annual report 2019 - plant & food research
TRANSCRIPT
Presented to the House of Representatives pursuant to Section 39 of the Public Finance Act 1989
This annual report presents operating results for The New Zealand Institute for Plant and Food Research Limited (Plant & Food Research) for the financial year ending 30 June 2019.
It meets our reporting requirements for the Acts of Parliament under which we are governed. Unless otherwise stated, all figures are in New Zealand dollars ($).
This report also demonstrates how we have supported our Core Purpose industries in meeting their targets for economic and environmental sustainability over past years, and how we have delivered on our strategic targets for a healthy business during the 2018/19 financial year. Information held in this report reflects our strategy as presented in our Statement of Corporate Intent for the 2018/19 period, with a summary of our future-focused strategy, presented in our Statement of Corporate Intent for the 2019/20 period.
J008
352
CONTENTS
2 About us4 Our locations5 Our performance6 Our highlights8 Celebrating our people
SECTION 1 OUR STRATEGY 10
12 Report from the Chair14 CEO’s review16 Our strategy for a smart green future20 Delivering on our 2018/19 strategy
SECTION 2 OUR SCIENCE 22
24 Better cultivars faster™
26 Premium foods and beverages28 Sustainable, premium seafood and
marine products30 Residue-free pest and disease control32 Sustainable and profitable production systems
SECTION 3 A HEALTHY BUSINESS 34
36 Sectors and customers39 Engagement40 Science for impact41 Organisational excellence 45 Ways of Working
More information can be found on our company website and via our social media channels.
plantandfood.co.nz
SECTION 4 OUR GOVERNANCE 46
48 Corporate governance50 Board of Directors51 Science Advisory Panel52 Organisational chart
SECTION 5 FINANCIAL STATEMENTS 54
56 Financial performance57 Directors’ report58 Independent auditors’ report60 Statement of comprehensive income61 Statement of changes in equity62 Balance sheet63 Cash flow statement64 Notes to the financial statements84 Performance indicators85 Statement of responsibility
86 Directory87 Index
OUR CORE PURPOSETO ENHANCE THE VALUE AND PRODUCTIVITY OF NEW ZEALAND’S HORTICULTURAL, ARABLE, SEAFOOD AND FOOD AND BEVERAGE INDUSTRIES TO CONTRIBUTE TO ECONOMIC GROWTH AND THE ENVIRONMENTAL AND SOCIAL PROSPERITY OF NEW ZEALAND.
2 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
We have more than 900 staff based at 14 sites across New Zealand, as well as offices in Australia and the USA.
ABOUT US
PLANT & FOOD RESEARCH IS A NEW ZEALAND SCIENCE COMPANY DELIVERING RESEARCH AND DEVELOPMENT DESIGNED TO GROW COMPETITIVE ADVANTAGE FOR CUSTOMERS IN HORTICULTURE, SEAFOOD, FOOD AND BEVERAGE, WINE AND CROPPING.
COMMERCIAL
$63.0M
OTHER
$2.3M
STRATEGIC FUNDING
$43.1M
ROYALTIES
$44.6M
CONTESTABLE
$15.9M
Our activities are funded through direct commercial research for our customers, the reinvestment of royalties and the New Zealand Government’s investment in science.
50% 50%
The Institute brings together more than 90 years of research supporting the primary industries.
→ 1926 The Department of Scientific and Industrial Research (DSIR) formed
→ 1928 DSIR joined with the Department of Agriculture in establishing a Plant Research Station
→ 1936 Plant Research Station transferred entirely to the DSIR. The DSIR began doing its own research rather than coordinating those of other institutions
→ 1980 The Fish Research Unit established at DSIR
→ 1992 Ten Crown Research Institutes (CRIs) established out of former government departments
→ 2008 Plant & Food Research formed following the merger of former CRIs HortResearch and Crop & Food Research.
OUR MISSION
To create the world’s most sustainable food production systems.
RESEARCH SUPPORT
97
GENERAL
169SENIOR LEADERSHIP
13RESEARCH
709
HEAD COUNT
988
Strategic funding — Government investment allocated directly to each CRI Contestable — Government investment allocated through competitive bidding Royalties — Commercial return from plant varieties and IP Commercial — Direct investment by customers Other — All other income sources
3PLANT & FOOD RESEARCH ANNUAL REPORT 2019
HORTICULTURE
WINE
SEAFOOD
HORTICULTURE WINE SEAFOOD FOOD AND BEVERAGE
CROPPING
DOMESTIC MARKET VALUE ($NZB) 2018 2.3 0.8 0.4 19.6 1.5
EXPORT MARKET VALUE ($NZB) 2018 3.8 1.7 1.8 33 0.2
SECTOR TARGET $10BBY 2020
$2BEXPORTS BY 2020
$3BEXPORTS BY 2025
$60BEXPORTS BY 2025
$1.95BBY 2025
OUR SCIENCE PLAYS A VITAL ROLE IN THE SUCCESS OF OUR SECTORS.
$91million
$412million
$14million
$758million
$156million
$271 million
$453million
$362million
$249 million
$1967million
$245million
$101million
$647million
$928 million
$163 million
$14million
$24 million
$14million
$68million
AFRICA
AUSTRALIA
ASIA
UNITED KINGDOM AND IRELAND
CONTINENTAL EUROPE NORTH
AMERICA
CENTRAL AND SOUTH AMERICA
NEW ZEALAND EXPORTS
Horticulture and wine — year to 30 June 2018 Seafood — year to 31 December 2018
4 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
1819
15
16
17
1
23
4 5
67
910 11
12
1314
NEW ZEALAND
AUSTRALIA
USA
8
OUR LOCATIONS
KIWIFRUIT
CITRUS
AVOCADO
POTATO
ONION
BRASSICA
PIPFRUIT
BERRYFRUIT
HOP
WINE GRAPE
CEREAL
PEA
SUMMERFRUIT
SEAFOOD
KEY
3/ PUKEKOHE
SITE AREA Total Research farm (ha) 5 4RESEARCH PLANTINGS
STAFF Research General Total
4 - 4
4/ RUAKURA
SITE AREA Total Research farm (ha) 6 1RESEARCH PLANTINGS
STAFF Research General Total
59 9 68
5/ TE PUKE
SITE AREA Total Research farm (ha) 45 39RESEARCH PLANTINGS
STAFF Research General Total
46 12 58
13/ CLYDE
SITE AREA Total Research farm (ha) 58 57RESEARCH PLANTINGS
STAFF Research General Total
5 2 7
14/ DUNEDIN
Co-located at University of Otago
STAFF Research General Total
5 - 5
15/ 16/ 17 AUSTRALIA
15. SOUTH AUSTRALIA 16. QUEENSLAND 17. VICTORIA
STAFF Research General Total
7 1 8
18/ 19 USA
18. CALIFORNIA 19. WASHINGTON
STAFF Research General Total
1 1 2
11/ BLENHEIM
Co-located at Marlborough Research Centre. Includes 10ha of research farm
RESEARCH PLANTINGS
STAFF Research General Total
13 2 15
12/ LINCOLN
SITE AREA Total Research farm (ha) 232 200RESEARCH PLANTINGS
STAFF Research General Total
148 45 193
6/ HAWKE'S BAY
SITE AREA Total Research farm (ha) 55 45RESEARCH PLANTINGS
STAFF Research General Total
52 21 73
7/ PALMERSTON NORTH
SITE AREA Total Research farm (ha) 4 -
STAFF Research General Total
107 23 130
8/ WELLINGTON
Co-located at Science New Zealand
STAFF Research General Total
- 1 1
10/ NELSON
SITE AREA Total Research farm (ha) 1 -FINFISH FACILITY 324,700L
STAFF Research General Total
43 9 52
9/ MOTUEKA
SITE AREA Total Research farm (ha) 48 40RESEARCH PLANTINGS
STAFF Research General Total
27 9 36
1/ KERIKERI
SITE AREA Total Research farm (ha) 46 38RESEARCH PLANTINGS
STAFF Research General Total
10 6 16
2/ AUCKLAND
SITE AREA Total Research farm (ha) 7 -
STAFF Research General Total
181 139 320
5PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR PERFORMANCE
REVENUE ($000) Budgeted figure in brackets
PEER-REVIEWED PUBLICATIONSMILESTONES COMPLETED TO AGREED TIMELINES
ANNUAL REVENUE / SCIENCE FTE ($000)
90%
of our 60 critical steps for achieving impact targets complete**
(TARGET = 85%)
384
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
86%85%
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19*
STRATEGIC FUNDING
CONTESTABLE
COMMERCIAL
ROYALTIES
OTHER
168,879 (163,753)
* Revenue as reported in the 2018/19 financial year reflects the impact of adoption of New Zealand Equivalents to International Financial Reporting Standards 15 (NZ IFRS 15). See page 65 for more details.
** Critical steps provide a detailed evaluation of our progress toward achieving sector impact targets as outlined in our Statement of Corporate Intent https://www.plantandfood.co.nz/file/SCI-2018-19.pdf.
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19*
275
250
225
200
175
150
119,588 (119,659)
128,879 (125,950)
139,748 (136,175)
145,840 (141,915)
156,401 (158,336)
286 303350
312 313 86% 88% 89% 86% 86%
6 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR HIGHLIGHTS
→ Opened a new Australian office located at the University of Adelaide’s Waite campus. Co-locating with academic and industry partners will boost research and innovation in South Australia’s horticulture and agri-food sectors.
→ Completed the four-year Mt Albert Research Centre redevelopment project. It included four floors of purpose-built laboratories (one of which is a PC3 lab) in the Hamilton Building, redevelopment of the Cunningham Building as a meeting hub, and purpose-built office and consumer research facilities in the Padfield Building. FOR MORE GO TO PAGE 45
→ Welcomed T&G Global as the strategic commercialisation partner for varieties from the Hot Climate Programme, operated collaboratively by Plant & Food Research, IRTA and Fruit Futur in Spain. The programme is focused on breeding new varieties of apples and pears to address challenges such as sunburn, colour and firmness associated with a changing global climate.
COMMENCED A PRODUCT
DEVELOPMENT PROJECT WITH
CHINESE COMMERCIAL PARTNER, FRUITDAY
AWARDED FUNDING
TO STUDY THE LEARNING
CAPABILITY OF BUMBLE BEES
WELCOMED T&G GLOBAL AS THE COMMERCIALISATION PARTNER IN THE HOT CLIMATE BREEDING PROGRAMME
→ Signed an agreement with Chinese E-commerce company Fruitday to develop a direct-to-fruit ripeness sensor label for avocados. This is the first commercial project that Plant & Food Research has undertaken with a Chinese commercial partner.
→ Received investment from the MBIE Endeavour Fund to study high value mānuka honey, an artificial bi-trophic ecosystem and a low glycaemic load starch ingredient. Each of the three selected Plant & Food Research-led projects was awarded $1 million.
→ Held “Science in the Darkroom: Unseen Science on Glass Plate Negatives” exhibition. Fifteen once-lost intricate and beautifully composed photographs were on display at Mt Albert Research Centre’s neighbour, Alberton House, to showcase the long history of plant research in Mt Albert.
→ Awarded funding from the Marsden Fund to study the learning capability of bumble bees and thermal adaptation of Australasian snapper. These projects are two of only seven Crown Research Institute-led projects that were selected by the Fund.
7PLANT & FOOD RESEARCH ANNUAL REPORT 2019
SIGNED MOU PROMOTING COLLABORATIVE RESEARCH PROGRAMMES IN YUNNAN
→ Secured funding for seven projects in the latest Ministry for Primary Industries Sustainable Farming Fund funding round. The projects include on-farm nitrogen (N) management, reduced use of agrichemicals in onion production, pest management in strawberries, and management of avocado fruit quality.
→ Released Aureo® Gold, a new biocontrol tool, commercialised by UPL, to kiwifruit growers. Aureo® Gold is a natural yeast strain that reduces growth and spread of Psa bacteria. FOR MORE GO TO PAGE 31
→ Supported the horticulture industry in gaining a milestone conditional approval from Environmental Protection Authority to release a parasitoid, Samurai wasp, as a biocontrol agent, should a brown marmorated stink bug incursion occur. This is the first pre-emptive classical biocontrol approval in New Zealand and possibly in the world. FOR MORE GO TO PAGE 31
→ Secured funding from MBIE Unlocking Curious Minds fund to work with students at Aorere College. The students will learn how scientists work with biosecurity threats in New Zealand, and develop a surveillance plan for their local area to assist the monitoring being done by government agencies.
→ Hosted 2,000 primary and intermediate students on a virtual field trip at our Hawke’s Bay site to explore the apple sector. Organised through LEARNZ and sponsored by MPI, the field trip series allows students to see the inner working of particular fields, with a focus on science and technology.
→ Co-delivered a commercialisation workshop with the New Zealand Embassy and Vietnamese Government in Ho Chi Minh City. The workshop focused on upskilling Vietnamese Government and businesses in plant variety commercialisation, using dragon fruit and apples as case studies.
→ Established a formal relationship with Northwest A&F University (NWAF) in China with the signing of the China-New Zealand Apple Research Centre agreement. Joint projects being developed include fruit flavour, colour, composition and cultivation, alongside projects with other NWAF partners.
Photo: Elijah Talamas
SUPPORTED THE
PRE-EMPTIVE APPROVAL
OF A BMSB PARASITOID
AWARDED FUNDING
TO STUDY THE LEARNING
CAPABILITY OF BUMBLE BEES
→ Signed a Memorandum of Understanding with the Department of Science & Technology of Yunnan Province and the Yunnan State Farms Group. The MoU will allow the organisations to scope potential collaborative research programmes in the Yunnan region of south west China.
RELEASED AUREO® GOLD
— A NEW BIOLOGICAL
CONTROL FOR KIWIFRUIT PSA
8 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
EXTERNAL AWARDS
CELEBRATING OUR PEOPLE
KUDOS AGRICULTURAL SCIENCE AWARD
ROYAL SOCIETY TE APĀRANGI, HAMILTON AWARD
→ The Ruakura-based Integrated Disease Control Team, led by Dr Phil Elmer, won the Kudos Agriculture Science Award for developing a number of biological control products and for their response to the kiwifruit disease Psa. Phil was also presented the Kudos Lifetime Achievement Award in recognition of his scientific achievement in the Waikato region.
→ Dr Jem Burdon was selected for the New Zealand Institute of Agricultural and Horticultural Science Fellowship for his longstanding contribution to postharvest science that supports New Zealand’s fresh fruit industries, particularly kiwifruit and avocado.
→ Dr Trish Fraser was made a life member of the New Zealand Society of Soil Science for her contributions to the Society.
→ Peter Thompson received a certificate of appreciation from MPI’s Director of Border Clearance Services for his dedicated efforts and ongoing support for Biosecurity New Zealand.
→ Dr Maren Wellenreuther won the Hamilton Award, the Royal Society Te Apārangi Early Career Research Excellence Award for Science, for her research to develop new aquaculture-ready species in New Zealand.
→ Dr Lee Huffman was selected as a Fellow of the New Zealand Institute of Food Science & Technology for her significant contribution to the New Zealand and international food technology profession.
→ Dr Kathleen Hofman, with commercial partners Sanford and Revolution Fibres, received the Future Development Innovation Award from Seafood New Zealand for the revolutionary development of actiVLayr™, a cosmetic skin product made of hoki skins that has drawn international acclaim.
→ Dr Jim Walker received the Syngenta Growth Award in the Sustainability - Researcher category for his role in the development and implementation of the Integrated Fruit Production programme, an approach to pest management that has become the cornerstone of the New Zealand apple export programme.
→ Dr Denis Curtin was conferred Fellow of the New Zealand Society of Soil Science in recognition of his substantial contributions to research on soil organic matter and soil fertility over a long and distinguished career.
NZIAHS
FELLOWSHIP
9PLANT & FOOD RESEARCH ANNUAL REPORT 2019
EXTERNAL AWARDS INTERNAL AWARDS
→ Chairman’s Awards recognising outstanding contributions to Plant & Food Research were presented to:
→ Piqa®Boo® Blast Team (Cath Kingston, Shona Seymour, Dr Monika Walter, Dr Rebecca Campbell, Mark Gardiner, Robert Diack, Dr Adam Friend, Virginia Marroni, Lester Brewer, Dr Jason Johnston, Dr Ken Breen, Dr Ben van Hooijdonk, Dr Stuart Tustin, and Robert Lamberts), in recognition of their rapid, proactive response to the severe outbreak of pear blast that hit the new Plant & Food Research cultivar Piqa®Boo® in 2018.
→ Spatial Agricultural Modelling Team (Dr Edmar Teixeira, Eric Burgueño, Hymmi Kong, Dr Linley Jesson, Dr Rogerio Cichota, Kate Richards, Jian Liu, Dr Mei Meiyalaghan, Dr Wei Hu, Tejas Sevak, Marcus Davy, Roy Storey, and friends), in recognition of the development of a powerful new spatial analysis framework capable of untangling complex interactions between crops, soils and climate.
→ Arlene Nixon, in recognition of her leadership of the Plant & Food Research apricot breeding programme, including the development of a new category of apricot with high consumer appeal that is now forming the basis of a new grower cooperative.
→ Work Area Manager Awards were presented to Robert Ward, Dr Roberta Gentile, and Julie Latimer for ensuring good health and safety practices within their areas of responsibility.
→ Margaret Hogg-Stec Memorial Scholarships, which provide women in the Institute with support for development initiatives, were awarded to Dr Lucia Ramos Romero, Dr Melissa Jordan and Dr Wei Cui.
→ Science New Zealand National Awards
→ Dr Nigel Larsen was presented with the Plant & Food Research Lifetime Achievement Award for his 35 years of contribution to the knowledge of food science and materials science in New Zealand and overseas.
→ Dr Sarah Pilkington received the Plant & Food Research Early Career Researcher Award for her impact on the kiwifruit industry.
→ The Mapping & Markers Team won the Plant & Food Research Team Award for cementing New Zealand’s position as the international leader in the development and application of molecular and genomic technologies for fruit breeding.KIWINET PWC COMMERCIAL
IMPACT AWARD
KIWINET BNZ
SUPREME AWARD
→ Dr Andrew Kralicek won the BNZ Supreme Award at the KiwiNet Research Commercialisation Awards for his research on harnessing insects’ receptors for commercial sensing.
→ The Amarasate® Team (Brendan Vercoe, Dr John Ingram, Dr Edward Walker and licensee Lifestream International) received the PwC Commercial Impact Award at the KiwiNet Research Commercialisation Awards for the commercialisation of Amarasate®. The 100% plant-based weight management extract has been commercialised through Lifestream as calocurb™.
NZIAHS
FELLOWSHIP
10 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
New cultivars, like ‘PremP009’ marketed as Piqa®Boo®, provide new opportunities for the New Zealand horticulture sector.
12 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
REPORT
FROM THE CHAIR
IT HAS BEEN A PRIVILEGE TO CHAIR THE PLANT & FOOD RESEARCH BOARD FOR THE PAST 9 YEARS.
