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annual report 2013

& waikato-tainui fisheries limitedtainui group holdings limited

ourbusiness

Waikato-tainui iWi members

Waikato-tainui marae

Waikato raupatu river trust

Waikato raupatu lands trust

tainui group holdings limited

Waikato-tainui Fisheries limited

Waikato-tainui te kauhanganui incorporated (tribal parliament)

te arataura

our structure

Waikato-tainui consists of over 64,000 registered iwi members. each iwi member affiliates to

at least one of the Waikato-tainui marae. each marae tri-annually elects three representative

iwi members for the appointed Wttki – or the tribal parliament. one additional representative

to the tribal parliament is appointed by the head of the kaahui ariki – kiingi tuheitia. From

the tribal parliament, 10 members are elected onto its executive – te arataura, and one is

appointed by kiingi tuheitia. te arataura oversees the tribal operations.

tainui group holdings limited (tgh) and Waikato-tainui Fisheries limited (WtF) are the

commercial entities of Waikato-tainui te kauhanganui incorporated (Wttki), the shareholder

and tribal authority of Waikato-tainui. tgh’s role is to deliver commercial returns on assets

for the Waikato-tainui people. this includes assets that were returned by the crown under the

Waikato raupatu claims settlement act 1995.

tgh’s principal objective is to maximise shareholder wealth through a sustainable asset

portfolio. our strategy of identifying and growing high quality assets to generate income, allows

us to provide consistent, long-term dividends for the benefit of current and future generations

of Waikato-tainui. these dividends are used by our shareholder to meet tribal expenditures

and for charitable purposes, distributed in the form of grants, to Waikato-tainui marae and

registered tribal members.

strong governance of our strictly commercial business model is the cornerstone of our

business philosophy. a clear distinction between wealth creation and the responsibilities of

distributing wealth has been agreed between us and the shareholder. the two parties have

signed a statement of corporate intent (sci) that documents all the necessary understandings

that must exist between us.

Tainui Group Holdings Annual Report 2013

1

2 financial performance summary

3 Year in review

4 our strategy

6 profile – ruakura

8 Business review Chairman’s report

Ceo’s report

overview

operational review

financial overview

sustainability

Growth

partnerships

30 our people our management

our team

34 our directors Board of directors

directors’ report

Governance

42 financial information five year trend statement

financial statements – tainui Group holdings limited

financial statements – waikato-tainui fisheries limited

CONTENTS

2

capital expenditure

bank debt to total assets

total assets

net proFit

reVenue groWth

return on shareholder Funds9.2%

10.3% in 2012

diVidend

$11.5m$11m in 2012

the dividend increases $0.5m annually.

$20.9m$56.4m in 2012

mainly represented by capital spend at the Base, especially infrastructural

improvements.

13.5%57.7% in 2012

hotel performance provided

a 65% contribution to the

increase in revenue.

25.3%26.0% in 2012

while there was a 4% increase in bank debt, it was diluted

by the increase in total assets.

$738m$694m in 2012

the increase is largely due to unrealised movement in

investment property values and capital

expenditure.

$45.1m$39.9m in 2012

favourable increases from unrealised movement in the value

of assets, particularly investment properties.

$20.8m$20.7m in 2012

marginal increase in operating profit, the result of a full year’s

earnings from novotel auckland airport.

finanCial performanCe summarYtainui Group holdinGs limited & waikato-tainui fisheries limited2013

net operating

proFit


3

MAY HArAtuA

Year in reViewAPriL PAengA-wHAAwHAA

TGH welcomes two new directors, Paki Rawiri and Hemi Rau and Board advisor Joanna Perry

OCtOber wHiringA-AA-nuku

Te AWA wins a bronze Nga Aho design award for ‘Aotearoaness’

TGH team participate in the Tri-Maori Festival

TGH participate in the Heartstopper Challenge fundraiser

Novotel Auckland Airport wins the 2012 New Zealand Hotel Industry Environmental Initiatives Award

June PiPiri

Rotokauri Joint Venture agreement is signed

TGH’s hosts the 2012 annual stakeholder function

JuLY HOOngOngOi

TGH farewells retiring Chairman, John Spencer and Hon. Koro Wetere and welcomes Sir Henry van der Heyden as Chairman

Te AWA wins Waikato/Bay of Plenty Architecture award for commercial architecture

MArCH POutuu-te-rAngi

Submissions on the Hamilton City Council Proposed District Plan close

DeCeMber HAkiHeA

Hamilton City Council publicly notifies its Proposed District Plan which includes the Ruakura structure plan

TGH a finalist in the New Zealand Institute of Chartered Accountants 2012 awards for best annual report for a corporate organisation

& w a i k a t o - t a i n u i f i s h e r i e s l i m i t e d

& Waikato-Tainui Fisheries Limited

A N N U A L R E P O R T 2 0 1 2

Bank debt facility of $50 million renewed

FebruArY Hui-tAnguru

Capitalisation of $70 million loan to Shareholder equity approved by WTTKI

m i l l i o nnOVeMber wHiringA-AA-rAngi

TGH team move into new offices at 6 Bryce Street, Hamilton

Waikato Regional Council issues Regional Policy Statement decisions confirming Ruakura as a major employment growth cell

Two new tenancies open at The Base, Sunny’s and The Clearance Shed

Roading and signalisation project at The Base completed

sePteMber MAHuru

Te AWA wins silver at the 2012 International Council of Shopping Centres Awards for design and development excellence in Shanghai, China

4

OUR strategY

to lead maaori eConomiC deVelopment, alonGside other iwi-owned Businesses, to Benefit maaori and the whole CommunitY.

OUR Vision

to maximise wealth, proVide lonG term returns and a Consistent diVidend to our shareholder. we do this primarilY throuGh strateGiC aCquisition, inVestment and deVelopment of propertY, and BY inVestments in Growth assets and fishinG.

OUR obJectiVe

groWth We invest for the long term, a horizon that stretches over decades.

We maintain a strong balance sheet with prudent borrowing levels.

We bring freshness, vibrancy, quality and longevity to the design and functionality of our property portfolio.

customers We cultivate long-term co-investor and tenant relationships for mutual benefit.

shareholder We reflect Waikato-tainuitanga in business wherever appropriate.

We provide a consistent dividend stream.

We continue ongoing engagement with our shareholder entities.

stakeholders We engage leading specialists to deliver the best service and products for our business.

We invest in long term partnerships with other businesses, including iwi.

We encourage cultural, social and environmental responsibility.

We invest in the team.

to meet our Vision and oBjeCtiVe, we applY a formula that is tarGeted towards the followinG keY Components that are important to our CompanY.

OUR Formula


5

obJectiVe progress outlookkeY strategies

deliver a long term sustainable dividend stream.

be a recognised contributor to the region’s economy.

be the leader or preferred partner of significant development projects and growth investments.

tgh’s total assets grew by 6.4% to $738 million in 2013.

tgh’s equity grew by 26.4% to $490 million in 2013 – almost half-way towards our 2021 target.

the base is new Zealand’s largest single retail development by area and australasia’s only hybrid (large format, mall and outlet) centre. businesses at the base employ just under 1,700 full and part-time employees.

ruakura will be a unique commercial development that will become a project of national significance creating growth and employment.

increasing tgh’s investment capacity and exposure to risk through diversification into growth assets will be critical in delivering the expected return and assets target.

Grow BeYond $1 Billion in

hiGh qualitY total equitY

BY 2021

groWth

differentiate from competitors by completing projects that reflect the enduring place in new Zealand society of Waikato-tainui.

novotel auckland airport hotel is infused with Waikato-tainui design features providing the first experience of new Zealand culture for many travellers.

the base (and in particular te aWa) design features are embedded with cultural elements from Waikato-tainui.

development of bryce street, hamilton boutique business precinct.

ruakura will showcase tgh’s core attributes, competitive advantage, and cultural edge.differentiate

from Competitors

sustainabilitY

create enduring relationships with the shareholder and partners whose views are closely aligned with tgh.

a group of preferred, strategic partners to provide appropriate advice and support as required which includes banks, construction, legal, financial and advisory services. We profile a sample of our strategic partners on pages 28 and 29.

representation at Wttki tribal forums.

implementation of the one team, one location strategy between tgh and the shareholder

regular review of long-standing relationships and active engagement with principals to ensure that our business needs are being met.

