Maori trustee annual report 2010 by Whenua Māori Open Source

Maori Trustee

Annual Report 2010

Maori T M Trustee

Annual Report 2010

Maori T M Trustee Minister of Māori Affairs I have the honour to present the Annual Report for the Māori Trustee for the year ended 31 March 2010.

John E Paki Māori Trustee 20 August 2010

Ki te Minita mō ngā Take Māori He hōnore ki ahau te tuku atu i te pūrongo ā tau ō Te Kai-Tiaki Māori mō te tau i mutu i te 31 o Māehe 2010.

John E Paki Kai-Tiaki Māori 20 Here turi kōkā 2010

Message from the MÄ ori Trustee

Overview

MÄ ori Trustee and Group Statement of responsibility

Audit report

Statement of service performance

Financial statements Statement of comprehensive income

Statement of changes in equity

Statement of financial position

Statement of cashflows

Notes to the financial statements

MÄ ori Trustee Common Fund and Special Investment Accounts Statement of responsibility

Audit report

Financial statement

Notes to the financial statement

On 1 July 2009 the Māori Trustee organisation was established as a stand-alone entity under the Māori Trustee Amendment Act 2009, separate from Te Puni Kōkiri, independent from government, with the mandate to become a viable, sustainable organisation. This was a major turning point in the 90 year history of the Māori Trustee, and I am pleased to present this first annual report from the new Māori Trustee organisation. I would also like to thank the staff at Māori Trustee who worked to ensure a smooth transition for our clients, and who have maintained their commitment to providing services to our clients during the year as well as taking up the challenge of transforming our organisation for the future. Continuing commitment Our core commitment to our clients remains the same – to build and protect the assets for now and for future generations. As trustee for our clients’ assets, we continued to provide solid returns on the assets we are responsible for, collecting $14.0 million in rental income from properties and achieving an above-benchmark gross return of 7.91% on client funds. In accordance with the new legislative requirements relating to payment of distributable income from Common Fund investment income received, we paid $1.3 million to 82,256 accounts held in the fund for the period 1 July 2009 to 31 March 2010. Transforming for the future As an independent organisation, we have embarked on a new path, one which we are determined will bring greater opportunities and value to our clients of today, and the future. Our strategic and business planning puts our clients front and centre of our business. We are committed to partnering with our clients, understanding their aspirations for their land and assets, and finding realistic opportunities to add value to our clients’ assets. We have set ourselves three overarching goals backed by

challenging, but achievable targets: Connecting to our people, achieving high returns from our clients’ land and assisting clients set up and benefit from sustainable commercial ventures. During 2009/10 we laid the foundation to achieve these goals, carrying out client research, pursuing opportunities to deliver the scale that will lift returns from land, and establishing a new Development Unit to work alongside trustees and owners to identify commercial opportunities. We know that delivering on the goals we have set ourselves will not be easy, and will take time. However since we have become a stand-alone organisation, we have already achieved a number of important milestones such as working with owners of 21 properties to offer a combined 155 hectares in one higher-value lease, launching a new company - Te Rua o Te Moko Ltd - to manage a joint venture dairy operation on behalf of 1,000 owners of four properties, and being named as a finalist in the Ahuwhenua Trophy BNZ Māori Excellence in Farming Award 2009 for our management of Hereheretau Station. Outlook As we move ahead on our new path, we will be challenging ourselves to provide more focussed and relevant services to our clients. This will mean making changes in how we work, including improving our processes and IT infrastructure, and putting in place a client satisfaction monitor to guide our business improvement and client relationships. We will also continue to drive our strategies of increasing client returns and looking for opportunities to develop higher value operations from assets. We expect that our investment strategy both for the Māori Trustee’s General Purposes Fund and the Common Fund, which holds all client funds, will continue to deliver in line with expectations. Emerging issues During the year the Māori Trustee made a submission on the Financial Service Providers (Pre-Implementation Adjustment) Bill and our team will continue to work with officials to ensure the

impact of the changes support the Māori Trustee’s obligations and services to clients. We will also be looking to review aspects of the Māori Trustee Amendment Act 2009 legislation which appear to be restrictive in relation to the operational sustainability of Māori Trustee, following implementation of the Common Fund requirements during the year. The Emissions Trading Scheme (ETS) is also a key issue for the land managed by the Māori Trustee. We are dedicating resource to understanding the implications and options for the land and for our clients, particularly as we are aware the ETS will extend to other sectors, including fishing and agriculture, over the next few years. I am confident that we have mapped a strategic pathway which will enable us to meet the challenges ahead and deliver excellent value to both our Government funders and our clients. I know that I am supported in this by the enthusiasm of the whole Māori Trustee team to embrace the new path we are on and be an active part of transforming the organisation so that we can deliver the services our people deserve.

PricewaterhouseCoopers in January 2010 found that all money paid by Te Puni Kōkiri had been accurately accounted for and that the accounting records are consistent between Te Puni Kōkiri and Tekau Plus. The Board of Tekau Plus subsequently requested a Value for Money Review, which was conducted by PricewaterhouseCoopers (who have recently done some work summarising the financial position and outputs of Tekau Plus) and two independent reviewers – Deputy State Services Commissioner, Tony Hartevelt and Māori businessman, Whaimutu Dewes. The findings of the review were released on 28 June 2010.

John E Paki Māori Trustee 30 July 2010

Tekau Plus Tekau Plus is a Māori business export programme, led by the Māori Trustee, Poutama Trust and Federation of Māori Authorities, and funded through Te Puni Kōkiri. The programme, which was started in October 2007, has the overall aim to develop Māori globally competitive icon businesses in the agribusiness sector, focusing on developing businesses that have the scale and scope to develop niche products for the world markets. The Māori Trustee, by rotation, became the chair in October 2009, and has provided administration services to the programme. The businesses are mainly focused on advanced value-added products in niche markets. During the first two years of operation, there was significant effort in place to develop the platform of information and systematic approach and building the clusters. An independent review completed by

Snapshot of Māori Trustee Business as at 31 March 2010 Hectares under management:

105,000 (estimated)

Properties under management:

2,046

Ownership interests in properties:

194,086

Client accounts:

128,456

Client funds under management: (Common Fund and Special Investment Accounts)

$66.0 million

Corporate funds under management: (General Purposes Funds)

$70.0 million

Staff:

Offices located in:

Whangarei, Hamilton, Gisborne, Rotorua, Whanganui and Wellington

2009/10 Highlights • Website launched at www.māoritrustee.co.nz • Online searchable unclaimed monies database launched at www.māoritrustee.co.nz • Common Fund total gross performance for the year was 7.91% • General Purposes Fund total gross performance for the year was 8.91% • Collected rental income on behalf of clients of $14.0 million and other income of $4.3 million from activities such as forestry, kiwifruit, dairy and stock sales • 92% of rental income invoiced was received • Presented the largest aggregation of properties yet - 21 - into one lease offer yielding higher value for all properties • Launched Te Rua o Te Moko Ltd, with independent directors, to manage a dairy joint venture on behalf of 1,000 owners in four properties • Significant investment in training both to support our people in the transition, and move quickly to lift our own expectation of what we will deliver for our clients. • Hereheretau Station, managed by Māori Trustee, was one of three finalists in the Ahuwhenua Trophy BNZ Māori Excellence in Farming Award 2009 – Beef and Sheep sector • Research by Business and Economic Research Ltd (BERL) showed that based on the portfolio of land Māori Trustee is responsible for, an initial economic output of $110 million per annum with downstream effects bringing a total of $278 million. This included the direct creation of 772 full time jobs with downstream effects contributing another 903 jobs. Māori Trustee’s overall contribution to GDP was calculated at $119 million.

The Māori Trustee Amendment Act 2009 The Māori Trustee Amendment Act 2009 came into effect from 1 July 2009. The main changes were: • The Māori Trustee was established as a standalone entity that acts independently, free from any direction or instruction from the Crown. • New obligations on the Māori Trustee to prepare an Annual Report and Statement of Service Performance as a Schedule 4 organisation under the Public Finance Act 1989. • The Māori Trustee succeeding to the existing undertaking of the Māori Trust Office with staff moving across from Te Puni Kōkiri to be employed by the Māori Trustee, on terms no less favourable. • Common Fund investment income remains in the Common Fund and distributable income is paid to client accounts. $1.3 million distributable income was paid to 82,256 Common Fund accounts. • The funding agreement between the Minister of Māori Affairs and the Māori Trustee was signed in December 2009. The agreement recognises that the Māori Trustee has a unique role in caring for Māori land and other assets on behalf of Māori.