As I finish my term on the Board, I am proud of the many achievements of our Institute. We have advanced scientific knowledge and applied it to boost numerous sectors, regions and sustainable economic growth for New Zealand. We have developed our business models, enhanced our regional footprint, and expanded our presence overseas — through staff on the ground and a wide range of partnerships.
There have been tough moments along the way and many successes too. Over the past decade, we have built a strong, values-based culture, and I am sure this culture will only become stronger and more of an asset to Plant & Food Research in the years ahead.
The new Senior Management Team have developed a forward-focused, ambitious strategy and I know the combined vision and hard work of everyone at Plant & Food Research will see the Institute reach new heights of scientific and business innovation in the coming years.
I wish to thank all the Directors, CEO David Hughes, the Senior Management Team and every member of staff for all the energy and teamwork you bring to your work. I have no doubt that Plant & Food Research will play its part in delivering a smart green future for New Zealand.
MICHAEL AHIEChairman (Retired: 30 June 2019)
“
13PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
“GLOBAL TRENDS IN FOOD CONSUMPTION ARE CHANGING AT PACE.
Our agrifood ecosystem must balance meeting the needs of a growing global population, addressing new pressures on our production systems due to a changing climate, and satisfying the demands of consumers with increasing requirements for environmentally sustainable, safe and nutritious food. New Zealand has a strong history of innovation which will provide a solid foundation for meeting these challenges.
Plant & Food Research is committed to supporting the plant and marine-based food industries in delivering science that will create the world’s most sustainable food production systems. Our research and our people are embedded across the production landscape of New Zealand. By working with our partners, we will deliver new technologies to support the growth of our sectors, creating new jobs in the regions and supporting New Zealand’s ongoing transition to high-value food production with enhanced environmental credentials.
The past year has been one of transition for Plant & Food Research, with a refreshed Senior Management Team developing the processes required to deliver on an evolving strategy. The Board is extremely proud of how the Institute has continued to perform over this period, delivering great science and a total revenue of $169 million.
I wish to acknowledge Michael Ahie in ensuring Plant & Food Research has a strong foundation to build on during the next phase of evolution. I also wish to thank every member of the Institute for their hard work and commitment in ensuring we deliver on our promise to the nation — to contribute to the economic growth and environment and social prosperity of New Zealand.
GREG GENTActing Chair
15PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
PLANT & FOOD RESEARCH BELIEVES THAT SCIENCE CAN CREATE A BETTER WORLD; THAT BY WORKING TOGETHER WE CAN CREATE A SMART GREEN FUTURE, DELIVERING ECONOMIC, ENVIRONMENTAL AND SOCIAL PROSPERITY.
Our world, our nation and our Institute are changing. More than half the world’s population now lives in urban areas, and this is predicted to increase to 68% by 2050. Consumers are demanding better environmental credentials for their food, and many are eating less meat and more fruits, vegetables and grains in an effort to reduce their impact on the planet. At home, this is echoed by findings by the Productivity Commission that diversification of land use to include more plant production is the best way for New Zealand to limit its own impact on a changing global climate.
For our Institute, we are evolving the way we work with our industries to maximise the value delivered by our research — for our customers, for the end-users of our science, and for our organisation. Our aim is to create the world’s most economically, environmentally and socially sustainable food systems. The products delivered by our customers in the horticultural, arable and seafood sectors are already amongst the most desired in the world. New Zealand’s reputation for high quality, safe food produced in an environmentally sustainable manner, coupled with a drive for innovation, holds us in good stead for meeting the demands of the future.
A year of transition
The first quarter of the 2018/19 financial year saw the appointment of four new members of the Senior Management Team, with a fifth — our first Group General Manager Māori — appointed at the end of 2018. Each member of the SMT holds responsibility for one of the strands of our new strategy (see page 17).
Our organisation has seen considerable success, with our revenue growing at 7% per annum on average for the past five years. This allows us to invest more in our staff, our equipment and our facilities to ensure we are best placed to deliver into the future. We have completed a major renovation at the Mt Albert Research Centre, the largest of our sites. This four-year project now sees more than 90% of our Auckland-based staff housed in purpose-built laboratory or office space. Our new 10-year capital plan will see significant development of our regional sites, starting with our Motueka and Te Puke Research Centres, both situated in areas of importance for the industries we serve.
Thanks to all
I wish to thank Michael Ahie for his time as Chair; it has been a real privilege to work with him over the past 18 months as we put our new strategy in place. I also wish to thank Michael James for his service as Chief Financial Officer and Marston Conder for his time as Chair of our Science Advisory Panel.
I particularly want to acknowledge the Plant & Food Research staff for their time, their commitment and their support as we move towards a new way of doing business. Plant & Food Research is in a great position to deliver science that will help our sectors produce food that helps people live a healthy life while maintaining New Zealand’s unique environment. By working together we will deliver a smart green future.
DAVID HUGHESChief Executive Officer
“
16 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
OUR STRATEGY FOR
A SMART GREEN FUTURE
WE BELIEVE SCIENCE CAN MAKE THE WORLD A BETTER PLACE
1 Invest to create world-class
science
2 Apply that science to create
maximum value
3 Share that value fairly with those
who have contributed to its creation to increase the sustainability of their businesses.
This strategy will be realised through seven strands that will ensure our activities align with the requirements of our Institute, our customers and our partners.
Our purpose is to enhance the value and productivity of New Zealand’s horticultural, arable, seafood, and food and beverage industries, to contribute to economic growth and the environmental and social prosperity of New Zealand.
We believe our science can deliver a smart green future and make the world a better place. SMART, using innovation and technology to create an optimised food production system that offers high-tech jobs; GREEN, protecting our environment with better use of our land, water and technology to produce healthy food; for a FUTURE that offers health, prosperity and opportunity for all.
OUR BUSINESS MODEL
Our future strategy is focused on three key elements:
17PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
Plant & Food Research’s strategy
OUR VALUES REFLECT …
INVESTING IN
INVE
STIN
G IN
INVESTING IN
FACILITIES &
TECH
NOLOGY
GROWTH IN PARTNERSHIPS
CUSTOM
ER E
NGA
GEM
ENT,
DEVELOPMEN
T BUSINESS
SCIENCE SERVICES WITH MĀORI
BRA
ND &
INN
OVAT
ION
DISCOVERY AND TH
E CREATIVE APPLICATION OF KNOWLEDGE • ACHIEVEMENT THROUGH LEADERSHIP • RELATIONSHIPS BASED ON H
ONES
TY, M
UTUA
L RE
SPEC
T AN
D TR
UST
INVEST in world class
science
SHARE the value created with New Zealand
SECUREPlant & Food Research’s fair share
APPLYto maximise
value creation
A smart green future
INVEST
SHARE APPLY
A W
ORLD CLASS
PROFITABLE STRONGER
LIFT
ING
OUR
FU
TURE SCIENCE
PEOPLE
INFORMATION
18 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
INVESTFUTURE SCIENCE
Investing in our future will allow us to deliver science that will support our industries long-term, not just in addressing their current needs. For us to remain current, we need to ensure we are building capability and undertaking world-class science that allows our science, our scientists, and our customers and partners to excel on the global stage.
A scan of major trends in agrifoods across the globe, coupled with analysis of our scientific strengths, has led to the identification of broad areas of research which we believe will provide New Zealand with the knowledge and capabilities required for long-term success. Our investment in fundamental science in these areas will support our industry sectors in preparing for the future. It also allows us to build capability in key areas to support our Science Services business, and creates opportunities to develop technologies for commercialisation through our Technology Development missions (see below).
Our Science Advisory Panel recommends investing 25% of revenue in fundamental science to better align with investments made by successful R&D organisations around the world. Plant & Food Research receives $43 million each year from the New Zealand Government’s Strategic Science Investment Fund (SSIF), and over the next three years we will transition this funding to invest in these future-focused areas of research, termed our Growing Futures™ directions.
Our Growing Futures™ directions → Horticultural production goes urban
— delivering new cultivars and growing systems tailored to indoor production systems to feed people where they live
→ Sustainable food production systems — ensuring New Zealand’s production systems are the best in the world for environmental sustainability
→ Sustainable supply chains — minimising environmental harm and minimising waste in the supply chain, from farm gate to consumer
→ Open ocean aquaculture — harnessing the ocean as a sustainable farming endeavour, creating open ocean marine farms to produce high quality seafood.
We also invest in science for Public Good where appropriate, for example, in biosecurity research that protects New Zealand’s flora from pest and disease incursions.
OUR PEOPLE
Valuing people is a commitment that guides our organisation. A sense of community – not only between our staff but also between our staff and the industries they serve – is fundamental to who we are and to our relationships with collaborators, customers and partners. It is vital for us to invest in our people to ensure we have world-class scientists working in world-class facilities to deliver world-class science.
We believe in providing careers, work environments and lifestyles that enable our people to engage in meaningful and fulfilling work whilst maintaining work-life balance. We have a strong focus on ethics, values, diversity, equity, wellbeing and safety which translates to the strong, positive culture fundamental to our organisation’s ability to deliver value for New Zealand. We develop leadership in all our people and create opportunities for advancement of those with high potential. We also continually assess and respond to the impact of people-focused initiatives and changing workplace trends.
OUR FACILITIES & INFORMATION
Our priority is ensuring an environment where ideas flourish and scientific discovery is enabled, allowing us to deliver research that supports the success of our industry sectors. Investing in our facilities and information systems ensures our people have the right tools, equipment and resources to deliver world-class science.
Our 10-year capital plan supports the investment of $300 million in land, buildings, technology, science equipment and other assets over the next decade. This will allow us to sequence our investments to complete redevelopments of all our core sites across New Zealand, develop a refreshed network of specialist facilities, and provide leading-edge science equipment and information management systems.
APPLYCUSTOMER ENGAGEMENT, BRAND & INNOVATION
Plant & Food Research is recognised for its positive culture of engagement with customers and for implementing innovative business approaches with partners. We have a strong reputation as a key R&D partner, not only with New Zealand industry but also overseas through relationships with New Zealand companies with significant international presence and multinational companies, as well as our increasing portfolio of international development activities.
Our ability to grow and deliver the best science is strongly linked to this reputation, and we are committed to ensuring our relationships with customers and partners are strong and positive. Our marketing efforts highlight not only our successes but also those of our customers. Through our Technology Development missions and, more long-term, through our Growing Futures™ directions, we generate technologies, products and intellectual property with potential to add value for our partners, and new business models allow us to maximise the return on investment in our science.
PARTNERSHIPS WITH MĀORI
The Māori economy is currently worth $50 billion and is set to double by 2030. Māori are 15% of New Zealand’s population, and are committed to the long-term future of New Zealand. The Māori principles of kaitiakitanga (guardianship of the land) and manaakitanga (care of the people) are
19PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
well aligned with our research priorities. We are committed to supporting Māori organisations in using Western science combined with an understanding of mātauranga Māori to realise the potential of their land and sea resources.
Plant & Food Research’s refreshed Māori engagement and business strategy, Te Whakakitenga, encapsulates our vision of being an organisation that helps Māori achieve the long-term success they are seeking. The strategy requires the building of enduring relationships with Māori entities based on trust and understanding, and greater awareness within our Institute of Māori principles and how these can be embedded in our research programmes.
SHARESCIENCE SERVICES
Our Science Services business addresses the needs of the agrifood industry, working with our customers to design and deliver purposeful R&D and delivering quadruple bottom-line value.
We work with private companies, levy-funded industry bodies, iwi organisations and Government departments to support the growth of our sectors. Our provision of R&D services is a critical part of New Zealand’s innovation ecosystem, creating value for our customers through the application of science.
Our research is strengthened by our engagement with leading scientific organisations around the world. Our network allows us to deliver science that is transformational, delivering solutions to global challenges such as sustainability, protecting crops from pests and diseases, or meeting consumer trends for novelty and health.
TECHNOLOGY DEVELOPMENT
Our Technology Development activity focuses on investing in a pipeline of products, from early stage ideas through to branded products, with commercial potential. We self-fund, partner and co-invest with other organisations as appropriate to develop these products through to commercialisation.
Successful product development will create impact for our partners and deliver a share of the value, through royalties or other business models, back to Plant & Food Research to re-invest in our science.
We have identified an initial portfolio of 18 technologies and 11 cultivar targets which are being taken forward as Technology Development missions. Business plans for these missions have agreed stop/go decision points, with stop decisions providing the opportunity for investment to be redeployed into other missions.
GROWING FUTURES™ • Informed by
Growing Futures™ strategy
• Allocated through research programmes
• Weighted towards targeted-basic science
• Predominantly SSIF-supported
SCIENCE SERVICES• Characterised by science creating value
for our customers• Responsive to customer’s strategic
priorities• Allocated through research projects• Predominantly customer-supported
TECHNOLOGY DEVELOPMENT• Informed by return on investment• Allocated as discrete product/technology
development missions• Plant & Food Research investment or
co-investment for a share of the value• Innovative in approach and business
models
A smart green future
GLOBAL CHALLEN
GES
GROWIN
G FUTURES™ STRATEGY
Science push for future impact Industry/opportunity pull for impact today
SCIENCE FOR FUTURE IMPACT SCIENCE FOR IMPACT TODAY
Horticultural production goes urban
Sustainable production
systems
Sustainable supply chains
Open ocean aquaculture
Science to deliver a smart green future
20 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
OUR VISION:
STATEMENT OF CORE PURPOSE:
DELIVERING ON OUR
2018/19 STRATEGY
WE DELIVER IMPACT TO OUR INDUSTRY SECTORS AND CUSTOMERS BY ALIGNING OUR SCIENCE AGAINST THREE OUTCOME AREAS
p 26 p 28 p 30 p 32p 24
OUR MISSION:
Find out more …
Sustainable, premium seafood
and marine products
Better cultivars faster™
Residue-free pest and disease
control
Sustainable and profitable
production systems
Premiumfoods and beverages
INCREASE VALUE
PROTECT & ENHANCE
SUSTAIN GROWTH
Growth in export value and volume from production of
Plant & Food Research-bred
cultivars
New cultivars innovation
Consumer insights
Seafood production
Biological control agents
Production technologies
Genomic selection tools
Food technologies
Premium seafood products
Disinfestation technologies
Systems modelling
Wellness foods and ingredients
Novel marine products Biosecurity Ecoverification
tools
Enhanced international
competitiveness and environmental
quality through pest and disease
management solutions
Enhanced international
competitiveness and environmental
quality through optimal use of
inputs
Growth in export value and volume
of whole foods and ingredients based on fruits,
vegetables and grains
Growth in export value and volume
of premium seafood and
marine products
STRATEGIC PRIORITIES
OUTCOME AREAS
STRATEGIC FOCUS
SSIF PLATFORMS
PERFORMANCE TARGETS
Premium plant-basedand seafood products
Plant-based food andseafood production
The following case studies and information represent the report of activities outlined in our Statement of Corporate Intent 2018/19.*
*This strategy was superseded by our new strategy as outlined on pages 16-19 and in our Statement of Corporate Intent 2019/20.
21PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR STRATEGY
OUR VISION: Valued by our stakeholders and admired by our peers for the quality and impact of our science
STATEMENT OF CORE PURPOSE:
To enhance the value and productivity of New Zealand’s horticultural, arable, seafood and food and beverage industries to contribute to economic growth and the environmental and social prosperity of New Zealand WE ENSURE THE HEALTH OF OUR
BUSINESS BY FOCUSING NOT JUST ON WHAT WE DELIVER TO INDUSTRY
BUT ON HOW WE DELIVER IT AND PERFORM AS A COMPANY
p 36 p 39 p 40 p 41 p 45 p 56
OUR MISSION:A sustainable business delivering science that maximises opportunities to enhance New Zealand’s economic, environmental and social prosperity
A HEALTHY BUSINESS
Growth in value and volume of customer base
Sectors and customers
Te Rāranga Ahumāra
Internationalisation
Building our brand
Science reviews and Science
Advisory Panel
Intellectual assets, databases and
collections
Productivity and efficiency Our Workplace
New business development
Client relationship management
Hubs, National Science
Challenges and other
collaborations
Managing risk Our Technology Sustaining profitability
Existing business growth
Technology transfer and digital
engagement
Investing in science and
capabilityHealth and safety Our People Growing revenue
Enhanced engagement with our stakeholders
Engagement
Enhanced performance
through establishment of best teams from across company
and beyond
Science for impact
Enhanced performance through best
practice approaches to
people and assets
Organisational excellence
Enhanced performance through best practice use
of technology, workplace and
workstyles
Ways of Working
Enhanced profitability
and financial performance
Financial performance
22 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
We’re breeding new cultivars with characteristics that command a premium in global markets.
24 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
Standing out in a crowded marketplace takes novelty, visual appeal and a reputation for high quality. New products that look and taste different, as well as capitalise on the natural “health halo” associated with plant crops and can be grown with minimal environmental impact, attract a premium in the global marketplace.
We develop new fruits, vegetables, arable and ornamental crops with the characteristics growers demand — such as improved resistance to pests and diseases, and high yields; and the taste, flavour and novelty attributes that consumers desire.
PERFORMANCE TARGET
→ Growth in export value and volume from production of Plant & Food Research-bred cultivars.
79% CRITICAL STEPS ACHIEVED as outlined in SCI 2018/19
RESEARCH FOCUS
→ Breeding tools that deliver premium cultivars
→ Genomic selection technologies to support breeding of New Zealand plant-based food crops.
INCREASE VALUE
BETTER CULTIVARS
FASTER™
Our sites in key growing regions across New Zealand allow our researchers, such as Claire Scofield in Clyde, to ensure new cultivars from our breeding programmes meet industry requirements.
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OUR SCIENCE
IMPACT CASE STUDIES
NEW APRICOTS TO ESTABLISH ASIAN MARKETThe New Zealand summerfruit industry has the goal of being a $465 million industry by 2035. This target includes a six-fold increase in apricot production to a value of $69 million, primarily through the establishment of an export market in Asia.
Three new apricot cultivars have been released through a breeding programme jointly funded through MBIE, Summerfruit New Zealand and Plant & Food Research. The new cultivars — ‘Nzsummer2’, ‘Nzsummer3’ and ‘Nzsummer4’ — have characteristics that appeal to Asian consumers, including increased sweetness, low acidity and bright colour. ‘Nzsummer4’ can be harvested earlier than traditional apricot varieties, while ‘Nzsummer2’ and ‘Nzsummer3’ mature later in the season, extending the market window for New Zealand apricots. In addition, ‘Nzsummer2’ and ‘Nzsummer3’ produce extremely low concentrations of ethylene compared with current varieties. This not only allows fruit to be left longer on the tree — extending the picking window and allowing more time for
sugar accumulation — but also ensures firmness is maintained in storage, facilitating transport of high quality fruit to overseas markets.