We will partner with other iwi in commercial developments. iwi are natural partners who share similar financial goals.

Further support and engagement with the tribe.

Create endurinG

relationships

partnerships

deliver investment returns in excess of market based hurdle rates.

Weighted average cost of capital methodology used to assess performance of tgh’s existing asset portfolio and inform investment decisions.

by focusing on risk adjusted returns tgh can measure the viability of competing projects on a like for like basis.

assess all future capital and investment projects to determine if returns meet required hurdle rate.

deliVer returns

operational

to develop highly competent, motivated and engaged people. to enable people to express their full potential.

implementation of the people strategy 2025

graduate recruitment evening held in march 2013 to showcase tgh achievements.

medical and vision checks and flu jabs offered for all staff. Weekly provision of fresh fruit provided to the team. team building events.

implementation of staff surveys.

recruitment and retention focus on creating a motivating and positive environment.Value

emploYee ContriButions

people

6

ruakuraOffER HamilTON?

WHaT dOES

a competitive advantage for the region’s economy

new jobs for thousands of people

growth and business opportunities for hamilton city

a wide range of new housing

Well designed buildings

a great place to live, with plenty of open spaces and trees

Walkways, cycleways and excellent public transport connections

a better balanced city, with jobs and houses co-located on the eastern side of the river

a substantial new source of rates for the council

trucking freight taken off local roads

reduced carbon emissions

What is it all about?

• A mixed-use land development on the eastern side of Hamilton City

• Undertaken in gradual stages over a 30-50 year period

• Uses 500 hectares of Waikato-Tainui land at Ruakura, along with adjoining land owned by Chedworth Properties Ltd

• It is still a proposal. It requires planning approval before work can start

What does it inVolVe?

• New housing

• Green belts, open spaces and wetlands

• A commercial and light industrial district

• A ‘knowledge zone’ around AgResearch, University of Waikato and Waikato Innovation Park

• A logistics and distribution centre (inland port and freight handling)

• Shopping and service precincts for local residents

artist’s impression.6


7

What’s the rationale For the deVelopment?

It will provide much needed employment on the eastern side of Hamilton City. Excellent walking, cycling and public transport links will make it easy for people to travel to and from work.

New housing will be provided, both medium and standard density, to meet a wide variety of needs. It will be complemented with generous open spaces and recreation areas to provide an attractive living environment.

It will feature low impact, sustainable storm-water and waste-water management systems, with particular use of wetlands to filter and cleanse the water before it can reach the Waikato River.

A ‘knowledge zone’ will be developed around The University of Waikato, AgResearch and Waikato Innovation Park, allowing for future growth and greater collaboration.

An inland port and logistics centre will be created, where freight will be swapped between road and rail, containers packed and unpacked and goods stored. This takes advantage of Ruakura’s unique location right on the intersection of the Eastern Main Trunk railway and the new Waikato Expressway, as well as the large projected increase in freight volumes in the upper North Island. World class technology will be used to handle container freight more quickly and efficiently than anywhere else in

the country. The inland port of the Ruakura development will be compact: it takes up less than 5% of the land within the area earmarked for growth.

the proposed First stages

Up to 2019 (indicative)

• Wetland and drainage systems created for storm water management

• Work begins on green belts

• The first housing development starts adjoining Fairview Downs

• Work begins on the logistics and distribution zone, including water and power supplies, rail earthworks and some distribution warehouses. The logistics and distribution area will initially cover about 80 hectares

• Limited freight movements – mostly by road – will begin

• Some light industrial development underway

2019 – 2021 (indicative)

• Green belt areas expanded

• Housing areas expanded

• Opening of the Hamilton section of the Waikato Expressway and an interchange for Ruakura. Road infrastructure created within Ruakura to link with it

• Rail freight starts to be on and off-loaded at the site

• Warehousing and logistics services activity increases

• Further work on wetland and drainage systems for storm water management

• Walkways and cycleways started

2021 – 2025 (indicative)

• Housing continues to expand

• More green spaces and complementary amenities developed

• Logistics and warehousing facilities and functions expand

• Full integration of road and rail freight handling starts to take place in the logistics and distribution area

ruakura – bY the numbers

• 1,800 new homes built

• 83 hectares of reserve, recreation areas, parks, walkways and cycleways provided

• 6,000-12,000 full time jobs created

• $3 billion in investment attracted to the region

• A projected $4.4 billion increase in the Waikato Region’s GDP

• When finished, it will generate over $14 million in extra rates for Hamilton each year, over 10% of the city’s current budget

• 630 fewer tonnes of carbon emissions emitted into the air – and over one million fewer kilometres travelled – each year by taking freight off road and onto rail

• Over 30 years, 740,000 heavy vehicle trips avoided

7

8

sir HenrY VAn Der HeYDen

8

FroM THE CHAirMAnteenaa koutou katoa


9

this is mY First report as chairman oF tainui group holdings. i accepted the position because i am a Firm belieVer in the increasinglY important role maaoridom Will plaY in our economY. it’s mY hope that Waikato-tainui Will take a leadership role. For iwi-owned companies, their first responsibility is to pay dividends from their profits. But as retained earnings and debt are their only sources of capital, they must reinvest some of their profit each year to increase the value of their assets, which they can in turn borrow against.

Over recent years TGH has created a solid core of investment properties that generate a reliable cash flow, among them The Base, Te AWA and the Novotel Auckland Airport.

They are however, stages in a much longer journey. If we are to make a real difference for the more than 64,000

people of Waikato-Tainui, TGH must have an asset base capable of delivering much higher returns to its Shareholder. Our dividend this year is equivalent to only $180 per person. Our Ruakura development is vital to get to that next stage where we increase our returns, but it will not be an overnight process.

2013 Financial results

Taking into account subdued economic growth, TGH and WTF performed well in 2013. Their combined net operating profit was steady at $20.8 million, a marginal increase on 2012.

The net profit for TGH and WTF was $45.1 million, up 13% from $39.9 million last year. This came on the back of a 13% increase in revenue, principally reflecting good trading conditions at the Novotel Auckland Airport.

TGH and WTF together paid a dividend to the Shareholder of $11.5 million, up $0.5 million from 2012.

The value of total assets at 31 March increased by $44 million, to $738 million.

Our Shareholder converted its $70 million loan, on the books since the settlement assets first transferred to TGH, to equity. This has given an extra $70 million of permanent capital, which now stands at $490 million. As a result, the return on Shareholder funds reduced from 10.3% to 9.2%.

Total bank debt (excluding Novotel Auckland Airport) sits at $161 million, with approved but unused facilities of $89 million. Total debt represents 25% of total assets, in line with our policy that debt cannot represent more than 30% of total assets.

neW inVestment strategY

TGH has embarked on a diversification strategy. While the majority of our assets remain in property, and will continue to do so, TGH’s strategy will see us diversifying into other investment sectors.

There is good reason for this. The company is charged with achieving a return on the commercial assets of

iF We are to make

a real diFFerence

For the more than

64,000 people oF

Waikato-tainui,

tgh must haVe an

asset base capable

oF deliVering much

higher returns to its

shareholder.

(27)

34

0.4

0.50.4

23

39

(1) WtFltgh

2009 2010 2011 2012 2013

45

net profit after minoritY interest

tGh & wtfl

net operatinG profit after minoritY interest

1216 15

21 21tGh & wtfl

2009 2010 2011 2012 2013

$m0

$m0

non-tradingtrading

2009 2010 2011 2012 2013

12

18

16 15

8

19

21 21

(40)

24net profit after minoritY interest

tGh & wtfl

$m0

10

Waikato-Tainui. These are mostly land holdings, restored after the tribe’s 1995 settlement with the Crown. However, it takes many years to develop an investment property before we earn any revenue from it, and a large percentage of the capital needed must be borrowed.