Funds Management Economic commentary March 2009 was considered the turning point of the financial crisis. A slow return by investors quickly became a flood, igniting global equity markets in anticipation of the global recovery. After global coordinated efforts by Central Banks to protect and support their domestic economies, the focus shifted to the future impact of those efforts. These efforts were in the form of Government guarantees, and easier monetary policy. The aim of lower interest rates was to help sustain and promote business activity in difficult times, but over stimulation can lead to inflation. Since March 2009 and throughout the year interest rates have steadily increased, due to potential inflation fears, and competition from Banks for local deposits. Fund summary Overall both the General Purposes Fund portfolio and the Common Fund portfolio exceeded the index against which both portfolios are benchmarked. The Composite A Grade index1 performed remarkably well given interest rates rose steadily throughout the year with a return of 5.93%. As investors returned from the safety of cash they went in search of the higher returns from corporate bonds and contributed to the positive return to the index. The outstanding performances for the Common Fund and the General Purposes Fund compared to the Composite A Grade index were due to: • a few individual companies recovering well in the wake of the recession • the short duration of the portfolios, and • narrowing credit margins on corporate debt as a result of more demand than supply.

Composite A Grade index is a combination of all NZ fixed rate corporate bonds rated A or better plus all NZ Government bonds for the 12 months to 31 March 2010

The following table summarises the composition of the funds and the market value as at 31 March 2010. Common Fund

General Purposes Fund

Fixed interest bonds

76%

Short term deposits

18%

10%

Private equity

Market value

$58.97m

$70.03m

Cash

Fund performance The following table summarises the gross and net performance for each fund compared to the benchmark for the 12 months to 31 March 2010. Fund Performance Common Fund

General Purposes

Market Index

Fund Gross performance2

7.91%

8.91%

Net performance3

7.74%

8.77%

5.93%4

Financial Summary The Māori Trustee Amendment Act 2009 resulted in significant changes to the financial performance and financial position as compared to the prior financial year. Māori Trustee Group Financial Performance Total revenue was $90.5 million compared to $10.2 million in 2009, an increase of $80.3 million. The significant changes in revenue were: • $8.0 million Crown appropriation and $3.5 million Crown capital funding. • Fee and commission income increased by $0.5 million to $2.2 million. This increase includes the Common Fund management fee of $0.3 million which the Māori Trustee charges in accordance with the Māori Trustee Amendment Act 2009. • Interest income decreased by $2.5 million, from $7.6 million to $5.1 million, because from 1 July 2010 interest income from Common Fund investments remained in the Common Fund with the introduction of the Māori Trustee Amendment Act 2009. •

$70.2 million associated with the reimbursement of expenses to the Crown and $1.4 million in respect of section 460A loans were resolved as part of the legislative reform and are required to be treated as revenue.

Gross performance is before fees and tax for the 12 months to 31 March 2010

Net performance is after fees and tax for the 12 months to 31 March 2010

Composite A Grade index is a combination of all NZ fixed rate corporate bonds rated A or better plus all NZ Government bonds for the 12 months to 31 March 2010

Total expenditure was $11.4 million compared to $9.6 million in 2009, an increase of $1.8 million. The significant changes in expenditure were: • Employee benefits increased by $1.2 million because the Māori Trustee reviewed resourcing requirements resulting in the creation of new positions. • The Māori Trustee employed specialists in finance, IT, legal and tax to provide technical advice to support the implementation of legislative changes and to deliver the outputs specified in the funding agreement between the Māori Trustee and the Minister of Māori Affairs. • A decrease in finance costs of $0.8 million because the requirement for the Māori Trustee to pay interest on accounts held on deposit in the Common Fund ceased with the introduction of the Māori Trustee Amendment Act 2009. Māori Trustee Group Financial Position Cash and cash equivalents increased by $10.0 million compared to the prior year. Non-current assets increased by $8.0 million, with held to maturity investments increasing by $6.5 million. This increase in cash and other assets was because of: •

The 2010 surplus, which included Crown capital funding received prior to the actual capital expenditure.

•

Crown appropriation of $2.7 million received in advance for the 2011 year.

Total liabilities decreased by $64.2 million to $4.7 million. The significant changes in liabilities were: •

Amounts owing to Te Puni Kōkiri decreased by $68.2 million, with the resolution of the liability as part of the legislative reform.

•

Income in advance increased by $2.7 million because Crown appropriation was received in advance for the 2011 year.

•

Sundry creditors increased by $0.5 million and accruals for employee benefits increased by $0.5 million.

Equity increased to $79.2 million as a result of the net surplus of $79.1 million. Common Fund and Special Investment Accounts Client funds held in the Common Fund and Special Investment Accounts totalled $66.0 million, an increase of $4.7 million from 2009. With the introduction of the Māori Trustee Amendment Act 2009 on 1 July 2009, Common Fund investment income remained in the Common Fund and it was then paid to all account holders on a pro-rata basis. This distributable income of $1.3 million was paid to 82,256 Common Fund account holders for the nine months to 31 March 2010.

In terms of the Crown Entities Act 2004, the Māori Trustee is responsible for the preparation of financial statements, the statement of service performance 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 and the statement of service performance for the year ended 31 March 2010, set out on pages 13 to 46, fairly reflect the financial position and operations of the Māori Trustee.

John E Paki Māori Trustee 30 July 2010

To the readers of the Māori Trustee and Group’s financial statements and statement of service performance for the year ended 31 March 2010 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 on her behalf. The audit covers the financial statements and statement of service performance included in the annual report of the Trustee and group for the year ended 31 March 2010. Unqualified opinion In our opinion: •

•

The financial statements of the Trustee and group on pages 20 to 46: •

comply with generally accepted accounting practice in New Zealand; and

•

fairly reflect: •

the Trustee and group’s financial position as at 31 March 2010; and

•

the results of operations and cash flows for the year ended on that date.

The statement of service performance of the Trustee on pages 13 to 19: •

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 funding agreement between the Minister of Māori Affairs and the Trustee (the funding agreement); and

•

its actual revenue earned and output expenses incurred, as compared with the forecast revenues and output expenses outlined in the funding agreement.

The audit was completed on 20 August 2010, and our opinion is expressed as at that date. The basis of our opinion is explained below. In addition, we outline the responsibilities of the Trustee and the Auditor, and explain our independence. Basis of opinion We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards. We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements and statement of service performance did not have material misstatements, whether caused by fraud or error. Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them in our opinion. The audit involved performing procedures to test the information presented in the financial statements and statement of service performance. We assessed the results of those procedures in forming our opinion.

Audit procedures generally include: •

determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;

•

verifying samples of transactions and account balances;

•

performing analyses to identify anomalies in the reported data;

•

reviewing significant estimates and judgements made by the Trustee;

•

confirming year-end balances;

•

determining whether accounting policies are appropriate and consistently applied; and

•

determining whether all financial statement and statement of service performance disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and statement of service performance. We evaluated the overall adequacy of the presentation of information in the financial statements and statement of service performance. We obtained all the information and explanations we required to support our opinion above. Responsibilities of the Trustee and the Auditor The Trustee is responsible for preparing the financial statements and statement of service performance in accordance with generally accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial position of the Trustee and group as at 31 March 2010 and the results of operations and cash flows for the year ended on that date. The statement of service performance must fairly reflect, for each class of outputs, the Trustee’s standards of delivery performance achieved and revenue earned and expenses incurred, as compared with the forecast standards, revenue and expenses outlined in the funding agreement. The Trustee’s responsibilities arise from the Public Finance Act 1989 and the Māori Trustee Act 1953. We are responsible for expressing an independent opinion on the financial statements and statement of service performance and reporting that opinion to you. This 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 New Zealand Institute of Chartered Accountants. Other than the audit, we have no relationship with or interests in the Trustee or any of its subsidiaries.

Phil Kennerley Audit New Zealand On behalf of the Auditor-General Wellington, New Zealand 12

Matters Relating to the Electronic Presentation of the Audited  Financial Statements   This audit report relates to the financial statements of Māori Trustee and Group for the  year ended 31 March 2010 included on Māori Trustee’s website. Māori Trustee is  responsible for the maintenance and integrity of Māori Trustee’s website. We have not  been engaged to report on the integrity of Māori Trustee’s website. We accept no  responsibility for any changes that may have occurred to the financial statements since  they were initially presented on the website.   The audit report refers only to the financial statements named above. It does not  provide an opinion on any other information which may have been hyperlinked to or  from the financial statements. If readers of this report are concerned with the inherent  risks arising from electronic data communication, they should refer to the published  hard copy of the audited financial statements and related audit report dated 20 August  2010 to confirm the information included in the audited financial statements presented  on this website.  Legislation in New Zealand governing the preparation and dissemination of financial  information may differ from legislation in other jurisdictions.