The first 20,000 trees have been bud grafted for planting in Central Otago, with enthusiastic interest for additional trees for replacement of older varieties
and new plantings. Orchards using the Future Orchard Planting Systems, based on two-dimensional tree structures to improve light interception, are anticipated to produce yields of more than 20 tonnes per hectare from the third season, similar to fully mature yields from the best performing current cultivars.
‘Nzsummer3’ produces low concentrations of ethylene, ensuring firmness is maintained in storage.
PRESERVING GERMPLASM COLLECTIONS FOR THE FUTUREMaintaining diverse collections of plant species is critical for introducing new traits into breeding programmes for plant crops. As new environmental, pest or disease pressures arise in New Zealand or consumer trends in export markets change, plant breeders require access to wide genetic diversity to breed new varieties of crops with the right combinations of characteristics required by growers, marketers or consumers.
Crops propagated by seed — such as cereals — can be stored in seedbanks for very long periods, but crops propagated vegetatively — such as potato, fruit and berry crops — have traditionally been stored in field collections or as tissue culture. Both these methods are costly and carry the risk of losing valuable germplasm. In 2017, cryopreservation — a low-cost, high-quality method of storing plant material at ultra-low temperatures using liquid nitrogen — was adopted by Plant & Food Research as the most reliable and economical form of permanent storage for its plant germplasm collections.
Plant & Food Research has begun transferring its germplasm collections, with around a third of its 700 varieties of potato now in cryo-storage. Varieties of the endangered Māori potato tāewa were given priority to ensure long-term conservation. The cryopreservation process to preserve the full genetic diversity of our apple germplasm has also begun, and an effective protocol for kiwifruit germplasm conversation has been developed.
Varieties of the endangered Māori potato tāewa, are now in cryo-storage to ensure long-term conservation.
26 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
The global consumer demands a great deal from their food. The ideal food not only meets their need for taste, texture, novelty and safety, but also matches their lifestyle choices by providing natural, convenient nutrition that offers additional benefits in terms of health and wellness.
Our research helps the food and beverage industry to understand what consumers in different markets want from their food, then uses this knowledge to develop new whole foods and ingredients that meet the requirements of the most discerning consumer.
INCREASE VALUE
PREMIUM FOODS
AND BEVERAGES
PERFORMANCE TARGET
→ Growth in export value and volume of whole foods and ingredients based on fruits, vegetables and grains.
92% CRITICAL STEPS ACHIEVED
RESEARCH FOCUS
→ In-market consumer insights and in-depth knowledge of product attributes to guide development and placement of premium New Zealand foods for export markets
→ New tools and technologies to deliver premium food products effectively to export markets
→ New functional foods, ingredients and biomaterials, utilising knowledge of raw materials, nutrition, health and wellness.
Our science supports New Zealand food companies in developing new products with high consumer appeal for export markets.
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OUR SCIENCE
IMPACT CASE STUDIES
IDENTIFYING WHAT’S IN OUR FOODFood composition databases have been used worldwide for many years to provide nutritional information for the food manufacturing industry, public health programmes, nutrition policy and clinical practice. More recently, with increasing incidence of diet-related diseases such as obesity and diabetes, it has been recognised that understanding diet is an important factor of improving health. The World Health Organisation, for example, cites nutritional education at school as a key weapon to combat childhood obesity.
Plant & Food Research and the Ministry of Health have managed the New Zealand Food Composition Database (NZFCD) for nearly 40 years. The product analyses held in the database are specific to New Zealand and are constantly updated to include new whole and processed products or to reflect changes in growing or manufacturing processes. In 2011, a website was developed to allow users to download reports published from the data. In 2018, the website was revamped to make the
data easier to access by a wider range of users, including the public, and allow users to manipulate the data online and personalise reports.
In addition to nutritional data on more than 2,600 foods commonly eaten in New Zealand, the new web interface allows users to examine and compare the concentrations of nutrients across a range of food products, of particular use for manufacturers developing new products with a health focus. New data have been included on free and added sugars, to address increasing public interest in the added sugar content of foods. For the food industry, the database also includes information to support the development of Nutrition Information Panels (NIPs) and potential nutrient content claims on food packaging, for example “a good source of vitamin C”.
The NZFCD website has had a 38% increase in the number of visits in the year since its relaunch, with more than 42,000 searches from 18,500 unique users. Around 77% of these visits are made from desktop computers, suggesting most users are accessing the website purposefully rather than out of casual curiosity from mobile devices.
The New Zealand Food Composition Database contains nutritional data on more than 2,600 foods commonly eaten in New Zealand.
WWW.FOODCOMPOSITION.CO.NZ
KIWIFRUIT IS A SWEET OPTIONKiwifruit is New Zealand’s most valuable horticultural export, earning around $2 billion a year, primarily from Asian markets. However, it is estimated that 438 million people in Asia will have diabetes by 2030, and there is a common misconception that consumption of high sugar fresh fruit, such as kiwifruit, is associated with increased blood glucose levels.
Plant & Food Research, in collaboration with the University of Otago and with funding from the High-Value Nutrition National Science Challenge and Zespri, has conducted three clinical trials to provide evidence that kiwifruit does not negatively impact on blood glucose. These trials — two involving healthy New Zealand-resident Chinese participants and one on pre-diabetic participants of differing ethnic origins — demonstrated that eating kiwifruit does not adversely affect weight gain, blood lipids (cholesterol) or other diabetes and cardiovascular risk measures. In addition, the studies showed that eating kiwifruit with a meal significantly slows the uptake of sugar after the meal.
Zespri will share these results in key markets across Asia, Europe and the USA to support marketing of kiwifruit as a whole food product with health and nutritional benefits. Whilst the clinical trials are not sufficient for a product health claim — unlike other documented health benefits such as beneficial effects on digestive health and high concentrations of vitamin C — the results will be used in toolkits, summarising all scientific studies conducted so far on New Zealand kiwifruit, being developed by Zespri for marketing purposes.
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OUR SCIENCE
New Zealand has one of the largest exclusive economic zones in the world, providing vast opportunities for our seafood and aquaculture sector. Ensuring the economic and environmental sustainability of the sector relies on ensuring the catch is treated with care and applying novel processing technologies to maximise the value from every fish.
Working with the seafood industry, we develop new technologies that increase production of seafood resources while ensuring quality is retained from capture to consumer. We are also using our understanding of marine molecules to develop novel extraction and processing technologies to produce high-value marine products from marine raw materials and seafood by-products.
PERFORMANCE TARGET
→ Growth in export value and volume of premium seafood and marine products.
100% CRITICAL STEPS ACHIEVED
RESEARCH FOCUS
→ New harvest and postharvest technologies to support higher-value seafood products
→ New production systems, including open ocean aquaculture
→ New technologies to support extended shelf-life and food safety
→ New extraction technologies with maximum value capture and minimised wastage to produce novel high-value products.
INCREASE VALUE
SUSTAINABLE, PREMIUM
SEAFOOD AND MARINE PRODUCTS
Our scientists, such as Matt Wylie, are developing new techniques to support the production of high quality seafood products for export.
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OUR SCIENCE
IMPACT CASE STUDIES
CHANGING THE WAY NEW ZEALAND FISHESConsumers are increasingly demanding sustainability for their food. The New Zealand seafood industry has introduced the Modular Harvesting System (MHS) technology, which provides consumers with assurances about the sustainability of their seafood.
In 2019, Fisheries New Zealand approved the use of the MHS for commercial North Island inshore fisheries for snapper, tarakihi, trevally, red gurnard and John Dory, with specific conditions. Along with the approval for use in deep water fisheries gained in 2018 — for hoki, hake and ling — the MHS is now approved for species that account for 57% of New Zealand’s $650 million of finfish exports.
The MHS was invented by Plant & Food Research and commercialised through the Precision Seafood Harvesting Primary Growth Partnership programme — a $44 million, 7-year partnership between the Ministry for Primary Industries, Sanford Limited, Moana New Zealand and Sealord. Moana, Sealord and Sanford have begun converting their fleets to the technology, which was designed to
be a low-cost retro fit option for existing trawlers. New trawlers are being designed to enable effective use of the system.
The MHS is a replacement of the terminal sections of traditional mesh trawl nets. The new system uses membranes designed to create an environment of low water flow and low turbulence to
match the biological tolerances of the fish — reducing fatigue, mortality and damage — and allowing undersized fish to escape from the trawl. Fish harvested using the system are brought on board still alive, maintaining quality for export and providing an opportunity to return unintended catch to the sea.
Moana New Zealand’s newest vessel, the Santy Maria, was designed to meet the requirements of the MHS system.
Photo: Moana New Zealand
MAXIMISING VALUE FROM 100% OF THE CATCHThe seafood industry is moving to use 100% of their catch for high value export products, rather than sending by-products to low value streams such as fish meal. The quota system limits catch to protect sustainability of wild fish stocks. New product initiatives are supporting growth of the industry without increasing catch volumes.
The pet food nutraceutical market is growing at 4.8% per year. Increased life expectancy of pets, and associated age-related health issues, mirrors that of the aging human population. Pet owners are increasingly viewing pets as members of their extended families, and are willing to purchase high-end products to improve their quality of life.
Māori-owned seafood company Okains Bay Seafood has developed two natural health supplements for dogs, manufactured from by-products of their ling fishing and processing operations. These products — one for skin and coat health, the other for joint, skin and coat health — will be marketed initially to pet owners in the USA, who currently spend more than US$16 billion a year on pet supplements and supplies. The products are expected to launch in late 2019.
Plant & Food Research scientists, through the MBIE-funded Bioprocessing Alliance, worked with Okains Bay Seafood to investigate the nutritional properties of ling to determine the suitability of the available raw materials as pet food ingredients. Using this knowledge, the team developed a product formulation and commercial-scale process to manufacture the two powdered nutraceutical products.
The global pet food nutraceutical market is growing at 4.8% per year.
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OUR SCIENCE
Protecting our productive environments from biological threats is vital. This not only ensures the safety of our native flora and fauna but also maintains access for our products to our key export markets.
Our research supports the production of plant crops with minimal use of chemical pest controls that continue to meet the world’s strictest phytosanitary legislations. We also support work across country borders to minimise incursions of new pests and diseases, and to develop new control methods and protocols when such incursions occur. Our genomics research is identifying genes that confer resistance to pests and diseases in key crops, supporting the development of new cultivars with improved natural resistance.
Our scientists, like Kudos Award winner Dr Phil Elmer, are developing new ways to control pests and diseases that minimise use of pesticides.
PERFORMANCE TARGET
→ Enhanced international competitiveness and environmental quality through pest and disease management solutions.
95% CRITICAL STEPS ACHIEVED
RESEARCH FOCUS
→ New tools and systems for biologically based pest and disease control
→ New cultivars with targeted pest and disease resistance
→ New “safe” disinfestation technologies
→ Improved biosecurity risk assessments, detection technologies, optimised surveillance approaches and new tools for readiness, response and eradication.
PROTECT & ENHANCE
RESIDUE-FREE
PEST AND DISEASE CONTROL
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OUR SCIENCE
IMPACT CASE STUDIES
31
CONTROLLING PSA WITH AUREO® GOLDIn 2010, the vine-killing kiwifruit disease Pseudomonas syringae pv actinidiae (Psa) was discovered in New Zealand. New orchard management protocols and a new cultivar ‘Zesy002’, marketed as Zespri® SunGold Kiwifruit, ensured survival of the New Zealand kiwifruit industry, but few crop protection products were available to protect plants from the disease.
Growers were in urgent need of a new product that controlled the disease with minimal environmental impact and left no residue on fruit, to meet standards for market access and consumer acceptance worldwide.
Plant & Food Research scientists screened their library of New Zealand-sourced microbes and discovered a yeast-like fungus, Aureobasidium pullulans, that demonstrated good and consistent efficacy against Psa in glasshouse tests. The yeast, originally isolated from an apricot from Clyde Research Centre, was fast-tracked through advanced glasshouse and field testing through a
partnership with AgResearch, Zespri, Kiwifruit Vine Health (KVH) and Etec Crop Solutions (now UPL). A commercial product, Aureo® Gold, was launched by UPL in New Zealand for control of Psa in kiwifruit in November 2018.
Aureo Gold leaves no residue on fruit, is bee safe, and has no adverse effect on fruit quality or yield. Growers can apply the biocontrol agent up to ten times during the season, including during flowering and post fruit set, a time in the calendar when use of other controls for Psa is severely limited. As a natural occurring yeast, Aureo Gold meets consumer demands for environmental sustainability, and it has BioGro™ Organic Certification.
The development of Aureo Gold has established new protocols for selection, efficacy criteria and methods for upscaling yeast-based biocontrol products for commercialisation. These processes are now being used to develop a next generation Aureo Gold product for control of Psa, as well as for the identification and development of biocontrol agents for other plant diseases.
PROTECTING NEW ZEALAND AGAINST A STINKY PESTBrown Marmorated Stink Bug (BMSB) is one of New Zealand’s most unwanted biosecurity threats. An incursion of BMSB would threaten more than 18 crops, including major horticultural export crops worth more than $5 billion including winegrapes, kiwifruit, pipfruit and summerfruit. Not only does the pest affect crops, with reports of up to 30% fruit loss in kiwifruit orchards, populations also overwinter in large numbers in homes, making it a significant public nuisance.
Native to Asia, BMSB is now also present across North America and Europe and has been detected in Chile, but is not yet established in New Zealand. Between September 2018 and April 2019, 212 live BMSB were discovered at New Zealand’s
borders, primarily on ships from the USA and Italy, and one post-border interception was reported. Two recent evaluations by the New Zealand Institute of Economic Research (NZIER) estimated that introducing a biocontrol agent against BMSB would reduce the economic impact of the pest by $15.7 billion over 20 years compared
with doing nothing, and by $5.6 billion compared to a pesticide-only regime.
Plant & Food Research, as part of the Better Border Biosecurity (B3) collaboration, is working to ensure New Zealand has tools to detect BMSB at the border and is prepared for a future incursion of the pest. A potential biological control agent, the Samurai wasp, has been tested to evaluate its potential impact on New Zealand biodiversity, and in August 2018 was given pre-emptive approval with controls by the Environmental Protection Agency (EPA) as a biocontrol should a BMSB incursion occur. Plant & Food Research scientists are working with scientists in China, through a collaboration with the Chinese branch of the Centre for Agriculture and Biosciences International (CABI-China), funded by Zespri, to better understand BMSB and the Samurai wasp in their native habitat.
The Brown Marmorated Stink Bug, Halyomorpha halys, is one of the biggest biosecurity threats for New Zealand’s horticultural crops.
Aureo® Gold has BioGro™ Organic certification.
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OUR SCIENCE
PERFORMANCE TARGET
→ Enhanced international competitiveness and environmental quality through optimal use of inputs.
90% CRITICAL STEPS ACHIEVED
RESEARCH FOCUS
→ New practices, tools and technologies to optimise production and supply of arable, vegetable, forage and fruit crops
→ New tools to support product marketing using scientifically verified environmental footprints.
Economic and environmental sustainability now go hand in hand for the horticultural and cropping sectors, with consumers expecting products to have demonstrable sustainability credentials as well as offering value for money.
Our research develops sustainable production methods that minimise the impact of production systems on the natural environment while optimising yield, quality and economic performance. We use knowledge of plant biology and the productive ecosystem to optimise water, nitrogen and other inputs, reducing the financial cost to the grower and allowing marketers to provide scientifically validated eco-credentials to global markets.
Our research programmes bring together the best teams, including visiting scientists like Chen Xia from the Yunnan Academy of Natural Sciences, to work with growers, such as pear grower Bruce Fraser, to ensure our science is fit-for-purpose.
SUSTAIN GROWTH
SUSTAINABLE AND PROFITABLE
PRODUCTION SYSTEMS
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OUR SCIENCE
IMPACT CASE STUDIES
33PLANT & FOOD RESEARCH ANNUAL REPORT 2017
Our research is helping Māori organisations, such as the Koukourārata Development Company, develop new food-based enterprises.
To meet demand for Piqa®Boo® quickly, a new growing system has been implemented.
OPTIMISING THE PIQA®BOO® HARVESTThe new interspecific pear cultivar ‘PremP009’, marketed as Piqa®Boo®, is a combination of characteristics from European and Asian pears tailored to the tastes of Asian consumers.
The fruit has a striking red appearance with crisp, juicy white flesh and very good storage capability. Small quantities of the fruit have been shipped to key Asian markets of China, Taiwan, Singapore and Malaysia over the past two years, and the price of fruit has been almost three times those of other pear varieties and double those of new premium apple varieties.
Currently, 70,000 trees are planted in New Zealand, with 50,000 more trees on order for delivery by 2021. To increase production of PiqaBoo to meet demand quickly, a new growing system
has been implemented on orchards. Developed through the MBIE-funded Future Orchard Planting Systems (FOPS) programme, trees are trained to grow in a two-dimensional planar formation. This increases light interception to almost 90% at maturity, compared with about 60% in standard tree formations, maximising the sunlight energy available to the tree for fruit production.
With the addition of rootstock trials and enhanced management practices, some five-year-old trees grown in the FOPS configuration have yielded more than 50 tonnes per hectare. It is suggested that full production could deliver yields of 80 tonnes per hectare. European pear orchard productivity, in the conventional orchard formation, is typically around 40 tonnes per hectare at full production.
In addition, new harvest management practices have improved fruit quality and profitability by reducing losses due to poor fruit colour and size from 15% to 1%.
RECLAIMING KŪMARA PRODUCTION IN KOUKOURĀRATAThe mana, pride and identity of the people of Koukourārata on the Banks Peninsula of Canterbury was historically closely linked to the abundance of seafood and vegetables available to feed its people and guests.
Koukourārata has a unique microclimate, with little frost and a long growing season, making it ideal for vegetable production. In early colonial days, Koukourārata and Puāri pā were centres for thriving commercial vegetable businesses, supplying vegetables to markets in Christchurch, Sydney and San Francisco. Production ended as the Christchurch area became increasingly urbanised, offering more localised employment opportunities and loss of land through the Canterbury land purchases of the 1850s.
Since a community garden was established at Koukourārata pā in 2011, the Koukourārata Development Company has worked to rebuild the area into a local food-based commercial enterprise focused on heritage and taonga species such as kūmara, kamo-kamo and taewa. Once established, it is anticipated that
the māra kai (food garden project) will generate revenue and employment for the communities and families of Koukourārata.
Plant & Food Research scientists have been working with the project to combine traditional mātauranga Māori with Western science to develop and evaluate new organic production systems for kūmara. Kūmara beds have been established both outside and in tunnel houses, and kūmara produced have been
sufficient to feed people on the marae and to further research. It is anticipated that marketing of produce will commence in the 2020 season.
The project has also built a model for restoring traditional kūmara production in the Canterbury region, and is being replicated at four neighbouring Ngāi Tahu communities such as Ōnuku, Rāpaki, Taumutu and Wairewa.