At The Base, for example, we have consents for the balance of the site and we will carefully develop as market demand and returns on capital warrant further expansion. Other potential property investments are viewed similarly. Over the medium term we do not want to affect our ability to pay an increasing Shareholder dividend. We have therefore decided to use the freed-up cash to pursue a higher yielding investment strategy.

There will be two parts to this new approach.

The first is to identify property development opportunities, selling rather than retaining the investment for the long term. We recognise however that there could be lengthy timeframes between development concepts, locating the land, rezoning, resource consenting, tenanting, building and then exiting.

So the second is to invest in one or more medium to large private businesses where the owner(s) are looking for fresh equity, and where there is potential for TGH to receive good cash flows after a relatively short time. We will aim for a few large stakes rather than many smaller ones, and add value through our governance and management expertise.

This new investment strategy builds on the fact that we still have capacity as well as a strong, reliable earnings stream. We also have the ability to take on more risk. We can accept a maximum volatility in earnings of 10% in any one year, and our current rate is 7%. Together these factors give us, our Shareholder, and the investment community the confidence that this new strategy is sound and that we can continue to grow.

It also means we have now set a much higher earnings threshold for all our future property-based investments.

tribal engagement

Ultimately what TGH does has to be for the benefit of tribal members. To achieve higher returns, without taking undue risk, takes time, and for many tribal members the wait is frustrating.

While in recent years the company has reported regularly to its Shareholder, it is fair to say that its main focus has been on getting TGH operating well. While the company has developed its experience and expertise over the last decade, it has been much harder on the Shareholder side to afford the structures, training and resources needed to execute tribal plans.

The result is that the combined people, assets and resources of the tribe and its commercial arm have been not been consistently aligned.

If TGH wants to be a part of Waikato-Tainui, and reach the goal of delivering a much higher sustainable dividend, it needs to engage much more deeply with all the stakeholders of Waikato-Tainui.

We need to take a holistic view and have a much better understanding of mutual expectations. We have made an intensive effort over the last 12 months to engage with the entire tribe, but this is only the start of a process.

this neW

inVestment

strategY builds on

the Fact that We

still haVe capacitY

as Well as a strong,

reliable earnings

stream.

While the

maJoritY oF our

assets remain in

propertY, and Will

continue to do so,

tgh’s strategY Will

see us diVersiFYing

into other

inVestments.

49%commercial properties

21%crown

properties

11%rural

properties

10%hotels

5%Fishing

2.7% agriculture

1% private equity

0.3% development properties

portfolio Value BY seCtor

tGh & wtfl

WtFltgh

2009 2010 2011 2012 2013

total assets

tGh & wtfl

484 516645 680 725

14 13

13

1313

$m0


11

One way of looking at it is the health and wellbeing of a person, except here we are talking about the health and wellbeing of the tribe, and how we can improve it.

One of the first tangible results of this closer collaboration has been our Shareholder’s decision to convert the $70 million loan it has had on our books to capital. This will allow the capital to be in one place, will drive financial efficiency and should lead to higher dividends being paid to the tribe. Over the coming year we hope that there will be further milestones in what we intend will be a much more integrated relationship.

goVernance

I would like to thank all Board members, the management team and staff of TGH for their commitment and achievements this year, and particularly for their welcome and support for me as the new Chairman.

I would like to pay special tribute to John Spencer who retired as Chairman on 30 June 2012, after almost a decade on the Board. I have inherited the very strong foundation he put into place, and he also ensured the transition between us was exceptionally smooth.

Sir Henry van der Heyden Chairman

outlook

We expect trading conditions to stay steady over the coming 12 months. Returns will be on a par with the last two years. Any uplift will depend on the timing and size of investments that flow from our new strategy, but it will be some time before that bears fruit.

I look forward to the ongoing engagement with our Shareholder, and to achieving the many important objectives we have set for the year ahead.

In terms of specific projects, Ruakura continues to be our major focus. The vision for this project, led by our CEO, Mike Pohio, is a tremendously exciting opportunity for Waikato-Tainui and the region generally to put itself on the map.

tainui Group holdings annual report 2013

oVer the coming

Year We hope

that there Will be

Further milestones

in What We intend

Will be a much

more integrated

relationship.

6 Bryce street, hamilton.

12

FroM THE CeO

Mike POHiO, CeO

12

teenaa koutou katoa


13

noVotel auckland airport

At the Novotel Auckland Airport we continued to be proactive. The highest possible service levels and concentration on the source of earnings is key to delivering a good outcome. As a result, patronage has increased. We’re pleased with how it is being managed by ACCOR. The hotel has cemented in its position as a quality offering in the broader Auckland market. The Novotel brand works well across many segments, including domestic and international travellers, flight crews, government agencies and the general public.

the base and te aWa

At The Base, we’ve appointed a Centre Manager, Assistant Manager, Marketing Manager, two Facilities Managers, a Caretaker and three Customer Service Representatives. These changes have enabled the company to delegate considerable authority to team members.

three Years ago tgh set a target oF a 10 per cent per annum cumulatiVe groWth in cash earnings. bY 2013 We had achieVed it, despite the ongoing backdrop oF the global Financial crisis.It was a challenge which came in two parts.

The first was to concentrate on the core business, maximising earnings and minimising costs. It’s vital the original assets we were entrusted with continue to be managed in a professional way. As the business increases in complexity, we’ve added new resources and consolidated internal processes so all our assets perform to expectations. It also means senior management can continue to concentrate on growing the business.

The second was to complete key developments, most notably Te AWA at The Base and the Novotel Auckland Airport. That heavy capital investment in the retail and hospitality sectors has been gradually reduced, falling from $56 million to $21 million this year.

as the business

increases in

complexitY,

We’Ve added neW

resources and

consolidated

internal processes

so all our assets

perForm to

expectations.

Novotel AucklANd Airport hAs

four ANd A hAlf stAr rooms

263

69,000people visited the BAse oN BoxiNg dAy, 2012The Base is the largest retail centre in New Zealand, so being sure the team take action for the right reasons, and in the right way, is important. On Boxing Day last year we had more than 69,000 people there, with very few incidents. The same figure in 2011 was 60,000, and in 2010 it was 40,000.

Retailing had a tough year in 2012. The Base has 190 tenants, so there is a spread of business models and tenants competing in the Waikato market. Large format retail is well patronised in good and bad times. We were therefore highly selective in the tenant mix and the standard of the offering presented to customers. We also aim to have strong relationships with both existing and prospective tenants. Our strength, above all, is our commitment to

novotel auckland airport.

te awa, the Base, hamilton.

over

14

making it a great shopping experience. Despite some turnover during the year, at balance date we were at 99% occupancy.

We refined the master plan for The Base, as we do every year, and were successful in obtaining amended resource consents for the rest of the centre. There will be ongoing capital expenditure but at a more measured fashion. Last year we’d envisaged first floor retailing, a multi-level car park, offices, more large format retail and a comprehensive health facility or Whaanau Ora. We also planned an auto precinct, but with recent vehicle testing regulatory changes we’ll proceed with a modified version of the concept. We also re-considered the multi level car park and first floor retail of Te AWA and concluded that, given the current economic climate and the amount of capital involved it will take more time to commit to that portion of the development.

hamilton riVerVieW hotel

This joint venture with Hamilton City Council comprises the Novotel Tainui and the Ibis Tainui. We continue to see ongoing support from

key customers including Fonterra, Gallagher Group, The University of Waikato and AgResearch, as well as sports teams that included Super 15 rugby, international cricket and ANZ Cup netball. The business has captured more market share but overall the Hamilton market remains subdued particularly the corporate sector.

residential subdiVisions

After many years we are coming to the end of our Huntingdon development, with 11 sections still to be sold. The long term partnerships we established with Malcolm MacDonald, Lugton Real Estate, CKL Surveyors, Norris Ward, and Ellice Tanner have been beneficial to all parties. We are looking to retain a presence in the Hamilton residential market beyond this, and hope to carry over some of these partnerships into a 700 section development at Rotokauri over the next decade.

other properties

Our underlying property investment portfolio is sound, though, other than positive movements in valuation for The Base and Ruakura there has been no other significant movement in property values. We continue to manage both our assets and our relationships with all our tenants, including the Crown and Crown

tgh owNs NeArly

of commerciAl ANd retAil property iN hAmiltoN’s cBd

14ha

our strength,

aboVe all, is our

commitment

to making it a

great shopping

experience.

agencies. We undertake rent reviews using independent valuers and reach agreement in a professional manner.

