Annual Report 2016 WAIRARAPA MOANA INCORPORATION WAIRARAPA MOANA TRUST
Annual Report 2016
WAIRARAPA MOANA INCORPORATION
Message from the Chair Tihei Mauri ora Mihi mai ki o tātau mate kua riro nei i te pō, haere, haere ki Paerau, ki te huinga Kahurangi. Koutou ki a koutou, tātau te hunga ora ki a tātau, tēnā anō tātau katoa. He mihi mahana ki a koutou ngā uri o Wairarapa Moana. Anei e whai muri nei ko ngā kōrero mō tēnei tau. Ka whakarāpopotongia ngā mahi kua oti kē, ka whakatakotongia ngā mahi mō te tau ka tū mai nei.
Kingi Smiler
Nō reira tēnā koutou, tēnā koutou, tēnā tātau katoa.
Commodity milk prices remained low in 2016 for the second year in a row and 2017 will continue to be challenging. The milk price for 2016 is $3.90 compared to our original budget of $4.50 which we advised at the time of last year’s annual report was subject to a lot of downside risk. Even though we received approximately $1.7million less revenue we were able to reduce farm costs by $1.8million and achieve higher production than in 2015. This was an excellent result produced by our farm team including General Manager, Nick Hume, and Operations Managers, David March and Phil McKinnon, and further improvements are projected for 2017, with
a forecast gross profit of $2.18million based on a $4.00 milk price. See summary from dairy operations below: The harvesting of the farm woodlots budgeted to realise approximately $1.5million based on current market prices then cash surplus after payment of interest costs is forecast at $1.16million, a significant improvement compared to 2016 and 2015. The overall cash break-even milk price before shareholder dividends for Wairarapa Moana Incorporation (WMI) as a whole is approximately
2017 Budget
2015 Actual
Milk Price
$4.00
$3.90
$4.40
Gross Profit / (Loss) from Dairy Operations
2,183
(46)
(329)
Net Forest Income
2,991
1,490
1,752
536
368
403
20
17
27
5,730
1,829
1,853
933
940
911
Operating Profit / (Loss)
4,797
889
942
Less Interest
3,634
3,406
2,872
Cash Surplus / (Loss) after Interest Costs
1,163
(2,517)
(1,930)
Milk Value Add Income – Miraka Other Total Income Less Administrative Expenses before Interest, Taxation, Depreciation and Amortisation
2
(in $000’s) 2016 Actual
ANNUAL REPORT 2016
$4.20. Our farm benchmarking results indicate that we are in the top 10% in our region. It has been reported widely in the media that the average costs of production for the dairy industry in 2016 are estimated at approximately $5 compared to our cost structure of $4.36 and budgeted to be $3.90 for 2017. This year Wairarapa Moana is required to comply with International Financial Reporting Standards (IFRS) and accordingly all assets are to be recorded at market value (even though WMI will never sell its’ land) and all stated changes are now recorded in the Statement of Comprehensive Income. The financial results are, therefore, significantly different than the previous generally accepted accounting standards (GAAP) applied in New Zealand as noted below:
The most significant difference is the recording of the annual change in market value for land and recording the increase or decrease in the income statement, this was not required under the GAAP method. In 2016 there has been an approximate 5% decrease in land values totalling approximately $9.9million and overall the comprehensive net loss for 2016 is $8.4million and $0.6million in 2015. As milk prices are expected to be low in 2017 we have made a similar adjustment for land devaluation with an overall $4.7million loss forecast. Miraka continues to be profitable but has been impacted significantly by the tough market conditions for whole milk powder prices and the high exchange rates. In addition, the UHT operations have operated at below forecast (in $000’s)
Net Profit / (Loss) After Tax
BUDGET 2017 (IFRS)
2016 (IFRS)
2015 (IFRS)
2015 (GAAP)
353
(2,817)
(1,750)
(506)
(9,000)
(9,924)
7,888
–
Other Comprehensive Income / (Loss) for the year: Revaluation (Devaluation) of Property Other Changes (net)
Total Comprehensive Income / (Loss) for the year
3,948
4,217
(6,770)
–
(5,042)
(5,623)
(1,118)
–
(4,688)
(8,440)
(632)
(506)
WAIRARAPA MOANA INCORPORATION
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demand. The next 12 months we expect to continue to see low milk prices and the continued challenge of high exchange rates. However, this will be offset by much higher forecast demand and margins for the UHT products into China.
The overall equity of WMI is $191million and a debt ratio of 24% provides us with a very strong balance sheet to withstand the unprecedented global price volatility currently being experienced.
Miraka is continuing to develop its value growth strategy with further opportunities in both business to business and business to consumer product opportunities. Miraka is expecting to commercialise these opportunities over the next 18 to 24 months and will be gradually introduced into the market.
The Committee recommends the following distributions for 2016:
Miraka is underpinning the value growth strategy by introducing a new incentivised milk price structure for all Miraka milk suppliers which will also benefit WMI and build a more sustainable value chain. This programme is referred to as Te Ara Miraka (The Miraka Way) and more details have been provided in our General Manager’s Report. We also extend our congratulations to the Miraka team for winning the inaugural 2016 Matariki Award hosted by Māori Television for the TeTupu–a-Nuku Business and Innovation Award, a very proud moment for our Miraka whānau.
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ANNUAL REPORT 2016
Regular Dividend Educational/ Marae Grants Dividend
$400,000 $90,000
Finally, I acknowledge the support and contribution of my fellow committee members Anne Carter, Arawhetu Gray, Te Horipo Karaitiana as well as our new member this year Murray Hemi and the valuable contribution from Dr Gavin Sheath and our Farm Business Advisory Group. Kingi Winiata Smiler chairman wairarapa moana incorporation
Our Vision To nurture our people, our place, our future
Our over-arching Philosophy is Kaitiakitanga active guardianship which is underpinned by
Our Values VALUE
BEHAVIOUR
OUTCOME
Tika / Integrity
People behave in an open, honest and respectful way. They do the right thing and build trust.
Trusted Relationships
Whanaungatanga / Communication
Effective communication is encouraged throughout all levels of WMI and is accurate, informative and timely.
Everyone is on the same page
Rangatiratanga / Courage
Provides vision and leadership to achieve excellence in everything we do for our collective whānau.
Success in what we do
Wānanga / Knowledge
Explore, encourage and lead in an environment that shares knowledge at all levels of WMI.
Talented Team
Kotahitanga / Working Together
The working environment is positive and collaborative so that all people are valued and have pride in themselves and WMI.
Proud People
5
Key Performance Measures
$(2.8)
(1.47)
million
Net profit after tax Reducing from $(1.75)m in 2015 due to a 10c reduction in milk price and reduction in livestock values.
(1.07)
percentage
percentage
Return on equity
Return on Assets
Decreased 1.22 percentage points from the 2015 year.
Decreased from (.20) in 2015.
24.0
$(8.9)
Growth and Risk Measures
$(1.2) million
million
percentage
Net Equity
Net Cashflows
Bank Debt
Received were $4.3m less than 2015 and is reflective in the reduced retrospective payments for milk sales.
With the purchase of Miraka shares and the reduction in milk price debt has risen as forecasted.
Net Profit (Loss) After Tax
Reduction in equity from 2015. The decrease in earnings and the reduction in livestock values and land values.
Dividends Paid
16 2.0
15
14 12
1.5
10 8 0.9
4 0
0.5 0.4 0.4
-2.8
-1.8
-0.1
1.6
2017 2016 2015 2014 2013 2012 Budget
Values in million’s of dollars
6
0.4
0.4
0.4
0.0 2017 2016 2015 2014 2013 2012
-2 -4
1.2
1.0
6 2
2
ANNUAL REPORT 2016
Values in million’s of dollars
General Manager’s Report Tēnā koutou ngā uri o te Moana tapu ko Wairarapa, anei te pūrongorongo mō te tau 2016.
Nick Hume
Farming is one of those industries where you never stop learning and developing, and things never stop changing.
The 2016 season was certainly one that has changed the mood amongst the farming community within New Zealand and the world. We have seen extremely low commodity milk prices. This has placed pressure on all farms across the globe. This has been driven by an over supply and a reduction in demand. We have seen the European Union step in to financially support their farmers which has not helped either. Many investors moved into milk production off the back of the strong prices seen in 2013 and 2014 and some countries have grown their supply exponentially since. On the demand side of the equation the Chinese buyers backed away from the market with the downturn in their own economy. Milk price last year in 2015 was low at $4.40 per kilogram of milk solid (kgMS) and no one picked that 2016 would fall lower to $3.90 kgMS. Current predictions are not looking positive for the 2017 season but long-term demand is expected to pick up in the following season. It will be a question of how long some suppliers (in particular overseas) will remain producing milk at a loss. Operating in the commodity market one needs to continue that long term focus and ensure that your investment strategy and system is designed to handle the fluctuations in the markets.
On the Farm Te Ara Miraka This coming season we see the launch of Te Ara Miraka from Miraka. This is the Miraka farming with excellence program. Te Ara Miraka supports and encourages a culture of excellence through the entire Miraka supply chain – from the farm to the customer. This links very strongly to their vision “nurturing our world” and of course has close links to WMI’s vision and values. WMI were involved in the initial design of the program and its standards (as were other shareholders and suppliers). The vision for Te Ara Miraka is to show “world leadership in sustainable on farm milk production practices to produce first class raw milk efficiently.” In order to do so the Miraka supplier base need to be first in class in what they do on farm day to day. The farming with excellence program is supported by WMI and the rest of the supplier base of Miraka (with many farmers still waiting to become a Miraka supplier). WMI have a strategic objective to grow beyond the current asset base. This program is important and relevant as it will create and support resilient businesses that will stand the test of market volatility. It is a long term journey that will bring advantages to the Miraka whānau and communities. This journey will add value to
WAIRARAPA MOANA INCORPORATION
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Figure 1: Forecast Dairybase Results per Ha 2015/2016
WMI’s assets in the form of value added returns by moving away from the whole milk power (WMP) which is considered a commodity and at risk of market volatility.
5000 4000
$ per Ha
3000 2000 1000 0 -1000
Income
EFS
Feed Costs
Bay of Plenty WMI
Wages Enabling
Total Costs
Waikato North Island
Source: Dairy NZ – Dairybase Economic Report 2016.
Figure 2: Forecast 2016 Sharemilker Comparisons
Scale – $, MS per Cow or MS per Ha
1800 1600 1400 1200 1000 800 600 400 200 0
EFS per Ha
Costs per Ha
MS per Cow
MS per Ha
WMI (2.8 cows/ha) North Island Avg (2.9 cows/ha) Source: Dairy NZ – Dairybase Economic Report 2016.
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ANNUAL REPORT 2016
Te Ara Miraka consists of five pou; Ngā Tangata (people), Te Taiao (environment), Taurikura (prosperity), Ngā Kau (cows) and Miraka (milk). Under each pou there are mandatory and incentivised targets. Initially Miraka have offered a 20 cent incentive to meet the standards. Reality is all of the standards are considered best practice for dairy farming, business and people management and something WMI are already working towards achieving and leading by example.
The season that was The early part to the production season saw very cold and windy conditions which affected pre Christmas production. Post Christmas the region experienced very humid and wet conditions which affected milk production as well. As always with farming we are at the mercy of the weather. Cows never got to the per day production seen in other seasons. There was one to two weeks in February that really stressed the cows and once their per day production falls it is very hard to bring them back up at that point in the season. This resulted in the budget production not being achieved. However the production number of 4,074,175 kgMS exceeded the 2015 season. Post Christmas with the moist humid conditions grass growth was a lot higher than previous years. This certainly meant the team were able to reduce supplement feed. The production delivered was the cheapest per kgMS WMI have delivered at this scale. In addition the team know where future opportunities exist and have
targeted plans for each of the farms for this season to replicate the cost effective milk solids.
We welcomed Phil McKinnon to the business last year pairing with David March (who has just started his fourth season with WMI). Both David and Phil were new to their roles as operations managers with David looking after the managed farms and Phil looking after the share milker farms and the dairy support units. They have now had a full season in their roles and are certainly looking to continue to add value in the current season.
WMI Annunity Amount Rent ($) Stumpage ($/m3)
The Committee of Management identified the risks associated with the commodity market after the last downturn in 2012 and undertook a programme to change the production system that would handle the cycles better. The farm team have grown in confidence in that system now and have seen how differing seasons can challenge the farms. They are capable of reacting and altering their plans to meet targets.
Figure 3: Stumpage vs WMI Annunity Stumpage
200 180 160 140 120 100 80 60 40 20 0 2000 2002 2004 2006 2008 2010 2012 2014 2016
Our most valuable asset is our staff. The staff we have are certainly ones to be proud of and I do not hesitate telling anyone what a great team we have. This includes those on farm, those in the Taupo office and of course our team in Masterton. Not only are the team skilled but they also have the motivation to meet WMI’s objectives. The farm team are willing to learn, grow and evolve. Farming is one of those industries where you never stop learning and developing, and things never stop changing. This has certainly been seen across the country this past 18 months with many well established farmers questioning what they are doing and altering what they do.
WAIRARAPA MOANA INCORPORATION
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The system change was under taken 3 seasons ago from a system 5 to a system 3. The farm team are starting to develop some real confidence in the system 3, which will be essential to battle the low payout. The WMI cost structure is still trending downwards and is budgeted to do so this coming season as well. The development of our staff continues and attracting shareholder whānau to the farms is a focus. Finding suitable young people in the dairy sector, who show leadership potential, is a challenge all dairy businesses face. The industry needs more young people to enter. Our investment in people sees WMI in a strong position for the future to attract the leaders of tomorrow. Production was down on budget. Expenses were 2.6% within budget. The WMI cost structure is now below the industry average, with production being higher than the average. The management team have a target to reach the top 10 % of New Zealand farms based on economic farm surplus (EFS). There are a number of key focuses on farm with the main focus over the past two seasons being the 6 week in calf rate. That is the percentage of cows that fall pregnant in the
first 6 weeks of mating. This metric is important as it means more cows calve early giving more days in milk before Christmas. In addition the earlier they calve the more time they have to gain weight to get back in calf for the following season. WMI was preforming below industry average which is very common for large scale farming. There was a detailed plan developed with the vision of seeing all the farms track towards the industry target of 78%. At the start of the project WMI had a 6 week in calf rate of 60%. We are pleased to say that the progress has been steady and we now have a 70% 6 week in-calf rate. The program was a 5 year program to get to the industry target and we are now into year 3. The industry have the target of 78% but not many farmers in the country are hitting this target which is of concern for the industry. WMI have impressed the reproduction providers with the progress they have made. Livestock Improvement Corporation (our genetics provider) have not seen such improvement at scale before. The plans implemented will become the blue print for other New Zealand farmers over the coming years. The farm team are the key part to that program and their response as always has been impressive.
Forestry The forestry continued to deliver above industry standards, with the annuity being paid until 2036. The 3rd rotation is coming up for renewal which will add to the income stream from forestry. The benchmarking for forestry sees WMI earning well above the average returns (figure 3) for the annuity. WMI are exploring how they can make those returns beyond 2036 and look forward to updating the owners in the future. There was a large rise in the value of the carbon credits that we own of $10 per unit which has been reflected in the increase in forestry assets in the balance sheet. This was an uplift of $2.8 million.
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ANNUAL REPORT 2016
Miraka Limited
Looking Ahead
Miraka Limited continues to perform and this year saw a net cash dividend paid to WMI of $980,000. Miraka are focusing on UHT products and value add products. The strategy is to move away from powder and into products directly delivered to end users as opposed to selling products to be used as ingredients. This will increase the profit margin on revenue generated which will flow to the owners of Miraka over time.
The budget for 2017 has a milk price of $4.00 included and will return a cash profit of $650,000 after dividends and interest. Included in the budget to achieve this result is the harvesting of the farm woodlots. This will net $1.5m in additional revenue for WMI. Milk price is still the most important element. For every $1 movement in milk price the bottom line moves by $3.3m. The need to be responsive to changes in the market is still important now and will be going forward. WMI are looking at options to hedge the milk price with the new market of milk futures established earlier this year. The efficient use of resources has been reinforced with the team and is the mantra for the season. Making the right decisions on when and how much supplement feed to use will be very important over the coming seasons. In addition how they use other resources.
Net equity Land values have fallen 5% which has reduced the net equity of the owners. Livestock values have also fallen reducing the assets. On a positive note Miraka has grown in value. If WMI were able to value Miraka at market value as opposed to equity accounting values the value would be higher again. If Market Values were able to be applied there would be an additional $18m of assets increasing net equity by the same amount. The value of each (one) Share in WMI at 31st May 2016 was $3.98, as valued by Crowe Horwath, compared to 31st May 2015 value of $4.28. This is reflective of the reduction in land and livestock values.
The debt Position Debt has increased during the period with the completion of developments on the farms and he purchase of the Maori Trustee shares in Miraka. Should milk price return to normal levels the 5 year future projections indicate that debt will track below the 15% of assets by 2020. The focus now that all development is complete (except for the new shed on Farm 7) is to make annual reductions in debt.
The 2017 budget has been compared to the economic models developed by Dairy NZ for Waikato, Bay of Plenty and the Taupo regions and the trends are very positive with costs trending down and revenue holding static. The long term projections for the Incorporation still look positive with a real focus on debt reduction being planned. There is an expected reduction in land values based on the payout trends. This will affect the balance sheet but as there is no intention of selling the Farm land this just affects the accounting values carried in the financial statements. Finally I would like to thank the staff of WMI for their support and efforts for the last twelve months. It has been challenging under the economic environment we operate in. I also would like to thank the Committee of Management for the governance and support. Nō reira e te Iwi, tēnā koutou, tēnā koutou, tēnā tātau katoa. Nick Hume general manager wairarapa moana incorporation
WAIRARAPA MOANA INCORPORATION
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Financial Report Results in Brief WAIRARAPA MOANA INCORPORATION
Budget NZ IFRS NZ IFRS NZ IFRS GAAP GAAP GAAP GAAP 2017 2016 2015 2015 2014 2013 2012 12 Mths 12 Mths 12 Mths 12 Mths 11 Mths 12 Mths 12 Mths
STATEMENT OF COMPREHENSIVE INCOME (NZ IFRS) / STATEMENT OF PROFIT AND LOSS (GAAP) Commodity Milk Price per kg milk solids $4.00
$3.90
$4.40
$4.40
$8.40
$5.80
$6.05
$000 $000 $000 $000 $000 $000 $000
Revenue from Dairy Farming Operations Costs of Production Gross Profit From Dairy Farming Operations Total Other Income Total Income
19,729 18,380 19,859 20,243 35,347 24,081 30,654 (17,545) (18,426) (20,188) (20,207) (21,128) (22,080) (26,310) 2,183 (46) (329) 36 14,219 2,001 4,344 3,547 5,730
2,182 1,853
2,186 2,222
2,592 16,811
1,834 3,835
1,906 6,250
Administrative Expenses (933) (940) (911) Income from Equity Accounted Investment Earnings before Interest, Taxation, 4,797 889 942 Depreciation and Other Items (EBITDOI)
(911) 2,590 3,901
(822) 3,390 19,379
(1,028) 1,127 3,934
(934) – 5,316
Finance Expense Depreciation and Amortisation Expense Operating Profit/(Loss) after Financing, and Depreciation
(2,876) (1,531) (506)
(2,380) (1,548) 15,451
(2,596) (1,425) (87)
(2,197) (1,546) 1,573
(3,634) (1,560) (397)
1,875 1,829
(3,406) (1,656) (4,173)
(2,872) (1,523) (3,453)
Other Items Share of Profit (Loss) from Miraka Limited 1,000 453 2,590 Revaluation of Forestry Asset 500 541 964 Revaluation (Devaluation) of Township – (13) (43) Revaluation (Devaluation) of Livestock 1,000 (1,462) (2,070) Revaluation of Farm Woodlots (1,500) 906 164 Total Other Items 1,000 424 1,605 Net Profit/(Loss) Before Tax Income Tax Expense (Income) Net Profit/(Loss) for the year
603 (250) 353
(3,749) (932) (2,817)
(1,848) (98) (1,750)
(506) – (506)
15,451 (434) 15,017
(87) – (87)
1,573 – 1,573
Other Comprehensive Income/(loss) for the year Revaluation (Devaluation) of Property, Plant and Equipment (9,000) (9,924) 7,888 Revaluation of Pre 1990 ETS Carbon Credits 283 2,810 71 Movement in Interest Rate Hedges – (1,444) (994) Revaluation (Devaluation) of Miraka Limited Equity Accounted Investment 2,000 2,398 (6,382) Revaluation of Financial Assets available for Sale 500 767 – Income Tax Relating to Comprehensive 1,175 (230) 535 Income Movements Other Comprehensive Income/(loss) net of income tax Total Comprehensive Income for the Year
(5,042) (5,623) 1,118 (4,688) (8,440) (632)
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ANNUAL REPORT 2016
Results in Brief WAIRARAPA MOANA INCORPORATION
Budget NZ IFRS NZ IFRS NZ IFRS GAAP GAAP GAAP GAAP 2017 2016 2015 2015 2014 2013 2012 12 Mths 12 Mths 12 Mths 12 Mths 11 Mths 12 Mths 12 Mths $000 $000 $000 $000 $000 $000 $000
STATEMENT OF CHANGES IN EQUITY Opening Shareholders’ Equity 191,904 200,822 203,646 206,265 174,110 174,804 175,563 Wairarapa Moana Forest Woodlot Revaluation 165 659 360 (93) Wairarapa Moana Forest Land Revaluation 1,034 445 (132) 1,169 Share and Investment Revaluation (6,348) 4,157 (1,998) 4 Farm Revaluation 7,880 12,445 999 (1,723) Township Revaluation (34) (160) (450) (215) Livestock Holding Gain (Loss) (2,070) 96 1,101 (83) Capital Gain/(Loss) on Sale Above Revaluation (127) Net Asset Revaluation change 627 17,642 (120) (1,068) Net Profit/(Loss) for the year Total other comprehensive income Total comprehensive income for the year
353 (5,042) (4,688)
(2,817) (5,623) (8,440)
(1,750) (506) 15,017 (87) 1,118 (632)
Contributions by and distributions to shareholders Movements in Reserves – – 77 77 – Dividend Declared (500) (478) (2,269) (2,269) (504) (487) Total contributions by and distributions (500) to shareholders Closing Shareholders’ Equity
(478)
(2,192)
(2,192)
(504)
(487)
1,573
(1,264) (1,264)
186,716 191,904 200,822 204,194 206,265 174,110 174,804
Closing Shareholders’ Equity is made up of the following components: Share Capital 46,739 46,739 46,739 46,739 46,739 46,739 46,739 Retained Earnings 27,607 27,253 30,548 23,580 26,277 7,400 9,085 Reserves 112,370 117,912 123,535 133,875 133,249 119,971 118,980 Closing Shareholders’ Equity 186,716 191,904 200,822 204,194 206,265 174,110 174,804
WAIRARAPA MOANA INCORPORATION
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Results in Brief WAIRARAPA MOANA INCORPORATION
Budget NZ IFRS NZ IFRS NZ IFRS GAAP GAAP GAAP GAAP 2017 2016 2015 2015 2014 2013 2012 12 Mths 12 Mths 12 Mths 12 Mths 11 Mths 12 Mths 12 Mths $000 $000 $000 $000 $000 $000 $000
Biological Assets – Livestock 14,693 13,693 14,060 14,060 14,410 11,926 12,844 Other Current Assets 3,307 5,010 4,275 3,613 10,382 5,413 8,687 Current Assets 18,000 18,703 18,335 17,673 24,792 17,339 21,531 Property, Plant and Equipment 165,499 172,324 182,329 182,339 166,645 150,837 148,254 (Wairarapa Moana Farms and House) Investments – Miraka 32,757 30,757 20,799 20,799 25,979 16,187 17,650 Investments – Other 4,409 3,909 3,681 3,681 3,646 3,740 3,024 Investment Property 29,240 28,740 28,347 28,265 27,346 27,542 27,659 (Mangakino Township and Forestry Lands) Intangible Assets (Carbon Credits) 4,583 4,300 1,490 1,490 1,419 188 653 Biological Assets – Farm Woodlots 1,590 3,090 2,185 2,184 2,020 1,361 961 Other Non-Current Assets – – – – – – – Non-Current Assets 238,078 243,120 238,831 238,758 227,055 199,855 198,201 Current Liabilities Non-Current Liabilities Shareholders’ Equity
3,200 66,162
3,219 66,700
5,564 50,780
4,537 47,700
6,462 39,120
3,928 39,156
6,549 38,379
186,716 191,904 200,822 204,194 206,265 174,110 174,804
KEY PERFORMANCE INDICATORS Growth/(Reduction) in net worth on $ (5,188) (8,918) (5,443) (2,071) 32,155 (694) (759) Growth/(Reduction) in net worth on % -2.70% -4.44% -2.64% -1.00% 18.47% -0.40% -0.43% Return on Equity -2.51% -4.40% -0.31% -0.25% 7.28% -0.05% 0.90% Return on Assets -1.83% -3.22% -0.25% -0.20% 5.96% -0.04% 0.72% Bank Debts as a % of total assets 24.60% 24.06% 19.40% 18.60% 15.53% 18.03% 17.47% STATEMENT OF CASH FLOWS Receipts from customers 23,000 19,227 28,699 28,699 32,191 30,742 26,551 Payments to Suppliers and Employees (19,000) (21,634) (22,972) (22,972) (25,341) (23,981) (23,068) Other Cash Flows from Operating Activities (3,500) (3,078) (2,712) (184) (638) 282 (512) Cash Flow from Operating Activities 500 (5,485) 3,015 5,543 6,212 7,043 2,971 Acquisition of Investments Acquisition of Property, Plant and Equipment Dividends Received Other Cash Flows from Investing Activities Cash Flow from Investing Activities
– – – – –
(8,087) (3) (3) (1,438) (10,293) (10,293) 997 1,388 1,388 235 150 149 (8,293) (8,758) (8,757)
(2,726) (4,308) 561 115 (6,358)
(64) (192) (5,679) (10,645) 25 52 217 735 (5,501) (10,050)
Term Borrowings Dividends Paid Other Cash Flows from Financing Activities Cash Flow from Financing Activities Net Increase in Cash and Cash Equivalents
– (500) – (500) –
12,987 (455) – 12,532 (1,246)
10,780 (1,982) – 8,798 3,055
8,580 (1,982) (2,528) 4,070 856
2,164 (382) (2,383) (601) (747)
777 (408) (2,595) (2,226) (684)
11,201 (1,045) (2,181) 7,975 896
Add Cash and Cash Equivalents at Start of Year Cash and Cash Equivalents at End of Year
(219) (219)
1,027 (219)
(2,028) 1,027
(2,028) (1,172)
918 171
1,602 918
706 1,602
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ANNUAL REPORT 2016
Policies A summary of the Wairarapa Moana Ki Pouakani Incorporation (“the Incorporation”) audited financial statements for the year ended 31 May 2016 is shown in the Financial Summary section of this annual report, also shown is the summarised 31 May 2017 budget which has been drawn from the full 31 May 2017 budget approved by the Committee of Management on the 16 April 2016. The summary financial statements have been prepared in accordance with FRS-43 Summary Financial Statements. The 31 May 2017 Budget includes estimates and assumptions for the revaluations of assets. These estimates are made with the available information at the time and seasonality and market movements may alter those numbers. The key variable to those estimates is milk price. The Committee of Management have taken a position on milk price and the budget is built on a payout of $4.00. The full audited financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (“NZ GAAP”). They comply with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The Incorporation has adopted External Reporting Board Standard A1 Accounting Standards Framework (for-profit Entities Update) (“XRB A1”). For the purposes of complying with NZ GAAP, the Incorporation is eligible to apply Tier 2 For-Profit Accounting Standards (New Zealand equivalents to International Financial Reporting Standards – Reduced Disclosure Regime (“NZ IFRS RDR”)) on the basis that it does not have public accountability and is not a large for-profit public sector entity.
This is the first year the financial statements have been prepared in accordance with NZ IFRS RDR (refer to the transition to NZ IFRS note in these summary financial statements and note 31 in the full financial statements), prior to this the Incorporation prepared financial statement in accordance with New Zealand Statements of Standard Accounting Practice and Financial Reporting Standards (collectively known as “Old GAAP”). Therefore, the summary financial statements for the years ended 31 May 2016 and 31 May 2015 are shown in accordance with NZ IFRS RDR, the year ended 31 May 2015 is also shown in accordance with Old GAAP as are the periods ended 31 May 2014, 30 June 2013 and 30 June 2012. The summary financial statements are presented in New Zealand dollars and are amounts are rounded to the nearest thousand dollars ($000). The amounts stated in the summary financial statements have been extracted from the full financial statements of the Incorporation, which were authorised by the Committee of Management on 15 July 2016, of which an unqualified opinion has been issued by our auditors. Unqualified audit opinions have been issued by our auditors for all years presented in the summary financial statements. Copies of the full audited financial statements are available from the Incorporation upon request. The summary financial statements do not include all disclosures provided in the full financial statements and cannot be expected to provide as complete an understanding as provided by the full financial statements of the Incorporation. The summary financial statements should be read in conjunction with the statement of accounting policies and notes to the full audited financial statements.
WAIRARAPA MOANA INCORPORATION
15
Disclosures RELATED PARTY RELATIONSHIPS, TRANSACTIONS AND BALANCES Committee Members
Committee member fees paid for the year Committee member expenses paid for the year (mainly travel and accommodation) Indemnity Insurance K Smiler (Chairman) – Executive Director Fees and Costs
2016 2015 $000 $000 20 42 40 15 212
36 16 154
287 248
Payable at 31 May
–
–
Associates The Incorporation owns 32.6% (2015 : 27.2%) of Miraka Limited, a milk processing company located in Taupo with a balance date of 31 July. The Incorporation’s shares rank equally with all other shares in Miraka Limited. During the year milk sales to Miraka Limited accounted for 87% (2015 : 85%) of the Incorporation’s revenue.
Cash Dividends Received from Miraka during the year
2016 2015 $000 $000 980 1,388
Owed by Miraka at 31 May May milk proceeds Retrospective payments for the season
677 1,748
636 770
2,425
1,406
No debts from Miraka have been written off or forgiven during the year. All transactions with Miraka occur on an arm’s length basis. There are no commitments or contingent liabilities relating to the investment in Miraka. During the year the Incorporation choose to match the offer for the shares offered by Te Tumu Paeroa resulting in the purchase of an additional 3.945 million shares at $2.05 per share in Miraka, increasing the Incorporations interest in Miraka to 32.6%.
16
ANNUAL REPORT 2016
Miraka Limited Equity Accounted Investment Miraka Limited is considered an associate to the Incorporation. The Incorporation owns 32.6% (2015: 27.2%) of the Miraka Limited shares. The Incorporation holds 23,747,308 shares in Miraka Limited at 31 May 2016 (2015: 19,829,013). The proportion of voting power is limited to the shareholding in Miraka Limited. Miraka Limited has a balance date of 31 July. Miraka Limited is recorded at equity accounting value as opposed to an independent market value.
2016 2015 $000 $000
Opening Balance Share of associates profit/(loss) for the year Share of associates other comprehensive income Cash Dividend Received Cash Paid for Shares
20,799 453 2,398 (980) 8,087
25,979 2,590 (6,382) (1,388) –
Closing carrying value of equity accounted investments
30,757
20,799
Reconciliation Cost (cash paid) 23,461 15,374 Share of Post Acquisition profits/(losses) and comprehensive income 7,296 5,425
30,757
20,799
Based on the comparable sale of the Maori Trustee (Te Tumu Paeroa) Shares during the financial year the established market value for a willing buyer and willing seller was $2.05, based on that value Miraka Limited would hold a value as follows: Miraka Limited share value based on comparable sale Shares Held Estimation of Market Value
$2.05 23,747,308 $48,681,981
Joint Venture
The Incorporation is a 33%, equal interest, limited partner of Whai Hua Limited Partnership, established for the purpose of developing and researching milk proteins to develop higher value products. The partnership has a 30 June balance date. 2016 2015 $000 $000 Funding contribution Payable to Whai Hua Limited Partnership at 31 May
204
352
–
–
No debts to Whai Hua Partnership Limited have been written off or forgiven during the year. All transactions with Whai Hua Partnership Limited occur on an arm’s length basis. There are no commitments or contingent liabilities relating to the investment in Whai Hua Limited Partnership.
WAIRARAPA MOANA INCORPORATION
17
Explanation of Transition to NZ IFRS These are the Incorporation’s first financial statements prepared in accordance with NZ IFRS RDR. Schedule of Changes
2016 2015 $000 $000
Income Statement Depreciation on Investment Property Revaluation of Biological Assets Revaluation of Investment Property Tax on changes
9 (1,906) 921 171
66 755 285 (194)
(805)
912
Reconciliation to Equity 31 May 2016 Previous Transitional NZ GAAP Effect NZ IFRS Current Assets Livestock 14,410 (14,410) – Biological assets – Livestock a – 14,410 14,410 Other current assets 10,382 – 10,382 24,792 – 24,792 Non Current Assets Wairarapa Moana Farms b 166,142 (166,142) – Forestry Lands c 25,276 (25,276) – Wairarapa Moana Farm Woodlots a 2,020 (2,020) – Mangakino Township c 3,490 (3,490) – Wairarapa Moana House b 503 (503) – Property Plant and Equipment b – 166,633 166,633 Investment Property c – 27,425 27,425 Intangibles c – 1,419 1,419 Biological assets – woodlots – 2,020 2,020 Investments d 29,625 (29,625) – Equity Accounted Investments d – 25,979 25,979 Other Investments d – 3,681 3,681 Deferred Income Tax Asset e – 7 7 Derivatives – mark to market f – 162 162 227,056 270 227,326 Current Liabilities Derivatives – mark to market f – 38 38 Deferred Income Tax Liability e – – – Other current liabilities 6,463 – 6,463 6,463 38 6,501 Non Current Liabilities Term Liabilities 39,120 – 39,120 Deferred Income Tax Liability e – 2,689 1,978 Derivatives – mark to market f – 162 162 39,120 2,851 41,260 Net Assets
206,265
(2,619)
204,357
Equity Issued Capital 46,739 – 46,739 Reserves f 133,249 (10,832) 122,417 Retained Earnings g 26,277 8,213 34,490 206,265 (2,619) 203,646 18
ANNUAL REPORT 2016
a Transfer Livestock and Woodlots to Biological Assets b Transfer Farms and Wairarapa Moana House to Property Plant and Equipment c Transfer to Investment Property and Intangibles (Carbon Credits) d Transfer to Investment in Associates and Other Investments e Recognition of Deferred Tax Liability f Mark to market valuation of Interest Rate swaps as at 31 May 2014 g Transfer revaluation reserves for Biological Assets and Investment Property to Retained Earnings
The effect of the above adjustments on retained earnings at 31 May 2014 is as follows: Retained Earnings under previous NZ GAAP Revaluation of Biological Assets Revaluation of Investment Property Depreciation on Investment Property Tax Expense
26,277 5,650 5,744 55 (3,236)
34,490
Reconciliation of net surplus The transition from previous NZ GAAP to NZ IFRS has had the following impact on the reported surplus for the year ended 31 May 2015 Net surplus (after taxation) under previous NZ GAAP Prior Period Error (note 30) Revaluation of Biological Assets Revaluation of Investment Property Depreciation on Investment Property Tax Expense
(506) (365) (1,906) 921 9 –
Net Surplus (after taxation) under NZ IFRS
(1,848)
WAIRARAPA MOANA INCORPORATION
19
Annual Report 2016
WAIRARAPA MOANA TRUST
Message from the Chair Ngā mihi nui ki a koutou. Tēnā koutou ngā uri o ngā t ¯puna i o te moana tapu ko Wairarapa.
Deborah Davidson
In February each year the Trust begins with a review and planning day.
We look back over the previous year to discuss the year’s achievements and to confirm the following year’s tasks from our Strategic Plan. The Board of Trustees is happy to confirm that tasks were completed as set for the previous year and new tasks are set for the subsequent year ahead. The Trustees have continued on from the development work in 2015 to ensure that we are assisting with the growth of whānau and t¯i puna Marae and are continuing to move forward within the areas of our core business of Future Leaders, Marae Development and Wairarapa Moanatanga. Policies relating to each portfolio were reviewed and changes were made to the Marae Development and Wairarapa Moanatanga policies with the changes reflecting the way the Trust works with whānau and Marae. A portfolio is allocated to each trustee and, as trustees, we understand the roles and responsibilities and that accountability is to whānau. We are a competent Trust and each trustee has the capability and passion for each portfolio assigned: Rutu Namana, Wairarapa Moanatanga; Mihirangi Hollings, Future Leaders; Tirau Te Tau, Marae Development; and Anaru Smiler, Finance. In April the Trust met with the Incorporation in Mangakino. These hui provide the Trust with the opportunity to report to the Incorporation on progress since we last met and to discuss allocation of funds and how the Trust can best support whānau aspirations into the future.
22
ANNUAL REPORT 2016
Education From grants received from the Incorporation, the Trust allocated $50,000 to education this year. Of this, $40,000 was distributed to Future Leaders Scholarships and Trade and Apprenticeships. This year there were 34 successful recipients. The remaining $10,000 was allocated to the Bridging Fund. Applications for these grants are available throughout the year or until funds have been expended, whichever occurs first. The purpose of the Bridging Fund is to provide a one-off grant, outside of the regular scholarships, to assist the descendants of the original owners of the Wairarapa Moana to gain pre-requisite requirements to either further education or future employment.
Wairarapa Moanatanga The Trust is committed to the Whakakaha Paepae programme with the karanga component in its third and final year. The intention of the programme is to not only strengthen but also sustain the paepae of t¯i puna Marae, allowing those that have been selected to share their knowledge with whānau and hapū o ngā t¯i puna Marae. The karanga programme has already proven its success. At present, wāhine participate in weekend noho at each t¯i puna Marae to learn and share knowledge. The first was held at Te Ore Ore in January 2016 and will end at Hurunui-oRangi later this year.
The start of the tāne programme is almost here. Rutu Namana and Henare Manaena have been working closely with Mike Kawana to progress this. T¯i puna Marae have been contacted to identify and put forward tāne to participate in the programme, representing each Marae.
Trustee Rotation / Election
We look forward to reporting on the progress of this programme that seeks to strengthen individual participants, hapū and Marae.
Acknowledgements
Marae Development The year began with meeting representatives of each t¯i puna Marae. This was to strengthen communication relationships and advise how the Trust may be able to assist with financial and administration obligations. It is encouraging to see almost all of the 2014 Special Grant funds have been uplifted. In February 2016 the Trust made some changes to the Marae Development policy which complemented our Strategic Plan outcomes for 2016/2017. Mahi continues with new goals to accomplish and with the support of shareholders that we are able to provide Marae with some assistance. It is commendable to those whānau who put many voluntary hours into helping Marae and it’s important to ensure we continue to support them.
This year two trustees retire by rotation. Rutu Namana has served two consecutive terms and I am due to retire by rotation and make myself available for re–election to the Trust.
I have had the privilege of being Chairperson of the Trust this year which has been an amazing yet humble experience which I have embraced and really enjoyed. The role of the Chairperson is so much easier when you have the committed trustees currently on the Board. The attendance and contributions made at our scheduled hui and work outside of hui is very much appreciated. On behalf of the Trust I would like to thank Rutu Namana for his consistent contribution since 2012; the trustees for their commitment during 2015/2016 period; and the Wairarapa Moana office for the support, dedication and the professionalism in which they work. There are many office hours committed to working with the Trust which we are grateful for. Thanks Charmaine, Dallas, Henare and Ngaere. Mauri Ora Deborah Davidson chairperson wairarapa moana trust
WAIRARAPA MOANA TRUST
23
In the 2016 academic year 34 scholarships were provided to tertiary, trade and apprenticeship recipients.
Scholarship Recipients 2016 Wairarapa Moana Trust would like to congratulate the following successful recipients of scholarships and bridging grants for 2016. A full list of scholarship recipients is listed below and is reflected in graph 1 by their fields of study. Graph 1: Current Areas of Study for Scholarship Recipients 2016 Bridging Fund
2
Environment
1
Agriculture Electrician
1
Carpentry
1
Journalism
1
1
Engineering
2
Law Science
7 3
Sport, Rec & Tourism Arts
2 6
Business & Commerce
6
Education & Teaching
2
Health
7
Māori (Te Reo/Culture)
3
Masters
1
0
1
2
3
4
5
6
7
Number of Students
24
ANNUAL REPORT 2016
TERTIARY RECIPIENTS Lionel Matenga Parekura Pewhairangi Reece Joseph Steffanie Jury Jordan Te Whaiti-Smith Aroha Geange Taryn Morunga Tama-Te-Kapua Hurihanganui Tessa Taute Charlotte Manning Johnathon Rutene Marla Jury Hannah Johnson Lucy Aitken Herewini Ammunson Isabella Woodward Cody Sherrard-Chase Pania Tasker Cereace Wallace Terena Te Whaiti Camryn Williams Rebecca Prattley Georgia Woodward Brooke Gibson Harriet Gibson Tapekaoterangi Hakopa Karangawai Paringatai-Hare Tayla Ahipene-Fisher Danielle Moeke-Ferris Te Aniwaniwa Hurihanganui AJ Walker Reubin Leask
PROGRAMME OF STUDY Master of Arts – Whakairo Rakau Bachelor of Maori Development Bachelor of Medicine/Bachelor of Surgery Bachelor of Medicine/Bachelor of Surgery Bachelor of Medicine/Bachelor of Surgery Bachelor of Nursing Bachelor of Health Science Bachelor of Health Science Bachelor of Health Science Bachelor of Teaching Bachelor of Primary School Teaching Bachelor of Commerce/Bachelor of Tourism Management Bachelor of Commerce / Bachelor of Laws Bachelor of Commerce / Bachelor of Laws Bachelor of Commerce / Bachelor of Laws Bachelor of Business Analysis – Financial Bachelor of Business Studies Bachelor of Arts Bachelor of Arts – Māori Bachelor of Law Bachelor of Laws / Bachelor of Arts Bachelor of Laws / Bachelor of Arts Bachelor of Laws / Bachelor of Arts Bachelor of Hospitality Management Bachelor of Environmental Management Bachelor of Science Bachelor of Science Bachelor of Science Technology Bachelor of Engineering Bachelor of Communications Diploma in Agriculture Diploma in Quantity Surveying
TRADE RECIPIENTS Niki Te Whaiti Marere-o-tonga Karauna
TRADE AND APPRENTICESHIP Apprenticeship/Certificate in Carpentry Apprenticeship in Electrician
BRIDGING FUND RECIPIENTS Kody Thompson Francis Walker
PROGRAMME OF STUDY Class 2 Truck Licence Certificate of Creative Arts – Level 4
WAIRARAPA MOANA TRUST
25
WAIRARAPA MOANA TRUST
Equity Information (unaudited) As at 31 May 2016
Legal name of entity
Wairarapa Moana Trust
Type of entity and legal basis
Incorporated as a Charitable Trust under the Charitable Trusts Act 1957 Registered as a Charity (registration number CC37635) under the Charities Act 2005.
Entity’s purpose or mission statement
Cultural, social and educational scholarships and marae grants.
Entity structure & governance
The trust is governed by a trust board of 5 trustees. The trust has no audit committee. On the trust board: Chairperson Deborah Davidson Trustee Rutu Namana Trustee Mihirangi Hollings Trustee Anaru Smiler Trustee Tiraumaera Te Tau
Main sources of cash & resources
The trust receives cash or resources from: • Grants from various organisations • Investment Income
Main methods used by the entity to raise funds
The trust applies for grants from various organisations.
The entity’s reliance on volunteers and donated goods or services
The trustees on the governing body are all volunteers. The trust does not receive donated goods.
26
ANNUAL REPORT 2016
WAIRARAPA MOANA TRUST
Statement of Service Performance (unaudited) For the year ended 31 May 2016
Description of the Entity’s Outcomes: To improve the success rate in education, specifically tertiary, trade training, apprenticeships and training for employment, by succeeding in chosen fields with a clear focus on long term goals and aspirations. To accept that whakapapa and associated philosophies are a vital cultural resource for Wairarapa Moana Trust members. To support the physical and spiritual wellbeing of t¯i puna Marae.
DESCRIPTION AND QUANTIFICATION (TO THE EXTENT PRACTICABLE) OF THE ENTITY’S OUTPUTS:
ACTUAL THIS YEAR
Waiata CD Recipients – sold 24, gifted 100 to support cultural programmes
124 CD’s
Wairarapa Moana: The Lake and It’s People – book purchased by shareholders and whānau
60 books
Te Rito o te Reo Karanga Wānanga – participants at three wānanga
60 people
T¯i puna Marae Development – work with governing and operational personnel to support marae development
48 people
Scholarship Recipients Quarterly newsletters (1,600 x4) Moana Mailer is distributed by post and via website
34 students 6,400+ people
Additional Information: ‘When I graduate from university I would like to give back to my iwi, my marae and Wairarapa Moana Trust as they have provided faith, confidence and support on my journey’ – SCHOLARSHIP RECIPIENT
‘The karanga awakens the emotions and turns the key of healing’ – TE RITO O TE REO KARANGA PARTICIPANT.
“I’m so proud of what has been achieved for our marae, thank you’ – MARAE KAUMATUA
WAIRARAPA MOANA TRUST
27
Financial Report WAIRARAPA MOANA TRUST
Statement of Financial Position As at 31 May 2016
2016 2015
$ $
Current Assets BNZ Cheque account 8,195 2,753 BNZ Call account 198,192 289,876 BNZ Education account 74,127 61,438 BNZ short term deposit 62,000 62,000 WBS short term deposits 80,000 80,000 Treaty Claims account 7,396 7,263 Accrued Interest 1,490 1,479 Inventories 30,850 32,550 Total Assets Current Liabilities Accounts Payable Accrued Audit Fee Provision for Grants GST payable
462,250
537,359
2,091 2,040 68,689 793
3,451 1,800 156,522 26,735
Total Liabilities
73,613
188,508
Net Assets 388,637 348,851 Accumulated Funds
Accumulated Surpluses (Note 5) 296,744 257, 091 Committed Funds (Note 6 ) 84,497 84,497 Restricted Funds (Note 5) 7,396 7,263 Total Accumulated Funds 388,637 348,851
For and on behalf of the Board:
Deborah Davidson
Rutu Namana
Date: 25 July 2016
Date: 25 July 2016
The statement of accounting policies and notes to the financial statements form part of and should be read in conjunction with these financial statements
28
ANNUAL REPORT 2016
WAIRARAPA MOANA TRUST
Statement of Cash Flows For the year ended 31 May 2016
2016 2015
$ $
Cashflows from Operating Activities Cash was provided from Grants Funding 34,782 208,696 Scholarship Funding 52,050 60,000 Interest 9,958 7,621 Sundry Income 1,874 1,078 GST (net) – 2,560 98,664 279,955 Cash was disbursed to Payments to Suppliers and Employees 9,124 16,142 Grants paid 97,651 35,924 Scholarships 39,500 45,000 GST (net) 25,942 – Net Cash provided from/(used in) Operating Activities
172,217 97,066 (73,553)
182,889
Cashflows from Investing Activities
Cash was disbursed to Fixed Assets purchased – – Net Cash provided from/(used in) Investing Activities
–
–
Cash was provided from Restricted Funds 133
197
Cashflows from Financing Activities
133 197 Cash was disbursed to Restricted Funds – – – – Net Cash provided from/(used in) Financing Activitiess
133
197
Net Increase/(decrease) in cash held Opening cash brought forward
(73,420) 503,330
183,086 320,244
Closing cash carried forward
429,910
503,330
The statement of accounting policies and notes to the financial statements form part of and should be read in conjunction with these financial statements
WAIRARAPA MOANA TRUST
29
WAIRARAPA MOANA TRUST
Statement of Cash Flows For the year ended 31 May 2016
2016 2015
$ $
Cash is made up of: BNZ Cheque Account No. 00 BNZ Autocall Account No. 25 BNZ Education Account No. 03 BNZ Term Deposit WBS Short Term Deposits Treaty Claims Accounts
8,195 198,192 74,127 62,000 80,000 7,396
429,910 503,330
2,753 289,876 61,438 62,000 80,000 7,263
The statement of accounting policies and notes to the financial statements form part of and should be read in conjunction with these financial statements
30
ANNUAL REPORT 2016
WAIRARAPA MOANA TRUST
Statement of Financial Performance For the year ended 31 May 2016
2016 2015
$ $
Revenue Interest Received BNZ 6,785 5,606 WBS 3,317 3,145 10,102 8,751 Grants Received Future Leaders Scholarship Grant 52,050 60,000 Wairarapa Moanatanga 13,043 26,087 Marae Development Grant 21,739 182,609
86,832 268,696
The Lake and its People Book Lake Book Sales 1,731 730 Less Opening Lake Books on hand (32,550) (33,150) Plus Closing Lake Books on hand 30,850 32,550 31 130 Sundry Income Waiata CD Sales 213 339 Other Income – 9
213 348
Total Revenue 97,178 277,925 Less Expenditure
Accountancy Audit fees Bank fees Bad Debts General Grants Meeting expenses Scholarships
2,300 2,200 2,280 2,040 80 77 70 – 517 858 7,262 192,445 5,383 7,515 39,500 47,000
Total Expenditure 57,392 252,135 Net Surplus for the period
39,786
25,790
The statement of accounting policies and notes to the financial statements form part of and should be read in conjunction with these financial statements
WAIRARAPA MOANA TRUST
31
WAIRARAPA MOANA TRUST
Statement of Accounting Policies For the year ended 31 May 2016 GENERAL ACCOUNTING POLICIES Reporting Entity Wairarapa Moana Trust has elected to apply PBE SFR-A (NFP) Public Benefit Entity Simple Format Reporting – Accrual (Not for profit) on the basis that it does not have public accountability and has total annual expenses of equal to or less than $2,000,000. Measurement System The measurement base adopted is that of historical cost. Reliance is placed on the fact that the Trust is a going concern. Accrual accounting is used to match revenues earned and expenses incurred. Specific Accounting Policies The following specific accounting policies which materially affect the measurement of earnings and the financial position have been applied: a Accounts Receivable Accounts receivable are stated at expected realisable value. b Goods and Services Tax All amounts are recorded exclusive of GST, except for Debtors and Creditors which are stated inclusive of GST. c Taxation Wairarapa Moana Trust is a registered charitable entity under the Charities Act 2005, and accordingly is exempt from income tax under sections CW41 and CW42 of the Income Tax Act 2007.
32
ANNUAL REPORT 2016
d Inventories Inventories are valued at cost. e Bank accounts & Cash Bank accounts & cash in the Statement of Cash Flows comprise cash balances and and bank balances (including short term deposits) with original maturities of 90 days or less. f Revenue from sale of goods Revenue is recorded when the goods are sold. If the purchaser pays before they receive their goods, the trust records a liability. If the purchaser does not pay on receipt of the goods, the trust records a debtor. g Revenue from sale of services Revenue is recorded based on the stage of completion of the service at balance date. h Changes In Accounting Policies There have been no changes in accounting policies. All policies have been applied on on bases consistent with those used throughout the period (Last year – Nil).
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2016 1. Capital and Operating Commitments As at balance date there were no Capital or Operating Lease Commitments (2015: nil). 2. Contingent Liabilities As at balance date there were no Contingent Liabilities (2015: nil). 3. Reconciliation Of Net Surplus With Cash Flow From Operating Activities 2016 2015
$ $
Net Surplus for the year
39,786
25,790
(Increase) / Decrease in Inventories (Increase) / Decrease in Interest Accruals Increase / (Decrease) in Accounts Payable Increase / (Decrease) in Provision for Grants Increase / (Decrease) in GST Increase / (Decrease) in Restricted Funds
1,700 (11) (1,120) (87,833) (25,942) (133)
600 (935) (23,929) 155,522 26,038 (197)
(73,553)
182,889
4. Grants & Scholarships Paid
Grants Wairarapa Moanatanga – Golden Shears Wairarapa Moanatanga – Whakakaha Paepae Marae Development
2016 2015 $
4,000 12,834 (9,572) 7,262
$
4,652 5,184 182,609
Scholarships Future Leaders Scholarships
192,445
39,500
47,000
39,500
47,000
Total Grants and Scholarships
46,762
239,445
WAIRARAPA MOANA TRUST
33
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2016 5. Changes In Accumulated Funds This Year 2016 2015
$ $
Trust Funds are represented as follows: Accumulated Surpluses Opening Equity 257,091 Transferred from tīpuna Marae – Surplus for the year (excl Restricted Funds) 39,653
228,846 2,652 25,593
Closing Equity
296,744
257,091
Restricted Funds Ngā Hapū Karanga o Wairarapa Fund Opening Funds 7,263 Interest received for the year 133
7,066 197
Closing Funds
7,263
7,396
Committed Funds (Note 6) 84,497 84,497 388,637 348,851
34
ANNUAL REPORT 2016
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2016 6. Committed Funds 2016 2015
$ $
Upgrade of the Hurunui-o-Rangi Marae Opening Funds 56,667 56,667 Receipts – – Payments – – Closing Funds
56,667
56,667
Upgrade of the Kohunui Marae Opening Funds 26,667 26,667 Receipts – – Payments – – Closing Funds
26,667
26,667
Upgrade of the Pouākani Marae Opening Funds 1,163 1,163 Receipts – – Payments – – Closing Funds
1,163
1,163
All tīpuna Marae Capital Asset Planning Opening Funds – 2,652 Receipts – – Payments – – Transferred to General Funds – (2,652) Closing Funds
–
–
84,497 84,497
WAIRARAPA MOANA TRUST
35
WAIRARAPA MOANA TRUST
Notes to the Performance Report For the year ended 31 May 2016 7. Analysis of Expenses 2016 2015
Expense Item
$
Expenses related to public fundraising There were no expenses relating to public fundraising
0 0
Volunteer and employee related costs Meeting expenses
5,383 7,515
Costs related to providing goods & services Opening Books on hand Closing Books on hand
32,550 (30,850)
$
33,150 (32,550)
1,700 600
Grants and donations made Grants (Note 4) 7,262 192,445 8. Related Party Transactions 2016 2015
$ $
Description of relationship Transactions with trustees Description of transaction Trustees were paid for attending meetings
3,260 4,150
9. Events After Balance Date There were no events that have occurred after balance date that would have a material impact on the Performance Report (Last Year: Nil).
36
ANNUAL REPORT 2016
Independent Auditor’s Report To the Trustees of Wairarapa Moana Trust We have audited the accompanying performance report of Wairarapa Moana Trust on pages 28 to 36 which comprises the statement of financial performance and statement of cash flows for the year ended 31 May 2016, the statement of financial position as at 31 May 2016, and the statement of accounting policies and other explanatory information. The responsibility of the Trustees for the performance report The Trustees are responsible on behalf of the entity for: a) identifying outcomes and outputs, and quantifying the outputs to the extent practicable, that are relevant, reliable, comparable and understandable, to report in the statement of service performance b) the preparation and fair presentation of the performance report which comprises: – the statement of financial performance, statement of financial position, statement of cash flows, statement of accounting policies and notes to the performance report in accordance with Public Benefit Entity Simple Format Reporting – Accrual (NotFor-Profit) issued in New Zealand by the New Zealand Accounting Standards Board, and c) for such internal control as the Trustees determine is necessary to enable the preparation of the performance report that is free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on the performance report based on our audit. We conducted our audit of the statement of financial performance, statement of financial position, statement of cash flows, statement of accounting policies and notes to the performance report in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)), Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the performance report is free from material misstatement.
Moore Stephens Markhams is a network of independent firms that are each members of Moore Stephens International Limited – member firms in principal cities throughout the world. Moore Stephens Wairarapa Audit is a partnership of PF Smith, MP Czudaj and MK Rania.
WAIRARAPA MOANA TRUST
37
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the performance report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the performance report, whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant to the entity’s preparation and fair presentation of the performance report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the performance report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Other than in our capacity as auditor we have no relationship with, or interests in, Wairarapa Moana Trust. Opinion In our opinion, the performance report on pages 28 to 36 presents fairly, in all material respects, the financial position of Wairarapa Moana Trust as at 31 May 2016, and its financial performance, and cash flows for the year then ended in accordance with Public Benefit Entity Simple Format Reporting – Accrual (Not-For-Profit).
Moore Stephens Wairarapa Audit Chartered Accountants, Masterton, New Zealand 25 July 2016
38
ANNUAL REPORT 2016
Disclosures Board of Trustees MEETINGS ATTENDED
2016 2015
Te Miha Ua-Cookson
1
4
Deborah Davidson
7
6
Anaru Smiler
7
7
Rutu Namana
7
6
Mihirangi Hollings
7
7
Tirau Te Tau
7
N/A
TRUSTEES HAVE RECEIVED FEES IN RELATION TO THEIR RESPONSIBILITIES
2016 2015
Te Miha Ua-Cookson
$125
$909
Deborah Davidson
$949
$413
Anaru Smiler
$749
$619
Rutu Namana
$486
$539
Mihirangi Hollings
$505
$514
Tirau Te Tau
$446
N/A
During the year the Trust received grants totalling $90,000 (GST incl) from Wairarapa Moana Incorporation by way of Future Leaders Education $50,000; Marae Development $25,000; and Wairarapa Moanatanga $15,000. Restricted funds held by the Trust for Ngā Hapū Karanga o Wairarapa are $7,396. Committed funds held by the Trust as at 31 May 2016 for Marae Development relate to Pouākani Marae $1,163; Kohunui Marae $26,667; and Hurunui-o-Rangi Marae $56,667.
WAIRARAPA MOANA TRUST
39
Notes
40
ANNUAL REPORT 2016
To contact the Wairarapa Moana Incorporation web www.wairarapamoana.org.nz email info@wairarapamoana.org.nz Masterton Office
PO Box 2019, Kuripuni, Masterton 5842 Wairarapa Moana House, 4 Park Avenue, Masterton 5810 Telephone 06 370 2608 Fax 06 370 2609 Taupo Office
PO Box 1347, Taupo 3351 Level 1, 14 Ruapehu Street, Taupo 3330 Telephone 07 213 2275 Fax 07 377 6156 Cover Photos
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