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OUR SCIENCE
Our research supports New Zealand growers in making environmentally and economically sustainable decisions.
36 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
A HEALTHY BUSINESS
To achieve the desired impacts from our research, we need strong partnerships with our clients, allowing us to create long-term relationships that are mutually beneficial. A shared view of global market and consumer trends is central to how we can support the New Zealand agrifood sector in developing new export products or positioning existing products in new markets.
Alongside this, we build new relationships with organisations who can apply our research to build a sustainable agrifood industry, both in New Zealand and overseas. We use a range of business models — from traditional licensing of intellectual property and fee-for-service to co-investment in R&D — to support the sustainable growth of our partners, from SMEs and small, high potential sectors to multinational companies. We also work with international agencies in developing countries to reduce poverty and improve lives through enhanced sustainable horticulture systems.
Through the High-Value Nutrition National Science Challenge, Plant & Food Research has hosted workshops to share results from a series of consumer studies conducted in China, to support New Zealand companies looking to develop new products for export. More than 100 participants from 80 companies, including 17 Māori enterprises, have attended workshops focused on four key areas — infant nutrition, gut health, metabolic health and immune health.
In January 2019, Plant & Food Research Australia opened a new base — to include offices and laboratories — at the University of Adelaide’s Waite campus. Already working with the University on agricultural product development, as well
as almond orchard systems and harvest technologies, the co-location will drive further research collaborations aimed at enhancing production, sustainability and adding value to the local horticulture, food and agriculture industries.
A Memorandum of Understanding was signed in March 2019 between Plant & Food Research, the Department of Science & Technology of Yunnan Province and the Yunnan State Farms Group. This initiative will scope the potential for collaborative horticultural research programmes in the Yunnan region of south west China. These programmes will support the production of fruit varieties licensed by New Zealand
companies as marketers look to establish a production base in the province.
In May 2019, Plant & Food Research and Māori venture Miro Limited Partnership chose to evolve their relationship to focus on establishing a portfolio of high-value horticultural crops to be grown and marketed by Miro in New Zealand and globally. This diversification of Miro’s strategy resulted in the conclusion of a previous relationship established to breed new varieties of berryfruit exclusively for Miro. Plant & Food Research and Miro are investigating opportunities where science will add value to the advanced horticulture aspirations of Miro and its shareholders.
SECTORS AND CUSTOMERSGROWING THE VALUE AND VOLUME OF OUR CUSTOMER BASE
T&G Global have joined the Hot Climate Programme as the exclusive commercialisation partner. The Programme — a partnership between Plant & Food Research, Institute of Agriculture and Food Research Technology (IRTA) and Fruit Futur — is focused on breeding new varieties of apples and pears to tackle challenges associated with a warming climate.
PERFORMANCE TARGET
→ Growth in value and volume of customer base.
* Target has been restated to reflect NZ IFRS 15 changes
DELIVERY ON OUR TARGETS TARGET* ACTUAL
Contract revenue from new customers $3M $4.2M
Value of science involving Māori $10M $10.8M
Revenue per FTE (commercial sources) $61.9K $59.9K
Offshore revenue 15% 15%
Contract revenue from NZ $50.0M $49.3M
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PARTNERING TO IMPROVE LIVES GLOBALLY
HIGH QUALITY HORTICULTURE IN CAMBODIA
The New Zealand Aid Programme- funded Cambodia Quality Horticulture project is a private sector-led initiative, looking to grow income and opportunities throughout the Cambodian horticultural value chain. The programme has a strong focus on training farmers and postharvest operators on best practice aligned with GAP (Good Agriculture Practice) and/or preferred supplier programmes. Human centered design is also being used to develop new agronomic and postharvest solutions, including the development of a new washing table to deliver clean product to consumers. We are also working closely with the Cambodian Government on the implementation of GAP systems.
2017–2021
Our International Development Unit enables Plant & Food Research to provide a tailored approach to our work in developing countries — building our reputation in partnering to develop and implement projects across the value chain that deliver sustainable impact, reduce poverty and improve lives.
Our current portfolio of projects focuses on the horticultural sector, concentrated in South East Asia but our footprint extends to Africa and the Pacific. These projects contribute to and support the priorities of the New Zealand Government; expand the experience-base and worldliness of our scientific capability; create opportunities for New Zealand industry in rapidly developing economies; and expand our brand profile in new markets.
VANILLA SECTOR DEVELOPMENT IN TONGA
In June 2019, we commenced a new initiative funded by the New Zealand Aid Programme to develop the Tongan vanilla sector. The programme is designed to grow the Tongan vanilla sector through better agronomic practice and management to improve vanilla yield and quality.
2019–2024
AVOCADOS IN CENTRAL HIGHLANDS OF VIET NAM
We are partnering with New Zealand G2G Know How and Sam Agritech to deliver technical know-how on avocado production, handling and processing. Critical to the success of this public-private partnership will be the benefits accruing to smallholder producers in the Dak Nong region and the establishment of new research partnerships with Vietnamese collaborators.
2018–2021
New techniques, such as the development of new crop washing protocols, support the production of safe vegetables in Cambodia.
Plant pathologist Lucia Ramos Romero and economist Dale Yi are contributing to a project to develop the avocado industry in Viet Nam.
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MARKET ACCESS FOR SAMOAN TARO
In a project funded by the Australian Centre for International Agricultural Research (ACIAR) we are working with the Samoan taro industry to overcome current biosecurity constraints to gain access to the Australian market. This is research-for-development project specifically looking at whether or not taro leaf blight can survive on corms in transit. If the disease can survive, then further work will be required to develop appropriate postharvest treatments.
2017–2019
IMPROVED SUSTAINABILITY FOR VIETNAMESE VEGETABLE FARMING
A five-year development project in Binh Dinh Province funded through MFAT’s New Zealand Aid Programme is drawing on our expertise in sustainable horticulture to improve the environmental and economic sustainability of vegetable farms, and safety outcomes for both farmers and consumers. A key development in 2019 was the launch of the La Lanh Viet-GAP certified vegetable brand that facilitates access to supermarkets.
2016–2021
DEVELOPING HORTICULTURE IN NORTHERN INDIA
A new partnership between New Zealand and the State of Himachal Pradesh, northern India, is working to improve production of the region’s key fruit crops, including apples, summerfruit, and sub-tropical fruit. Funded by the World Bank, the Himachal Pradesh Horticultural Development project includes a range of scientists from New Zealand organisations, including Plant & Food Research, with support from the New Zealand Apple and Pear industry and government agencies.
2018–2020
AVOCADO FARMING IN KENYA
We’re working alongside New Zealand industry partner Olivado and the New Zealand Aid Programme to support sustainable economic development of small-holder avocado orchards in Kenya. We are currently finalising an extension to this programme that will facilitate wider adoption and extend the results beyond the Olivado supply chain.
2013–2018 (proposed extension 2019-2021)
EXPANDING THE VIET NAM DRAGON FRUIT SECTOR
Plant & Food Research, the Southern Horticultural Research Institute (SOFRI) and the Sub-Institute of Agricultural Engineering and Post-Harvest Technology (SIAEP) are collaborating on a New Zealand Aid Programme to enhance the Vietnamese dragon fruit industry. The project has developed a range of novel dragon fruit varieties with new flavour and colour combinations, a new production system to enhance productivity, a protocol for the control of canker (a significant disease threatening the industry), and improved postharvest high pressure washing and cool-chain management systems. The emphasis in the last year has been scaling up of the technologies and practices to farmers and packhouses; and sharing of knowledge on controlled production commercialisation models with government and industry to provide the groundwork for the future release of proprietary varieties.
2013–2020
Our research has contributed to the development of new varieties and production systems to enhance the lives of dragon fruit farmers in Viet Nam.
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Effective partnerships with our customers, partners and other stakeholders are key to identifying research opportunities based on industry and market trends, and support conversion of research into desired impacts. These relationships, both within New Zealand and overseas, ensure we understand our customers’ operating environments and support the transfer of relevant research to end-users to meet their current and future needs.
In February 2019, Plant & Food Research partnered with KPMG to lead a delegation of 24 senior leaders from New Zealand’s food industry — including CRIs, government representatives, industry bodies and food marketers — to The Netherlands to build understanding of and connections with the Dutch agrifood ecosystem. During the trip, the group met with entrepreneurs, university leadership, sector leaders, growers and social influencers, and conversations are ongoing around building better relationships within the New Zealand industry and with key Dutch leaders.
Plant & Food Research co-hosts key events, alongside industry and academic colleagues, to ensure visibility and understanding of research activities. In 2018, these included the Advanced Diagnostics for Food Safety workshop
with the New Zealand Food Safety Science & Research Centre; Kiwi2018 with Zespri; and the Australasian Plant Virology Workshop with Berry Co., the University of Auckland, New Zealand Winegrowers, the Ministry for Primary Industries, Zespri and Kiwifruit Vine Health (KVH). In addition, our scientists regularly share their findings at industry conferences across New Zealand, many of which are also sponsored or otherwise supported by Plant & Food Research.
ENSURING THE VISIBILITY OF SCIENCE
We are also committed to ensuring the value and importance of our science activities and impacts to a range of audiences, including the New Zealand public. This supports the Government’s strategies to encourage better engagement with science for all New Zealanders, but also ensures the science literacy of the future workforce for our Institute and our industries.
In May 2019, Plant & Food Research was showcased as part of a LEARNZ virtual field trip to Hawke’s Bay alongside T&G Global and Rockit Global Limited, sponsored by MPI. Approximately 2,000 students were virtually hosted at our Havelock North site to learn about research across the apple value chain, including breeding, growing systems, biosecurity and postharvest.
A second group of students graduated from the Kerikeri Horticultural Gateway Programme, aimed at providing Northland rangatahi with skills to support future employment in the horticulture industry. This partnership between Plant & Food Research, Orangewood Packhouse and the New Zealand Sports Turf Institute supports secondary school students in gaining NCEA credits through applied learning in the orchard and packhouse environment.
ENGAGEMENTPARTNERING FOR SUCCESS PERFORMANCE TARGET
→ Enhanced engagement with our stakeholders.
A new Biosecurity Trail at Auckland Botanic Gardens gives locals and overseas visitors a chance to learn about New Zealand flora and how it can be protected from biosecurity risks.
DELIVERY ON OUR TARGETS TARGET ACTUAL
Commercial reports per science FTE 0.71-0.75 0.85
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SCIENCE FOR IMPACT
OPTIMISING SCIENCE QUALITY AND BUILDING THE BEST TEAMS
PERFORMANCE TARGET
→ Enhanced performance through establishment of best teams from across the company and beyond.
Our scientists, such as Mike Manning, involved in research to battle the kiwifruit disease Psa were awarded the 2017 Prime Minister’s Science Prize.
SCIENCE QUALITY
9INTERNATIONAL AWARDS
TARGET 5–15
19INTERNATIONAL COMMITTEE
INVITATIONS TARGET 20–40
18EDITORIAL BOARD INVITATIONS
TARGET 5–15
SCIENCE PUBLICATIONS
384PEER REVIEWED PUBLICATIONS
76%PUBLICATIONS WITH
COLLABORATORS TARGET 70–80%
3.36SCIMAGO CITATION AVERAGE
TARGET 2.8–3.0 per published paper
INTELLECTUAL ASSETS
12PATENTS GRANTED
TARGET 10–12
7NZ 13 OVERSEAS
PLANT VARIETY RIGHTS TARGET 4–6
13NEW LICENCESTARGET 10–12
7TRADEMARKS REGISTERED
TARGET 2
Excellent science supports the pursuit of robust, innovative and creative research to sustain discoveries that deliver impact to our sectors. Through an annual programme of science reviews and under the guidance of our Science Advisory Panel, we are constantly working to ensure our teams have the best plans, resources, skills and collaborations to deliver high quality and relevant science.
Three science reviews were conducted over the 2018/19 year, on the topics of seafood production and aquaculture, management of plant insect pests, and sensing and imaging systems for production and supply chains. Each review includes a panel of subject-area experts from across the globe, who visit Plant & Food Research to hear about current activities before providing feedback to inform a future action plan. A review was also conducted of the Institute’s high performance computing capability and infrastructure, to ensure it is fit for purpose now and into the future.
A programme of internal workshops provide scientists from across the
Institute with the opportunity to gain better understanding of research activities and identify areas for potential collaboration. This year, workshops were held on data science and indoor growing systems. We also held our Senior Scientist Forum, in March 2019. Approximately 60 staff were in attendance at the Forum, which allowed senior staff to understand more about organisation strategy, science direction and to provide an opportunity to establish better networks across the science structure. The second annual Emerging Researcher Forum was held in October 2018, giving junior science staff a chance to network, present their research to their peers and interact with the Science Advisory Panel.
Plant & Food Research continued a series of workshops with researchers from Australian organisation CSIRO, discussing Adoption of Technologies. In addition, researchers from across New Zealand organisations, including NIWA, Cawthron Institute, AUT, and the Universities of Victoria and Waikato, as well as James Cook University Australia, came together to discuss future opportunities for collaborating in seaweed research.
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ORGANISATIONAL EXCELLENCE
ENHANCING OUR PERFORMANCE PERFORMANCE TARGET
→ Enhanced performance through best practice approaches to people and assets.
Our values capture what is important for us and provide a framework for our people-related initiatives and decision-making.
We are committed to the practice of equality of opportunity, which provides for equal access, consideration and encouragement in recruitment, selection, promotion, conditions of employment and career development for both current and prospective employees.
We view our diverse workforce, comprising people from many different cultures and nationalities, as a strength that aligns well with the increasingly international nature of our research and development programmes.
Our performance and reputation as a good employer is underpinned by our commitment to fostering a positive workplace culture that is characterised by three shared values:
→ The creative application of our knowledge
→ Achievement through leadership
→ Relationships based on mutual respect and trust.
BEST PRACTICE RECRUITMENT, SELECTION AND INDUCTION
We use best practice selection procedures for all appointments, with line managers being supported throughout the selection process by our HR Advisory team. All vacancies are advertised internally to provide opportunities for career development and advancement. When advertising externally we use web-based technologies to access a diverse range of communities and candidates. A comprehensive induction and orientation programme ensures all new recruits are supported to become effective contributors as early as possible.
Erin Stroud (right), working with postdoctoral scientist Jay Jayaraman, is one of 95 postgraduate students currently based at Plant & Food Research, providing young scientists with industry-focused experience.
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2013 2014 2015 2016 2017 2018 2019
Māori 4 1 2 4 2 6
NZ European/Pakeha/NZ 19 31 18 48 73 66 64
Pacific Island 1 1
Australia 3 3 2 1 3 2 3
China 2 4 5 4 4 3 3
India/Pakistan/Bangladesh/Sri Lanka 4 2 5 5 6 4 3
Other Asia 3 4 6 6 3 9 9
United Kingdom/Ireland 1 5 5 4 7 5 8
Other Western Europe 3 5 4 6 6 8
Eastern Europe 1 2 1
USA/Canada 4 2 2 1 2 6 3
Latin America/Caribbean 1 4 1 6 2
South Africa 2 2 1
Other Africa 1 1 2
Total 41 60 53 83 109 116 103
NATIONAL/ETHNIC ORIGIN OF NEW RECRUITS at 30 June 2019
In 2018/19 we appointed 103 people from 17 different nationalities (59 female, 44 male), including 48 from within the organisation.
PROMOTING EQUAL EMPLOYMENT OPPORTUNITIES
Our EEO initiatives are directed at increasing the percentage of women at senior levels, both in science and in other areas of the Institute and increasing the opportunities for groups who are historically under-represented in our workforce including Māori, Pacifica and people with disabilities. Progress is reviewed annually through a set of workplace demographic metrics and data covering gender, ethnicity, nationality and disability collected from new recruits.
The proportion of senior women scientists including those in group leadership roles continues to increase, largely through internal promotions, and we expect that further progress will continue to be made over the next decade as significant numbers of our senior scientists retire.
Our Māori business unit Te Raranga Ahumāra is focused on leading the implementation of Māori research and innovation objectives. This is
supported by performance indicators for developing capability and increasing understanding within Plant & Food Research and among Māori regarding the opportunities to work more closely.
Our annual Summer Studentship Programme provides promising science students from across New Zealand with their first experience of working in science. In 2018 eight of the 26 studentships were awarded to Māori and Pacifica people as part of a broader initiative for increasing participation from groups that are under-represented in the science workforce.
PROGRESSIVE CONDITIONS OF EMPLOYMENT
The Plant & Food Research General Terms & Conditions of Employment include provisions promoting equal employment opportunities, career development and employee participation in the development of the workplace. They provide a wide range of benefits including superannuation, medical insurance and generous leave provisions supporting work life balance.
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Our partnership agreement with the PSA serves as an effective mechanism for involving staff in the ongoing development of a high quality work environment in line with the principles of partnership and EEO.
Additional paid parental leave, on-site child care facilities at our larger sites and flexible and part-time hours of work enable people to balance their work and family responsibilities and minimise disruption to their careers. 18% of our salaried staff work part-time, including a significant number who have reduced their hours while they care for dependents.
Career and associated remuneration structures utilise standard job evaluation methodologies and peer review to ensure equity and transparency in both pay and progression opportunities. The historic pay gap between male and female science staff is reducing, with median female pay levels now at 98% of the median pay rates for males across our eight science salary ranges. This ratio is repeated across our six salary ranges for general staff.
Staff working towards retirement have the option of progressively reducing their hours and responsibilities. Retraining and outplacement support is available to staff affected by change in the workplace.
ENGAGING OUR PEOPLE
Our biennial workplace survey is our primary vehicle for assessing how people are viewing their jobs and the organisation. In 2018 a new research-based survey tool was adopted which draws on past and present experiences and future expectations as the basis for assessing employee engagement. Overall engagement levels for Plant & Food Research were 3% higher than the survey’s New Zealand and global R & D benchmarks, and were on a par with the global benchmark for all participants.
The 2018 survey, which was completed by 83% of staff, also included statements comprising the engagement index in the previous survey. Responses were in line with those achieved in 2016, with scoring indicating that on average, all respondents agree that they ‘would recommend Plant & Food Research as a great place to work’.
DEVELOPING POTENTIAL
Our Performance, Planning and Review process ensures that all staff have work and development plans that are reviewed annually with their manager. All staff have the opportunity to be supported in studying toward qualifications that align with the Institute’s requirements. Women across the organisation have the opportunity to apply for financial support through the Margaret Hogg-Stec scholarship, with up to three being awarded annually.
Our strengths-based Leadership Programme provides development opportunities for current and future leaders at all levels of the organisation.
Over the past year, 83 people participated in the programme. Thirty-six of these were in the Cornerstones of Leadership option, which is targeted at people who have yet to have line management responsibilities. Fourteen participated in a team leadership programme, which is designed to support leaders taking responsibility for leading a team or group of people for the first time. A further 33 people participated in follow-up
Fran Doerflinger, postharvest scientist working in our International Development Unit, is one of 103 new recruits during the 2018/19 year.