Since our balance date is 31 March, our farms were partly affected by the drought. We are uncertain of the full effects beyond that, but there will certainly be an impact on next year’s volumes and earnings.

We have nearly completed a re-development of our Bryce Street precinct in the Hamilton central business district (CBD). TGH has refurbished the street-front site, moving our staff into that building along with new tenant Joe’s Garage. As our operations have grown it became increasingly difficult to maintain effective and efficient working arrangements. Our tribal CEO and her staff have moved into our old office at 4 Bryce Street, and Slater & Company, chartered accountants, have taken the tenancy at 2 Bryce Street. The precinct layout and landscaping have also been improved.

wintec, hamilton.

iBis tainui, hamilton


15

for loNg-term developmeNt

ruAkurA provides NeArly

500ha

of triBAl iNvestmeNts iN fishiNg

$33mtgh mANAges

Fishing

Fishing is a business that carries continuous risks. These include catching the quota, the make-up and saleability of the catch and the exchange rate. In the past these risks have been managed by others on our behalf. Given recent regulatory changes regarding foreign chartered vessels, TGH has proactively sought to maintain and improve the tribe’s returns from fishing. We have therefore chosen to align with Sealord Limited in terms of fishing our deep-sea quota, and with Aotearoa Fisheries Limited in respect of our in-shore quota.

neW inVestment strategY

As the Chairman has outlined, TGH has decided to diversify its investment strategy. The overall intention is to grow earnings at a higher rate than the cost of debt.

In terms of private company investments, the first step will be to appoint a Chief Investment Officer (CIO), with proven capability not only

to look at investment propositions but also refresh the framework in which these decisions are made. This role will complement the current investment work at governance and management level.

Up until this time we’ve looked at pre-existing investment propositions or ones we’ve been introduced to. With the new CIO, we intend to build on the sectoral analysis work we’ve already done to identify specific targets for investment.

TGH’s unique offer will be that of a local investor that is there for the long term, our ability to share a vision, our experience in governing a business that is managed to a high standard and strong discipline. This is the same proven philosophy that has been so successfully applied over the course of the last ten years. Hamilton Riverview Hotel and Novotel Auckland Airport are clear illustrations.

ruakura

Our proposed development at Ruakura was a major focus during the year as we worked our way through a number of regional and local planning processes.

The first of these was Waikato Regional Council’s Regional Policy

tgh has

proactiVelY sought

to maintain and

improVe the tribe’s

returns From

Fishing.

the oVerall

intention is to

groW earnings at

a higher rate than

the cost oF debt

and the First step

Will be to appoint

a chieF inVestment

oFFicer, With

proVen capabilitY to

look at inVestment

propositions.

Statement (RPS). This is a very important document. It sets the framework for all District Plans within the area, as well as the Regional Transport Plan. TGH and its partner Chedworth Properties sought and obtained approval for the Ruakura project to be included in the proposed RPS, and presented comprehensive reports to the hearings in front of the independent panel. At the time of writing there are some appeals to the Environment Court, and the RPS is expected to be finalised in 2014.

The second was Hamilton City Council’s Proposed District Plan (PDP). The Council included in its April 2012 draft what is known as the Ruakura Structure Plan, which gave effect to the Ruakura provisions in the RPS – such as zoning, permitted activities, roads and services, the nature of the built environment and so on.

farmland at ruakura, hamilton.

16

TGH and Chedworth Properties submitted a wide range of structural, environmental, social and cultural reports as part of the draft District Plan process, and participated in three public open days and a workshop in May 2012. The PDP was notified in December 2012, and submissions called for by mid 2013.

We have also worked with the Hamilton City Council to develop an integrated catchment management plan, that is required before any development can take place. This is yet to be finalised.

In late 2012, TGH and Chedworth submitted a Private Plan Change to the Council for our Ruakura development. It was designed to lift prohibitions on land inherited from the Waikato District Council. Importantly, it would also allow us to lodge resource consent applications, most crucially for roading and services, both necessary precursors for the inland port and logistics zone to proceed in a timely fashion. The New Zealand Transport Agency, Waikato Regional Council and the Waikato District Council supported our application.

1,000haover

of fArmlANd is mANAged By tghThe alternative would have been to let the Ruakura development be dealt with as part of the PDP, which also removes the prohibition. TGH’s concern however was that the PDP would not of itself enable resource consenting. The current District Plan also took 13 years to finish. In the worst case scenario, the new one might not be fully operative until 2025.

While it might be more like five years in practice, the Council wouldn’t be able to guarantee that. In other words, work on the site could be years away under that scenario.

Of its own accord, TGH initiated consultation with the local community and as a result made a number of modifications to the private plan. However, in April 2013, Hamilton City Councillors, in a 7-5 split, decided not to allow the plan change to proceed to the next stage. That would have meant notifying the plan change, calling for public submissions, and having them heard by independent commissioners. Councillors decision to prevent the plan from being notified ran counter to the views of both Council officers and independent legal and regulatory advisors. TGH has therefore appealed the decision to the Environment Court.

We note that the inland port and logistics zone at Ruakura is included in FutureProof, the region’s long-term plan. It also features in assessments by the Upper North Island Strategic Alliance, a consortium of most upper North Island territorial authorities and several government agencies, as well as in Ports of Auckland planning documents.

Throughout the year we also worked with the New Zealand Transport

our main

Focus Will be

on completing

the regulatorY

processes For

ruakura, and

identiFYing the

potential to groW

our inVestment

portFolio in neW

areas.

Mike Pohio Chief Executive

Agency as it worked its way through options for Hamilton interchanges with the new Waikato Expressway. There have been several rounds of consultation with a final proposed solution to be revealed in May 2013.

people

TGH continued to invest in its staff in 2013, with ongoing implementation of the People Strategy 2025. The move to new offices has resulted in more productivity, energy and collaboration to the working environment, promoting the one team, one location strategy. Our focus is very much on creating a motivating and positive workplace, and supporting each member of staff with a specifically tailored individual development programme.

outlook

TGH will continue to consolidate its asset management processes in 2014, in a market that may show some marginal improvement albeit with a number of attendant risks.

Over and above that our main focus will be on completing the regulatory processes for Ruakura, and identifying the potential to grow our investment portfolio in new areas.

I would like to finish by expressing my gratitude to all members of the TGH team and our many partners for all their hard work again this year. It is sincerely appreciated. It is also heartening to know that so many people see the advantages and value that ongoing investment by iwi-owned businesses bring to the whole community.


17

so mANy people see the AdvANtAges ANd vAlue thAt oNgoiNg iNvestmeNt By iwi-owNed BusiNesses BriNg to the whole commuNity

18

portFolio management

cash FloWs

Managing cash flows is crucial to TGH. They are reported on and managed weekly. The ability to do this successfully has a cascading effect on the timing of debt draw downs, and therefore interest rate exposure. As a high proportion of income is derived from property rental, cash inflows are regular with very little deviation. Cash outflows may spike according to the various development projects requiring funding, but otherwise operating outflows also remain at consistent levels.

Sustainability and quality of cash flows are essential components of TGH’s business. They must withstand market fluctuations, and service not only operating costs but also the dividend to our Shareholder and debt requirements.

Through its tenancy profile, TGH is provided with stable, long-term, high quality tenants such as Genesis, Waikato Institute of Technology, University of Waikato, Kiwi Income Property Trust and Crown agencies. In 2013, these tenants generated the bulk of investment property cash inflow, comprising 23% of total rental revenue, down from 29% in 2012.

TGH’s rental cash flows are now predominantly from retail tenants at The Base. TGH’s increased exposure to the retail sector prompts a hands-on approach to tenant relationship managemesant and debt collection.

A careful and considered approach is applied to property development. Before any property development is approved, its feasibility is analysed to ensure that the project’s cash flows meet internally developed risk-adjusted hurdle rates.

The most significant development undertaken in TGH’s history was the construction of Te AWA at The

Base. The development was broken into multiple stages, so TGH received rental revenue as each stage was completed, allowing debt to be serviced accordingly. Before commencing each stage, a committed leasing threshold also had to be met to provide surety of cash inflows. The approach taken there will also be applied to future property developments. Another significant development was the construction of the Novotel Auckland Airport. Built during the global financial crisis, with demand for construction at a low point, the pricing was competitive.

economic Value added and sector reporting

TGH’s market is as wide and varied as the business TGH operates. However, the nature of the core business placed TGH in the investment property sector in 2013 (This is set to change from 2014 as outlined in the Chairman and CEO’s reports). Largely based in Waikato, TGH owns a significant footprint in the Hamilton area where competitors are commercial landlords, retail operators and residential and commercial property developers.

TGH periodically compares its performance to market benchmarks to assess returns on investments. The balance sheet consists mostly of tangible assets that are reported at market value, and so an Economic Value Added (EVA) analysis is suited to TGH’s business. Unlike most property companies however, TGH is compelled to hold significant parcels of strategic undeveloped land that have considerable value. There are also parcels of land that are of significance to Waikato-Tainui which cannot be sold and whose returns would otherwise be considered low by comparison to sector benchmarks. This has the inevitable impact of eroding traditional performance metrics such as return on assets (ROA) and return on equity (ROE).

TGH has evolved its EVA reporting to

1872013

key

covenant: Covenants are the financial measures which tGh must abide by under the terms of the bank debt facilities and only apply to the entities within the Group that have provided guarantees.

interest cover ratio covenant: interest cover ratio calculates the number of times the profit (before interest cost) exceeds interest costs. the ratio must be more than two times.

gearing percentage covenant: the gearing percentage covenant is the equity as a percentage of the total tangible assets.

2.0

67%

60%

minimum covenantmarch 2013 covenant

quasi equity as a % of total tangible assets

operational REviEW

interest CoVer position (ratio)

GearinG position

interest BearinG liaBilities (Bank deBt) - tGh

752009

882010

1872011

1802012

bank debt debt to total assets gearing

15.5% 17.0%

28.9%26.5% 25.8%

maximum gearing = 30% debt: total assets

2.6

2013

187


19

allow for the review of the sectors for which it has significant investment in. These are investment properties, (commercial, retail, government and rural), development properties, hotels, agriculture and fishing.

For each sector, TGH has developed risk adjusted hurdle rates using public information to assess its balance sheet profile. These rates are used as a basis to evaluate potential future investment in these sectors, as well as benchmarks for reviewing current or historic performance. The nature of sector reporting allows TGH to ‘drill down’ into individual assets if required to assess performance and therefore make decisions to either dispose of or improve the asset.

treasurY management

TGH has a similar challenge to companies operating a co-operative structure, in that it is dependent on debt to fuel growth. TGH has not issued capital to anyone other than its Shareholder. This dependence on debt, by necessity, requires TGH to take a pragmatic approach in managing liquidity and risk exposure by:

Utilising relationships with banks, business partners and advisors;

Building sound internal treasury competencies;

Employing technology to provide current market information; and

Developing and adhering to practical liquidity, debt, and hedging policies.

Management reports each month to the Board on TGH’s compliance with policies governing hedging profiles, debt durations, and overall risk exposure. Any compliance deviation is reported, explained fully, and corrective action taken as necessary.

debt duration

TGH forecasts its debt monthly, on a 12 month rolling basis for operational purposes, but a longer term view of

capital expenditure is also taken to provide future funding requirements.

In December 2012 TGH renewed $50 million of its core debt, maintaining total debt facilities (excluding debt associated with the Novotel Auckland Airport) at $250 million. The company has a clear focus on tenor (debt duration) and balancing the associated pricing. This focus provides greater security around future liquidity requirements and means that TGH does not need to constantly refinance its debt every year, which usually comes at considerable cost and management time.

As the company embarks on the new higher yielding investment strategy, there will be robust consideration of all investement options before the balance of the debt facilities are drawn.

interest rate risk

Utilising both banking relationships and technology, TGH monitors the interest rate market on a daily basis. This is particularly important in times of global economic uncertainty, as this impacts on the swap rates that TGH is able to achieve. Swaps are financial instruments which are entered into with banks to hedge interest rate risks. Further detail on TGH’s interest rate risk is provided in note 25.1 (b)(ii) of the notes to the financial statements on page 72.

With little growth anticipated in TGH’s forecast debt, and with hedging policy limits at adequate levels, the company did not take out any additional interest rate swaps in the current financial year.

cost eFFectiVeness

TGH constantly monitors overheads to ensure that profitability margins are not compromised. TGH provides corporate services to the Shareholder which avoids duplication of resources within the wider Waikato-Tainui group and enhances the depth of specialist functions.

The level of overheads recognises TGH’s need to attract talented staff and to engage specialist external consultants and legal advisors as needed. The long ‘gestation period’ between concept and completion of a project means that overheads are often incurred ahead of resultant steady-state revenue streams.

margin management

As TGH is predominately in the property investment and development business it places significant emphasis on achieving commercially acceptable returns on property leases, and adopts a selective approach to property investment and development projects to ensure the risks TGH takes are appropriately compensated for.

Rent reviews are another opportunity to review and negotiate terms with existing tenants. Depending on the lease agreement, rent reviews are based on a number of standard mechanisms, such as current market rental as assessed by an independent valuer, inflation, and an increase in tenant’s revenues. The majority of TGH’s leases have clauses which stop the rental from decreasing. Further detail on rent reviews is provided on page 20.

A feasibility study is undertaken where a property development or investment opportunity is presented to the company. The study assesses what resources are required for the development and calculates the development margins and rental returns. Property development projects are assessed based on the calculated returns and are dependent on compensation for the resources utilised and risk involved. As a project is progressed, constant monitoring of its feasibility is conducted, ensuring that there are no cost over-runs. In 2013, all projects were maintained within budget.

20

inVestment properties

TGH’s investment properties comprise 79% (2012: 78%) of the company’s total assets. In 2013, they out-performed the listed property sector average in terms of growth in both value and cash, despite a relatively flat market over the past year. A high proportion of Crown tenants with good quality covenants, long term leases provide a significant contribution to both rental revenue and capital growth. Ground leases provide further stability as tenants have a shared interest in retaining their tenancies and renewing beyond the initial lease expiry date. Our property values have been boosted by the statutory planning progress at Ruakura. The retail sector also contributed to growth due to tenant mix improvements, retail sales increases, infrastructural improvements made to support the existing retail and planned expansion. The values of all other property sectors have remained relatively static.

acquisitions and disposals

TGH continually reviews its property portfolio to ensure that all its investments are providing appropriate returns. While a number of acquisition opportunities were presented in 2013, there were only two properties that were purchased. Both were at Rotokauri, and were acquired for added residential development. Three properties were disposed of during the year. Two properties in Hamilton, located in Hill Street and Queens Avenue, were considered uneconomic to retain or develop. The third property sold was part of the former Hort Research block at Pukekohe, which also proved difficult to develop and low yielding. In total, 7.43 hectares were purchased and 5.94 hectares sold during 2013.

weiGhted aVeraGe lease term - tGh

Years

0

5.7 5.2 5.76.9

12.8

7.3

rural office retail industrial public portfolio

2009 2010 2011 2012 2013

inVestment propertY porfolio Value - tGh

$m0

133 176 248 311 334

63

62

61

6455

25 29 29 29 36

40

39

40

4243

59

74

74

78105

office/comercialretailpublic sector

industrialrural/industry

inVestment and management

135 rent reviews were completed during the financial year which resulted in additional revenue of $1.2 million, providing an uplift of 4.4% over prior rentals. Total occupancy for 2013 was 99% (2012: 98%) at year end. Occupancy was maintained at high levels throughout the year as industrial and retail vacancies were filled.

the base proFile

The Base is New Zealand’s first super regional shopping centre due to its scale, the diversity of its retail offering and high number of anchor tenants. Consequently it draws a significant proportion of its patronage from regional areas, in addition to Hamilton City, enhanced by excellent customer access with the network of major arterial roads connecting to The Base.

The Base continues to be the country’s largest retail development comprising large format retail (LFR), food and hospitality, a large DIY offer, an outlet centre and an enclosed specialty retail shopping mall which includes a cinema complex.

During the year a further 18 tenants signed lease agreements and commenced trading at The Base, including 12 new tenants in Te AWA, 3 new LFR tenants and 2 tenants that were relocated. In total The Base has 190 tenants, 109 in Te AWA and 31 outlet tenants (such as DressSmart) and 50 LFR tenants.

A key strength of The Base continues to be customer car parking, roading layout and car-parking management system.

iNvESTmENT pROpERTy portFolio summarY

property asset value ($million)

occupancy (%)

2013 2012 2013 2012

retail 334 311 99 100

rural 105 78 100 100

public 55 64 98 95

industrial 43 42 100 100

office 36 34 96 94

total 573 528 99 98

2013 2012

net lettable area (sqm) 82,622 81,171

number of tenancies 190 180

occupancy 99% 99%

carparks 3,479 2,860

pedestrian count 7.5m 7.1m

Vehicle count 3.9m 3.6m

KEy STaTiSTiCS the base


21

During the year, a further 619 (net) customer car parks were constructed, bringing capacity to 3,479. Additional access ways were created to ease traffic congestion, aided also by the Te Rapa bypass which opened in December 2012.

cbd deVelopment

TGH’s new head office, including Joe’s Garage Cafe, a new cafe operator to Hamilton, was completed at 6 Bryce Street, Hamilton. This re-development, along with TGH’s neighbouring buildings at 2 Bryce Street, occupied by Slater & Company (Chartered Accountants), and 4 Bryce Street, now occupied by Waikato-Tainui Te Kauhanganui Incorporated (TGH’s Shareholder), will form a boutique office precinct which will help enhance the CBD and reinforce TGH’s commitment to the central city.

TGH is also very pleased to have successfully tenanted Palate restaurant in its refurbished premises located in the Alma Street building in Hamilton, which overlooks the Waikato River. Palate continues to be one of the region’s premier restaurants, and the shift to this location should only enhance that reputation.

During the year TGH also secured the Earthquake Commission as a new tenant for the Hamilton CBD and the Waikato region in a refurbished property in London Street.

residential deVelopment

The Callum Brae Tainui joint venture development at Huntington is nearing completion with only 11 of its 655 sections remaining for sale. Planning is underway for the residential development of 44 hectares at Rotokauri, less than a kilometre west of The Base, along with a further 7 hectares purchased at Rotokauri during the year. This will ensure that TGH remains in the residential development sector with a supply of sections available for the next 20 years. Added to Rotokauri and located an easy distance from both Hamilton and Auckland, 31 sections are available for sale at Hartis Avenue, Huntly.

Finding the right Fit

It took two years for Garageworks directors Karyn Grant and business partner Craig Macfarlane to find the right spot for Joe’s Garage, Hamilton.

“We loved the natural elements of the building, the steel and stonework and the sunny profile. And it was a fringe location, not on the main street or in the “hospo” zone. Joe’s ethos is that it has to be a destination known to locals and sought out by visitors,” Grant says.

“TGH wanted quality and longevity for the fitout and the lease, and so did we. They understood the importance of us making sure everything was just right.”

Grant says that’s all about making Joe’s a place comfortable for locals and visitors alike.

“We need a place that’s understated and unpretentious, funky and industrial, where you can get fresh food and exceptional espresso in a relaxed and casual environment.

“Being new to the Waikato, TGH also made us feel very welcome. It feels like we have family here, which is very special in a commercial environment.”

aWaRdS aNd aCCOladESinternational council shopping center aWards – asia paciFic: 2012 international council of shopping centers, silver award for design and development for te aWa

neW Zealand hotel industrY aWards: 2012 environmenal initiative award for novotel auckland airport

neW Zealand commercial proJect aWards: 2013 silver award for retail

neW Zealand architecture aWards: 2012 bay of plenty/Waikato architectural award for commercial architecture for te aWa

nga aho design aWard: 2012 bronze award for aotearoaness for te aWa

NOmiNaTiONSnZ institute oF chartered accountants: 2012 best annual report by a corporate organisation (Finalist)

22

374 kawhia (pine) planted 1996-1997

270 waipuna

(redwood) planted

2005-2007

150 whatawhata

(pine) planted 2001-2002

inVestments

hotels

TGH’s investment in hotels totalled $69 million as at March 2013, comprising the Novotel Auckland Airport and the company’s shareholding in the Hamilton Riverview Hotel (HRH).

TGH maintains a 70% controlling interest in the Tainui Auckland Airport Hotel Limited (TAAH). Auckland International Airport Ltd and ACCOR own 20% and 10% respectively. Opened in May 2011, with 2013 being the first full year of operation, the hotel’s occupancy and room rates have exceeded expectations and provided solid results which are forecast to strengthen over the coming year.

TGH’s investment in HRH was one of the company’s first major financial investments in 1998. TGH owns 41% of HRH whilst Hamilton City Council (HCC) and Accor own 41% and 18% respectively. HRH holds total assets of $44 million which are represented by two hotels within close proximity of each other, Novotel Tainui and Ibis Tainui. HRH’s performance during the year was flat as occupancy suffered. Looking ahead, growth in occupancy and room rate is assumed to be average given the subdued market.

Fishing

TGH’s fishing interests total $33 million, and comprise commercial quota and other assets allocated to Waikato-Tainui as a result of the Maaori commercial fisheries settlement with the Crown.

Under the Maori Fisheries Act 2004, assets from the settlement could only be transferred to those entities that met the prescribed criteria as a Mandated Iwi Organisation (MIO), and which would be managed by an approved Asset Holding Company (AHC).

The MIO for Waikato-Tainui is Waikato-Tainui Te Kauhanganui Incorporated, and TGH is an AHC.

TGH’s quota investment of $20 million provides a return of 7%. Snapper and crayfish are the highest value quota held. The volume of hoki also provides a significant contribution to the total quota.

TGH has an alliance with AHC’s of Ngaati Raukawa and Ngaati Maniapoto, and the three iwi have until now leased out their aggregated quota, having ceased to run an active fisheries operation together in 2008. As mentioned in the CEO’s report on page 15, TGH, Ngaati Raukawa and Ngaati Maniapoto have aligned with Aotearoa Fisheries Limited (AFL) in a multi-year quota lease arrangement. In addition, TGH has entered into a joint management agreement with Sealord Group Limited to jointly manage its deep-sea quota. With the new arrangements in place, it is hoped that returns from fishing will start to improve.

WTF holds 5.48% of the income shares in AFL, an iwi owned company which provided a dividend to WTF of $0.4 million in December 2012. Separate financial statements are presented for WTF from pages 77 to 82.

agriculture

Farms

TGH owns and operates one drystock station and has sharemilkers contracted on two dairy farms. Today the three farms are valued at approximately $22 million (including Fonterra shares).

The drystock farm, also known as Hangawera Station, is located near Morrinsville. It runs 2,500 ewes, 200 cows and approximately 300 trading cattle. These stock numbers include approximately 150 bulls that are sold to the dairy market each year. TGH employs two full-time farm staff and is an active manager of this farm. The two dairy farms are located on Bankier Road, Gordonton and Tainui Road, north of Morrinsville. Both are run

on a 50/50 sharemilker basis with the farms collectively producing 326,000 kgs of milk solids from approximately 1,000 cows.

TGH is reviewing the agriculture land portfolio with a view to maximising returns and considering opportunities to take a more active approach in the management of these assets as part of a wider farming system.

ForestrY

As a long-term investment in the TGH portfolio, a total of 795 hectares is currently planted in trees with a further 1,074 hectares leased out. The trees are a mix of Radiata Pine and Californian Redwood. The latter is well placed for the New Zealand Emissions Trading Scheme.

dairY produCtion kilograms of milk solids

2013

326

2012

325

2011

284

2010

286

2009

266

ms/kg in thousands

effeCtiVe farm area BY heCtares

250 tainui road

(dairy)

109 hukanui (dairy)

650 hangawera (drystock)

forest BY heCtares


23

solid results Are forecAst to streNgtheN over the comiNg yeAr

24

net operatinG profit moVement

net operating profit2012

income expenses netfinance

share ofassociatesprofit

netoperating profit2013

$m

20.7

(6.7)

(0.5) (0.2)

20.8

reVenue

expenditure

3%quota leasing

54%rental

30%hotel

7%other

6%sale of sections 3%

quota leasing

57%rental

26%hotel

10%other

4%sale of sections

2013

2013

2012

2012

key: the white bar represents increases in income in 2013 which is offset by the red bars, representing increases in costs. the net result of the white and red bars will provide the movement between 2012 and 2013 net operating profit.

7.5

0

15%employee costs

13%other

11%rental

4%sale of sections

3%cost

of sales 2%depreciation and amortisation

52%hotel

54%hotel

17%employee costs

9%other

9%rental

5%sale of sections

3%cost

of sales3%depreciation and amortisation

total $62.7m

total $28.8m

total $22.0m

total $55.3m

fiNaNCial oVerVieW


25

net operating proFit moVement The net operating profit movement graph shows the change between 2012 and 2013. A full year of Novotel Auckland Airport transactions and also rental income from Te AWA at The Base resulted in increases in both total revenue and operating expenses. Finance costs are now also recognised in the operating results since these major capital projects are now complete. There was a minor increase in interest compared to last year, despite net debt increasing by $7 million.

reVenueA full year of income from the Novotel Auckland Airport shows up in 2013, representing 30% of the total revenue. Rental income from Te AWA at The Base is now being received for a full year on stages 3 and 4 tenancies. Residential section sales included the sale of the Rotokauri land to Rotokauri Development Limited joint venture, while there were fewer section sales to external parties in 2013 as the stock on hand held by the Callum Brae Tainui joint venture diminished. Fishing returns remained relatively flat. Other income included dairy revenue and livestock revaluations, both of which suffered compared to 2012, due largely to drought conditions experienced during the 2012/2013 summer. In 2012, other income included dividends from Ryman Healthcare, but this did not occur 2013 due to the sale of these shares in July 2011.

expenditureExpenditure has been influenced by costs associated with the Novotel Auckland Airport and Te AWA at The Base, given that we have a full year’s worth of costs flowing through since the hotel opened and also for stages 3 and 4 at Te AWA. New positions at both The Base and at TGH head office, have affected employee costs.

a Weight oFF the mind

Palate moved to its present location at 20 Alma Street, Hamilton, overlooking the Waikato River, a year ago. The team, led by owner and head chef Mat McLean, hasn’t looked back since, winning Cuisine’s Best Regional Restaurant title in 2012.

Mat has been running his own restaurant for 8 years. One of the more demanding but rewarding aspects of the job is supervising the staff of 25 young people.

“You become a mentor, a counsellor, everything. The whole experience, and seeing them grow, has changed me. It’s taught me perseverance and belief that success is not just financial.”

His relationship with TGH has also been positive. “We’d had enough of the other end of town, and when I heard this site was empty, I worked overtime to develop a business plan and approached them. They were helpful and supportive, and I found a real respect. Since then it’s been seamless, we have a great relationship and my tenancy is no longer a concern.”

by SpENd iN 2013

top tensuppliers

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26

neW Zealand emissions trading scheme (nZets)The NZETS is a complex scheme focused on carbon management and administration. TGH is affected due to its fisheries, forestry, and agriculture related interests. We are fortunate to have a forestry portfolio which strategically positions TGH to engage in the carbon credit market and aim towards being a carbon neutral company. TGH holds 4,191 units for the quota held in its fisheries portfolio and expects to soon receive units for the forestry portfolio.

cultureWaikato-Tainuitanga is a fundamental aspect of TGH’s development and operations. We seek to ensure tikanga (protocol) is followed for all projects - including appropriate karakia (spiritual prayer) for construction sites.

Waikato-Tainui designs feature in our developments and businesses. The Novotel Auckland Airport, Te AWA and The Base all have embedded Waikato-Tainui cultural imagery, reinforcing our ownership and identity, as well as creating unique visitor experiences.

Staff are also made aware of the cultural influences within the organisation through the induction process and other measures, such as the celebration of Maaori Language Week.

social deVelopmentOur business activities contribute to positive growth for the greater Waikato region and New Zealand economy – from jobs created by our projects through to Shareholder distributions.

The dividend we pay each year helps the Shareholder to meet tribal administrative costs and to fund distributions to marae, education, health and well-being initiatives, and social and cultural developments.

sustainabilitYminimisation during construction. The hotel has obtained EarthCheck certification which is the leading benchmarking and certification programme for the tourism and hospitality industry. It provides a framework for environmental and social performance through independent third party verification.

example or reference site of stormwater system for ruakura.

tGh team participates in trimaaori festival.

inter-iWi exchangesIwi represent a sizable economic force in New Zealand. During the year TGH met with representatives from Ngaati Apa, Te Arawa, Ngai Tahu and Tauranga Moana. In addition, TGH and Ngai Tahu Holdings Corporation representatives have attended each other’s strategic planning sessions.

enVironmentResponsible, sustainable development that makes sense and protects the environment is how TGH operates. The ethylene tetra fluoro ethylene (ETFE) roof at Te AWA is an illustration of sustainable construction. Made from 100% recyclable materials, the product is self-cleaning and has insulating properties. It is light-weight, and requires minimal energy for transportation and installation. ETFE also allows natural light penetration, requiring little need to illuminate the common areas of Te AWA with additional lighting.

A car park management system (Meter Eye) has been installed in the basement car park at Te AWA and at the large format retail area at The Base. Shoppers can easily view where vacant car parks are located, saving both energy and vehicle running time.

Novotel Auckland Airport has installed triple glazing not only to eliminate airport noise, but also to provide added insulation and has also been constructed with low energy fittings. Materials and finishes were selected for their low environmental impact. Considerable thought was put into water and energy conservation and waste

Master planning for the Ruakura development incorporates greenfield design. Stormwater is proposed to be processed on site, thereby minimising discharge into the public stormwater systems which flow into the Waikato River. This is a deliberate and essential design feature, and fits well with the Shareholder’s aspiration to restore and protect the health and well-being of the Waikato River.

TGH promotes recycling throughout all business operations with weekly paper recycling at its premises. The Base and Te AWA also promote the recycling ethos with the provision of recycling bins for shoppers and the recycling programme for tenants. This annual report has been printed on environmentally friendly paper which has been sourced from legally harvested forests, and has been printed with environmentally friendly ink.


27

groWth

TGH’s core focus is growing its asset base to achieve long-term sustainable returns for its Shareholder. With an unprecedented $191 million capital spend incurred over the past three years, TGH is now at the back end of its two major projects, Te AWA at The Base and the Novotel Auckland Airport. TGH has experienced a step-change in benefits flowing from these two projects in the form of increased revenue and operating cash flows.

The Novotel Auckland Airport continues to make a significant contribution to TGH’s results. It has now had its first full year of operations, having opened in May 2011. Providing solid returns, especially when compared to the capital invested, the hotel has established its presence in the Auckland market. The hotel employees 143 full and part-time employees. With an 11% increase in full and part time jobs, and a steady increase in patronage, The Base and Te AWA were also major drivers behind the steady growth in 2013, becoming the preferred shopping destination in Hamilton and the wider region. Resource consents for the development of the remaining for 11 hectares, as well as additional retail on level one of Te AWA have been approved, providing capacity for further development and employment growth.

Located less than one kilometre west of The Base is the Rotokauri joint venture land, the site of the company’s proposed 700 section residential subdivision. Planning is underway with initial sales forecast to occur from 2015. Once established, the Rotokauri development will complement and fuel further economic growth at The Base.

Combined, these completed and proposed projects will provide the platform for the development at Ruakura and investment propositions under the new investment strategy.

Assets and earnings growth have been, and will continue to be, funded via cash flow and bank lending facilities. One key challenge in maintaining business growth will be access to long term funding that matches the investment horizons of TGH. Meeting this challenge is part of the wider strategic planning regularly undertaken by the Senior Management Team and Directors.

te AwA fAceBook likes grew By Almost 300% to over

8,300

communitYTGH supports many community initiatives. In May 2012, TGH continued its support of a community initiative called the ‘At Heart Foundation’ for congenital heart defects in children. During surgery, a child’s chest cavity is cooled down in an icy slush to slow their heart rate. To replicate this process, the ‘At Heart Foundation’, in conjunction with The Base, held an event on site where teams could be sponsored to jump in an icy cold pool for five minutes and then warm up in a spa bath afterwards. As a result, $22,000 was raised on the day for the 12 Kiwi children born every week with a heart defect.

‘Shave for a Cure’ is Leukaemia and Blood Cancer New Zealand’s biggest fundraising event, helping the estimated six Kiwis who are diagnosed with a blood cancer every day. The Base hosted the ‘Shave for a Cure’ event where individuals, businesses and the community can seek sponsorship for shaving their head. The event was well support by the community, raising $2,000 for the cause.

The Base is the proud sponsor of the ‘player of the day’ where one child is nominated from each netball or rugby team. The prize is a gift card from The Base – encouraging team spirit and positive participation.

The Novotel Auckland Airport supports the ‘Cure Kids’ appeal and up until March 2013 raised approximately $12,000 by hosting a wine and cheese evening, several raffles, a pizza night, and a karaoke night.

the BAse hAs creAted employmeNt for

people1,692

28

partnershipscreating eFFectiVe partnerships has been an inValuable component oF tgh’s business strategY. three organisations Whom the companY currentlY Works With are proFiled here.

OpEN bOOK pROCESS REWaRdiNg

daryl horn, opus

For Daryl Horn, Associate at Opus Architecture in Hamilton, designing the new TGH offices and the Joe’s Garage tenancy at 6 Bryce Street was one of the most enjoyable projects he’s worked on. “Despite a tight timeframe and all the usual pressures of a construction project, it went very smoothly. The entire team gelled and it ran like clockwork with any emerging issues being easily resolved. Everyone was focused and went the extra mile to ensure an excellent outcome was achieved.”

Daryl attributes this to several things. “You’re made to feel part of the TGH team. It’s the people first and foremost but also their innovation and drive. You can’t help but be immersed and excited by their enthusiasm and ideas. This inspires and drives you to create something great.”

The design brief was very clear he says. “It was to utilise and retain as much of the existing building as possible especially the road front facade. The building had a lot of heritage and character and TGH wanted this preserved. On the ground floor the direction was to have an industrial look open plan office area with exposed services and steelwork, and to utilise the existing brick walls. For the first floor it was to have a more conventional office environment with a combination of offices, open plan and meeting areas.

i see tgh as being

VerY innoVatiVe.

theY had great ideas

and a strong design

sense oF What theY

Want to achieVe. this

alloWed us to easilY

take their Vision and

make it a realitY. |

For Watts & Hughes Construction, who undertook the construction work on 6 Bryce Street, it was also a rewarding project. The 125-strong company had worked with TGH before on the Ibis Tainui as well as several projects at The Base.

Mark Gutry, Construction Director, who worked on the project, says there was a lot of history in the building that they uncovered during the project – old commercial kitchen and gym gear, even night club paraphernalia.

“We initially set out to re-use as much of the old brick façade as possible. Unfortunately the building needed a lot of seismic strengthening to bring it up to code, and the bricks were all mixed – there was no consistency. We did use as many of them as we could along the back walls though.”

Like Opus, Watts & Hughes appreciated the process that was followed. TGH project managed the refurbishment, but there was flexibility, good communication and the Watts & Hughes team felt very supported throughout.

“It’s great to see the workings of the building which are usually hidden out of sight. It’s interesting and different. The amalgamation of existing and new works very well and you can’t help but be taken in by the calming working atmosphere it creates.”

Daryl is thrilled with the end result, which he says is a credit to everyone involved.

“I see TGH as being very innovative. They had great ideas and a strong design sense of what they want to achieve. This allowed us to easily take their vision and make it a reality.”

Opus Architecture is currently working with TGH on developing the wider precinct at Bryce Street which will include new landscaping, upgrading the existing surrounding buildings and incorporating new covered walkways.

iNNOvaTivE appROaCH iNSpiRES


PART

NER

SHIP

S

29

russell kerr, iss new Zealand

a high qualitY Job is

important because not

onlY iss, but also tgh,

gets measured on the

team’s perFormance.

“They involved us, the architect and the engineers in the design and to help find efficiencies to meet the budget they had in mind. It’s called an open book process. It’s a good way to do it,” he says.

“TGH’s approach is very professional. They command respect from how fairly they treat all their contractors. Even those who haven’t worked for them before, and come cold calling, always get a fair hearing.”

There were some surprises on the project. Gutry says Watts & Hughes’ Directors make a point of getting involved in projects, but for him it was a bit of a double-edged sword.

“My daughter, oldest brother and sister-in-law all work nearby. So there was no shortage of supervision for the job, I can tell you!”

mark Gutry, watts & hughes Construction

mY daughter,

oldest brother

and sister-in-

laW all Work

nearbY. so there

Was no shortage

oF superVision

For the Job, i can

tell You! |

It’s easy to take a clean and tidy shopping centre for granted. At The Base and Te AWA, a dedicated team of thirty, 10 full-time and 20 part-time, make sure people don’t even think about it.

ISS Facilities Services Limited (ISS), one of the largest of its kind in New Zealand, and internationally the world’s fourth largest private employer, won the contract four years ago. The job has expanded significantly as The Base has grown and Te AWA has been built during that time. It’s a cornerstone contract for ISS, and TGH is their second largest client in the region after the Waikato District Health Board.

Russell Kerr, ISS New Zealand’s General Manager, explains that there’s much more to the job than most people would imagine.

“The normal daily cleaning is broken into two parts. The first covers opening hours. Tables are cleared

mORE THaN mEETS THE EyE

promptly in the foodcourt. Edges are wiped, spills cleaned up and smears on glass doors rubbed off quickly. Waste must be dealt with and toilets checked every 60 minutes. The second is at night. A second team undertakes what’s called a deep clean, where all flat surfaces are dusted and wiped, and floors scrubbed and polished.”

Over and above the daily routine are what’s known as ‘periodicals’. These can be weekly, monthly, six-monthly or yearly. That’s when things like high dusting, cleaning high windows and washing the outside of buildings are all tackled.

“The number of staff on at any one time depends on peaks, such as lunchtimes, weekends, school holidays, Christmas week and the Boxing Day sales,” he says.

“And that’s not all. Because our staff are wearing TGH uniforms, they’re often asked questions or directions. So they must know the layout of the place, and respond courteously.”

All this requires special training, careful planning and lots of communication.

ISS works closely with TGH’s facilities management team at The Base on a daily basis to ensure it delivers the standard of service TGH expects. “A high quality job is important because not only ISS, but also TGH, gets measured on the team’s performance.”

Kerr believes there’s mutual respect between ISS and TGH, and is keen to grow the relationship. “I also personally think iwi will be critically important to the growth of this country. They’re going to be economic powerhouses within the economy.”

30

chris Joblin mike pohio nathan Yorktama potaka

chris was appointed Chief financial officer in 2009. prior to joining tGh Chris held a number of senior financial positions in both new Zealand and the united kingdom. