limited

(TML) and MTD1 Limited, and Te Tumu Paeroa Dairy

Limited Partnership which is jointly owned with

the Māori Education Trust. Subsidiaries are those

entities over which the Māori Trustee has the power

to govern the financial and operating policies to

obtain benefits from their activities.

The principal activity of TML is that of a holding

company to hold shares in Quantum Limited. The

financial statements of the subsidiary are prepared

for the same reporting period and using accounting

policies consistent with those for the Māori Trustee.

The Te Tumu Paeroa Dairy Limited Partnership was

originally created with the Māori Trustee as the

only limited partner owning 100 partnership units.

Subsequently, 50 of the 100 partnership units were

transferred to the Māori Education Trust.

MTD1 Limited is a wholly owned subsidiary of the

Māori Trustee with no transactions for the year

ended 31 March 2014. MTD1 Limited is the general

partner for the Te Tumu Paeroa Dairy Limited

Partnership which was created in May 2013. As the

general partner, MTD1 Limited has responsibility

for the management and control of the business

and partnership.

The financial statements of subsidiaries are prepared

for the same reporting period as the Māori Trustee,

with the exception of Te Tumu Paeroa Dairy Limited

Partnership which has a 31 May balance date to align

with farming practice.

Intercompany transactions, balances and unrealised

gains on transactions between the subsidiary

companies and the Group are eliminated.

Investments in subsidiaries are subject to annual

review for impairment.

Investments in associatesAssociates are entities over which the Māori

Trustee has significant influence and that are

neither subsidiaries nor joint ventures. Significant

influence is where the Māori Trustee has over 20%

of the voting rights. The Māori Trustee investments

in associates include Putake Limited, Putake

Investments Limited Partnership, Miraka Limited,

Rangihamama Dairy Limited Partnership and RDF1

Limited. Quantum Limited is an investment in

associates in the Group financial statements.

Investments in associates are accounted for using

the equity method of accounting in the consolidated

financial statements. Under the equity method,

investments in associates are carried at cost plus

post-acquisition changes in the Māori Trustee’s

share of the net assets of the associate, less

provision for impairment.

The financial statements of associates are prepared

for the same reporting period as the Māori Trustee,

with the exception of: Miraka Limited, which has a

31 July balance date; Quantum Limited, which has a

31 December balance date; and Rangihamama Dairy

Limited Partnership and RDF1 Limited which have a

31 May balance date to align with farming practice.

The financial statements of associates are prepared

using consistent accounting policies.

Significant accounting policiesRevenueRevenue is recognised and measured at the fair

value of the consideration received or receivable to

the extent that it is probable that economic benefits

will flow to the Māori Trustee and that the revenue

can be reliably measured.

Fees and commissionsThe Māori Trustee can only deduct commissions

upon actual receipt of trust monies. Therefore,

commissions are recognised on a cash basis and

fees on an invoice basis.

InterestInterest revenue is recognised using the effective

interest method. The effective interest rate is the

rate that exactly discounts the estimated cash flows

associated with a financial instrument over the

expected life of the instrument.

Revenue from the CrownThe Māori Trustee receives revenue from the

Crown pursuant to a Funding Agreement dated

20 December 2012. Revenue from the Crown is

recognised as revenue when earned and is reported

in the financial period to which it relates.

LeasesLeases that do not transfer substantially all the risks

and rewards incidental to ownership of an asset to

the Māori Trustee are classified as operating leases.

Operating lease payments are recognised as an


expense on a straight-line basis over the term of the

lease in the statement of comprehensive income.

Financial instrumentsThe Māori Trustee is party to financial instruments as

part of its normal operations. Financial instruments

include:

» Financial assets – cash and cash equivalents,

debtors and other receivables, term deposits,

held-to-maturity investments, loans and

receivables and non-current assets held for sale

» Financial liabilities – creditors and other payables

income in advance and employee benefits.

Purchases and sales of financial assets are

recognised on the date when the Māori Trustee

becomes party to a financial contract. Financial

assets are derecognised when the right to receive

cash flows from the financial assets have expired or

been transferred.

Financial instruments are initially recognised

at fair value plus transaction costs. Subsequent

measurement of financial instruments depends on

the classification of the financial instrument.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand;

cash at bank and short-term deposits with an

original maturity of three months or less that are

readily convertible to known amounts of cash

and that are subject to insignificant risk of changes

in value.

Debtors and other receivablesDebtors and other receivables are initially

recognised at fair value and subsequently measured

at amortised cost using the effective interest rate

method, less provision for impairment.

A provision for impairment of debtors is established

when there is objective evidence that the Māori

Trustee will not be able to collect all amounts due

according to the original terms of the receivable.

Financial difficulties of the debtor, default payments

or debts more than 60 days overdue are considered

objective evidence of impairment.

The amount of the provision for impairment is the

difference between an asset’s carrying amount

and the present value of estimated future cash

flows, discounted at the original effective interest

rate. The carrying amount of the asset is reduced

through the use of a provision account, and the

amount of the loss is recognised in the statement

of comprehensive income. When a debtor is

uncollectible, it is written off against the provision

account.

Term depositsInvestments in term deposits are initially measured

at fair value plus transaction costs. For term

deposits, impairment is established when there is

objective evidence that the Māori Trustee will not be

able to collect amounts due according to the original

term of the deposit.

Held-to-maturity investmentsNon-derivative financial assets with fixed or

determinable payments are classified as held-

to-maturity investments when the Māori Trustee

has the positive intention and ability to hold

these investments to maturity. Held-to-maturity

investments include government stock, bank bonds

and corporate bonds. Investments intended to

be held for an undefined period are not included

in this classification.

Held-to-maturity investments are initially recorded

at fair value plus transaction costs and are

subsequently measured at amortised cost using

the effective interest method less any impairment

losses. The amortisation is recorded in the

Statement of Comprehensive Income as interest

income/expense. Gains and losses are recognised in

the statement of comprehensive income when the

investments are derecognised or impaired.

Loans and receivablesLoans and receivables are non-derivative financial

assets with fixed or determinable payments that

are not quoted on an active market. Loans and

receivables include loans and mortgages, advances

to Te Māori Lodges Limited, Conversion Fund loans

and other advances.

Loans made at nil or below-market interest rates

are initially recognised at the present value of

their expected future cash flows, discounted at the

current market rates of return for similar financial

instruments. The loans are subsequently measured

at amortised cost using the effective interest

method. The difference between the face value and

present value of the expected future cash flows of a

loan is recognised in the net surplus or deficit

as impairment.


E.37These assets are initially recorded at fair value plus

transaction costs and are subsequently measured at

amortised cost using the effective interest method

less provision for impairment.

A provision for impairment of loans and receivables

is established when there is objective evidence

that the Māori Trustee will not be able to collect all

amounts due according to the original terms of the

receivable. Financial difficulties of the debtor, default

payments or debts more than 60 days overdue are

considered objective evidence of impairment.

The amount of the provision for impairment is the

difference between an asset’s carrying amount and

the present value of estimated future cash flows,

discounted at the original effective interest rate. The

carrying amount of the asset is reduced through the

use of a provision account, and the amount of the

loss is recognised in the statement of comprehensive

income. When an asset is uncollectible, it is written off

against the provision account.

Loans and mortgages are classified as current assets

if principal repayments are due within twelve months

of balance date or if the principal amount is overdue

at balance date. All other amounts are classified as

non-current assets. Prior year figures in relation to

the classification of the current portion of loans and

mortgages have been adjusted retrospectively in the

current year financial statements.

StockStock are livestock measured at estimate of market

value at reporting date.

InvestmentsInvestments are stated at market value.

Non-current assets held for saleNon-current assets held for sale are classified

as held for sale if their carrying amount will be

recovered principally through a sale transaction

rather than through continuing use. Non-current

assets held for sale are measured at the lower of

their carrying amount or fair value less disposal

costs. Any impairment losses for write-downs of

non-current assets held for sale are recognised

in the surplus or deficit. Any increases in the fair

value (less disposal costs) are recognised up to

the level of any impairment losses that have been

previously recognised.

Investments in associatesThe Māori Trustee’s share of post-acquisition

surplus/(deficits) and other comprehensive income/

(expenditure) is recognised in the statement of

comprehensive income. The cumulative post-

acquisition movements are adjusted against the

carrying amount of the investment.

Investments in associates are recorded at cost less any

impairment losses in the Parent’s financial statements

and are accounted for using the equity method of

accounting in the Group financial statements.

Investments propertyInvestment properties are measured initially at cost,

including transaction costs. After initial recognition,

investment properties are measured at fair value at

balance date. The fair value of investment properties

is calculated by completing a property valuation

which reflects market conditions at balance date.

A gain or loss arising from a change in the fair

value of investment property shall be recognised in

surplus or deficit for the period in which it arises.

Property, plant and equipmentProperty, plant and equipment consist of IT

equipment, office equipment, furniture and fittings,

motor vehicles, land and buildings.

Land is measured at fair value, and buildings are

measured at fair value less accumulated depreciation

and impairment losses. All other property, plant

and equipment are measured at historical cost, less

accumulated depreciation and impairments.

Depreciation is charged to the statement of

comprehensive income on all property, plant and

equipment, other than work in progress and land.

Depreciation is calculated on a straight-line basis

at rates estimated to allocate the cost of an asset

over the estimated useful life. The estimated useful

lives and associated depreciation rates of the asset

classes are as follows:

IT equipment 3 years 33%

Office equipment 5 years 20%

Furniture and fittings 5 years 20%

Motor vehicles 5 years 20%

Buildings 50 years 2%

AdditionsThe cost of an item of property, plant or equipment

is recognised as an asset only when it is probable

that future economic benefits or service potential

associated with it will flow to the Māori Trustee and


the cost of the item can be measured reliably. Work

in progress is recognised at cost less impairment

and it is not depreciated.

In most instances, an item of property, plant or

equipment is initially recognised at its cost. Where

an asset is acquired at no cost, or for a nominal

cost, it is recognised at its fair value as at the date

of acquisition.

DisposalsProperty, plant and equipment assets are

derecognised when disposed of or when no further

future economic benefits are expected from use

of the assets. Gains and losses on disposal are

determined by comparing the proceeds with the

carrying amount of the asset. Gains and losses

on disposal are included in the statement of

comprehensive income.

RevaluationsLand and buildings are revalued with sufficient

regularity to ensure that the carrying amount does

not differ materially from fair value and at least

every three years.

The carrying values of revalued assets are assessed

annually to ensure that they do not differ materially

from fair value. If there is evidence supporting a

material difference, then the off-cycle asset classes

are revalued.

The net revaluation results are credited or debited

to other comprehensive income and are

accumulated to an asset revaluation reserve in

equity for that class of asset. Where this would

result in a debit balance in the asset revaluation

reserve, this balance is not recognised in other

comprehensive income but is in the surplus or

deficit. Any subsequent increase on revaluation that

reverses a previous decrease in the value recognised

in the surplus or deficit will be recognised first in

the surplus or deficit up to the amount previously

expensed, and then in other comprehensive income.

On subsequent sale of a revalued property, the

attributed revaluation surplus remaining in the

asset revaluation reserve is directly transferred

to retained earnings.

Intangible assetsIntangible assets consist of acquired software

and software modified for use. Intangible assets

are measured at historical cost less accumulated

amortisation and impairments.

Amortisation is charged to the statement of

comprehensive income on all intangible assets,

other than work in progress. Amortisation is

calculated on a straight-line basis at rates estimated

to allocate the cost of an asset over the estimated

useful life. The useful lives of the intangible assets

have been assessed to be finite. The estimated

useful lives and associated amortisation rate of the

asset class is as follows:

Acquired software 10 years 10%

Impairment of non-financial assetsProperty, plant and equipment and intangible assets

are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying

amount may not be recoverable. An impairment

is recognised in the statement of comprehensive

income for the amount by which the carrying

amount exceeds the recoverable amount. The

recoverable amount is the higher of an asset’s fair

value less costs to sell and value in use.

Creditors and other payablesCreditors and other payables represent liabilities for

goods and services provided to the Māori Trustee

prior to the end of the financial year.

Creditors and other payables are initially recognised

at fair value and subsequently measured at

amortised cost using the effective interest method.

Employee benefitsEmployee benefits include accrued salaries and

wages, annual leave earned, and retiring and long

service leave entitlements.

Employee benefits expected to be settled within

twelve months of balance date are measured at the

undiscounted current rates of pay and the accrued

entitlements.

Employee benefits that are payable beyond twelve

months of balance date, such as long service

leave, are calculated on an actuarial basis, which

takes into account years of service, years until

entitlement, the likelihood that staff will reach the

point of entitlement, and the net present value

of the estimated cash flows.

Superannuation schemesObligations for contributions to KiwiSaver and

the State Sector Retirement Savings Scheme

are accounted for as defined contribution

superannuation schemes and are expensed in the

statement of comprehensive income as incurred.


E.37ProvisionsThe Māori Trustee recognises a provision for future

expenditure of uncertain amount or timing when

there is a present obligation as a result of a past

event, it is probable the expenditure will be required

to settle the obligation, and a reliable estimate can

be made of the amount of the obligation.

RestructuringThe Māori Trustee recognises a provision for

restructuring when an approved detailed formal

plan for the restructure has either been announced

publicly to those affected or implementation of the

restructure has already commenced.

Goods and services tax (GST)All items in the financial statements are exclusive of

GST, except for receivables and payables, which are

presented on a GST-inclusive basis. Where GST is not

recoverable as input tax, it is recognised as part of

the related asset or expense.

The net amount of GST receivable or payable to

Inland Revenue is included as part of receivables or

payables in the statement of financial position.

The net GST paid to or received from Inland Revenue,

including the GST relating to investing and financing

activities, is classified as a net operating cash flow in

the statement of cash flows.

EquityEquity is measured as the difference between total

assets and total liabilities. Equity is disaggregated

and classified into the following components.

» General Purposes Fund – funds held by the Māori

Trustee in its own right.

» Appropriation Account – established under the

Māori Trustee Amendment Act 2009 to account

for revenue received from the Crown.

» Asset Revaluation Reserve(s).

Income taxationThe Parent, the Māori Trustee is exempt from

income tax as a public authority. Accordingly, no

provision has been made for income tax for the

Parent. All subsidiaries of the Parent are taxpayers.

The accounting policies applied in respect of the

subsidiaries are as follows:

Income tax expense comprises both current and

deferred tax. Income tax expense is charged or

credited to the Statement of Comprehensive Income,

except when it relates to items charged or credited

directly to equity, in which case the tax is charged

to equity.

Current tax is the expected tax payable on the

taxable income for the year, using tax rates enacted

or substantively enacted at reporting date and any

adjustments to tax in respect of previous years.

Deferred tax is recognised using the balance sheet

method, providing for temporary differences

between the carrying amount of assets and liabilities

for financial reporting purposes and the carrying

amounts used for taxation purposes.

The amount of deferred tax provided is based on

the expected manner of realisation of the asset or

settlement of the liability, using tax rates enacted

or substantively enacted at each reporting date.

Deferred tax assets and liabilities are not discounted.

A deferred tax asset is recognised in the financial

statements for all deductible temporary differences

and for the carry forward of unused tax losses

and unused tax credits only to the extent that it

is probable that future taxable surpluses will be

available against which the asset can be utilised.

Deferred tax assets are reduced to the extent that it

is no longer probable that the related tax benefit will

be realised. Unrecognised deferred tax assets are

reassessed at each balance sheet date.

Statement of cash flowsThe make up of cash and cash equivalents in

the statement of cash flows is the same as that for

cash and cash equivalents in the statement

of financial position.

Operating activities include cash received from all

income sources and cash payments made for the

supply of goods and services.

Investing activities include the acquisition

and disposal of non-current assets and other

investments not included in cash equivalents.

Financing activities include activities that result in

changes to the size and composition of equity.

Contingent assets and contingent liabilities Contingent assets and contingent liabilities are

disclosed in the notes to the financial statements

at the point at which the contingency is evident.

Contingent assets are disclosed if it is probable that

the benefits will be realised. Contingent liabilities are

disclosed if the possibility that they will crystallise is

not remote.


CommitmentsCommitments are future expenses and liabilities

to be incurred on contracts entered into before

balance date.

Cancellable commitments that have penalty or exit

costs explicit in the agreement are reported at the

minimum future payments, including the value of

the penalty or exit cost. Commitments include:

» Non-cancellable operating leases for property,

which are measured as the future payments due

under the lease contract.

» Other non-cancellable commitments for

consulting contracts, which are measured as the

future payments due under the contracts.

Significant judgements, accounting estimates and assumptionsThe preparation of financial statements in

conformity with NZ IFRS requires the Māori Trustee

to make judgements, estimates and assumptions

concerning the future. The estimates and associated

assumptions are continually reviewed and are based

on historical experience and other factors that are

believed to be reasonable under the circumstances.

Actual results may differ from these estimates. The

estimates, judgements 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.

Estimation of asset useful lives

The useful lives of assets have been based on

historical experience. In addition, the condition of the

assets is assessed annually and considered against

the remaining useful lives. Adjustments to useful

lives are made when considered necessary.

Significant judgementsThe Māori Trustee has exercised the following critical

judgement in applying the accounting policies.

» Impairment of financial and non-financial assets

The Māori Trustee assesses the impairment

of assets at each reporting date by evaluating

conditions specific to the Māori Trustee and to

the particular asset that may lead to impairment.

If an impairment trigger exists, the recoverable

amount of the asset is determined.

» Revaluation of investment property

The Māori Trustee assesses the fair value of its

investment property at each reporting date by

completing a property valuation which evaluates

market conditions at balance date.

Changes in accounting policiesThere have been no changes in accounting policies.

All policies have been applied on a basis consistent

with previous years.


E.371. Revenue from Crown

The Māori Trustee received revenue from the Crown in accordance with the Funding Agreement dated

20 December 2012 between the Minister of Māori Affairs and the Māori Trustee. The revenue in the current

financial year is $10,347,000 (2013 $10,347,000).

2. Investment income

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Interest income from investments 3,636 4,111 3,634 4,108

Interest income from lending 208 289 208 289

Capital gain and losses realised 103 - 103 -

Total investment income 3,947 4,400 3,945 4,397

3. Employee benefits

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Salaries and wages 6,702 6,342 6,193 6,342

Defined contribution plan employer contributions 155 112 155 112

Increase/(decrease) in employee entitlements 10 (44) 10 (44)

Recruitment related 138 95 138 95

Total employee benefits 7,005 6,505 6,496 6,505

4. Farm expenses

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Administration expenses 175 - - -

Feed 915 - - -

Lease payments 324 - - -

Repairs and maintenance 247 - - -

Stock movement 252 - - -

Unrealised loss on financial assets 378 - - -

Other farm expenses 1,006 - 29 -

Total farm expenses 3,297 - 29 -


5. Other expenditure

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Fees paid to auditors

Audit fees for Parent 141 133 141 133

Audit fees recoveries from 2013 18 - 18 -

Audit fees for subsidiary 19 13 - -

Impairment of property, plant and equipment - 804 - 804

Impairment of loans and receivables (609) 126 5,643 2,581

Occupancy 650 437 650 437

Consultants’ fees 1,383 1,496 1,325 1,487

Legal fees 8 56 8 56

Te Puni Kōkiri support costs - 58 - 58

Travel 254 323 254 323

Telecommunications 222 287 222 287

Printing and stationery 181 148 181 148

Insurance 198 195 197 189

Software licences and maintenance 608 408 608 408

Loss on disposal/ write-off assets 808 - 808 -

Other operating costs 859 835 859 836

Total other expenditure 4,740 5,319 10,914 7,747

6. Taxation

Group

2014 2013

$000 $000

Reconciliation between tax expense and accounting surplus

Surplus before tax 2,017 4,099

Tax at 28% (2013 28%) 565 1,148

Tax effect of:

Parent company income not taxable (277) (434)

Non-taxable income (288) (713)

Tax expense/ (benefit) - -

Figures above are presented only for the Group as the Parent is exempt from tax.

There is zero tax expense (2013 $Nil) and there is no offsetting movements (2013 $Nil). A deferred tax asset

has not been recognised in relation to tax losses of $52,400,000 (2013 $50,600,000).

7. Cash and cash equivalents

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Cash at bank and on hand (431) 152 127 125

Deposits at call 5,039 10,557 4,984 10,360

Short-term deposits 2,600 5,500 2,600 5,500

Total cash and cash equivalents 7,208 16,209 7,711 15,985

The carrying value of cash at bank, deposits at call and short-term deposits with maturities less than three

months approximates their fair value.


E.378. Debtors and other receivables

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Trade debtors 474 284 468 267

Interest receivable 130 78 130 78

Sundry receivables 782 849 178 843

Total debtors and other receivables 1,386 1,211 776 1,188

The carrying value of debtors and other receivables approximates their fair value.

Trade debtors are non-interest bearing and are generally on 30-day terms. An impairment loss is recognised

when there is objective evidence that an individual trade debtor is impaired. All debtors including $211,000

past due have been assessed for impairment and no provision has been deemed necessary (2013 $Nil).

9. Held-to-maturity investments

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Current portion

Government stock - 1,545 - 1,545

Bank bonds 5,167 2,763 5,167 2,763

Corporate bonds 8,487 3,273 8,487 3,273

Total current portion 13,654 7,581 13,654 7,581

Non-current portion

Bank bonds 9,530 12,511 9,530 12,511

Corporate bonds 20,266 31,312 20,266 31,312

Total non-current portion 29,796 43,823 29,796 43,823

Total held-to-maturity investments 43,450 51,404 43,450 51,404

10. Loans and receivables

Group

2014 2013

Gross Impairment Net Gross Impairment Net

$000 $000 $000 $000 $000 $000

Current portionLoans and mortgages 804 (373) 431 874 (294) 580

Conversion Fund loans 204 - 204 - - -

Total current portion 1,008 (373) 635 874 (294) 580

Non-current portion

Loans and mortgages 2,323 (360) 1,963 3,702 (464) 3,238

Conversion Fund loans 2,916 (2,506) 410 3,183 (3,089) 94

Other advances 19 - 19 95 (1) 94

Total non-current portion 5,258 (2,866) 2,392 6,980 (3,554) 3,426

Total loans and receivables 6,266 (3,239) 3,027 7,854 (3,848) 4,006


Parent

2014 2013


$000 $000 $000 $000 $000 $000

Current portion

Loans and mortgages 804 (373) 431 874 (294) 580

Conversion Fund loans 204 - 204 - - -

Total current portion 1,008 (373) 635 874 (294) 580

Non-current portion

Loans and mortgages 2,323 (360) 1,963 3,702 (464) 3,238

Conversion Fund loans 2,916 (2,506) 410 3,183 (3,089) 94

Advances to Te Māori Lodges Limited

64,607 (50,357) 14,250 62,978 (42,376) 20,602

Other advances 19 - 19 95 (1) 94

Total non-current portion 69,865 (53,223) 16,642 69,958 (45,930) 24,028


The carrying value of loans and receivables approximates their fair value. Movements in the provision for

impairment of loans and receivables are as follows:

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Provision for impairment at 1 April 3,848 3,721 46,224 41,891

Additional provisions made during the year - 287 7,981 4,493

Receivables written off during the year - - - -

Unused provisions reversed during the year (609) (160) (609) (160)

Provision for impairment at 31 March 3,239 3,848 53,596 46,224

All loans and receivables have been reviewed at balance date and impaired where necessary to approximate

their fair value.

Conversion Fund loans were established under the Māori Affairs Act 1953. The Māori Trustee is either

receiving funds from distributions or converting the Conversion Fund loan to an interest-free loan with

repayment terms.

In 1991, the Māori Trustee gave certain guarantees in favour of The National Bank of New Zealand Limited

(NBNZ) in relation to certain borrowings by TML to purchase an interest in the Quality Inns New Zealand

Limited (QINZ) hotel chain. Subsequently, the Māori Trustee bought the loan off NBNZ and took over TML.

TML borrowed $12,680,000 from the Māori Trustee to buy shares in QINZ costing $12,680,000. QINZ

subsequently became Quantum Limited.

The loan value to TML increases annually by the capitalisation of interest which was $1,729,000 for the year

less $100,000 loan repayment received during the year (2013 $1,751,000 interest). The loan is assessed for

impairment annually.


E.37The ageing profile of loans and receivables at year end is detailed below:

Group

2014 2013Gross Impairment Net Gross Impairment Net

$000 $000 $000 $000 $000 $000

Not past due 2,435 (73) 2,362 3,718 (99) 3,619

Past due 1 – 30 days 7 - 7 22 - 22

Past due 31 – 60 days 4 - 4 27 - 27

Past due 61 – 90 days 4 - 4 53 - 53

Past due over 90 days 3,816 (3,166) 650 4,034 (3,749) 285


Parent

2014 2013


$000 $000 $000 $000 $000 $000

Not past due 2,435 (73) 2,362 3,718 (99) 3,619

Past due 1 – 30 days 7 - 7 22 - 22

Past due 31 – 60 days 4 - 4 27 - 27

Past due 61 – 90 days 4 - 4 53 - 53

Past due over 90 days 68,423 (53,523) 14,900 67,012 (46,125) 20,887


Impairment in the ‘Not past due’ category relates to the fair value impairment of loans that have an interest

rate of 0%.

11. Investments in associates

Group Parent

Equity holding 2014 2013 2014 2013

$000 $000 $000 $000

Putake Limited 50% (2013 50%) 1,297 1,124 1,248 1,248

Putake Investments Limited Partnership

50% (2013 50%) 3,794 3,693 3,083 3,083

Miraka Limited 15.43% (2013 15.43%) 13,176 8,717 11,543 10,000

Quantum Limited 30% (2013 30%) - 20,602 - -

RDF1 Limited 50% (2013 0%) - - - -

Rangihamama Dairy 50% (2013 0%) 205 - 191 -

Limited Partnership

Total investments in associates 18,472 34,136 16,065 14,331


Movements in the carrying amounts of investments in associates are as follows:

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Investments in associates at beginning of year 34,136 37,301 14,331 14,331

Share of associates’ net surplus/(deficit) 2,744 293 - -

Share of associates’ other comprehensive income/ (expenditure)

921 (3,056) - -

Share of dividends paid by associates (461) (402) - -

New investments during the year 1,734 - 1,734 -

Investments classified to assets held for sale (20,602) - - -

Investments in associates at end of year 18,472 34,136 16,065 14,331

Summarised financial information of associates is as follows:

Group

2014 2013

$000 $000

Assets 204,547 265,923

Liabilities 108,561 131,125

Net assets 95,986 134,798

Revenue 26,525 41,115

Total comprehensive income/(expenditure) 14,732 (909)

Share of associates’ total comprehensive income

Net surplus/(deficit) after tax 2,744 293

Other comprehensive income/(expenditure) 921 (3,056)

Total share of associates’ comprehensive income 3,665 (2,763)

Comparative summarised financial information of associates for last year included results for Quantum

Limited, which has in the current year been classified as non-current assets held for sale, and hence is

excluded from the current year figures.

Putake Limited and Putake Investments Limited PartnershipPutake Limited is an investment vehicle for investment in Māori business. On 10 December 2010, the

shareholders of Putake Limited established a limited liability partnership, Putake Investments Limited

Partnership, and the investments were sold to the partnership. The shareholders of Putake Limited are

the limited partners with a 50% ownership each and Putake Limited is the general partner. Putake Limited

repurchased and cancelled shares totalling $7,307,000 and the shareholders used the cash proceeds as

the cash contribution to the partnership.

The equity accounted value of Putake Investments Limited Partnership in the Māori Trustee’s group accounts

is $3,794,000. The partnership has had their 2014 accounts qualified by their auditors due to uncertainty

over the carrying value of one of the partnership’s investments, being $400,000 within the equity accounted

value of $3,794,000. The qualification has arisen due to the partnership not being provided with sufficient

information to accurately determine any level of impairment.

Miraka LimitedMiraka Limited is a milk powder manufacturing company. The investment is an associate because the

Māori Trustee has one of the five seats on the Board and is therefore deemed to have significant influence.

The equity accounted results for Miraka Limited for the eight months to 31 March 2014 are unaudited.

In the Group financial statements, the carrying value of Miraka Limited has been adjusted to reflect the

share of the associates’ net assets in compliance with NZ IAS 28 Investments in Associates.


E.37Quantum LimitedThe Māori Trustee’s subsidiary Te Māori Lodges Limited holds shares in the associate Quantum Limited,

which manages and operates hotels.

In the financial year ended 31 March 2014, the investment in associate has been classified as non-current

assets held for sale in accordance with NZ IFRS 5 following the Board’s approval to sell the Quantum Limited

shares. Further, the non-current assets held for sale have been deemed impaired and written down to their

expected sale price.

Rangihamama Dairy Limited Partnership and RDF1 LimitedRangihamama Dairy Limited Partnership is a partnership between the Māori Trustee and the Omapere

Taraire E & Rangihamama X3A Ahu Whenua Trust to run a Joint Venture Farm of 500 cows created in

December 2013. The Omapere Taraire E & Rangihamama X3A Ahu Whenua Trust and the Māori Trustee

have set up a general partner to manage the Rangihamama Dairy Limited Partnership’s business and this

is a registered company called RDF1 Limited which is jointly owned with 50% ownership each by Omapere

Taraire E & Rangihamama X3A Ahu Whenua Trust and the Māori Trustee.

12. Non-current assets held for sale

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Investment in Quantum Ltd as at 1 April 20,602 - - -

(Impairment)/reversal of impairment (6,352) - - -

Total non-current assets held for sale 14,250 - - -

Te Māori Lodges Limited holds 12.25 million shares in Quantum Limited, which has been classified as held

for sale following the Board’s approval to sell the shares for a total value of $14.25 million. The Māori Trustee

through its subsidiary, Te Māori Lodges Limited, has entered into a conditional agreement with Millennium

and Copthorne Hotels (MCK) dated 9 July 2014 to sell its 30% interest in Quantum Limited. The price agreed

for the acquisition of the shares is $14.25 million in cash. Completion of the purchase is subject to approval by

the Overseas Investments Office and is expected to occur ten business days after that approval is obtained.

Settlement is expected to occur within the next 30–50 day period.

13. Investment property

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Opening balance at 1 April - - - -

Additions at cost 6,950 - 6,950 -

Fair value adjustment 3,929 - 3,929 -

Closing balance at 31 March 10,879 - 10,879 -

The investment properties are dairy units located in the Otorohanga region. It is the Māori Trustee’s policy

that investment properties are valued at fair value based on an independent valuation. Fair value is based

on market values, being the price that would be received to sell the property in an orderly transaction

between market participants at the measurement date less expected costs incurred in selling the property.

Movements in the valuation of investment property are reflected in the Statement of Comprehensive income

as a gain on investment property revaluation ($2,127,000) and a non-current liability ($1,802,000). The latter

item reflects a gain sharing arrangement in place between the Māori Trustee and Māori Education Trust.


Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Rental revenue from investment property - - 180 -

Direct operating expenses (including repair and maintenance) arising from investment property that generated rental revenue during the period

(29) - (29) -

Total amount recognised in profit and loss (excluding revaluations) (29) - 151 -

14. Property, plant and equipment

Group 2014

IT

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$000 $000 $000 $000 $000 $000 $000 $000Cost at beginning of year 340 120 746 245 1,452 1,969 - 4,872

Additions 74 76 18 39 - - 449 656

Disposals (88) (31) (630) - (1,452) (1,969) - (4,170)

Revaluation increase/(decrease) - - - - - - - -

Elimination on revaluation - - - - - - - -

Cost at end of year 326 165 134 284 - - 449 1,358

Accumulated depreciation at beginning of year

148 79 377 221 - - - 825

Depreciation 87 23 93 28 21 - 58 310

Depreciation on disposals (82) (21) (369) - (21) - - (493)


Accumulated depreciation at end of year

153 81 101 249 - - 58 642

Net carrying value at end of year 173 84 33 35 - - 391 716


E.37Parent 2014

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Additions 74 76 18 39 - - - 207

Disposals (88) (31) (630) - (1,452) (1,969) - (4,170)

Revaluation increase/(decrease) - - - - - - - -


Cost at end of year 326 165 134 284 - - - 909


148 79 377 221 - - - 825

Depreciation 87 23 93 28 21 - - 252

Depreciation on disposals (82) (21) (369) - (21) - - (493)

Elimination on revaluation - - - - - - -


153 81 101 249 - - - 584

Net carrying value at end of year 173 84 33 35 - - - 325

Group and Parent 2013

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Additions 190 10 48 - - - - 248

Disposals (195) (14) (40) - - - - (249)

Revaluation increase/(decrease) - - - - (804) 44 - (760)

Elimination on revaluation - - - - (119) - - (119)

Cost at end of year 340 120 746 245 1,452 1,969 - 4,872


274 74 275 167 71 - - 861

Depreciation 69 19 134 54 48 - - 324

Depreciation on disposals (195) (14) (32) - - - - (241)

Elimination on revaluation - - - - (119) - - (119)


148 79 377 221 - - - 825

Net carrying value at end of year 192 41 369 24 1,452 1,969 - 4,047

There are no restrictions over the title of the Māori Trustee’s items of property, plant and equipment, nor are

any property, plant and equipment assets pledged as security for liabilities.

During the year, the Māori Trustee relocated its head office in Wellington to 110 Featherston Street, and as a

result sold its former head office premises at 259 Wakefield Street, incurring a loss on disposal of $808,000

which is detailed in the Statement of Comprehensive Income.


15. Intangible assets

Group and Parent

2014 2013

$000 $000

Cost at beginning of year 3,095 2,198

Additions 82 2,279

Disposals - (1,390)

Work in progress 37 8

Cost at end of year 3,214 3,095

Accumulated amortisation at beginning of year 116 1,394

Amortisation 318 112

Amortisation on disposals - (1,390)

Accumulated amortisation at end of year 434 116

Net carrying value at end of year 2,780 2,979

During the last financial year, the old core systems were written off and the new core systems capitalised.

There are no restrictions over the title of the Māori Trustee’s intangible assets nor are any intangible assets

pledged as security for liabilities.

16. Creditors and other payables

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Creditors and accruals 1,677 1,107 1,185 1,071

GST payable 70 150 103 150

Total creditors and other payables 1,747 1,257 1,288 1,221

As creditors and other payables are non-interest bearing and are normally settled on 30-day terms, their

carrying value approximates the fair value.

17. Employee benefits

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Current portion

Accrued salaries and wages 90 107 90 107

Severance 66 - 66 -

Annual leave 322 278 322 278

ACC liabilities 31 29 31 29

Retirement and long service leave 24 43 24 43

Total current portion 533 457 533 457

Non-current portion

Retirement and long service leave 14 29 14 29

Total non-current portion 14 29 14 29

Total employee benefits 547 486 547 486


E.37The present value of retirement and long service leave obligations are determined on an actuarial basis.

These determining factors include: discount rate, salary inflation, years of service, years until entitlement,

and the likelihood that staff will reach the point of entitlement. Any changes to these factors will affect the

net present value of the estimated cash flows and the carrying amount of the liability.

Expected future payments are discounted using forward discount rates obtained from the New Zealand

Treasury. A discount rate of 3.15% (2013 2.56%) and an inflation factor of 2% (2013 2.00%) were used based

on historical salary inflation patterns.

18. Reconciliation of net operating surplus with net cash flows from operating activities

Group Parent

2014 2013 2014 2013

Notes $000 $000 $000 $000

Net surplus 2,017 4,099 988 1,551

Add/(deduct) non-cash items

Amortisation of premiums/discount 194 195 194 195

Depreciation 14 310 324 252 324

Amortisation of intangible assets 15 318 112 318 112

Impairment losses/(gains) 199 930 6,451 3,385

Share of associates’ net deficit/(surplus) 11 (2,744) (293) - -

Gain on investment property revaluation (2,127) - (2,127) -

Impairment of investments in associates 6,352 - - -

Unrealised loss on financial assets 378 - - -

Add/(deduct) movements in working capital

Dividend received from associates 461 402 - -

Add/(deduct) movements in working capital

(Increase)/decrease in debtors and other receivables

(885) (151) (298) (151)

(Increase)/decrease in stock (2,027) - - -

Increase/(decrease) in creditors and other payables

549 (866) 162 (865)

Increase/(decrease) in Crown revenue in advance

- (2,587) - (2,587)

Net cash flows from operating activities 2,995 2,165 5,940 1,964

19. Commitments

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Lease commitments as lessee

Less than 1 year 568 173 568 173

1 year to 2 years 526 121 526 121

2 years to 5 years 1,342 78 1,342 78

Greater than 5 years 1,644 - 1,644 -

Total lease commitments as lessee 4,080 372 4,080 372


The Māori Trustee leases its head office and regional office premises. A significant portion of the non-

cancellable operating lease expense relates to the lease of the Wellington head office which has a November

2022 right of renewal and a termination date of 30 November 2028.

The Māori Trustee does not have the option to purchase assets pursuant to any of the leases.

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Lease commitments as lessor

Less than 1 year 262 52 262 52

1 year to 2 years 262 - 262 -

2 years to 5 years 68 - 68 -

Greater than 5 years - - - -

Total lease commitments as lessor 592 52 592 52

The Māori Trustee sub-leases a portion of its headoffice premises to other parties. Additionally

approximately, 79.3% of the commitment as lessor relates to investment property. A significant portion of the

non-cancellable operating lease income relates to the sub-lease of the investment property.

20. Contingent liabilities and assets

Unclaimed monies (1963 to 1993)A contingent liability of $7,644,000 (2013 $7,644,000) relates to beneficiary monies paid out by the Māori

Trustee under section 30(9) of the Māori Trustee Act 1953 to the Māori Education Trust, the Māori Purposes

Fund Board and the New Zealand Māori Council. This section was later substituted by section 2(1) of the Māori

Trustee Amendment Act 1996, which became effective on 24 June 1996. The Māori Trustee will be liable to

make payment to beneficiaries who establish an entitlement in the future.

Compensation leasesThe Māori Trustee administers leases where compensation is payable to the lessee on expiry or resumption

of a lease.

In some of these cases, the Māori Trustee is required by the Māori Vested Land Administration Act 1954 to

advance to owners monies required to meet compensation payments, where sums set aside during the

course of the lease prove to be insufficient. Advances that the Māori Trustee may be required to make upon

resumption of such leases is not quantifiable at this time.

In other cases where the lease provides for compensation to be paid to the lessee, and there is insufficient

funds held on behalf of the owners, the Māori Trustee is not required by statute to provide these funds.

However, the Māori Trustee may be called upon to provide a loan from the General Purposes Fund to assist

owners to meet the obligations to lessees to pay for improvements. The value of such advances is not

quantifiable at this time.

Land Overlay 3AA number of Māori land trusts administered by the Māori Trustee as responsible trustee have received

notification from the Gisborne District Council that parts of their land are subject to serious land erosion

and have been classified as ‘Land Overlay 3A’ under the Council’s Combined Regional Land and District Plan.

Under the Combined Regional Land and District Plan a works plan must be developed for land classified as

Land Overlay 3A, which provides, amongst other things, for the establishment of effective tree cover for the

affected land by 2021.

The Māori Trustee has been in communication with the Gisborne District Council regarding this issue and the

challenges facing many of the affected trusts to meet the compliance costs associated with the Land Overlay

3A requirements. As Land Overlay 3A obligations ultimately rest with the legal landowner, the Māori Trustee


E.37could in the future be required to cover compliance costs associated with the Land Overlay 3A requirements,

which are unable to be met by the affected trusts.

The potential costs (if any) are unable to be quantified at this time. Factors that would impact quantification

include the outcome of the discussions with the Gisborne District Council and other agencies, whether

affected trusts are eligible to meet some of the compliance costs from the East Coast Forestry Project grant

(and if so, the amount of the grant) and the financial ability of individual trusts to meet compliance costs when

called upon to do so.

Pre-1990 forestA number of Māori land trusts administered by the Māori Trustee as responsible trustee or as custodian

trustee own ‘pre-1990 forest’ (as defined under the Climate Change Response Act 2002). The Māori Trustee

has the obligations of the legal landowner of ‘pre-1990 forest’ under the Act, associated legislation and rules.

If ‘deforestation’ (as defined under the Act) of any pre-1990 forest were to occur, the trusts concerned would

need to meet the deforestation liability by the surrender of NZUs or Kyoto-compliant emissions units (except

where the Environmental Protection Authority has determined that responsibility for the deforestation lay

with a third party e.g. the holder of a forest right or lessee). If a land trust that the Māori Trustee administers

as responsible trustee or custodian trustee did not have sufficient emissions units to meet a deforestation

liability and did not have, or could not obtain, third party finance to acquire sufficient emissions units to meet

the deforestation liability, the Māori Trustee as legal landowner would need to ensure that the affected trust

acquired emissions units to meet the deforestation liability.

The potential costs (if any) are unable to be quantified at this time. Factors that would impact quantification

in the event of deforestation include the number of hectares subject to deforestation (and accordingly the

number of emissions units that need to be surrendered) whether the emissions units held by an affected

trust are sufficient to meet the deforestation liability and, if not, the cost to acquire additional emissions units

at the time.

Other contingent liabilitiesThe Māori Trustee has received or is aware of potential claims totalling $482,000 (2013 $154,000). The

additional claim during the year relates to a lease management dispute. The outcome of this matter remains

uncertain at the end of the reporting period.

21. Financial instruments

The carrying amounts of each category of financial assets and financial liabilities are as follows:

Group Parent

2014 2013 2014 2013

Notes $000 $000 $000 $000

Financial assets

Cash and cash equivalents 7 7,208 16,209 7,711 15,985

Debtors and other receivables 8 1,386 1,211 776 1,188

Term deposits 23,300 8,000 23,300 8,000

Held-to-maturity investments 9 43,450 51,404 43,450 51,404

Loans and receivables 10 3,027 4,006 17,277 24,608

Total financial assets 78,371 80,830 92,514 101,185

Financial liabilities

Creditors and other payables 16 1,747 1,257 1,288 1,221

Income in advance - - 36 -

Employee benefits 17 547 486 547 486

Other non-current liabilities 13 1,802 - 1,802 -

Total financial liabilities 4,096 1,743 3,673 1,707


Fair valueThe fair value of all loans and receivables is equivalent to the carrying amount disclosed in the Māori Trustee’s

Statement of Financial Position.

The held-to-maturity investments had a fair value of $43,777,000 as at 31 March 2014 (2013 $53,060,000).

The fair value is determined using quoted market prices.

Financial instruments riskThe Māori Trustee’s activities expose it to a variety of financial instrument risks, including market risk, credit

risk and liquidity risk. The Māori Trustee has a series of policies to manage the risks associated with financial

instruments and seeks to minimise exposure from financial instrument risks.

Market riskCurrency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because

of changes in exchange rates. The Māori Trustee has no foreign denominated financial instruments and,

accordingly, has no exposure to currency risk. Miraka Limited purchases goods and services overseas, which

require it to enter into transactions denominated in foreign currencies. The foreign currency risk is managed

by entering into foreign exchange forward contracts.

Sensitivity analysis

As at 31 March 2014, if the New Zealand dollar had weakened/strengthened by 5% against the United States

dollar with all other variables held constant, the surplus for the year would have been:

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

5% increase/(decrease) in NZ dollar against US dollar would increase/(decrease) the net surplus 288 85 - -

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in interest rates. The Māori Trustee is exposed to interest rate risk on those financial

instruments that have floating interest rates.

The investments that have floating or variable interest rates or coupon payments are as follows:

Group Parent

2014 2013 2014 2013

Cash and cash equivalents sensitivity analysisWeighted average effective interest rate % 3.28 3.40 3.29 3.41

1% increase/(decrease) in interest rates would increase/(decrease) interest income and equity

$000 78 162 77 160

Held-to-maturity investments sensitivity analysisWeighted average effective interest rate % 3.46 3.46 3.46 3.46

1% increase/(decrease) in interest rates would increase/(decrease) interest income and equity

$000 45 50 45 50

Credit riskCredit risk is the risk that a third party will default on its obligation to the Māori Trustee, causing a loss to

be incurred. Credit risk arises from the financial assets of the Māori Trustee, which comprise cash and cash

equivalents, term deposits, debtors and other receivables, loans and receivables and held-to-maturity

investments.


E.37Cash, cash equivalents and term deposits

Cash, cash equivalents and term deposits are invested with registered banks.

Debtors and other receivables

There are no material concentrations of credit risk with respect to debtors and other receivables.

Held-to-maturity investments

The Māori Trustee maintains a diversified investment portfolio of bonds in order to minimise credit risk.

The fund investment parameters are:

» The minimum rating of the portfolio will be at least BBB rated or better unless approved

by the Investment and Credit Committee and the Māori Trustee.

» For corporate issuers, no single issuer shall exceed 10% of the fixed income portfolio.

In the past 12 months, the Māori Trustee’s portfolio has held relatively high levels of cash in response to a lack

of issuance of attractively priced corporate bonds and the Māori Trustee’s view that we were at or near the

bottom of the interest rate cycle.

Loans and receivables

The Māori Trustee has issued mortgages under section 32 of the Māori Trustee Act 1953 and section 248 of

the Māori Affairs Act 1953, Conversion Fund loans and other advances.

Advances under section 32 of the Māori Trustee Act 1953 may or may not be secured. Where security is taken,

the security may be a first or second mortgage security over a freehold interest in land, a memorial of charge

over land or a debenture.

Advances under section 248 of the Māori Affairs Act 1953 may or may not be secured. Where security is

taken, the security is a memorial of charge over land.

The Conversion Fund was abolished by the Māori Affairs Amendment Act 1987, which effectively vested the

Conversion Fund assets in the Māori Trustee. Conversion Fund loans are ‘presumed advances’ and are not

secured, but the Māori Trustee owns shares in the land to which the Conversion Fund loans relate. The Māori

Trustee has made impairment provisions for loans.

The following table analyses the credit quality of financial assets that are neither past due nor impaired, with

reference to Standard and Poor’s credit ratings (if available) or to historical information about counterparty

default rates.

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Cash and cash equivalents and term deposits

AA - 23,635 - 23,411

AA- 20,119 574 20,622 574

A+ 10,389 - 10,389 -

Total cash and cash equivalents and term deposits 30,508 24,209 31,011 23,985

Held-to-maturity investments

AAA to A 30,882 35,279 30,882 35,279

A- to BBB 12,568 16,125 12,568 16,125

Total held-to-maturity investments 43,450 51,404 43,450 51,404

Liquidity riskLiquidity risk is the risk that the Māori Trustee will not have sufficient funds to meet commitments as they

fall due.


Cash and cash equivalents and term deposits

The Māori Trustee monitors forecast cash requirements daily. Surplus funds are invested for terms

appropriate for the expected cash requirements. A minimum buffer is maintained, which provides access

to funds in excess of the forecast cash requirements.

The table below analyses the Māori Trustee’s financial liabilities into maturity groupings based on the

remaining period from end of year to the contractual maturity date.

Financial liabilities

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Less than 6 months 1,747 1,257 1,324 1,221

6 – 12 months 533 457 533 457

Later than 12 months 1,816 29 1,816 29

Total financial liabilities 4,096 1,743 3,673 1,707

22. Capital management

The Māori Trustee’s capital is its equity, which is comprised of accumulated funds. Equity is represented by

net assets. The Māori Trustee is subject to the financial management and accountability provisions of the

Māori Trustee Act 1953.

The Māori Trustee manages its equity as a by-product of prudently managing revenues, expenses, assets

and liabilities, investments and general financial dealings to ensure that the Māori Trustee effectively achieves

its strategies and remains a going concern.

23. Related parties

The Māori Trustee transacts with the related parties below:

Related entities Nature of relationship

Te Māori Lodges Limited Wholly owned subsidiary

Miraka Limited Investment in associate

Putake Limited Investment in associate

Putake Investments Limited Partnership Investment in associate

MTD 1 Limited Wholly owned subsidiary

Te Tumu Paeroa Dairy Ltd Partnership Investment in subsidiary

RDF1 Limited Investment in associate

Rangihamama Dairy Ltd Partnership Investment in associate

Crown Appropriation funding

Māori Trustee Common Fund Management

Ahuwhenua Trophy Sponsorship agreement

The following transactions were entered into with related parties during the year:

Te Māori Lodges Limited (TML)Te Māori Lodges Limited (TML) is a wholly owned subsidiary of the Māori Trustee. During the year the Māori

Trustee provided management services to TML for $10,000 (2013 $17,000). Directors’ fees of $20,000 were

charged by TML to Quantum Limited, in which TML holds a 30% ownership interest (2013 $17,000).

The Māori Trustee had an advance to TML at 31 March 2014 of $64,607,000 (2013 $62,978,000). The provision

for impairment against the advance at 31 March 2014 was $50,357,000 (2013 $42,376,000).


E.37The Māori Trustee charged interest on the TML advance of $1,729,000 (2013 $1,751,000). The interest income

was capitalised to the advance. Intercompany transactions and balances have been eliminated in the Group

financial statements. TML repaid a $100,000 loan to the Māori Trustee during the year (2013 $Nil). The

carrying value of the TML advance has been deemed impaired and written down to the expected sale price

of Quantum investment.

During the year, the Māori Trustee obtained accommodation services of $7,000 (2013 $15,000) in the

ordinary course of business.

Miraka LimitedThe Māori Trustee has a 15.43% shareholding in the associate Miraka Limited (2013 15.43%). The company

is a milk powder manufacturing company.

During the year, the Māori Trustee paid a further $1,543,000 for 1,234,568 shares in Miraka to contribute

towards the funding of a UHT plant expansion.

Putake LimitedThe Māori Trustee has a 50% shareholding in the associate Putake Limited,which has been the general

partner for Putake Investments Limited Partnership since 10 December 2010.

Putake Investments Limited PartnershipThe Māori Trustee holds a 50% interest in the Partnership.

MTD1 LimitedMTD1 Limited is a wholly owned subsidiary of the Māori Trustee. MTD1 Limited has been the general partner

for Te Tumu Paeroa Dairy Limited Partnership since May 2013.

Te Tumu Dairy Limited PartnershipThe Māori Trustee holds a 50% interest in the partnership. During the year, the Māori Trustee paid

$2,889,000 to the partnership as capital contribution and charged $180,000 rent for investment properties.

Intercompany transactions and balances have been eliminated in the Group financial statements.

RDF1 LimitedThe Māori Trustee has a 50% shareholding in the associate RDF1 Limited, which has been the general partner

for the Rangihamama Dairy Limited Partnership since December 2013.

Rangihamama Dairy Limited PartnershipThe Māori Trustee has a 50% interest in the partnership. During the year, the Māori Trustee paid $191,000 to

the partnership as capital contribution.

CrownThe Crown is a major source of revenue for the Māori Trustee.

Appropriation revenue from the Crown of $10,347,000 (2013 $10,347,000) is provided pursuant to a funding

agreement dated 20 December 2012 between the Māori Trustee and the Minister of Māori Affairs for a three-

year term until 31 March 2016.

The funding provided by the Crown enables the Māori Trustee to fulfil statutory and other common law

obligations. The Statement of Service Performance reports against the outputs detailed in the funding

agreement. Payment for these services is managed by Te Puni Kōkiri on behalf of the Crown.

Māori Trustee Common FundThe Māori Trustee manages the Common Fund and this management relationship confers significant

influence on the fund. The Māori Trustee is entitled to charge the Common Fund a management fee under

section 26A of the Māori Trustee Amendment Act 2009. A total management fee of $656,000 was charged

during the year (2013 $585,000). The management fee receivable as at 31 March 2014 was $56,000

(2013 $53,000).


Ahuwhenua TrophyThe Māori Trustee as agent for the Ahuwhenua Trust Board has entered into a sponsorship agreement to

run the competition for Ahuwhenua Trophy in 2014. The Māori Trustee provides sponsorship support and

in-kind services which comprise legal support and financial support to fulfil the service as agent for the

competition. During the year the Māori Trustee provided $55,000 in cash for Ahuwhenua sponsorship 2014

(2013 $46,000).

Statutory roleThe core function of the Māori Trustee is to hold land as trustee or administer land as agent for Māori

landowners. The Māori Trustee also administers other entities under statute, for example, the Māori Soldiers

Trust which owns and operates Hereheretau Station.

The Māori Trustee has a statutory entitlement under the Māori Trustee Act 1953 to charge fees and

commissions for managing trusts, agencies and properties, providing accounting and tax services and taking

instructions for special investments. For the year ended 31 March 2014, the Māori Trustee earned $1,311,000

in fees and commissions (2013 $2,052,000).

The Māori Trustee is able to lend monies under the Māori Trustee Act 1953. Loans made to trusts, agencies

and landowners are generally at market interest rates. Loans advanced to replace Conversion Fund loans are

non-interest bearing (Note 10).

Key management personnelThe Māori Trustee maintains an interest register. During the year the Māori Trustee received $10,000 cost

recovery for the Māori Leaders bootcamp from an entity, where one of the key management personnel is a

director. There were no payments made or payments received from entities over which key management

personnel have control or significant influence, other than the entity noted above.

Group Parent

2014 2013 2014 2013

$000 $000 $000 $000

Key management personnel benefits

Salaries and other current employee benefits 1,092 820 1,092 820

Post-employment benefits 32 16 32 16

Total key management personnel benefits 1,124 836 1,124 836

Key management personnel comprise the Māori Trustee, Deputy Māori Trustee, General Manager Funds

Management and Commercial Development, Chief Operating Officer, Chief Financial Officer and Manager

Strategy (2013 included four key management personnel). The Chief Financial Officer was appointed in

September 2013 and the Manager Strategy in February 2014.


E.3724. Remuneration of employees

Parent Parent

2014 2013

$000 $000

Total remuneration paid or payable

$100,000 – $109,999 3 3

$110,000 – $119,999 1 1

$120,000 – $129,999 3 2

$130,000 – $139,999 1 3

$140,000 – $149,999 - -

$150,000 – $159,999 - 3

$160,000 – $169,999 1 1

$170,000 – $179,999 1 -

$180,000 – $189,999 - 1

$190,000 – $199,999 - 1

$200,000 – $209,000 1 2

$210,000 – $219,999 3 1

$240,000 – $249,999* - 1

$250,000 - $259,999* 1 -

$270,000 – $279,999 - 1

15 20

During the year ended 31 March 2014, five (2013 nine) employees received compensation and other benefits

in relation to cessation totalling $111,400 (2013 $874,000).

*Remuneration in this band was paid to the Māori Trustee.

25. Events after the balance date

The following events occurred after 31 March 2014:

(a) After consultation with staff, a restructure of Value Added and Custodian and Agency team was confirmed

on 2 May 2014. Redundancy costs arising from the restructure are estimated to amount to $250,000.

(b) On 12 May 2014, the Māori Trustee received a $500,000 loan repayment from the Māori Soldiers Trust.

There have been no other significant events after balance date.

26. Explanation of significant variances against budget

Statement of comprehensive incomeRevenueRevenue from fees and commissions is $309,000 over budget. This is mainly due to the fact that fees were

not budgeted for at the time the budget was set.

Farm revenue is $2,922,000 over budget due to the Māori Trustee entering into limited partnerships that

were not budgeted for.

ExpenditureEmployee benefits are over budget by $952,000, mainly due to projects that were not budgeted for

and $509,000 relates to Te Tumu Paeroa Dairy Limited Partnership which was not known at the time

of budgeting.


Depreciation and amortisation are $67,000 less than budget because the budget assumptions were for the

second stage of the core system enhancement to be completed this year which has been delayed to the next

financial year.

Restructuring costs are $117,000 more than budget relating to out-sourcing the transactional processing

of the finance function resulting in redundancies. This out-sourcing occurred as of 1 April 2014, however

a provision for restructuring was created at balance date.

Farm expenses are $3,297,000 over budget due to the Māori Trustee entering into limited partnerships

that were not budgeted for.

Other expenditure was under budget by $68,000 resulting from the reversal of impairment of loans

$609,000, consultant fees were under budget by $55,000 as the actual project and consultancy costs

incurred for the year were less than budget, insurance costs were under budget by $59,000 owing to

the sale of the Wellington head office, underspent legal fees by $45,000, underspent contract workers

by $51,000 and underspent governance costs by $57,000, offset by the loss on disposal of the Wellington

head office building of $808,000.

Other income and other comprehensive incomeThe share of associates’ net surplus was higher than budget by $2,744,000 and the share of associates’

other comprehensive income was higher than budget by $921,000 as these were not known at the time the

budgets were prepared. Impairment of investment in associates is $6,352,000 higher than budget relating

to a write down of investment in Quantum Limited to the expected sale price of $14.25 million which was not

known at the time the budgets were prepared. Gain on investment property revaluation was higher than the

budget by $2,127,000 as this was also not expected at the time the budgets were prepared.

Statement of financial positionAssetsNon-current assets held for sale are less than budget by $8,807,000 owing to the decision to impair and

dispose of the investment in Quantum Limited. Investment in associates is higher than the budget by

$4,228,000 owing to the change in value of the investment in Miraka Limited by $4,459,000, Putake Limited

by $173,000, Putake Investments Limited Partnership by $101,000 and as a result of additional interest in

the Rangihamama Dairy Limited Partnership.

Property, plant and equipment and intangible assets have reduced by $4,340,000 owing to the sale of

the Wellington head office building. Investment property is higher than the budget due to the acquisition

of Te Kawa and Ouruwhero farms which occurred during the year.

Stock of $2,027,000 and investments of $2,633,000 relates to livestock and Fonterra shares resulting from

consolidation of the Te Tumu Paeroa Dairy Limited Partnership.

LiabilitiesOther non-current liabilities are greater than the budget due to the fair valuing of investment property

to reflect potential future liability on sale of investment properties.

Statement of cash flowsNet cash flows from operating activities varied from budget by $1,805,000, mainly due to consolidation

of farm revenue and expenses of the Te Tumu Paeroa Dairy Limited Partnership.

Net cash flows from investment activities varied from budget by $5,061,000 as surplus funds were

invested in associates ($1,734,000) and investment property ($6,950,000) offset against cash received

from the sale of the Wellington head office building $2,817,000. Term deposits matured and invested are

higher than the budget by $11,870,000 as held-to-maturity investments matured have been reinvested

in term deposits.

Cash received on loans and receivables repaid was $1,949,000 higher than budget, mainly due to some

unbudgeted payments received on Revolving Credit and Conversion Fund loans.


E.37

Statement of Trust MoniesFor the year ended 31 March 2014

The Māori Trustee operates trust accounts under section 23 of the Māori Trustee Amendment Act 2009

(the Act). The transactions through these accounts and the balances at 31 March 2014 are not included in the

Māori Trustee’s financial statements. Movements in these accounts were as follows:

Common Fund Special Investment Accounts

2014 2013 2014 2013

Notes $000 $000 $000 $000

Account balances at beginning of year 83,145 71,544 2,895 7,734

Cash proceeds from trusts and land administration

i 10,088 9,956 - -

Net distributable income after tax ii 2,788 3,080 - -

Payments to account holders (6,072) (6,132) - -

Net investments matured/(invested) 428 5,810 - -

Net special investments invested/(matured) - - (428) (4,839)

Net loans advanced/(repaid) (465) (39) - -

Net monies introduced/(withdrawn) (878) (1,087) - -

Movement in tax and management fee liability (67) 13 - -

Account balances at end of year 88,967 83,145 2,467 2,895

The Common Fund represents monies received by the Māori Trustee under sections 23 and 25 of the Act,

in trust for persons entitled to receive them. All Common Fund monies are guaranteed by the Crown under

section 27 of the Act.

Special Investment Accounts are investments made in accordance with section 24 of the Act. The Common

Fund and Special Investment Accounts are invested as follows:

Common Fund Special Investment Accounts

2014 2013 2014 2013

Cash and cash equivalents 4.0% 7.3% 0.4% 0.8%

Term deposits 32.6% 25.3% 98.0% 97.8%

Bonds 63.4% 67.4% 1.6% 1.4%

100.0% 100.0% 100.0% 100.0%

The market value of Common Fund investments as at 31 March 2014 was $89,600,000 (2013 $85,000,000).


(i) Cash proceeds from trusts and land administrationCommon Fund

2014 2013

$000 $000

Rent and other income 23,409 21,946

Māori Trustee fees and commissions (1,261) (2,538)

Operating and administration expenditure (6,454) (6,422)

Capital expenditure (2,134) (18)

Net payments to Inland Revenue (3,472) (3,012)

Cash proceeds from trusts and land administration 10,088 9,956

(ii) Net distributable income after tax Common Fund

2014 2013

$000 $000

Common Fund investment income 4,246 4,393

Māori Trustee Common Fund management fee (656) (585)

Supplementary fee (182) (48)

Distributable income 3,408 3,760

Tax withheld (620) (680)

Net distributable income after tax 2,788 3,080

Te Tumu Paeroa

Level 3, Seabridge House

110 Featherston Street

PO Box 5038

Wellington 6145

Aotearoa New Zealand

0800 WHENUA (0800 943 682)

tetumupaeroa.co.nz

facebook.com/TeTumuPaeroa

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