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NEW ZEALAND WORKFORCE PROFILE as at 30 June 2019
RESEARCH
41 (9)
GENERAL
18 (4)
VOLUNTARY STAFF TURNOVER Retired figure in bracketsRESEARCH
SUPPORT
97
GENERAL
169
SENIOR LEADERSHIP
13
RESEARCH
709
37
HEAD COUNT
59 (13)988
GENDER
RESEARCH TEAMS
RESEARCH SUPPORT
GENERAL
SENIOR LEADERSHIP
50%50%
0 20 40 60 80 100% <30 30-39 40-49 50-59 60-69 70+
%50
40
30
20
10
0
RESEARCH TEAMS
OTHER
AGE
development sessions, which use 360 degree surveys to measure programme impact, with resurveys showing continued positive results.
This year we have begun implementation of a successfully piloted internal mentoring programme. Thirty-one mentoring relationships have now been established.
A SAFE AND HEALTHY CULTURE
The National Health & Safety Committee, comprising staff and management representatives, is responsible for setting and reviewing the Institute’s health and safety programme, in line with continuous improvement
principles. The programme includes objectives developed by local health and safety committees drawn from staff at each of the Institute’s sites.
The Institute’s ongoing efforts in this regard are reflected in continuing low levels of injury rates including those requiring medical treatment or time off, and a continuing improvement in the Institute’s position relative to industry benchmarks.
Recommendations from an external audit of the organisation’s safety culture form the basis of a three-year safety culture initiative that places a strong emphasis on employee involvement in critical risk management. To this end,
six critical risk groups drawn from staff under the sponsorship of a senior leader are involved in developing and monitoring controls in areas that pose the greatest health and safety risk for our people.
Our Code of Conduct & Ethics and Policy on Unacceptable Behaviour define those actions including harassment, bullying and unlawful discrimination that will not be tolerated and provide processes for responding to situations where unacceptable behaviour may have occurred. A network of trained contact people provides confidential support and advice on the Policy.
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The redevelopment and modernisation of our work environments is being guided by a set of principles and objectives that capture the way we aspire to work, collectively known as Ways of Working. This initiative will ensure our spaces and our technology will support science and business innovations throughout the Institute.
Over the past year, Plant & Food Research has developed a Long Term Capital Plan to clarify intentions for major investment in land, buildings, specialised infrastructure and equipment over the next 10 years. This plan provides for significant development at a number of our sites across New Zealand to ensure they remain fit-for-purpose and support our research for the long term.
In November, a major redevelopment of the Mt Albert Research Centre, our largest site, was completed, with more than 90% of staff now housed in new purpose-built facilities. Planning for development and extension at our Motueka and Te Puke research centres is in progress, with work beginning at Motueka in the 2019/20 financial year.
A review of our land resources has seen investment in new land at Lincoln and Kerikeri, as well as a new partnership with Wakatū in Motueka, that will allow for extension of breeding activities and other research programmes to support growth in these regions.
Significant investments have been made in upgrading our core IT infrastructure to improve the resilience and security of our systems to enable scientific activities. A multi-year programme across all our sites and data centres to upgrade key services and digital storage will ensure a robust digital technology platform for current and future activities. In addition, the roll-out of 35 new technology-enabled collaboration spaces, the installation of new telephony and video conferencing systems, and widely available Wi-Fi across our sites supports flexible working styles.
Dr Andrew Kralicek (right) gives Prime Minister Jacinda Ardern (centre) and Minister for Research, Science & Innovation Dr Megan Woods a tour of new labs in the Hamilton Building, the largest building of the Mt Albert Research Centre, during the official ceremony to reopen the Building after the completion of the four-year Mt Albert Redevelopment project.
WAYS OF WORKINGCREATING INSPIRING WORKPLACES AND WORKSTYLES
PERFORMANCE TARGET
→ Enhanced performance through best practice use of technology, workplace and workstyles.
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OUR SCIENCE
We work with a range of plant-based industries, including the arable sector, to develop the most sustainable crop production systems.
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CORPORATE GOVERNANCE
STATEMENT OF CORE PURPOSE
The Statement of Core Purpose (SCP) outlines the clear, explicit and enduring strategic role for Plant & Food Research as determined by the New Zealand Government. The SCP outlines the Institute’s roles and responsibilities and how these will benefit New Zealand, and is used by the Crown to evaluate performance on a four-year rolling basis.
Plant & Food Research’s SCP can be found online at plantandfood.co.nz/file/pfr-scp.
STATEMENT OF CORPORATE INTENT
The Statement of Corporate Intent (SCI) outlines the Institute’s five-year strategy, including the nature and scope of activities and performance targets. The SCI includes plans to contribute to the outcomes described in the SCP and outlines key performance indicators to support their delivery.
Plant & Food Research’s SCI 2019/20 to 2023/24 can be found online at plantandfood.co.nz/file/sci-2019-20.pdf.
LEGAL OBLIGATIONS
Plant & Food Research is subject to (amongst others):
→ Crown Research Institutes Act 1992
→ Commerce Act 1986
→ Crown Entities Act 2003
→ Crown Entities Amendment Act 2013
→ Health & Safety in Employment Act 1992
→ Official Information Act 1982
→ Public Audit Act 2001
→ State Sector and Public Finance Reform Act 2012.
BOARD OF DIRECTORS
The Board of Directors, appointed by the Minister of Science & Innovation according to the Crown Research Institutes Act, sets the Institute’s strategic direction and delegates responsibility for the management of the Institute to the Chief Executive.
The Board acts under a Charter which formalises and sets out the manner in which the Board’s powers and responsibilities will be exercised and discharged, adopting principles of good corporate governance and practices that accord with best practice and the application of laws in the jurisdictions in which the company operates. In line with best practice, the Board completes an annual Board performance evaluation.
The Board regularly reviews key policies across the Institute. “Deep-dive” reviews are also periodically undertaken, including most recently a review of the organisational risk framework and supporting risk registers.
For the 2018/19 year
Number of meetings held: 11 Meetings held at: Mt Albert, Lincoln, Blenheim and Te Puke.
Michael Ahie, Chairman (11) Appointed: 1 July 2010 Resigned: 30 June 2019
Greg Gent, Deputy Chair (11) Appointed: 1 July 2013
Parmjot Bains (10) Appointed: 1 July 2018
Andrew von Dadelszen (9) Appointed: 1 July 2014
Colin Dawson (10) Appointed: 1 July 2015
Wendy Venter (11) Appointed: 1 July 2018
(number in brackets indicates number of meetings attended during the 2018/19 year)
Profiles of the current Board of Directors can be found on page 50 or on the plantandfood.co.nz website. Remuneration details for the Directors can be found on page 57.
Schedule of major annual activities
→ August — Annual Report
→ October — Annual Risk Review
→ October — Insurance Renewal
→ October — Science Advisory Panel
→ November — Annual General Meeting
→ March —Investment Portfolio Review
→ March/October — Strategy Review
→ April — SCI and Business Plan.
Committees
There are currently two standing Committees operating under the direction of the Board Chair:
Audit & Risk Management CommitteeGreg Gent (Chair), Andrew von Dadelszen, Wendy Venter
The Plant & Food Research Board, appointed by the Minister of Science & Innovation, sets the Institute’s strategic direction and delegates responsibility for the management of the Institute to the Chief Executive.
OUR GOVERNANCE
49PLANT & FOOD RESEARCH ANNUAL REPORT 2019
Number of meetings/ teleconferences in 2018/19: 4
The primary objective of the Audit & Risk Management Committee is to act as the main conduit with the company’s auditors, to serve as an independent and objective party in reviewing financial information, auditing, accounting, compliance and financial reporting strategies and processes.
In the 2018/19 year, the Committee reviewed and approved the Institute’s:
→ Internal Audit Programme
→ External Audit Programme
→ Insurance Policy.
Appointments & Remuneration CommitteeColin Dawson (Chair), Michael Ahie, Parmjot Bains Number of meetings in 2018/19: 2
The purpose of the Appointments & Remuneration Committee is to oversee the appointment, performance review and remuneration of the Chief Executive Officer and senior executives who report directly to the CEO.
SCIENCE ADVISORY PANEL
The Board also receives advice from the Institute’s external Science Advisory Panel.
The purpose of the Panel is to provide objective strategic advice to the Board to promote its decisions on research strategies, future science activities and development associated with achieving Plant & Food Research’s Core Purpose.
Members of the Science Advisory Panel are:
→ Professor Marston Conder (Chair, University of Auckland) Resigned: October 2018
→ Professor Gillian Dobbie (University of Auckland) Appointed: August 2019
→ Dr Ernst van den Ende (Wageningen University & Research Centre, The Netherlands).
→ Professor Cathie Martin (John Innes Centre, UK)
→ Professor Alastair Robertson (Australia).
Profiles of the Science Advisory Panel members can be found on page 51 or on the plantandfood.co.nz website.
MANAGING RISK EFFECTIVELY
Plant & Food Research has an established framework for managing risk in an effective, efficient and consistent manner, to inform strategic and business planning processes, optimise allocation of resources and allow Plant & Food Research to effectively recognise, prioritise and respond to risks. The Risk Management Framework adopts processes consistent with those established in the ISO 31000:2009 Standard: Risk Management — Principles & Guidelines.
Plant & Food Research has a Business Continuity Plan (BCP) which acts as a framework for organisational preparedness, emergency response and recovery after disruption by a significant natural or man-made incident.
The BCP focuses on the response and recovery of critical assets and operations to mitigate the potential impact of an incident to the Institute’s ability to deliver on its business and strategic plan and to protect Institute staff and the wider community. The BCP also includes a framework for site-specific Emergency Response Plans (ERPs).
CODE OF CONDUCT & ETHICS
Plant & Food Research’s reputation is determined to a large degree by perceptions of the conduct and performance of its staff. The Code of Conduct & Ethics is intended to inform and guide the Institute’s staff on the standards of conduct, decision-making and ethical behaviour that are important at Plant & Food Research.
The Code of Conduct & Ethics includes guidelines on:
→ Acting with honesty and integrity
→ Consistently demonstrating professionalism
→ Respecting and acting within the law
→ Maintaining confidentiality
→ Avoiding conflicts of interest
→ Being socially responsible.
Plant & Food Research operates its scientific research activities in accordance with national legislation, including ethics approvals for all human and animal studies (coordinated by the Institute’s Biosafety Advisory Committee).
OUR GOVERNANCE
50 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
Wendy Venter
Wendy operates her own consultancy in Wellington. She is a former partner at EY, Deputy Chief Executive of the Ministry of Social Development and Assistant Auditor-General at the Office of the Auditor General. Wendy was an independent member of the State Services Commission’s Risk and Assurance Committee. Wendy is a chartered accountant with expertise in governance, risk management, integrity and assurance. She was born and educated in India, and came to New Zealand as a young graduate.
BOARD OF DIRECTORS
FOR THE 2018/19 YEAR
Number of meetings: 11
Meetings held at: Mt Albert, Lincoln, Blenheim and Te Puke
Michael Ahie (Chairman)
Resigned: 30 June 2019 Taranaki Nga Ruahine Ngati Ruanui
Michael Ahie is a business owner and company director based in Wellington. He is Chancellor of Massey University, a director of FMG and Chair of the board of ComplyWith, Spring Sheep Milk Co., the New Zealand Food Safety and Assurance Advisory Council and the New Zealand Plant Market Access Council. He is a member of Inland Revenue's Risk & Assurance Committee.
Andrew von Dadelszen
Andrew von Dadelszen has held diverse governance and leadership roles, including central and local government and corporate governance, finance and investment advice, large-scale farming, service industries and the not-for-profit sector. Andrew is qualified with an MBA from Henley Management College and Brunel University, London. Andrew is a Justice of the Peace and a Bay of Plenty Regional Councillor. He is also an Independent Hearings Commissioner with a Chairs Endorsement. He has previously been a member of the Board of the Environmental Protection Authority — a Crown Agency.
Colin Dawson
Colin Dawson has held a number of senior executive positions in the primary, secondary and tertiary health care sectors. Formerly CEO of Otago Innovation, Colin continues to be involved in the commercialisation of research. He has held directorships with a number of biotechnology and medical companies including NZX-listed companies BLIS Technologies and Pacific Edge. He currently chairs the Boards of Tiro Lifesciences, Upstream Medical Technologies and Certus Bio and sits on the MARS Bioimaging Board. Colin is a Chartered Fellow of the Institute of Directors and is involved in horticulture via a Central Otago export cherry orchard and small vineyard.
Greg Gent (Deputy Chair)
Acting Chair from 1 July 2019
Greg Gent, of Ruawai, is a senior commercial director with dairy farming interests in Northland. He has strong governance expertise having spent a decade on the Fonterra Board, and holding other directorships in the dairy, insurance and financial services.
Parmjot Bains
Parmjot Bains has strategy and science commercialisation experience in New Zealand and globally. She has held roles in strategy with McKinsey and Company, biotechnology as the former CEO of Neuren Pharmaceuticals, in agribusiness with Fonterra and more recently in the pharmaceutical industry. She trained as a medical doctor in New Zealand and has a Masters degree from the University of Cambridge, UK.
OUR GOVERNANCE
51PLANT & FOOD RESEARCH ANNUAL REPORT 2019
Professor Gillian Dobbie
PhD Department of Computer Science University of Auckland, New Zealand
Gillian Dobbie is a Professor of Computer Science at the University of Auckland, and the Director of the Auckland ICT Graduate School. She is science lead on the Precision Driven Health joint research partnership and chairs the Science Advisory Group for the PlantTech Research Institute. Her main research interests are big data, stream data mining, machine learning, data management, and software engineering, and she has published more than 130 international peer reviewed papers. She convenes the Mathematical and Information Sciences panel for the Marsden Fund of the New Zealand Royal Society.
SCIENCE ADVISORY PANEL
Our Science Advisory Panel is an important part of ensuring our science continues to have a focus on high quality, and is open to new international developments and ideas. The panel provides our Board with their insights on Plant & Food Research’s science quality, strategy, and involvement in and uptake of new international developments.
Dr Ernst van den Ende
PhD Managing Director, Plant Sciences Group (PSG), Wageningen University, The Netherlands
Dr Ernst van den Ende has an extensive international background in agricultural science, particularly in management of urban green areas, plant diseases, plant pathogenic fungi and plant and crop protection. He has responsibility for the Plant Sciences Group at Wageningen, which conducts plant-related research and teaching programmes from the molecular through to the population level. Professor van den Ende has particular experience in the Wageningen University/PRI structure, which provides a relevant model for University/Research Institute collaboration and interaction. This is seen in the cluster of the Plant Sciences Group (PSG) which embodies applied research (Wageningen Plant Research) and fundamental research and education (Wageningen University).Dr van den Ende brings to the panel particular understanding of research collaboration and development of interacting research structures. He also provides an important link with European organisations of interest to Plant & Food Research and an international perspective on sustainable plant production.
Professor Cathie Martin
PhD FRS Group Leader, Department of Cell and Developmental Biology, John Innes Centre, UK
Professor Cathie Martin is an international leader in plant science, focusing on cellular specialisation and differentiation, particularly in relation to gene function. She has an extensive background in University and Research Institute research processes and programmes. Professor Martin, in addition to her position at the John Innes Centre, has a background in University visiting professorships and University relations. As former Editor-in-Chief of the world’s leading plant science journal, Plant Cell, she has particular experience in identifying current and future international trends in plant science, and in evaluating science quality. Currently she is an Associate Editor for Plant Physiology. Her own research interests in cellular and metabolic regulation and functionality, particularly in the areas of nutritional properties of plants, are of particular importance to Plant & Food Research's research interests.Professor Martin brings to the panel particular experience in leading international plant science, science evaluation, and an in-depth understanding of current and future trends and developments in both research technologies and science disciplines. She also strengthens Plant & Food Research's links with UK and European research organisations of interest.
Professor Alastair Robertson
PhD FFSC CChem FIFST Group Executive Food, Health & Life Science Industries, CSIRO, Australia
Professor Alastair Robertson is a leading international expert in food science. His career has involved research positions in both industry (in the UK) and in research institutes. These positions have included Director of the UK’s Institute of Food Research (IFR), CEO of Food Science Australia, a joint venture between CSIRO and the Victorian Government, and CSIRO Executive Director (and subsequently Deputy Chief Executive), Science Strategy and Investment. He led the consolidation of the Australian National Research Flagships and oversaw the integration of the CSIRO Science Investment Process and Performance Management Framework as strong governance mechanisms to underpin CSIRO’s delivery of impact from mission directed research. Professor Robertson currently holds an Honorary Professorship at the University of East Anglia (UK) and is a Research Professor at the University of Tasmania.Professor Robertson brings to the panel wide international expertise in food science, and in developing and managing research structures based on science excellence and delivery. He also helps to consolidate Plant & Food Research's developing interaction with key Australian research centres and science initiatives.
OUR GOVERNANCE
52 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
ORGANISATIONAL CHART
GROUP GENERAL MANAGER FINANCE, INFRASTRUCTURE
& INFORMATION
GROUP GENERAL MANAGER SCIENCE SERVICES
GROUP GENERAL MANAGER TECHNOLOGY DEVELOPMENT
GROUP GENERAL MANAGER MĀORI
Finance
Business Performance
Information & Knowledge Services
Legal
Assets & Services
Biosafety & Environmental Compliance
Bioprotection
Sustainable Production New Cultivar Innovation
Food Innovation
Seafood Technologies
BOARD OF DIRECTORS
OUR GOVERNANCE
Māori Relationships
Quentin Smith Philippa Stevens Dr Kieran Elborough
David Hughes
CHIEF EXECUTIVE OFFICER
Stacey Whitiora
53PLANT & FOOD RESEARCH ANNUAL REPORT 2019
GENERAL MANAGER PEOPLE & CULTURE
GROUP GENERAL MANAGER MARKETING & INNOVATION CHIEF SCIENTIST
Payroll
Organisational Development
Human Resources
Health & Safety
OUR GOVERNANCE
Our Senior Management Team oversees all aspects of Plant & Food Research and is accountable to the Board of Directors via the CEO. Collectively the team ensure the delivery of all research activities, finance and legal requirements, assets and services, human resources, commercial functions and science quality.
Impact Evaluation
International Development
Business Development
Plant Varieties
Intellectual Property
Customer & Brand
Craig Jensen Dr Gavin Ross Professor Richard Newcomb
54 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
We work with the food and beverage industry to ensure optimised production systems across the value chain.
55PLANT & FOOD RESEARCH ANNUAL REPORT 2019
OUR SCIENCE
IMPACT CASE STUDIES
PLANT & FOOD RESEARCH ANNUAL REPORT 2019 55
FINANCIAL STATEMENTS
56 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
In 2018/19, we completed a four-year redevelopment of the Mt Albert Research Centre which now sees more than 90% of staff housed in new, purpose-built offices and laboratories
FINANCIAL PERFORMANCEGROWING REVENUE AND SUSTAINING PROFITABILITY
PERFORMANCE TARGET
→ Enhanced profitability and financial performance.
Plant & Food Research has delivered another year of strong financial performance. Total revenue was up on the prior year, underpinned by solid growth in commercial research revenues and royalties. Profit before tax at $8.3 million was on budget and $1 million higher than in the prior year. Net Profit after Tax (NPAT) at $5.9 million was down on budget (primarily because of the delay in the sale of a surplus property) however was still up $0.5 million on the prior year.
Plant & Food Research continues to benefit from a strong Balance Sheet, with year-end net assets of $114.8 million. We expect our overall borrowings to increase modestly in the next financial year as we advance some strategic capital projects. However, even at forecast levels our borrowings will remain conservative and commensurate with the underlying financial risk settings of the organisation.
Over the last 12 months we have continued to make good progress with our investment programme to replace end-of-life buildings and equipment.
A significant milestone was the official opening of the refurbished Hamilton Building at the Mt Albert Research Centre on 22 November 2018 – the culmination of a significant and complex multi-year project. The development of a new long-term capital plan will continue to support an acceleration of our investment programme as we push forward with further projects over coming years.
57PLANT & FOOD RESEARCH ANNUAL REPORT 2019
DIRECTORS’ REMUNERATIONDuring the year the following remuneration was paid or payable to Directors in accordance with the schedule approved by the Shareholding Ministers:
Group $M Ahie 70,404 (ceased 30 June 2019)G Gent 45,750P Bains 36,564A von Dadelszen 36,560C Dawson 36,564W Venter 36,564
REMUNERATION OF EMPLOYEESThe number of employees and ex-employees whose total remuneration, including benefits and severance payments, on an annualised basis, was in excess of $100,000 in $10,000 bands, is:
Remuneration Number of Remuneration Number ofbands in $000 employees bands in $000 employees100 - 109 65 210 - 219 3110 - 119 43 220 - 229 3120 - 129 33 230 - 239 1130 - 139 35 240 - 249 1140 - 149 21 260 - 269 1150 - 159 18 270 - 279 1160 - 169 9 280 - 289 1170 - 179 7 290 - 299 1180 - 189 5 310 - 319 1190 - 199 3 410 - 419 1200 - 209 1 540 - 549* 1
* Includes the Chief Executive’s remuneration
For and on behalf of the Board of Directors:
Greg Gent, Acting Chair29 August 2019
2019 2019 2018Actual Budget Actual$000 $000 $000
Revenue 168,879 163,753 156,401
Profit before taxation 8,309 8,296 7,347
Less taxation expense 2,443 1,304 1,985
Profit attributable to Owners 5,866 6,992 5,362
PRINCIPAL ACTIVITY OF THE GROUPThe Group’s principal activity is to provide scientific research that benefits New Zealand, within the horticulture, arable, seafood and processed food industries; in accordance with the purpose and principles for the operation of Crown Research Institutes as set out in sections 4 and 5 of the Crown Research Institutes Act 1992.The Company is a company limited by shares and incorporated in accordance with the Companies Act 1993.
REVIEW OF OPERATIONSA review of the operations accompany this report on page 13.
SHARE DEALINGSThe Directors have not, and are unable to, trade in shares of the Company as all shares of the Company are held by the Shareholding Ministers on behalf of the Crown. Accordingly the Board has received no notices of dealings in relevant interests in shares of the Company.
DIRECTORS’ INSURANCEDirectors’ and Officers’ liability insurance was effected for the Directors and certain employees of the Company. The insurance is in respect of certain specified liabilities, not including criminal liability, incurred by a Director or employee in respect of any act or omission in his or her capacity as a Director or employee of the Company.The Company has indemnified Directors and certain employees of the Company for costs and proceedings and for liabilities incurred by the Director or employee in respect of any act or omission in his or her capacity as a Director or employee of the Company. The indemnity for liabilities incurred does not extend to criminal liability or liability for breach of a fiduciary duty owed to the Company.
AUDITORSKaren Shires, with the assistance of PricewaterhouseCoopers, is the appointed auditor on behalf of the Auditor-General. The Auditor-General is the statutory auditor pursuant to section 14 of the Public Audit Act 2001 and section 21 of the Crown Research Institutes Act 1992.
SIGNIFICANT CHANGESThere were no significant changes to the business of the Company during the year.
RESULTS OF GROUP OPERATIONS
DIRECTORS’ REPORT
THE DIRECTORS ARE PLEASED TO PRESENT THE FINANCIAL STATEMENTS OF THE NEW ZEALAND INSTITUTE FOR PLANT & FOOD RESEARCH LIMITED FOR THE YEAR ENDED 30 JUNE 2019.
58 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
The Auditor-General is the auditor of The New Zealand Institute for Plant & Food Research Limited. The Auditor-General has appointed me, Karen Shires, using the staff and resources of PricewaterhouseCoopers, to carry out the audit of the financial statements of the Group, consisting of The New Zealand Institute for Plant & Food Research Limited and its subsidiaries, on his behalf.
OPINIONWe have audited the financial statements of the Group on pages 60 to 83 that comprise the balance sheet as at 30 June 2019, the statement of comprehensive income, statement of changes in equity and cash flow statement for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information.
In our opinion, the financial statements of the Group: • present fairly, in all material respects:
- its financial position as at 30 June 2019; and - its financial performance and cash flows for the year then
ended; and• comply with generally accepted accounting practice in New
Zealand in accordance with New Zealand Equivalents to International Financial Reporting Standards and International Financial Reporting Standards.
Our audit was completed on 29 August 2019. This is the date at which our opinion is expressed.
The basis for our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and our responsibilities relating to the financial statements, we comment on other information, and we explain our independence.
BASIS FOR OUR OPINIONWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand). Our responsibilities under those standards are further described in the Responsibilities of the auditor section of our report.
We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing Standards.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR THE FINANCIAL STATEMENTSThe Board of Directors is responsible on behalf of the Group for preparing financial statements that are fairly presented and that comply with generally accepted accounting practice in New Zealand.
The Board of Directors is responsible for such internal control as it determines is necessary to enable it to prepare financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible on behalf of the Group for assessing the Group’s ability to continue as a going concern. The Board of Directors is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the Board of Directors has to cease operations, or has no realistic alternative but to do so.
The Board of Directors’ responsibilities arise from the Crown Research Institutes Act 1992.
RESPONSIBILITIES OF THE AUDITOR FOR THE AUDIT OF THE FINANCIAL STATEMENTSOur objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit carried out in accordance with the Auditor-General’s Auditing Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures and can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of readers taken on the basis of these financial statements.
For the budget information reported in the financial statements, our procedures were limited to checking that the information agreed to the Group’s Statement of Corporate Intent.
We did not evaluate the security and controls over the electronic publication of the financial statements.
INDEPENDENT AUDITORS’ REPORT
TO THE READERS OF THE NEW ZEALAND INSTITUTE FOR PLANT & FOOD RESEARCH LIMITED’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
59PLANT & FOOD RESEARCH ANNUAL REPORT 2019
As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also:• We identify and assess the risks of material misstatement
of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.
• We conclude on the appropriateness of the use of the going concern basis of accounting by the Board of Directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• We evaluate the overall presentation, structure and content of the financial statements, including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Our responsibilities arise from the Public Audit Act 2001.
OTHER INFORMATIONThe Board of Directors is responsible for the other information. The other information comprises the information included on pages 1 to 57 and pages 84 to 85, but does not include the financial statements, and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information. In doing so, we consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
INDEPENDENCEWe are independent of the Group in accordance with the independence requirements of the Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board.
In addition to the audit, we have carried out a research assignment in relation to the High Value Nutrition National Science Challenge and a training workshop for business development which are compatible with those independence requirements. Other than the audit and these assignments, we have no relationship with or interests in the Group.
Karen Shires PricewaterhouseCoopers On behalf of the Auditor-General Auckland, New Zealand
60 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 June 2019
GROUP2019 2019 2018
Actual Budget ActualUnaudited
Note $000 $000 $000PROFIT AND LOSSRevenueStrategic funding 43,103 43,103 43,103Crown-funded research contracts 15,888 15,740 15,333Commercial science research contracts (4) 107,589 103,505 96,024Other income 2,299 1,405 1,941
168,879 163,753 156,401
Less operating costs (4a)Personnel costs 93,761 93,523 89,994Depreciation expense (5) 11,890 11,631 11,054Amortisation expense (5) 1,078 1,628 860(Gain) on sale of assets (487) (3,500) (32)Other operating expenses (6) 53,549 50,977 47,146
159,791 154,259 149,022
Profit before interest & taxation 9,088 9,494 7,379Finance income 146 52 106Finance costs (497) (1,152) (269)Share of (loss)/profit of associates and joint ventures (15) (428) (98) 131
Profit before taxation 8,309 8,296 7,347Taxation expense (7) 2,443 1,304 1,985Profit after taxation attributable to owners 5,866 6,992 5,362
OTHER COMPREHENSIVE INCOMEItems that may be reclassified subsequently to profit or loss:Currency translation differences (18) - 56Cash flow hedges (18) 83 - (116)Other comprehensive income 65 - (60)Total comprehensive income attributable to owners 5,931 6,992 5,302
The accompanying notes form part of these financial statements.
61PLANT & FOOD RESEARCH ANNUAL REPORT 2019
STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2019
ATTRIBUTABLE TO OWNERS OF THE GROUP
Note Share capitalRetained earnings
Foreign currency translation
Cash flow hedge Total Equity
$000 $000 $000 $000 $000
Balance as at 01 July 2017 17,436 86,157 (76) 25 103,542
Changes in equity forProfit for the year 5,362 5,362
Other comprehensive income, net of taxes Currency translation 56 56Revaluation of cash flow hedges (18) (116) (116)
Balance as at 30 June 2018 17,436 91,519 (20) (91) 108,844
Changes in equity forProfit for the year 5,866 5,866
Other comprehensive income, net of taxesCurrency translation (18) (18)Revaluation of cash flow hedges (18) 83 83
Balance as at 30 June 2019 17,436 97,385 (38) (8) 114,775
The accompanying notes form part of these financial statements.
62 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
BALANCE SHEETas at 30 June 2019
GROUP2019 2019 2018
Actual Budget ActualUnaudited Restated
Note $000 $000 $000
Current assetsCash and short-term deposits (8) 2,456 2,443 2,143Receivables and prepayments (9) 42,619 28,898 39,505Assets held-for-sale 969 406 406Inventories 243 198 331Total current assets 46,287 31,945 42,385
Current liabilitiesAccounts payable and accruals (10) 21,497 20,095 20,770Employee entitlements (11) 10,635 10,648 10,196Borrowings (8) 14,400 15,300 13,350Current portion mortgage - 20 21Taxation payable 661 332 990Total current liabilities 47,193 46,395 45,327
Working capital (906) (14,450) (2,942)
Non-current assetsProperty, plant and equipment (12) 113,950 120,586 111,508Intangible assets (13) 1,550 3,945 1,910Investments - associates (15) 1,748 2,562 671Investments - other 49 100 55Deferred tax asset (16) 59 - -Total non-current assets 117,356 127,193 114,144
Non-current liabilitiesEmployee entitlements (11) 1,675 1,562 1,531Mortgage - 133 147Deferred tax liability (16) - 331 680Total non-current liabilities 1,675 2,026 2,358
NET ASSETS 114,775 110,717 108,844
Represented by:EquityShare capital (17) 17,436 17,436 17,436
Retained earnings 97,385 93,314 91,519Foreign currency translation reserve (38) (33) (20)Cash flow hedge reserve (18) (8) - (91)
TOTAL SHAREHOLDERS EQUITY 114,775 110,717 108,844
For and on behalf of the Board of Directors:
Greg Gent, Acting Chair Wendy Venter, Director29 August 2019 29 August 2019
The accompanying notes form part of these financial statements.
63PLANT & FOOD RESEARCH ANNUAL REPORT 2019
CASH FLOW STATEMENTfor the year ended 30 June 2019
GROUP2019 2019 2018
Actual Budget ActualUnaudited
Note $000 $000 $000
Cash flows from/(applied to) operating activitiesReceipts from customers 165,606 168,655 152,625Interest and dividends received 227 52 175
Payments to employees and suppliers (146,624) (148,687) (141,226)Interest paid (426) (845) (194)Tax paid (2,888) (1,250) (1,547)
Net cash flows from operating activities (20) 15,895 17,925 9,833
Cash flows from/(applied to) investing activitiesSale of property, plant and equipment 675 4,075 129
Purchase of property, plant and equipment (15,267) (20,620) (19,775)Purchase of intangible assets (13) (539) (1,765) (1,136)Purchase of investments (1,325) (1,303) -
Net cash flows (applied to) investing activities (16,456) (19,643) (20,782)
Cash flows from/(applied to) financing activitiesProceeds from borrowings 1,050 2,000 11,450Repayment of mortgage (168) (16) (20)
Net cash flows from financing activities 882 1,984 11,430
Net cash flow 321 266 481
Effect of foreign currency translation adjustment (8) 6 25Opening cash and cash equivalents 2,143 2,171 1,637
Closing cash and cash equivalents (8) 2,456 2,443 2,143
The accompanying notes form part of these financial statements.
64 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2019
1. REPORTING ENTITIESThe New Zealand Institute for Plant & Food Research Limited (the “Company” or “Plant & Food Research”) and its subsidiaries (the “Group”) is a Crown Research Institute governed by the Crown Research Institute Act 1992 and is a limited liability company incorporated and domiciled in New Zealand. The whole of the share capital is held by Ministers of the Crown on behalf of the New Zealand Government. The Company’s registered office is 120 Mt Albert Road, Sandringham, Auckland 1025.
The Group is primarily involved in research services.
The Group is designated as a profit-oriented entity for financial reporting purposes.
These financial statements have been approved for issue by the Board of Directors on 29 August 2019.
2. BASIS OF PREPARATIONThe financial statements are presented in New Zealand dollars (NZD), which is the Company’s functional and presentation currency. All financial information presented in New Zealand dollars has been rounded to the nearest thousand dollars ($000).
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(A) Statement of ComplianceThese financial statements have been prepared in accordance with the requirements of the Crown Research Institutes Act 1992, the Public Finance Act 1989, the Companies Act 1993 and the Financial Reporting Act 2013.
The financial statements have also 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 Financial Reporting Standards, as appropriate for profit-oriented entities. They comply with International Financial Reporting Standards (IFRS).
The Group is a Tier 1 entity.
(B) Use of EstimatesThe preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Although these estimates are based on management’s knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ from estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected. Use of estimates and assumptions is disclosed further in note 3(V).
(C) New and Amended Standards and Interpretations Adopted by the GroupThe following new standards and amendments to standards became effective in the current period financial statements:
NZ IFRS 9 Financial InstrumentsEffective from 1 January 2018 NZ IFRS 9 replaced the classification and measurement models in NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contactual cash flow characteristics of the financial asset.
The Group adopted NZ IFRS 9 from 1 July 2018, with the practical expedients permitted under the standard. Comparatives for 2018 were not restated.
The Group has a small number of foreign exchange contracts held in cash flow hedges, borrowings at amortised cost and loans and receivables. Given the nature of the financial instruments held the impact on the Group of NZ IFRS 9 was minimal.
The new hedge accounting rules aligned the accounting for hedging instruments more closely with the Group’s risk management practices. The Group confirms that its current hedge relationships qualify as continuing hedges under NZ IFRS 9.
The new impairment model requires the recognition of impairment provisions based on expected credit losses rather than only incurred losses as is the case under NZ IAS 39. Based on the assessments undertaken, and future economic and customer changes, the Group had no change in the loss allowance for trade debtors.
NZ IFRS 9 introduced expanded disclosure requirements and changes in presentation. These had a minimal impact on the Group’s accounts.
65PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
NZ IFRS 15 Revenue from Contracts with CustomersEffective from 1 January 2018 NZ IFRS 15 replaced the current guidance in IAS 18 Revenue and IAS 11 Construction Contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer and the performance obligation is completed.
The Group adopted the new standard from 1 July 2018 using the modified retrospective approach which means that the cumulative impact of the adoption would have been recognised in retained earnings as of 1 July 2018 and comparatives were not restated. However, no adjustments were required.
The Group assessed the impact of applying the new standard on the Group’s financial statements and identified the following areas that were affected:
- Under NZ IFRS 15 an entity is the principal in a transaction if it obtains control of the specified goods or services before they are transferred to the customer. This resulted in subcontractor expenses being recognised as expenses rather than offset against revenue. The impact on 2019 revenue and expenses was an increase of $4.2M. The 2018 impact would be an increase to revenue and expenses of $5.5M.
(D) Standards and Interpretations Issued and not yet AdoptedThe following new standards and amendments to standards that have been issued but are not yet effective and have not been early adopted by the Group are:
NZ IFRS 16 LeasesEffective from 1 January 2019 NZ IFRS 16 replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchance for consideraton. Under NZ IAS 17, a lessee was required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16 requires a lessee to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Included is an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees.
The Group intends to adopt NZ IFRS 16 from 1 July 2019.
The impact on the balance sheet at 1 July 2019 has been assessed as approximately $14M with a right-of-use asset and a corresponding lease liability being recognised. The impact on the Profit & Loss for 2020 has been assessed as approximately $280,000 as a result of rental expenses being reclassified to lease interest expense and lease depreciation expense.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accounting policies set out below have been applied consistently to all periods presented in these financial statements.
(A) Basis of Consolidation(i) SubsidiariesThe consolidated financial statements of the Group include the parent entity, Plant & Food Research, and its controlled entities. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. This power exists where the Group controls the majority voting power on the governing body or where such policies have been irreversibly predetermined by the Group or where the determination of such policies is unable to materially impact upon the level of potential ownership benefits that arise from the activities of the subsidiary. The financial statements of subsidiaries are included in the consolidated financial statements from the date which the Group obtains control and until such time as the Group ceases to control the entity.
The Group measures the cost of a business combination as the aggregate of fair values, at the date of exchange, of assets given, liabilities incurred or assumed, in exchange for control of the subsidiary plus any costs directly attributable to the business combination.
Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. If the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business combination, the difference will be recognised immediately in the Statement of Comprehensive Income.
The purchase method of accounting is used to prepare the consolidated financial statements of the Group. In preparing the consolidated financial statements, the effects of all transactions, balances and unrealised gains and losses on transactions between entities in the Group have been eliminated. The Group’s investment in its subsidiaries are initially carried at cost in the Parent’s financial statements subject to any write down arising from an annual impairment review.
(ii) AssociatesAssociates are those entities over which the Group has significant influence, but not control, of the financial and operating policies.Investments in associate companies have been accounted for using the equity method of accounting and are initially recognised at cost and the carrying amount is increased or decreased to recognise the Group’s share of the surplus or deficit of the associate after the date of acquisition. The Group’s share of the surplus or deficit of the associate is recognised in the Group’s Statement of Comprehensive Income. Distributions received from an associate reduce the carrying amount of the investment.
If the Group’s share of deficits of an associate equals or exceeds its interest in the associate, the Group discontinues recognising it’s share of further deficits. After the Group’s interest is reduced to zero, additional deficits are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports surpluses, the Group will resume recognising its share of those surpluses only after its share of the surpluses equals the share of the deficits not recognised.
The Group’s share in the associate’s surplus or deficits resulting from unrealised gains on transactions between the Group and its associates is eliminated.
66 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
(B) RevenueRevenue is recognised at the fair value of consideration received or receivable to the extent that it is probable, that economic benefits will flow to the Group. Revenue is shown net of GST, returns and discounts and after eliminating sales within the Group. The following specific recognition criteria must be met before revenue is recognised:
(i) Strategic fundingStrategic funding from the Crown, was established 1 July 2011 and is recognised as a Government grant in accordance with NZ IAS 20. Government grants are assistance provided by the Government in the form of transfers of resources to the Group in return for past or future compliance with certain conditions relating to the operating activities of the Group.
The primary condition is that the Group will deliver science research as specified in the strategic funding contract.
Strategic funding is recognised in the Statement of Comprehensive Income on a systematic basis in the year it is received.
(ii) Crown-funded research contractsCrown-funded research contracts have one performance obligation and therefore the full transaction price is allocated to that one performance obligation. Crown-funded revenue is recognised over time using the input method. The input method is based on the Company’s efforts to satisfy the performance obligation with revenue recognised by reference to the stage of completion of the performance obligation, assessed on the basis of the actual service provided as a proportion of the total services to be provided.
(iii) Commercial science research contractsSale of goodsRevenue from the sale of goods is recognised at the point in time when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be reliably measured. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.
Sale of research servicesResearch services are provided on a fixed-price contract, with contract terms generally ranging from less than a year to five years.
Commercial research contracts have one performance obligation and therefore the full transaction price is allocated to that one performance obligation. Commercial science revenue is recognised over time using the input method. The input method is based on the Company’s efforts to satisfy the performance obligation with revenue recognised by reference to the stage of completion of the performance obligation, assessed on the basis of the actual service provided as a proportion of the total services to be provided.
If circumstances arise that may change the extent of the progress toward completion, the estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected in income in the period in which the circumstances that give rise to the revision become known by management.
RoyaltiesRoyalty revenue is recognised when the performance obligation to which the sales-based royalty has been allocated has been satisfied.
(iv) Other incomeRental incomeLease receipts under an operating lease are recognised as revenue on a straight-line basis over the lease term.
(v) Interest revenueInterest revenue is recognised on a time-proportion basis using the effective interest method.
(C) Foreign Currency TranslationForeign currency transactions are translated into New Zealand dollars using the exchange rates prevailing at the dates of the transactions, except when forward currency contracts have been taken out to cover short-term forward currency commitments. Where short-term forward currency contracts have been taken out, the transaction is translated at the rate contained in the contract. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing at the period end. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at balance date of foreign denominated monetary assets and liabilities are recognised in the Statement of Comprehensive Income, except when deferred in equity as qualifying cash flow hedges.
The results and balance sheets of all foreign operations that have a functional currency different from New Zealand dollars are translatedinto the presentation currency as follows:
The assets and liabilities of foreign controlled entities are translated by applying the rate ruling at balance date and revenue and expense items are translated at the average rate calculated for the period. The exchange differences arising on the re translation are taken directly to equity in the foreign currency translation reserve.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowing and other currency instruments designated as hedges of such investments, are taken to shareholder’s equity.
67PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
(D) Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred.
(E) Cash Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with maturities of three months or less from date of acquisition, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
(F) Trade and Other ReceivablesTrade receivables are recognised initially at fair value, plus any transaction costs, and subsequently measured at amortised cost using the effective interest method, less any provision for loss allowance.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off when identified. A provision for loss allowance has been calculated using the simplified approach allowed under NZ IFRS 9 (see Note 9).
When a trade receivable is uncollectible, it is written off against the provision if it has been provided for or immediately recognised in the Statement of Comprehensive Income, within other operating expenses, if not. Any recoveries of trade receivables written off are credited against bad debts in the Statement of Comprehensive Income.
(i) Accrued income (contract asset)Accrued income is the right to consideration in exchange for services transferred to the customer, conditioned on something other than the passage of time. Accrued income is recognised for the earned consideration that is conditional. The right to consideration is dependent on acceptance by the customer.
(G) Property, Plant and EquipmentThe Group has four classes of property, plant and equipment: - Land - Buildings - Plant and equipment - Motor vehicles
Land is recorded at cost. All other property, plant and equipment is shown at cost less accumulated depreciation and any accumulated impairment losses, except for assets transferred from the Crown. Property, plant and equipment transferred from the Crown has been included in the accounts at values established by independent valuers which is the deemed cost. All subsequent expenditure has been initially recorded at cost.
Cost includes expenditures that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount only when it is probable that future economic benefits or service potential associated with the asset will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Statement of Comprehensive Income when the expense is incurred. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition. The Group constructs some items of plant for use in research. These have been brought into the accounts at the cost of direct labour and materials plus an appropriate proportion of direct overheads.
Land transferred to the Group cannot be freely traded. Section 30 of the Crown Research Institutes Act 1992 requires that prior to sale sections 40-42 of the Public Works Act 1981 be complied with. These sections require that land offered for sale must be offered to the original owner of that land or their successors. An arbitration clause is included to establish fair values for such offers.
Gains and losses on disposals 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.
(i) Non-current Assets Held for SaleNon-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.
(H) DepreciationDepreciation on assets, except land, is calculated using the straight-line method, at rates calculated to allocate the asset’s cost, less estimated residual value, over its estimated useful life. Leasehold improvements are depreciated over the shorter of the unexpired period of the lease and the estimated useful life of improvements.
The useful lives of major asset classes of property, plant and equipment have been estimated as follows: Buildings 10 - 100 years Plant and equipment 3 - 10 years Motor vehicles 3 - 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year-end.
The assets’ carrying value is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
68 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
(I) Intangible Assets(i) SoftwareThe cost of software, databases and related items, either acquired or internally generated, is recognised as an expense when incurred, except for:
The cost of software, databases and related items, either acquired or internally generated, which are unique and controlled by the Group, and that will probably generate measurable economic benefits exceeding costs beyond one year is capitalised as intangible assets.
Costs associated with maintaining computer software are recognised as an expense when incurred.
The carrying value of software is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the Statement of Comprehensive Income.
The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows: Software 3 - 5 years
(ii) Trademarks and licensesThe cost of acquired trademarks and licenses are capitalised as intangible assets where they will probably generate measurable economic benefits exceeding costs beyond one year. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives, which is between 10 and 15 years.
(iii) Research and developmentResearch and development is the business of the Company. Most work is performed under contract for others, and in most cases intellectual property rights are retained. All research and development costs are expensed in the period they are incurred.
When a project reaches the stage where it will probably generate future measurable economic benefits exceeding development cost, development cost is recognised as an intangible asset. The asset is amortised from the commencement of commercial production of the product to which it relates, on a straight-line basis, over the period of expected benefit.
(J) Financial Assets(i) ClassificationThe Group classifies its financial assets in the following measurement categories: those to be measured at amortised cost and those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss). The classification depends on the group’s business model for managing the financial assets and the contractual terms of the cash flow.
For assets measured at fair value, gains and losses will be either recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) MeasurementAt initial recognition, the Group measures financial assets at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
iii) Financial assets at fair value through profit or lossThis category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. After initial recognition they are measured at their fair values. Gains or losses on remeasurement are recognised in the Statement of Comprehensive Income.
Financial assets in this category include derivatives, see note 3 (R).
(iv) Financial assets at amortised costThe Group classifies its financial assets at amortised cost only if both of the following criteria are met: - the asset is held to collect the contractual cash flows, and - the contractual terms give rise to cash flows that are soley payments of principal and interest.
(K) Impairment of Financial AssetsThe Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note W details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by NZ IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
69PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
(L) Trade PayablesTrade payables are initially measured at fair value and subsequently measured at amortized cost using the effective interest method.
(i) Revenue in advance (contract liability)Revenue in advance is the obligation to transfer services to a customer for which the Group has received consideration from the customer. Revenue in advance is recognised as revenue when the Goup performs under the contract.
(M) ProvisionsProvisions are recognised when the Company has a present obligation (either legal or constructive), as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date, the discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as an interest expense.
(N) Employee Benefits(i) Wages and salaries, annual leave, sick leave and other benefitsProvision is made for employee benefits accumulated as a result of employees rendering services up to balance date including related oncosts.
The benefits include wages and salaries, annual leave, sick leave, incentives and other benefits. The provision for employee benefits is measured at the remuneration rates expected to be paid when the liability is settled.
The Group recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Group anticipates it will be used by staff to cover those future absences.
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.
(ii) Long service leave and retirement leaveService leave and retirement leave entitlements are calculated based on the employee’s entitlement and their current pay rate. The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Long term benefits expected to be settled within 12 months are classified as employee entitlements under current liabilities.
(iii) Pension and post retirement benefitsThe Group operates a defined contribution superannuation plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions to a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The Group’s contributions made to defined contribution superannuation plans are recognised as an expense in the Statement of Comprehensive Income when they are due.
(O) LeasesThe Company leases certain plant and equipment, land and buildings.
Operating lease payments, where the lessors effectively retains substantially all the risks and benefits incidental to ownership of the leased item, are recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the lease term.
(P) Income Tax(i) Current taxIncome tax expense comprises both current tax and deferred tax, and is calculated using tax rates that have been enacted or substantially enacted by balance date. Current tax and deferred tax are charged or credited to the Statement of Comprehensive Income, except when they relate to items charged or credited directly to equity, in which case the tax is dealt with in equity. Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years.
(ii) Deferred taxDeferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences calculated using the liability method and unused tax losses. Deferred tax is not accounted for if it arises from initial recognition of goodwill or from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax is recognised if it arises from investments in subsidiaries and associates, and interests in joint ventures, except where the company can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is measured using the tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
70 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
(Q) Goods & Services Tax (GST)The Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the Balance Sheet are stated net of GST, with the exception of receivables and payables which include GST invoiced. 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 recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the Balance Sheet.
The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the Cash Flow Statement.
Commitments and contingencies are disclosed exclusive of GST.
(R) Derivative Financial InstrumentsDerivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.
The Group designates their derivatives as hedges of foreign exchange risk associated with the cash flows of highly probably forecast transactions (cash flow hedges).
The Group documents at the inception of the hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset changes in cash flows of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.
(S) BorrowingsBorrowings are initially recognised at their fair value net of transaction costs. After initial recognition all borrowings are measured at amortised cost using the effective interest method.
(T) Budget FiguresThe budget figures are derived from the Statement of Corporate Intent as approved by the Board, and the Shareholder, at the beginning of the financial year. The budget figures have been prepared in accordance with NZ IFRS, using accounting policies that are consistent with those adopted by the Group for the preparation of these financial statements. The budget figures are unaudited.
(U) Critical Accounting Estimates and AssumptionsIn preparing these financial statements the Group has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
(i) Retirement and long service leaveThe present value of the retirement and long service leave obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will impact on the carrying amount of the liability.
In determining the appropriate discount rate the Company considered the interest rates on NZ government bonds which have terms to maturity that match, as closely as possible, the estimated future cash outflows. The salary inflation factor has been determined after considering historical salary inflation patterns. A weighted average discount rate of 1.7% and a salary inflation factor of 3.7% were used.
If the discount rate were to differ by 1% from the Company’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $58,000 higher / lower.
If the salary inflation factor were to differ by 1% from the Company’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $18,000 higher / lower.
The carrying amount of employee entitlements are disclosed in the Balance Sheet.
(V) Critical Judgements in Applying the Company’s Accounting PoliciesManagement has exercised the following critical judgement in applying the Company’s accounting policies for the period ended 30 June 2019:
(i) Revenue recognitionIn determining the revenue to be recognised from a contract to provide services judgement is required in respect of assessing the percentage of completion of the project. In making this judgement the actual service provided as a proportion of the total services to be provided is reviewed. If circumstances arise that may change the extent of the progress the estimates are revised.
(ii) Impairment provisionsThe impairment provisions for financial assets disclosed in Note 9 are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
71PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
GROUP2019 2018
Note $000 $000
4. COMMERCIAL SCIENCE RESEARCH CONTRACTSRoyalties 44,559 37,687Other commercial science research contracts 63,030 58,337Total commercial science research contracts 107,589 96,024
The table below details how much of the revenue recognised in the current report period relates to carried-forward revenue-in-advance.
Revenue recognised that was included in revenue-in-advance at the beginning of the periodCommercial science research contracts 5,981
4A. OPERATING COSTSIncludes:Auditors’ remuneration
Audit fees for financial statement audit 131 127Other services - research 30 51
Directors fees 262 257Employer contributions to defined contribution plans 1,615 1,565Unrealised foreign exchange losses/(gains) (65) (137)
5. DEPRECIATION AND AMORTISATIONDepreciation
Buildings 3,856 3,764Plant and equipment 7,566 6,846Motor vehicles 468 444
Total depreciation on property, plant and equipment (12) 11,890 11,054
Amortisation Software and databases 1,078 860Patents, trademarks and licences - -
Total amortisation of intangible assets (13) 1,078 860
6. OTHER OPERATING EXPENSESOther operating expenses
Materials 5,898 5,625Research & services contracts 15,803 10,845Rental and operating lease costs 8,993 8,231Travel 6,534 6,668Other general operating costs 16,321 15,777
Total other operating expenses 53,549 47,146
72 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
GROUP2019 2018
Note $000 $0007. TAXATIONProfit before taxation 8,309 7,347Prima facie taxation @ 28% 2,327 2,057
Plus/(less) taxation effect:Non-assessable income (138) -Non-deductible expenditure 204 39Prior period adjustment 135 (16)Imputation credits on dividends received (37) (19)
Utilisation of tax losses (48) (76)
2,443 1,985
The taxation charge is represented by:Current taxation 3,182 2,636Deferred tax benefit (16) (739) (651)
2,443 1,985
The Company is not required to maintain an Imputation Credit Account pursuant to section OB1(2)(d) of the Income Tax Act 2007.
8. CASH AND BORROWINGSCash on hand and at bank 2,456 2,143Short-term deposits - -
Cash and short-term deposits 2,456 2,143
The carrying value of short-term deposits with maturity dates of three months or less approximates their fair value.
Current portion of borrowings 14,400 13,350
Borrowings 14,400 13,350
The Group has the following borrowing facilities at 30 June 2019:
The borrowings are secured by a first ranking general security agreement over the Group’s assets and subject to two financial covenants. The general security agreement means that the Group may not grant a security interest greater than 5% of total tangible assets to another party or dispose of assets greater than $1,000,000 without the consent of the bank.
The Group is required to ensure that the following financial ratios are met:(i) Shareholder funds of not less than 50% of adjusted tangible assets; and(ii) Earnings for the year not less than 3.00 times its consolidated funding costs.
The Group complied with these ratios during the year ended 30 June 2019 (2018: complied).
As at 30 June 2019, the total facilities drawn of $14.4M are classified as current as they are payable on demand or on call. The interest rate for borrowings was 3.01% for 2019 (2018: 2.72%).
Expiry Facility Drawdown
Multi option credit facility No. 1 17 September 2020 6,000 6,000Multi option credit facility No. 2 17 March 2023 19,000 8,400
73PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
GROUP2019 2018$000 $000
9. RECEIVABLES AND PREPAYMENTSTrade receivables 29,007 25,287Loss allowance (286) (286)
28,721 25,001
Accrued income 10,842 11,721Prepayments and other receivables 3,056 2,783
42,619 39,505
The carrying value of receivables approximates their fair value. The carrying amount of receivables that would otherwise be past due, butnot impaired, whose terms have been renegotiated is $1,732,000 (2018: $962,000).
The Group applies the NZ IFRS 9 simplified approach to providing for expected credit losses, which uses the lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses trade receivables have been grouped based on days past due. The expected loss rates are based on our historicalcredit losses since 2010, adjusted for any significant known amounts that are not receivable. Forward looking information has also been incorporated as appropriate.
On this basis, the loss allowance at 30 June 2019 is as follows:
Movements in the loss allowance provision for receivables are as follows: GROUP2019 2018$000 $000
Balance at 01 July (286) (286)Additional provisions made during the year - -Receivables written-off during the year - -
Balance at end of year (286) (286)
Expected Gross Lossloss rate carrying amount allowance provision
Not past due 0.09% 27,013 (24)Past due 1 - 30 days 0.27% 842 (2)Past due 31 - 60 days 0.45% 398 (2)Past due 61 - 90 days 0.90% 26 -Past due > 91 days 35.40% 728 (258)Total 29,007 (286)
74 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
GROUP2019 2018$000 $000
10. ACCOUNTS PAYABLE AND ACCRUALSTrade payables 10,737 10,283Other payables and accruals 4,015 3,990Revenue in advance 6,745 6,497
21,497 20,770
Accounts payable and accruals are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value ofaccounts payable and accruals approximates their fair value.
11. EMPLOYEE ENTITLEMENTSAnnual leave 5,916 5,582Service leave 1,076 1,014Retirement leave 3,279 3,170Other leave and accruals 2,039 1,961
Total employee entitlements 12,310 11,727
Comprising: Current 10,635 10,196Non-current 1,675 1,531
12,310 11,727
75PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
12. PROPERTY, PLANT AND EQUIPMENTGROUP
Land BuildingsPlant
and Equipment Motor Vehicles Total $000 $000 $000 $000 $000
CostOpening balance 01 July 17 8,564 96,684 113,665 5,916 224,829Additions - 8,122 10,330 727 19,179Disposals - (110) (1,173) (503) (1,786)Transfers - (1,120) (308) - (1,428)Foreign exchange movement - - - - -
Closing balance 30 June 18 8,564 103,576 122,514 6,140 240,794
Accumulated depreciationOpening balance 01 July 17 - 30,001 86,261 4,369 120,631Additions - 3,764 6,846 444 11,054Disposals - (79) (1,152) (454) (1,685)Transfers - (714) - - (714)
Closing balance 30 June 18 - 32,972 91,955 4,359 129,286
Net book value 8,564 70,604 30,559 1,781 111,508
GROUP
Land BuildingsPlant
and Equipment Motor Vehicles Total $000 $000 $000 $000 $000
Cost Opening balance 01 July 18 8,564 103,576 122,514 6,140 240,794Additions - 3,782 10,857 625 15,264Disposals (66) (148) (212) (421) (847)Transfers (236) (964) 215 - (985)Foreign exchange movement - - (3) - (3)
Closing balance 30 June 19 8,262 106,246 133,371 6,344 254,223
Accumulated depreciationOpening balance 01 July 18 - 32,972 91,955 4,359 129,286Additions - 3,856 7,566 468 11,890Disposals - (89) (200) (371) (660)Transfers - (243) - - (243)
Closing balance 30 June 19 - 36,496 99,321 4,456 140,273
Net book value 8,262 69,750 34,050 1,888 113,950
Some land holdings are restricted assets to the extent that they are potentially subject to Maori land claims. The book value of land potentially subject to Maori claims is $7,069,000.
The Company holds numerous germplasm collections of horticultural material for research purposes. Due to the nature of the collections their value can not be measured reliably for financial purposes, however they have a fundamental importance to the Company’s research.
Included within total additions last year is $2.7M (2018: $8.4M) associated with the redevelopment of our Mt Albert site.
76 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
13. INTANGIBLE ASSETSGROUP
Software, Databases
Patents, Trademarks Goodwill Total
$000 $000 $000 $000CostOpening balance 01 July 17 9,667 467 19 10,153Additions 1,136 - - 1,136Disposals - - - -Transfers 308 - - 308
Closing balance 30 June 18 11,111 467 19 11,597
Accumulated amortisationOpening balance 01 July 17 8,341 467 19 8,827Additions 860 - - 860Disposals - - - -Transfers - - - -
Closing balance 30 June 18 9,201 467 19 9,687
Net book value 1,910 - - 1,910
GROUPSoftware, Databases
Patents, Trademarks Goodwill Total
$000 $000 $000 $000CostOpening balance 01 July 18 11,111 467 19 11,597Additions 539 - - 539Disposals - - - -Transfers 179 - - 179
Closing balance 30 June 19 11,829 467 19 12,315
Accumulated amortisationOpening balance 01 July 18 9,201 467 19 9,687Additions 1,078 - - 1,078Disposals - - - -Transfers - - - -
Closing balance 30 June 19 10,279 467 19 10,765
Net book value 1,550 - - 1,550
77PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
14. INVESTMENTS - SUBSIDIARIES Principal Activity Balance Interest
Date Held %
CropSeed Limited Seed growing services 30 June 100Plant & Food Research (USA) Corporation Marketing and consultancy services in the USA 30 June 100Plant & Food Research Australia Pty Limited Science, marketing and consultancy services in Australia 30 June 100Truffle Investment New Zealand Limited Non trading 30 June 100
Plant & Food Research Australia Pty Limited is incorporated in Australia. Plant & Food Research (USA) Corporation is incorporated in the USA.All other subsidiaries are incorporated in New Zealand.
15. INVESTMENTS - ASSOCIATESThe Group’s share of profit/(loss) in its associated companies and joint ventures for the year was ($428,000) (2018: $131,000).
Principal Activity Interest Total Total Revenue Profit/(Loss)30 June 2019 Held Assets Liabilities
Pacific Berries LLC Developing & commercialising IP 50.0% 832 - 435 400Senztec Limited Developing & commercialising IP 50.0% 68 518 - (450)PFR-Miro Plant Breeding Limited Developing & commercialising IP 50.0% - - - (549)Forage Innovations Limited Developing & commercialising IP 49.0% 1,419 755 1,840 262Biopolymer Network Limited Developing & commercialising IP 33.3% 766 226 1,961 (94)Prevar Limited Developing & commercialising IP 29.0% 6,564 525 279 (780)Rhindo International Limited Developing & commercialising IP 25.0% 11 - 2 1Blinc Innovation Limited Developing Lincoln hub complex 20.0% 466 386 1,881 15
30 June 2018
Pacific Berries LLC Developing & commercialising IP 50.0% 686 - 279 227Forage Innovations Limited Developing & commercialising IP 49.0% 1,225 822 1,704 75Biopolymer Network Limited Developing & commercialising IP 33.3% 854 221 2,308 (90)Rhindo International Limited Developing & commercialising IP 25.0% 10 - - -Blinc Innovation Limited Developing Lincoln hub complex 20.0% 947 882 2,165 -
GROUP2019 2018$000 $000
Pacific Berries LLC 416 295Prevar Limited 834 -Forage Innovations Limited 308 183Biopolymer Network Limited 151 182Other associates & joint ventures 39 11
Total associate and joint venture investments 1,748 671
78 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
16. DEFERRED TAX ASSET/(LIABILITY)
Property, plant Investments- Derivative financial Employee Other Tax Totalequipment associates instruments entitlements provisions losses
$000 $000 $000 $000 $000 $000 $000GROUPBalance at 01 July 2017 (3,169) (98) 7 2,745 (816) - (1,331)Charged to statement of comprehensive income 691 (5) (33) (20) 18 - 651Balance at 30 June 2018 (2,478) (103) (26) 2,725 (798) - (680)
Charged to statement of comprehensive income 736 99 24 95 (215) - 739
Balance at 30 June 2019 (1,742) (4) (2) 2,820 (1,013) - 59
GROUP2019 2018$000 $000
17. SHARE CAPITAL & RESERVESOrdinary shares (000’s)On issue opening balance 17,436 17,436Issued for cash - -
On issue at closing balance 30 June 17,436 17,436
All issued shares are fully paid and have no par value.The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.All shares rank equally with regard to the Company’s residual assets.
18. CASH FLOW HEDGE RESERVEOpening balance at 01 July (91) 25Transferred to cost of sales - -Revaluations 83 (116)
Closing balance at 30 June (8) (91)
The hedge reserve is used to record fair value gains or losses on foreign exchange forward contracts that qualify as cash flow hedges.
79PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
GROUP2019 2018$000 $000
19. COMMITMENTSThe following amounts have been committed to by the Group or Parent, but are not recognised in the financial statements:
a) Capital commitmentsProperty, plant and equipment 9,918 5,695
b) Operating commitments (excluding leases) 575 342
c) Operating lease commitmentsLease commitments under non-cancellable operating leases are as follows:
Not later than one year 1,723 1,869Later than one year and not later than five years 4,753 4,131Later than five years 13,346 13,616
19,822 19,616
d) Operating lease incomeLease income under non-cancellable operating leases are as follows:
Not later than one year 162 207Later than one year and not later than five years 64 119Later than five years 117 127
343 453
The Group received rental income of $819,000 during the year (2018: $844,000). Rental income is included within Other income in the Statement ofComprehensive Income.
The Group leases premises and plant and equipment. Operating leases held over properties give the Group the right to renew the lease subject to a redetermination of the lease rental by the lessor. There are no renewal options or options to purchase in respect of plant and equipment held under operating leases.
The Group rents premises. Operating leasees have the rights to renew the lease subject to a redetermination of the lease rental.
20. RECONCILIATION OF PROFIT AFTER TAX WITH CASH FLOW FROM OPERATING ACTIVITIESProfit after tax 5,866 5,362
Add/(less) non-cash items:Share of retained loss/(profit) of associates and joint ventures 428 (131)Depreciation and amortisation 12,968 11,914Movement in foreign exchange (12) (8)Non-cash movements in investments - 96Decrease in future tax liability (739) (651)Increase in employee entitlements 583 54
13,228 11,274Add/(less) items classified as investing activities:
(Gain) on sale of property, plant and equipment (487) (32)Dividends received from joint venture 81 74
Movements in working capital:Increase in receivables and prepayments (3,237) (8,077)Decrease/(increase) in inventory 88 (42)Increase in trade payables and accruals 686 656Increase/(decrease) in taxation payable (329) 618
(2,792) (6,845)
Net cash flow from operating activities 15,895 9,833
80 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
21. RELATED PARTY TRANSACTIONSThe Company is a wholly owned entity of the Crown. The government significantly influences the role of the Company in addition to being a major source of revenue.
The Group enters into transactions with government departments, state-owned enterprises and other Crown entities. These transactions occur within a normal customer / supplier relationship on terms and conditions no more or less favourable than those which it is reasonable to expect the Group would have adopted if dealing with that entity at arm’s length in the same circumstances. Such transactions have not been disclosed as related party transactions.
Strategic funding amounting to $43,103,000 was received from MBIE (a government department) during the year to 30 June 2019. (2018: $43,103,000). Strategic funding is disclosed on the face of the Statement of Comprehensive Income.
Sale of services Due from2019 2018 2019 2018
Transactions with: $000 $000 $000 $000
Associates 4,730 1,193 557 452
For the year ended 30 June 2019, the Group has impaired a related party receivable for $250,000 (2018: $0).
The Group contracted with parties associated with certain directors during the year. These are as detailed below.These transactions were all at normal commercial rates.
GROUP2019 2018$000 $000
Parties associated with Directors Nature of the transaction
Southern Cross Healthcare Health insurance 706 787Kiwi Innovation Network Limited Services - 629
b) Key management personnel compensation:Salaries and other short term employee benefits 2,632 3,170
Key management personnel include the Board of Directors, the Chief Executiveand the other members of the senior executive team.
81PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
22. FINANCIAL INSTRUMENTSThe Group’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Group 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.
Market riskCurrency riskCurrency risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Group purchases goods and services overseas which require it to enter into transactions denominated in foreign currencies. The Group also holds small balances of AUD, EUR and USD at call in order to settle transactions denominated in foreign currencies. As a result of these activities, some limited exposure to currency risk arises.It is the Group’s policy to manage foreign currency risks arising from contractual commitments and liabilities by entering into foreign exchange forward contracts to hedge the foreign currency risk exposure. All of the forward exchange contracts have maturities of less than one year at the balance sheet date.
Sensitivity analysisThe Group’s results are not sensitive to changes in foreign exchange rates.
Credit risk Credit risk is the risk that a third party will default on its obligations to the Group, causing the Group to incur a loss.Due to the timing of its cash inflows and outflows, the Group invests surplus cash with registered banks with a Standard & Poor’s credit rating of A- or above. The Group’s investment policy limits the amount of credit exposure to $10M with any one institution.The largest credit exposure with any one institution at balance date is $1.7M (2018: $1.5M).
The Group’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and short-term deposits (note 8), net receivables (note 9) and derivative financial assets. There is no collateral held as security against these financial instruments.
Management has a credit policy in place under which each new customer is individually analysed for credit worthiness and assigned a credit limit before the standard payment and delivery terms and conditions are offered. Where available the Group reviews external ratings and references are obtained. Credit limits are reviewed on a regular basis.
Net receivables includes two customers who represent 46% (2018:43%) of the total trade receivables at balance date. The Group is not exposed to any other concentrations of credit risk.
82 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
22. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping committed credit lines available. It is the Group’s policy to provide credit and liquidity enhancement only to wholly owned subsidiaries.
The table below analyses the Group’s derivative financial instruments and other financial liabilities that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
GROUP 2019Carrying Contractual Up toamount cash flow 12 months 1-2 years 3 years +
Trade and other payables 12,230 12,230 12,230 - -Borrowings 14,400 14,400 14,400 - -
26,630 26,630 26,630 - -
Forward exchange contractsInflow (8) 2,727 2,727 - -Outflow - - - - -
GROUP 2018
Trade and other payables 12,172 12,172 12,172 - -Borrowings 13,350 13,350 13,350 - -Mortgage 168 168 20 42 106
25,690 25,690 25,542 42 106
Forward exchange contractsInflow (91) 3,345 3,345 - -Outflow - - - - -
Fair value estimationThe group uses various methods in estimating the fair value of a financial instrument.
- The fair value is calculated using quoted prices in active markets (Level 1)- The fair value is estimated using inputs other than quoted prices included in Level 1 that observable for the asset or liability either directly (as prices)
or indirectly (derived from prices) (Level 2); and- The fair value is estimated using inputs for the asset or liability that are not based on observable market data (Level 3).
The Groupʻs derivative financial instruments are all level 2 forward foreign exchange contracts with a fair value of ($8,000) (2018: $91,000).
These have been fair valued using forward exchange rates that are quoted in an active market.
In the period to 30 June 2019 there were no significant changes in the business or economic circumstances that affect the fair value of the Group’sfinancial assets and financial liabilities.
83PLANT & FOOD RESEARCH ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended 30 June 2019
23. CATEGORIES OF FINANCIAL ASSETS AND LIABILITIESThe carrying amounts of financial assets and liabilities by classification are as follows:
GROUP2019 2018
Note $000 $000
Financial assets measured at amortised costCash and cash equivalents (8) 2,456 2,143Trade and other receivables (9) 39,563 36,722Total financial assets at amortised cost 42,019 38,865
Financial liabilities measured at amortised costAccounts payable and accruals (10) 12,230 12,172Employee entitlements (11) 10,635 10,196Borrowings (8) 14,400 13,350Mortgage liability - 168
Total financial liabilities at amortised cost 37,265 35,886
The fair value of the financial assets and liabilities approximate their carrying value.
24. CAPITAL MANAGEMENTThe Company’s capital is its equity, which comprises share capital and accumulated funds. Equity is represented by net assets.
The Company is subject to the financial management and accountability provisions of the Crown Research Institutes Act 1992, which imposes restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities and the use of derivatives.
The Company manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities and general financial dealings to ensure the Company effectively achieves its objectives and purpose, whilst remaining a going concern.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
25. CONTINGENCIESContingent LiabilitiesThere were no contingent liabilities known to exist at balance date (2018: $0).
Contingent AssetsThere were no contingent assets known to exist at balance date (2018: $0).
84 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
PERFORMANCE INDICATORSfor the year ended 30 June 2019
2019 2018Actual Actual
RESEARCH COLLABORATIONPeer reviewed publications 384 313
Book chapters 12 5
TECHNOLOGY & KNOWLEDGE TRANSFERLicences - new 13 12Client reports 555 462Plant variety rights
Granted in NZ 7 3Granted overseas 13 7
Patents 12 20Trademarks
Registered 7 4
Requests for information from databases and collections 23 18
SCIENCE QUALITYScience reviews 3 3
International awards 9 9Invitations for international committees 19 15Invitations for editorial boards 18 6
85PLANT & FOOD RESEARCH ANNUAL REPORT 2019
STATEMENT OF RESPONSIBILITYfor the year ended 30 June 2019
In the financial year ended 30 June 2019, the Board and management of The New Zealand Institute for Plant & Food Research Limited were responsible for:
→ the preparation of the financial statements and the judgements used therein.→ establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial and
non-financial performance reporting.
In the opinion of the Board and management of The New Zealand Institute for Plant & Food Research Limited, these financial statements fairly reflect the financial position and operations of The New Zealand Institute for Plant & Food Research Limited for the year ended 30 June 2019.
Greg Gent, Acting Chair Wendy Venter, Director29 August 2019 29 August 2019
86 PLANT & FOOD RESEARCH ANNUAL REPORT 2019
DIRECTORS
Greg Gent Acting Chair
Parmjot Bains
Andrew von Dadelszen
Colin Dawson
Wendy Venter
CHIEF EXECUTIVE OFFICER
David Hughes
SENIOR MANAGEMENT TEAM
Dr Kieran Elborough Group General Manager, Technology Development
Craig Jensen General Manager, People & Culture
Professor Richard Newcomb Chief Scientist
Dr Gavin Ross Group General Manager, Marketing & Innovation
Quentin Smith Group General Manager, Finance, Infrastructure & Information
Philippa Stevens Group General Manager, Science Services
Stacey Whitiora Group General Manager, Māori
REGISTERED OFFICE
120 Mt Albert Road Sandringham Auckland 1025New Zealand
AUDITORS
PricewaterhouseCoopers on behalf of the Auditor-General
BANKERS
ANZ Bank New Zealand Ltd
Westpac New Zealand Ltd
DIRECTORY
NEW ZEALAND
AUCKLAND120 Mt Albert RoadSandringhamAuckland 1025Private Bag 92169Auckland 1142Tel 09 925 7000Fax 09 925 7001
CLYDE990 Earnscleugh RoadRD 1, Alexandra 9391
DUNEDINDept of ChemistryUniversity of OtagoBox 56Dunedin 9054
HAWKE’S BAY30 Crosses RoadHavelock North 4130Private Bag 1401Havelock North 4157
KERIKERI121 Keri Downs RoadRD 1, Kerikeri 0294
LINCOLN74 Gerald StreetLincoln 7608Private Bag 4704Christchurch 8140
MARLBOROUGH85 Budge StreetBlenheim 7201PO Box 845Blenheim 7240
MOTUEKA55 Old Mill RoadRD 3, Motueka 7198
NELSON297 Akersten StreetPort NelsonNelson 7010Box 5114Port NelsonNelson 7043
PALMERSTON NORTHBatchelar RoadPalmerston North 4474Private Bag 11600Palmerston North 4442
PUKEKOHECronin RoadRD 1, Pukekohe 2676
RUAKURABisley RoadHamilton 3214Private Bag 3230Hamilton 3240
TE PUKE412 No 1 RoadRd 2, Te Puke 3182 WELLINGTONLevel 617 Whitmore StreetWellington 6011
AUSTRALIA
School of Agriculture and WineUniversity of AdelaideWaite CampusUrrbraeSA 5064, Australia
USA
430 F Street, Suite FDavis CA 95616, USA
As at 1 July 2019
87PLANT & FOOD RESEARCH ANNUAL REPORT 2019
AAid 37-38Apple 7-8, 25, 33, 39Aquaculture 18, 28, 40Australia 2-4, 6, 36, 40, 49, 108Avocado 4, 7-8, 37
BBerry 25, 39Bioprotection 110Breeding 6, 9, 22, 24-25, 36, 39, 45
CCereal 4China 7, 31, 33, 36Cropping 2, 32Cultivar 9, 18, 31, 33
DDisease 3, 8, 18, 25, 30-31, 38, 40
EEnvironment 13, 16, 18, 29, 32, 39, 43Ethics 18, 44, 49
FFinancial Statements 3, 55Food 2-3, 6, 8-9, 12-13, 16-19, 24-29, 31, 33, 36-43, 45, 48-49, 51, 53, 56, 110, 113
GGenomics 30Governance 3, 47-53Government 2, 7, 18, 37-39, 48
HHealth 9, 18, 21, 24, 26-27, 29, 31, 36, 39, 44, 48Honey 6
IInsect 40
KKiwifruit 4, 7-9, 25, 27, 31, 39-40
NNational Science Challenge 36
PPea 4Pest 3, 7-8, 18, 25, 30-31Pipfruit 4, 31Potato 4, 25
RRisk 27, 30, 44, 48-49, 56
SScience 2-3, 5-9, 13, 16, 18-20, 23, 26, 32-33, 36, 39-40, 42-43, 45, 48-49, 51-53, 108, 110Science Advisory Panel 3, 40, 48-49, 51Seafood 2-4, 8, 17-18, 28-29, 33, 40, 110Senior Management Team 12-13, 53, 108Snapper 6, 29Strategy 2-3, 11-13, 16, 19-20, 25, 40, 48, 51Summerfruit 4, 25, 31Sustainability 2, 8, 16, 18, 28-29, 31-32, 36Sustainable Production 32, 110
UUSA 2, 4, 29, 108
VVegetables 24, 26, 33, 37
WWellness 26Wine 2-4, 108
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