The Māori Trustee Amendment Act 2009 established the Māori Trustee as a standalone entity from 1 July 2009. The Māori Trustee was listed in Schedule 4 of the Public Finance Act 1989, requiring the preparation of the annual report and statement of service performance in compliance with 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 2004: •

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.

In addition, in his letter the Minister of Finance has ‘determined’ that the definition of ‘financial year’ set out in section 136(1) of the Crown Entities Act 2004 will be 12 months ending 31 March for the Māori Trustee not the usual 12 months ending 30 June for crown entities. 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 for the 12 months ended 30 June 2010. These performance measures are also relevant for the 12 months ended 31 March 2010. As this is a transition year, output costings are not available for individual outputs. The total cost of outputs for the year ended 31 March 2010 is summarised below. 2010

Māori Trustee funding ex TPK creditor Crown appropriation Crown capital funding Interest income Total output funding

Actual $000 3,426 7,987 3,520 86 15,019

Budget $000 2,689 7,987 10,676

Expenditure funded ex TPK creditor (April–June 2009) Expenditure funded by Crown appropriation (July 2009–March 2010) Total output expenditure

3,426 7,157 10,583

2,689 8,179 10,868

The outputs funded from Crown appropriation are: 1. Management of the Common Fund 2. Management of client interests 3. Land management 4. Supporting sustainable development of assets 5. Capability and capacity of the organisation 6. Statutory and Funding Agreement requirements.

1. Management of Common Fund Management of Common Fund including: • monitor investment strategy • administration and management of Common Fund transactions and records • payment and distribution of monies to client accounts • manage Common Fund in accordance with statutory and regulatory requirements, and in accordance with investment strategy and parameters • investment strategy monitoring endorsed by advisory board • Common Fund transactions are made in accordance with Māori Trustee Act and Trustee Act • all distributions to client accounts are made in accordance with legislation and regulations

Achieved

Monthly investment management meetings reviewed the funds management performance and investment strategy. The returns on Common Fund investments were above comparable market indices.

Undertake quarterly reviews of the Common Fund in accordance with section 26(4) of the Māori Trustee Act

Achieved

Quarterly reviews of Common Fund performance completed.

Achieved

4,020 ownership records added 194,086 total ownership interests at 31 March 2010

Administration of Common Fund transactions and records continues, including payment and distribution of monies to client accounts. Developed specifications for the Common Fund utilising legal and tax advice, enabling the Māori Trustee to calculate the distributable income in compliance with the Māori Trustee Act.

2. Management of Client Interests Manage ownership interests in land administered by the Māori Trustee •

add up to 4,000 ownership records

Manage client records for accounts held by clients with respect to one or more properties or funds

•

update up to 12,000 client account records

Achieved

12,443 client account updates 129,115 total client records at 31 March 2010

•

provide information as requested by the Māori Land Court (estimated 1,200)

Achieved

1,350 searches provided to the Māori Land Court

•

95% of all information requests undertaken for Māori Land Court completed by due date

Achieved

100% of information requests completed by due date

•

make 20,000 payments out to clients throughout the year

Achieved

23,493 payments

•

pay distributable income to client accounts by 31 March in accordance with section 26 of Māori Trustee Act

Achieved

Distributable income of $1.3 million paid to 82,256 client accounts on 31 March and in accordance with legislation

•

95% of distributable income is paid on time and is in accordance with section 26 and Regulation 10 under the Māori Trustee Act

•

provide reports to clients by 30 June in accordance with Regulation 10 95% of reports to clients on distributable income to be on time and accurate

•

Achieved

100% of distributable income paid on time and in accordance with legislation

The reports to clients are to be provided by 30 June and this will be completed in 2010/11

Initiatives to locate beneficial owners and obtain information needed from owners •

publish Unclaimed Money list annually

Achieved

A web-based searchable unclaimed money list launched in January 2010

•

develop a strategy to identify, locate and obtain information from beneficial owners to enable the payment of currently unclaimed monies, including: • strategy to identify, locate and obtain information from beneficial owners developed by 30 June 2010 • the development of targets and milestones; • initiatives aimed at increasing awareness and clients’ provision of information to the Māori Trustee

Achieved

Developed a strategy to identify, locate and obtain information from beneficial owners and to increase awareness of owners. Completed a 90 day work programme, including targets and milestones to 30 June 2010.

•

measuring progress

This performance measure will be completed in 2010/11

•

monitor initiatives and activities to determine effectiveness

This performance measure will be completed in 2010/11

3. Land Management Provide governance and management of at least 2,060 properties to protect the beneficial owners’ interests, including through:

Partially achieved

2,046 properties managed at 31 March 2010

•

manage the land seeking utilisation of the land and payment of rates maintaining the accounts record management

Achieved

169 rent reviews 89 lease renewals 619 rent inspections

collection and payment of monies, including taxes

Achieved

Monies are collected and paid as required. Rental arrears and tax penalties are monitored – these are indicators of the timely collection and payment of monies.

• • •

•

90% of income is collected on time

Achieved

92% of income was collected on time

•

manage tax interest, filing tax returns on time and accurately for 95% of applicable properties

Achieved

99% of tax returns were filed on time

•

meeting legal and compliance requirements

Achieved

The requirements for legal compliance are varied and many. During the year no significant legal issues or risks arose for the Māori Trustee.

Manage the Māori Trustee’s accountability through: •

holding at least 500 meetings with owners and representatives

Achieved

568 meetings with owners and trustees

•

appearing before the Māori Land Court on applications relating to the Māori Trustee (at least 200)

Achieved

215 appearances before the Māori Land Court

• •

providing reports for inspection where required providing special purpose update reports to owners or representatives on arrangements for their properties (for at least 200 properties) provide properties with reports in accordance with trust orders all accountability reports meet fiduciary requirements

Achieved

164 special purpose reports to owners and representatives. Special purpose reports are in lieu of meetings. The number of meetings was more than projected by 68, resulting in the number of special purpose reports being less than projected.

seek client feedback to measure perceptions and satisfaction by 30 June

Achieved

In June 2009 client and market perceptions and expectations studies were undertaken through focus groups and targeted surveys. This work has informed the development of more comprehensive and detailed research and is currently being developed into a client satisfaction survey.

• • •

4. Supporting sustainable development of assets •

Planning

•

Increase productivity of land

Review land utilisation strategy • develop and test planning process for 50 land blocks • support and encourage active owner participation through the provision of information and facilitating opportunities for development • plans include sustainability factors

Achieved

The following have been undertaken: • developing processes for engaging with landowners and identifying development opportunities • developing scorecards and criteria for assessment of the opportunities • completing pilots with several blocks and incorporating the learnings into the processes being developed • analysis of the Māori Trustee portfolio to identify opportunities • preliminary research, for example developing a horticulture strategy and testing options.

•

Achieved

Examples of land brought into higher productive use include: • Te Rua o Te Moko dairy farm project (190 ha) • land that was previously overrun with gorse has been converted to effective grazing with water reticulation (250 ha) • two blocks with a comprehensive farm management plan including water reticulation, fences and races, effluent system and housing (40 ha) • Rotorua block (70 ha) where a new leasee worked with the trustees to remove gorse and upgrade the land.

bring 600 ha into higher productive use

5. Capability and capacity of the organisation Develop and enhance systems and processes to provide effective and efficient core services to clients •

seek client feedback to measure perceptions and satisfaction by 30 June

•

systems development include reporting requirements

Achieved

In progress

Build the capacity and capability of the organisation, including through: •

developing and implementing a training strategy training strategy to focus on the Māori Trustee’s core services implemented by 31

Achieved

The training programme for core skills development was undertaken with the emphasis on: • the financial management capability • communication with clients, including conducting positive relationships • training on legal subjects for regional and head office staff.

Partially achieved

This performance measure will be completed in 2010/11.

Review fees and commissions charging framework by March 2010

Partially achieved

Work was started on developing the costings, income data and average times to complete activities.

Develop the information, systems and processes needed to progress towards an outcomes framework for reporting and accountability purposes • information, systems and processes needed to move to an outcomes framework in development by 30 June 2010

Partially achieved

During the year a high level Information System Strategic Plan was developed and process mapping was completed as the initial steps to the new system requirements. This performance measure will be completed in 2010/11.

•

March 2010

• •

developing an organisational performance framework organisational performance framework developed by 30 June 2010 covering: • cost of services provided • value for money • client feedback

6. Statutory and Funding Agreement requirements Meet requirements under the Public Finance Act, Crown Entities Act, Public Audit Act, Trustee Act, MÄ ori Trustee Act, the funding agreement, Official Information Act and others as required â&#x20AC;˘ meet statutory timeframes for annual reporting and other statutory obligations

Achieved

All statutory obligations have been met.

Meet quarterly reporting requirements under the funding agreement

Achieved

Quarterly reports on the funding agreement were completed for the September, December and March quarters.

Group

Parent

2010

2009

2010

2009

Actual

Budget

Actual

$000

5,128

4,453

7,635

7,027

12,033

Commission

1,049

1,092

1,036

1,049

1,036

Fees

1,184

1,008

689

1,202

729

Notes

Revenue Investment income

Crown appropriation

7,987

Crown capital funding

3,520

Share of associateâ&#x20AC;&#x2122;s net surplus

Te Puni KĹ?kiri creditor written off

70,207

Section 460A loan fees

1,354

Agribusiness contract income

730

Ahuwhenua sponsorship income

214

90,470

14,754

10,195

92,350

14,577

5,325

5,716

4,157

5,325

4,157

Other income Total revenue Expenditure Employee benefits Depreciation

139

224

149

139

149

Amortisation

113

399

264

1,182

399

1,182

254

(11)

2,157

4,400

Finance costs Impairment losses/(gains) Grants paid

Agribusiness

575

Ahuwhenua

224

Other expenditure

5,169

5,020

3,293

5,146

3,284

Total expenditure

11,378

11,347

9,648

13,258

14,050

Net surplus

79,092

3,407

547

79,092

527

79,092

3,407

547

79,092

527

Other comprehensive income Total comprehensive income

The accompanying notes form part of these financial statements.

Group Notes

Parent

2010

2009

2010

2009

Actual

$000

153

(3,614)

Equity at beginning of year General Purposes Fund Effect of Te Puni KĹ?kiri creditor balances written back relating to periods prior to 1 April 2008, taken directly to equity

Effect of reclassification of Agribusiness and Ahuwhenua agency arrangements relating to periods prior to 1 April 2008, taken directly to equity

(390)

153

(421)

Restated equity at beginning of year Total comprehensive income as

3,583

(166) -

(166)

(3,913) 3,583

(390)

(720)

547

527

574

554

74,656

4,436

79,092

74,809

153

74,490

Appropriation Account

4,436

Equity at end of year

79,245

153

78,926

previously reported Effect of reclassification of Agribusiness and Ahuwhenua agency arrangements in 2009 financial year

Restated total comprehensive income for 2009 Transfers from statement of comprehensive income General Purposes Fund Appropriation Account Total comprehensive income Equity at end of year General Purposes Fund

(166) (166)

The accompanying notes form part of these financial statements.

Group Notes

Parent

2010

2009

2010

2009

Actual

$000

Current assets Cash and cash equivalents

20,264

10,299

20,169

10,177

Debtors and other receivables

715

1,493

714

1,489

2,556

4,709

2,556

4,709

23,535

16,501

23,439

16,375

Held to maturity investments Total current assets Non-current assets Held to maturity investments

49,560

43,004

49,560

43,004

Loans and receivables

5,146

4,213

5,146

4,213

Investment in subsidiaries Investment in associates

5,237

5,200

5,000

Property, plant and equipment

390

Intangible assets

Total non-current assets

60,412

52,559

60,175

52,359

Total assets

83,947

69,060

83,614

68,734

4,702

68,907

4,688

68,900

4,702

68,907

4,688

68,900

Equity

79,245

153

78,926

Total liabilities and equity

83,947

69,060

83,614

Current liabilities Creditors and other payables

Total liabilities

The accompanying notes form part of these financial statements.

(166) 68,734

Group

Parent

2010

2009

2010

2009

Actual

$000

Interest income

5,691

6,832

5,682

6,832

Fees and commissions

1,887

1,817

1,905

1,817

14,135

800

793

Notes

Cash flows from operating activities

Crown appropriation and capital funding Net receipts from Agribusiness and Ahuwhenua

Other income Employee benefits

(3,599)

Suppliers

(2,749)

(1,040)

(2,731)

(1,040)

Interest payments to clients

(399)

(1,182)

(399)

(1,182)

Goods and services tax received/(paid)

139

Grants Net cash flows from operating activities

(3)

(54) (3)

(3,599)

139 (3)

(54) (3)

15,906

7,163

15,933

7,163

757

177

757

177

Disposal of intangible assets

Disposal of property, plant and equipment

4,235

6,219

4,235

6,219

Cash flows from investing activities Loans and receivables repayments

Investment maturities and sales Purchase of property, plant and equipment

(439)

(3)

(439)

(3)

(82)

Loan advances

(1,794)

Investment purchases

(8,618)

(13,305)

(8,618)

(13,305)

Net cash flows from investing activities

(5,941)

(6,861)

(5,941)

(6,861)

Net increase in cash

9,965

302

9,992

302

10,299

9,997

10,177

9,875

20,264

10,299

20,169

10,177

Purchases of intangible assets

Cash at beginning of year Cash at end of year

The accompanying notes form part of these financial statements.

Reporting entity The Māori Trustee is a corporation sole defined under the Māori Trustee Act 1953 (the Act) and is domiciled in New Zealand. The Māori Trustee is responsible for monitoring the affairs of a selection of Māori land blocks and trusts to maintain, develop and enhance Māori assets. These financial statements have been prepared in terms of Section 23 of the Act for the General Purposes Fund and the Appropriation Account. The General Purposes Fund represents funds held by the Māori Trustee in his 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 as defined by the Funding Agreement between the Minister of Māori Affairs and the Māori Trustee for the period 1 July 2009 to 30 June 2011 (Funding Agreement). The financial statements of the Māori Trustee and its subsidiary (the Group) for the year ended 31 March 2010 were approved for issue by the Māori Trustee on 30 July 2010. The Māori Trust Office was dissolved upon commencement of the Māori Trustee Amendment Act 2009 on 1 July 2009, and the Māori Trustee’s role extended to cover the responsibilities of the former Māori Trust Office as from that date. Whereas the costs of the Māori Trust Office were previously charged to the Māori Trustee by Te Puni Kōkiri and accounted through the General Purposes Fund, as from 1 July 2009 such costs are now met by the Māori Trustee from appropriations received from the Crown. Although the Māori Trustee was established as a stand-alone entity, listed on Schedule 4 of the Public Finance Act 1989 as from 1 July 2009, the roles and responsibilities of the Māori Trustee have remained substantially the same for the full year to 31 March 2010. The first annual report of the Māori Trustee as a stand-alone entity has therefore been prepared for the full year ended 31 March 2010, with comparative figures provided from the financial statements of the Māori Trustee for the year ended 31 March 2009. Basis of preparation Statement of compliance The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for public benefit entities. Budget figures The budget figures were approved by the Māori Trustee. The budget figures were prepared in accordance with NZ IFRS and are consistent with the accounting policies adopted by the Māori Trustee for the preparation of the financial statements. Measurement base The financial statements have been prepared on a historical cost basis modified by the revaluation of held to maturity investments. The methods used to measure fair value are detailed in the specific accounting policies. Functional and presentation currency The financial statements are presented in New Zealand dollars, which is the Māori Trustee’s functional currency. All values are rounded to the nearest thousand dollars ($000).

Standards, amendments and interpretations There are no standards, amendments and interpretations issued that are not yet effective and have not been early adopted that have a significant impact on these financial statements if adopted. Basis of consolidation Investments in subsidiaries The consolidated financial statements comprise the financial statements of the Māori Trustee and its wholly owned subsidiary, Te Māori Lodges Limited (TML). Subsidiaries are those entities over which the Māori Trustee has the power to govern the financial and operating policies as to obtain benefits from their activities. The principal activity of TML is that of a holding company which holds shares in Quantum Limited. The financial statements of the subsidiary are prepared for the same reporting period and using consistent accounting policies as the Māori Trustee. In preparing the consolidated financial statements, all inter entity balances and transactions resulting from inter-group transactions have been eliminated. The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of the acquisition. Investments in subsidiaries are subject to annual review for impairment. Investments in associates Associates are entities over which the Māori Trustee has significant influence that are neither subsidiaries nor joint ventures. Significant influence is where the Māori Trustee has over twenty percent of the voting rights. The Māori Trustee treats the investments in Putake Limited and Quantum Limited as investments in associates. 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 in the associate, less provision for impairment. The financial statements of associates are prepared for the same reporting period as the Māori Trustee, using consistent accounting policies. The Māori Trustee is required, as an entity listed in Schedule 4 of the Public Finance Act 1989, to have audited financial statements available within four months of the 31 March 2010 balance date in terms of the Crown Entities Act 2004, section 156(2). The audit opinion was delayed due to the late confirmation of material balances for an associate company. Significant accounting policies Revenue Revenue 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 commissions The Māori Trustee can only deduct fees and/or commissions upon actual receipt of trust monies from fees and commissions owing to the General Purposes Fund from the Common Fund. As such fees and commissions are recognised on a cash basis. 25

Interest Interest revenue is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated cash flows associated with the financial instrument over the expected life of the instrument. Revenue from the Crown The Māori Trustee receives funding from the Crown, which is restricted in its use for the purpose of the Māori Trustee achieving the outputs specified in the Funding Agreement. Revenue from the Crown is recognised as revenue when earned and is reported in the financial period to which it relates. Dividends Dividends are recognised when the Māori Trustee’s right to receive payment is established. Leases Leases 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 instruments The 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, held to maturity investments and loans and receivables

•

financial liabilities - creditors and other payables.

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 equivalents Cash 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 which are subject to an insignificant risk of changes in value. Debtors and other receivables Debtors 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 the 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 the debtor is uncollectible, it is written off against the provision account. Held to maturity investments Non-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 and commercial 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. Gains and losses are recognised in the statement of comprehensive income when the investments are derecognised or impaired. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. Loans and receivables include advances to stations, properties and clients, loans and mortgages, advances to Te Māori Lodges and conversion fund loans. These 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 the 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 the asset is uncollectible, it is written off against the provision account. Investments in associates The Māori Trustee’s share of post acquisition surplus or deficits are recognised in the statement of comprehensive income, and the share of post acquisition movements in reserves are recognised in reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the investment. Property, plant and equipment Property, plant and equipment consists of EDP equipment, office equipment, furniture and fittings and motor vehicles. Property, plant and equipment are measured at historic 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. 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:

EDP equipment Office equipment Furniture and fittings Motor vehicles

3 years 5 years 5 years 5 years

33% 20% 20% 20%

Property, plant and equipment assets are derecognised when disposed 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. Intangible assets Intangible assets consist of acquired software and software modified for use by the MÄ ori Trustee. Intangible assets are measured at historic cost less accumulated amortisation and impairments. Costs that are directly associated with the development of software for internal use are included in intangible assets. Direct costs include software development and employee costs. 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 rates of the asset classes are as follows: Acquired software Developed software

3 years 3 years

33% 33%

Impairment of non financial assets Property, 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 assetâ&#x20AC;&#x2122;s fair value less costs to sell and value in use. Creditors and other payables Creditors and other payables represent liabilities for goods and services provided to the MÄ ori 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 entitlements Employee entitlements include accrued salaries and wages, annual leave earned and retiring and long service leave entitlements. Employee entitlements expected to be settled within 12 months of balance date are measured at the undiscounted current rates of pay and the accrued entitlements. Employee entitlements that are payable beyond 12 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 schemes Obligations 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. Provisions The 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. 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, then it is recognised as part of the related asset or expense. The net amount of GST receivable or payable to the Inland Revenue Department is included as part of receivables or payables in the statement of financial position. Income taxation The Māori Trustee is defined as a public authority under the Income Tax Act 2004 and therefore is exempt from income taxation. Statement of cash flows The makeup of cash and cash equivalents in the statement of cash flows is the same as cash and cash equivalents in the statement of financial position. Operating activities include cash received from all income sources by the Māori Trustee 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. Commitments Commitments are future expenses and liabilities to be incurred on contracts that had been 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 contract. 29

Significant judgements, accounting estimates and assumptions The 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. Estimation of asset useful lives The useful lives of assets have been based on historical experience. In addition, the condition of the assets are assessed annually and considered against the remaining useful lives. Adjustments to useful lives are made when considered necessary. Signifiant judgements The Māori Trustee has exercised the following critical judgements 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. The Māori Trustee does not consider that the triggers for impairment testing have been significant.

Changes in accounting policies There have been no changes in accounting policies. All policies have been applied on a basis consistent with other years.

1. Investment income Group

Interest income from investments Interest income from other sources

Finance costs

Parent

2010

2009

2010

2009

Actual

$000

4,778

7,308

6,681

11,718

350

327

346

315

5,128

7,635

7,027

12,033

399

1,182

399

1,182

The Māori Trustee Amendment Act 2009 requires all income received from the investment of money in the Common Fund to be paid into the Common Fund from 1 July 2009. Therefore, 2010 interest income and finance costs only includes three months of interest income from the Common Fund and interest expense paid to the Common Fund, compared to 12 months in 2009.

2. Crown appropriation and capital funding Group

Parent

2010

2009

2010

2009

Actual

$000

Crown appropriation

7,987

Crown capital funding

3,520

The Crown appropriation and Crown capital funding is paid to the Māori Trustee in accordance with the funding agreement between the Minister of Māori Affairs and the Māori Trustee. The Crown capital funding also includes $1,525,000 for property, plant and equipment, intangibles and cash as part of the transition of the Māori Trust Office, as part of Te Puni Kōkiri, to a stand alone entity established on 1 July 2009. 3. Te Puni Kōkiri creditor written off Group

Te Puni Kōkiri creditor written off

Parent

2010

2009

2010

2009

Actual

$000

70,207

Section 41 of the Māori Trustee Act 1953 enabled the Crown to recoup the Māori Trust Office expenses from the Māori Trustee General Purposes Fund. By Cabinet approval dated 14 April 2008, the Minister of Finance and the Minister of Māori Affairs were jointly authorised to write off the Māori Trustee liability to the Crown upon enactment of the Māori Trustee Amendment Act 2009, which repealed section 41. As at 1 July 2009, the liability to the Crown was $70,207,000 and this amount was approved for write-off by the Minister of Finance upon recommendation of the Minister of Māori Affairs on 17 November 2009. As at 30 June 2009, the Te Puni Kōkiri creditor balance exceeded the balance advised by Te Puni Kōkiri by $3,583,000. This amount related to write-offs and adjustments posted by Te Puni Kōkori in their accounts in prior years but not posted in the Māori Trustee’s account, and has been recognised as an adjustment to the opening equity balance of the General Purposes Fund. 4. Section 460A loan fees During its administration of loans and advances made under section 460A of the Māori Affairs Act 1953, the Māori Trustee deducted commission from proceeds paid to the Crown. Due to uncertainty regarding the authority to make these deductions, a liability to the Crown was recognised. As at 1 July 2009, upon commencement of Māori Trustee Amendment Act 2009, confirmation has been received from Te Puni Kōkiri that the balance owing from the Māori Trustee in respect of section 460A loans is nil. The accumulated balance of $1,354,000 has accordingly been recognised as revenue as at that date. 5. Agribusiness and Ahuwhenua The Māori Trustee administers Agribusiness projects and Ahuwhenua Trophy as the umbrella organisation in conjunction with other parties. The contract and sponsorship income received and expenses paid are not treated as the Māori Trustee’s income and expenditure in the statement of comprehensive income. However, in the 2009 and prior years financial statements this income and expenditure was recognised in the statement of comprehensive income. Adjustments have been made to the General Purposes Fund opening balance in the statement of changes in equity. In the statement of financial position Agribusiness and Ahuwhenua balances are recognised in cash and cash equivalents and sundry creditors.

6. Grants paid Group

Māori Education Trust QEII

Parent

2010

2009

2010

2009

Actual

$000

The Māori Trustee is required by Section 3 of the Queen Elizabeth II Postgraduate Fellowship of New Zealand Act 1963 to make an annual payment of $3,000. 7. Other expenditure Group

Parent

2010

2009

2010

2009

Actual

$000

127

118

127

118

Audit fees for subsidiary

Recovery for prior year audit overrun

538

500

538

500

Consultants and legal fees

2,777

1,654

2,766

1,652

Other operating costs

1,718

976

1,715

975

5,169

3,293

5,146

3,284

Fees paid to auditors Audit fees for parent

Directors’ fees Occupancy

8. Cash and cash equivalents Group

Parent

2010

2009

2010

2009

Actual

$000

Cash at bank and on hand

3,237

113

3,236

111

Deposits at call

6,404

2,828

6,340

2,708

10,623

7,358

10,593

7,358

20,264

10,299

20,169

10,177

Short-term deposits

9. Debtors and other receivables Group

Parent

2010

2009

2010

2009

Actual

$000

Trade debtors

262

660

262

660

Interest receivable

102

833

101

829

Sundry receivables

351

715

1,493

714

1,489

The carrying value of debtors and other receivables approximates their fair value. Trade receivables are non interest bearing and are generally on 30 - 60 day terms. An impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. All overdue debtors have been assessed for impairment and no provision has been deemed necessary. 10. Held to maturity investments Group

Parent

2010

2009

2010

2009

Actual

$000

Government stock

1,522

Commercial bonds

2,556

3,187

2,556

3,187

2,556

4,709

2,556

4,709

Government stock

2,565

2,560

2,565

2,560

Commercial bonds

46,995

40,444

46,995

40,444

49,560

43,004

49,560

43,004

Current portion

Non-current portion

11. Loans and receivables Group

Parent

2010

2009

2010

2009

Actual

$000

5,144

4,198

5,144

4,198

Conversion Fund loans

Advances to Te MÄ ori Lodges Limited

5,146

4,213

5,146

4,213

Advances to stations, properties and clients Loans and mortgages

Advances to stations, properties and clients Group

Parent

2010

2009

2010

2009

Actual

$000

Advances to stations, properties and clients

119

Provision for impairment

(6)

(104)

(6)

(104)

Provision for impairment Impairment provision at beginning of year (Increase)/decrease in provision Impairment provision at end of year

(104)

(6)

(104)

(6)

(104)

Loans and mortgages Group

Loans and mortgages Provision for impairment

Parent

2010

2009

2010

2009

Actual

$000

5,586

4,269

5,586

4,269

(442)

(71)

5,144

4,198

(442)

(71)

5,144

4,198

Provision for impairment Impairment provision at beginning of year

(71)

(Increase)/decrease in provision

(371)

Impairment provision at end of year

(442)

(71)

(442)

(71)

Conversion Fund Loans Group

Parent

2010

2009

2010

2009

Actual

$000

Conversion Fund loans

3,320

3,336

3,320

3,336

Provision for impairment

(3,318)

(3,336)

(3,318)

(3,336)

Provision for impairment Impairment provision at beginning of year (Increase)/decrease in provision Impairment provision at end of year

(3,336) 18 (3,318)

(3,347) 11 (3,336)

(3,336) 18 (3,318)

(3,347) 11 (3,336)

Advances to Te Māori Lodges Limited Group

Parent

2010

2009

2010

2009

Actual

$000

Advances to Te Māori Lodges Limited

57,540

55,637

Provision for impairment

(57,540)

(55,637)

Impairment provision at beginning of year

(55,637)

(51,226)

(Increase)/decrease in provision

(1,903)

(4,411)

Impairment provision at end of year

(57,540)

(55,637)

Provision for impairment

12. Investment in associates Quantum Limited

Group 2010

2009

Actual

$000

Shares in Quantum Limited

12,680

Provision for impairment

(12,680)

Provision for impairment Impairment provision at beginning of year (Increase)/decrease in provision Impairment provision at end of year

(12,680)

The Māori Trustee’s 100% owned subsidiary Te Māori Lodges Limited holds shares in Quantum Limited. The true value of Quantum Limited is in excess of the amount recognised however this amount has been fully impaired as the underlying investment in Te Māori Lodges Limited has been incurring losses and has a negative equity value of $33,090,000 (2009 $31,907,000).

Putake Limited

Group

Parent

2010

2009

2010

2009

Actual

$000

5,200

5,144

5,000

Share of net surplus after tax

Carrying value at end of year

5,237

5,200

5,000

Carrying value at beginning of year

Group 2010

2009

Actual

$000

Extracts from associate’s statement of financial performance Revenue

449

563

113

Current assets

2,817

4,668

Non-current assets

8,317

6,397

11,134

11,065

661

665

10,473

10,400

5,237

5,200

Net surplus Extract from associate’s statement of financial position

Current liabilities Net assets Share of associate’s net assets

Putake Limited is an investment vehicle for Māori business of which the Māori Trustee has a 50% share. The equity accounted results for Putake Limited for the year ended 31 March 2010 are unaudited. 13. Property, plant and equipment Group and Parent 2010 EDP Equipment

Office Equipment

Furniture and fittings

Motor vehicles

Total

$000

228

132

112

472

275

439

Cost at end of year

283

169

184

275

911

Accumulated depreciation at beginning of year

196

121

408

113

230

129

109

521

Net carrying value at end of year

222

390

Depreciation

113

139

Cost at beginning of year Additions

Depreciation Accumulated depreciation at end of year

Depreciation charged on assets held by Te Puni Kōkiri Total depreciation expense

Group and Parent 2009

Cost at beginning of year Additions Transfers to Te Puni Kōkiri

Work in progress

EDP Equipment

Office Equipment

Furniture and fittings

Motor vehicles

Total

$000

225

132

112

505

(36)

Cost at end of year

228

132

112

472

Accumulated depreciation at beginning of year

144

102

329

Depreciation

Accumulated depreciation at end of year

196

121

408

Net carrying value at end of year

Depreciation

Depreciation charged on assets held by Te Puni Kōkiri

Total depreciation expense

149

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.

14. Intangible assets Group and Parent 2010 Computer Software

Total

$000

1,292

Cost at end of year

1,374

Accumulated amortisation at beginning of year

1,214

1,295

Net carrying value at end of year

Amortisation

Cost at beginning of year Additions

Amortisation Accumulated amortisation at end of year

Amortisation charged on assets held by Te Puni Kōkiri Total amortisation expense

Group and Parent 2009 Work in Progress

Computer Software

Total

$000

Cost at beginning of year

1,292

1,307

Additions

(15)

Cost at end of year

1,292

Accumulated amortisation at beginning of year

1,157

Amortisation

Accumulated amortisation at end of year

1,214

Net carrying value at end of year

Amortisation

Amortisation charged on assets held by Te Puni Kōkiri

Total amortisation expense

There are no restrictions over the title of the Māori Trustee’s intangible assets, nor are any intangible assets pledged as security for liabilities.

15. Creditors and other payables Group

Parent

2010

2009

2010

2009

Actual

$000

403

310

389

303

2,662

Sundry creditors

912

363

912

363

Employee benefits

487

Te Puni Kōkiri creditor

66,781

S 460A loans liability

1,354

238

4,702

68,907

4,688

68,900

Creditors and accruals Income in advance

GST payable

Creditors and other payables are non interest bearing and are normally settled on 30 day terms, therefore the carrying value approximates their fair value. Income in advance was the Crown appropriation for the April to June 2010 quarter that was received on 31 March 2010. Sundry creditors represents the liability for funds held on behalf of Agribusiness and Ahuwhenua as at 31 March 2010. Employee benefits were recognised in Te Puni Kōkiri statement of financial position at 31 March 2009 because the Māori Trust office employees were Te Puni Kōkiri employees. Amounts owing to Te Puni Kōkiri for reimbursement of expenses to the Crown and the section 460A loans were resolved with the Māori Trustee Amendment Act 2009 legislative reform on 1 July 2009.

16. Reconciliation of net operating surplus with net cash flows from operating activities Group

Net surplus

Parent

2010

2009

2010

2009

Actual

$000

79,092

547

79,092

527

Add/(deduct) non cash items Amortisation of premiums/discount

(20)

(794)

(20)

(794)

Depreciation

113

Impairment losses/(gains)

254

(11)

254

(11)

Share of associate earnings

(37)

(56)

629

(119)

625

Amortisation of intangible assets

Add/(deduct) movements in working capital (Increase)/decrease in debtors and other receivables Increase/(decrease) in creditors and other payables Net cash flows from operating activities

(119)

(64,206)

7,460

(64,212)

7,424

15,906

7,163

15,933

7,163

17. Commitments Leasing and operating commitments Group

Parent

2010

2009

2010

2009

Actual

$000

Less than 1 year

351

366

351

366

1 year to 2 years

326

353

326

353

2 years to 5 years

848

923

848

923

Greater than 5 years

934

1,206

934

1,206

2,459

2,848

2,459

2,848

18. Contingent Liabilities Unclaimed Monies (1963 to 1993) A contingent liability of $7,644,000 (2009 $7,644,000) relates to beneficiary monies paid out by the Māori Trustee under statutory direction to the Māori Education Trust, the Māori Purposes Fund Board and the New Zealand Māori Council. The Māori Trustee will be liable to make payment to beneficiaries who establish an entitlement in the future. Compensation Leases The 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 the owners the funds required to meet compensation payments upon resumption, as the level of funds required to be set aside during the course of the lease is insufficient. The value of advances which the Māori Trustee may be required to make upon resumption of a lease is not quantifiable at this time. 40

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 is often called upon to provide the finance required. The value of advances is not quantifiable at this time. Other Contingent Liabilities The Māori Trustee has received or is aware of potential claims totalling $200,000 (2009 $200,000). The Māori Trustee denies liability and will defend the claim.

19. Financial instruments Group

Parent

2010

2009

2010

2009

Actual

$000

20,264

10,299

20,169

10,177

715

1,493

714

1,489

52,116

47,713

52,116

47,713

5,146

4,213

5,146

4,213

78,241

63,718

78,145

63,592

4,702

68,907

4,688

68,900

Financial assets Cash and cash equivalents Debtors and other receivables Held to maturity investments Loans and receivables

Financial liabilities Creditors and other payables

Fair Value The fair values of all investments, excluding company shares and held to maturity investments, is equivalent to the carrying amount disclosed in the Māori Trustee’s statement of financial position. The General Purposes Fund held to maturity investments had a current market value of $53.5 million as at 31 March 2010 (2009 $47.2 million). The investment in company shares has no quoted market price and it is not practicable to estimate a market value due to certain restrictions that may exist if divestment were to occur. All current estimates, taking into account these possible restrictions, indicate a market value in excess of the current value as recorded in these financial statements. Financial instruments risk The 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 instruments. These policies do not allow any transactions that are speculative in nature to be entered into. Market Risk Currency 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. 41

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 a floating interest rate. The investments that have floating or variable interest rates or coupon payments are as follows: Group

Parent

2010

2009

2010

2009

Actual

2.47%

2.98%

2.47%

2.98%

3.32%

6.98%

3.32%

6.98%

Cash and cash equivalents sensitivity analysis Weighted average effective interest rate (%) 1% increase/(decrease) in interest rates would increase/(decrease) interest income and equity ($000) Held to maturity investments sensitivity analysis Weighted average effective interest rate (%) 1% increase/(decrease) in interest rates would increase/(decrease) interest income and equity ($000)

Credit risk Credit 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, debtors and other receivables, loans and receivables and held to maturity investments. The Māori Trustee’s maximum credit exposure from potential default is the carrying amount of these instruments. Debtors and other receivables There are no significant concentrations of credit risk with respect to debtors. Loans and receivables The Māori Trustee has made advances to stations, properties and clients and issued mortgages under Section 32 of the Māori Trustee Act 1953 and Section 248 of the Māori Affairs Act 1953. Advances under Section 32 of the Māori Trustee Act 1953 may or may not be secured. Where a 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 a 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 “deemed advances” and are not secured but the Māori Trustee owns shares in the land in which the Conversion Fund loans relate. Security for other financial instruments is either unobtainable due to the nature of the instrument or is not sought due to the instrument being invested in high credit quality organisations. The Māori Trustee has made impairment provisions for advances and Conversion Fund loans.

Held to maturity investments The financial instruments are spread amongst a number of financial institutions to minimise the risk of default. The Māori Trustee and the Māori Trustee Investment Committee apply the following parameters when investing money to minimise exposure to credit risk: •

85% of fixed income securities are to have an ‘A’ grade rating or better

•

For New Zealand Government stock, State Owned Enterprise and Local Authority stock and bank items, no single security shall exceed 10% of the fixed income portfolio

•

For corporate and capital notes, no single security shall exceed 5% of the fixed income portfolio.

Liquidity risk Liquidity risk is the risk that the Māori Trustee will not have sufficient funds to meet commitments as they fall due. 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 Māori Trustee applies the following parameters when investing money to minimise exposure to liquidity risk: •

A target of 10% of the portfolio is to be invested in money market accounts with a maximum term of 364 days

•

A target of 75% to be invested in fixed income securities

•

A target of 15% to be invested in equity securities.

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. Group

Parent

Less than 6 6-12 months months $000

1-5 years

Less than 6 6-12 months months

1-5 years

$000

Creditors and other payables 31 March 2010

4,702

4,688

31 March 2009

68,907

68,900

20. Related parties Crown The Crown is a major source of revenue for the Māori Trustee. Appropriation revenue from the Crown of $7,987,000 (2009 $nil) and Crown capital funding of $3,520,000 (2009 $nil) arises from a Funding Agreement between the Māori Trustee and the Minister of Māori Affairs. The funding provided by the Crown will enable 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 Kōkori on behalf of the Crown. 43

Common Fund Māori Trustee manages the Common Fund and this management relationship confers significant influence on the funds. The Māori Trustee is entitled to charge the Common Fund a management fee under section 26A of the Māori Trustee Amendment Act 2009. A management fee of $322,000 was charged for the nine months to 31 March 2010 (2009 $nil) and was included in sundry receivables at 31 March 2010. Prior to the Māori Trustee Amendment Act 2009 coming into force, the Māori Trustee earned $799,000 Common Fund investment income for the three months to 30 June 2010 (2009 $3,285,000 for 12 months) and paid $399,000 interest to the Common Fund for the three months to 30 June 2010 (2009 $1,182,000 for the 12 months). Statutory Role The core function of the Māori Trustee under legislation is to hold land as trustee or administer land as agent for Māori land owners. The Māori Trustee has a statutory entitlement under the Māori Trustee Act 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, the Māori Trustee earned $1,871,000 fees and commissions (2009 $1,659,000). The Māori Trustee also administers other entities under statute, for example the Māori Soldiers Trust, including Hereheretau station. The Māori Trustee is able to lend monies under the Māori Trustee Act. Loans made to Common Fund trusts, agencies and properties and to staff are at market interest rates, unless the loan is advanced to replace a Conversion Fund loan. Te Māori Lodges Limited (TML) Te Māori Lodges Limited (TML) is a wholly owned subsidiary of the Māori Trustee. TML is a holding company which holds shares in Quantum Limited. During the year the Māori Trustee provided management services to TML for $18,000 (2009 $40,500). The Māori Trustee has an advance to TML at 31 March of $57,540,000 (2009 $55,637,000). The provision for impairment against the advance at 31 March was $57,540,000 (2009 $55,637,000). The Māori Trustee charged interest on the TML advance of $1,903,000 (2009 $ 4,411,000). The interest income was capitalised. Intercompany transactions and balances have been eliminated in the Group financial statements. Putake Ltd Māori Trustee has an investment in the associate Putake Ltd. The company invests in enterprises that create greater Māori wealth, commercial understanding, transparency, corporate governance and choice. John Paki, Māori Trustee, is a director of Putake Ltd. He received no remuneration or other benefits in 2010 (2009 $nil).

Ahuwhenua Trophy The Māori Trustee’s role is administrator for the Ahuwhenua Trophy BNZ Māori Excellence in Farming Award 2010 - Dairy. This role involves invoicing and receiving sponsorship and paying the related expenditure. Maui Tangohau, Deputy Māori Trustee, is the project director of the organising committee. The Māori Trustee received $nil (2009 $20,000) fees for the services provided. Tekau Plus Tekau Plus is an agribusiness project. It is a collaboration between Māori Trustee, Poutama Trust and Federation of Māori Authorities (FOMA) and is funded by way of a contract with Te Puni Kōkiri. John Paki, Māori Trustee, was appointed chair of the Tekau Plus Board in October 2009. The Māori Trustee’s role is as administrator. Management fees for services and board meeting fees of $32,000 were received (2009 $45,000). The objective of Tekau Plus is for selected cluster businesses to foster Māori participation in global agribusiness, with the aim of 10 clusters earning $10 million in foreign exchange in 10 years. An independent review completed by PricewaterhouseCoopers in January 2010 found that all money paid by Te Puni Kōkiri had been accurately accounted for and that the accounting records are consistent between Te Puni Kōkiri and Tekau Plus. The Board of Tekau Plus subsequently requested a Value for Money Review, which was conducted by PricewaterhouseCoopers (who have recently done some work summarising the financial position and outputs of Tekau Plus) and two independent reviewers – Deputy State Services Commissioner, Tony Hartevelt and Māori businessman, Whaimutu Dewes. The findings of the review were released on 28 June 2010. Key Management Personnel The Māori Trustee maintains an interests register. There were no payments made or payments received from entities that key management personnel have control or significant influence over, other than the entities noted above. Some key management personnel and family members are owners of land managed by the Māori Trustee in the ordinary course of business and have account balances with the Common Fund. Distributable income paid on account balances was calculated in compliance with legislation. Group

Parent

2010

2009

2010

2009

Actual

$000

958

1,185

958

1,185

983

1,217

983

1,217

Key management personnel benefits Salaries and other current employee benefits Post employment benefits

Key management personnel include members of the senior management team established in 2010. This team has fewer members than the 2009 operations committee, resulting in a reduction in key management personnel benefits as compared to 2009.

21. Remuneration of employees Parent 2010 Actual $000 Total remuneration paid or payable $100,000 - $109,999

$120,000 - $129,999

$130,000 - $139,999

$140,000 - $149,999

$250,000 - $259,999

1 8

During the year ended 31 March 2010 no employees received compensation in relation to cessation, totalling $nil (2009 $nil). 22. Post reporting date events The following events occurred after 31 March 2010: •

The Māori Trustee has entered into an agreement to subscribe for 10 million ordinary shares in Miraka Ltd, subject to certain conditions being met. The company is building a wholemilk processing plant, commencing operations in August 2011.

•

The Māori Trustee entered into an agreement to purchase a building for $4,750,000.

There have been no other significant post reporting date events.

In terms of the Māori Trustee Act 1953, the Māori Trustee is responsible for the preparation of the Common Fund and Special Investment Accounts financial statement and for the judgements made in it. 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 the financial statement as at 31 March 2010 set out on pages 50 to 52 fairly reflects the financial position of The Common Fund and Special Investment Accounts.

John E Paki Māori Trustee 30 July 2010

To the readers of The Māori Trustee’s Common Fund and Special Investment Accounts financial statements as at 31 March 2010 The Auditor-General is the auditor of the Māori Trustee’s Common Fund and Special Investment Accounts. The Auditor-General has appointed me, Phil Kennerley, using the staff and resources of Audit New Zealand, to carry out the audit of the accounts of the Common Fund and Special Investment Accounts on her behalf for the year ended 31 March 2010. Unqualified Opinion In our opinion, the financial statements of the Common Fund and Special Investment Accounts on pages 50 to 52: •

Comply with generally accepted accounting practice in New Zealand; and

•

fairly reflect the financial position of the Common Fund and Special Investment Accounts as at 31 March 2010.

The audit was completed on 30 July 2010, and our opinion is expressed as at that date. The basis of our opinion is explained below. In addition, we outline the responsibilities of the Māori Trustee and the Auditor, and explain our independence. Basis of Opinion We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards. We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements did not have material misstatements, whether caused by fraud or error. Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion. The audit involved performing procedures to test the information presented in the financial statements. We assessed the results of those procedures in forming our opinion. Audit procedures generally include:

•

determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;

•

verifying samples of transactions and account balances;

•

performing analyses to identify anomalies in the reported data;

•

reviewing significant estimates and judgements made by the Māori Trustee;

•

confirming year-end balances;

•

determining whether accounting policies are appropriate and consistently applied; and

•

determining whether all financial statement disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements. We evaluated the overall adequacy of the presentation of information in the financial statements. We obtained all the information and explanations we required to support our opinion above. Responsibilities of the Māori Trustee and the Auditor The Māori Trustee is responsible for preparing the financial statements in accordance with generally accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial position of the Common Fund and Special Investment Accounts as at 31 March 2010. The Māori Trustee’s responsibilities arise from the Māori Trustee Act 1953. We are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001. Independence When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand. Other than the audit, we have no relationship with or interests in the Common Fund and Special Investment Accounts.

Phil Kennerley Audit New Zealand On behalf of the Auditor-General Wellington, New Zealand

Matters Relating to the Electronic Presentation of the Audited  Financial Statements   This audit report relates to the financial statements of the Māori Trustee Common Fund  and Special Investment Accounts for the year ended 31 March 2010 included on Māori  Trustee’s website. Māori Trustee is responsible for the maintenance and integrity of  Māori Trustee’s website. We have not been engaged to report on the integrity of Māori  Trustee’s website. We accept no responsibility for any changes that may have occurred  to the financial statements since they were initially presented on the website.   The audit report refers only to the financial statements named above. It does not  provide an opinion on any other information which may have been hyperlinked to or  from the financial statements. If readers of this report are concerned with the inherent  risks arising from electronic data communication, they should refer to the published  hard copy of the audited financial statements and related audit report dated 30 July  2010 to confirm the information included in the audited financial statements presented  on this website.  Legislation in New Zealand governing the preparation and dissemination of financial  information may differ from legislation in other jurisdictions.

2010

2009

$000

7,726

10,430

100

181

187

7,907

10,717

7,907

10,717

14,581

15,987

4,483

6,973

Company debentures, stocks and bonds

39,013

27,633

Total investments

58,077

50,593

54,175

46,830

2,540

2,503

Stations

780

1,260

Accounts payable

582

58,077

50,593

Special Investment Accounts Investments under specific direction Cash and cash equivalents Government stocks Company debentures, stocks and bonds Total investments under specific direction

Funded by Specific deposits on behalf of MÄ ori clients

Common Fund Investments Cash and cash equivalents Government stocks

Funded by Proceeds from trust and agency activities Capital gains from Common Fund investment

Total funds

The accompanying notes form part of this financial statement.

Statement of Accounting Policies Reporting entity The Māori Trustee is a corporation sole defined under the Māori Trustee Act 1953 (“the Act”) and is domiciled in New Zealand. This financial statement is prepared in terms of Section 23 of the Act for the following separate funds: •

The Common Fund

•

Special Investment Accounts.

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 Investments are investments made in accordance with Section 24 of the Act. The Māori Trustee administers the monies in Special Investment Accounts and the monies in the Common Fund in accordance with the Act. Section 26B (2) of the Māori Trustee Amendment Act 2009 requires the Māori Trustee’s annual report to report on the total amount of distributable income, less management fees, paid on money held in trust in the Common Fund. The financial statement for The Common Fund and Special Investment Accounts is for the year ended 31 March 2010 and was approved for issue by the Māori Trustee on 30 July 2010. Basis of preparation Statement of compliance In November 2004 the Accounting Standards Review Board (ASRB) approved the adoption of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). At that time, the ASRB announced the adoption of NZ IFRS would be mandatory for reporting entities with accounting periods beginning on or after 1 January 2007. In September 2007 the ASRB announced that for certain small to medium size entities the mandatory adoption of NZ IFRS had been delayed. These entities can continue to apply New Zealand Generally Accepted Accounting Principles (NZ GAAP) as prescribed by New Zealand Financial Reporting Standards and Statements of Standard Accounting Practice. The Common Fund and Special Investment Accounts meet the criteria for deferral of NZ IFRS due to not being publicly accountable and their size. The financial statement has been prepared in accordance with NZ GAAP, consistent with previous periods. Measurement base The financial statement has been prepared on a historical cost basis, except for the revaluation of certain items as detailed in the specific accounting policies. Functional and presentation currency The financial statement is presented in New Zealand dollars, which is the Māori Trustee’s functional currency. All values are rounded to the nearest thousand dollars ($000).

Significant accounting policies Cash and cash equivalents Cash 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 which are subject to an insignificant risk of changes in value. Government stocks Government stocks are stated at the lower of cost, adjusted for the amortisation of any premium or discount, or net realisable value. The premium or discount is amortised over the life of the investment on a straight line basis. Company debentures, stocks and bonds Company debentures, stocks and bonds are stated at the lower of cost, adjusted for the amortisation of any premium or discount, or net realisable value. The premium or discount is amortised over the life of the investment on a straight line basis. Financial instruments Financial instruments include cash and cash equivalents, Government stocks, and company debentures, stocks and bonds. On initial recognition, financial assets are measured at cost. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred. The financial instruments are subject to credit risk, whereby a third party will default on its obligation to the Māori Trustee, causing a loss to be incurred. Income tax The Common Fund has been issued a certificate of exemption from the Inland Revenue Department. Income tax on special investments is deducted at source where the Māori client is not exempt from income tax. Goods and Services Tax (GST) The Common Fund and the Special Investment Accounts are not registered for GST. Changes in accounting policies There have been no changes in accounting policies. All accounting policies have been applied on a basis consistent with other years.

Distributable income Nine months to 31 March

Income earned on Common Fund investments Māori Trustee management fee Distributable income Tax credits Net distributable income paid on Common Fund accounts

2010

2009

$000

1,576

(322)

1,254

(260)

994

The Māori Trustee Amendment Act 2009 requires distributable income to be paid to Common Fund account holders. Distributable income is the Common Fund investment income net of the Māori Trustee management fee. Distributable income has been calculated for the nine months to 31 March 2010. 52

Maori Trustee

Annual Report 2010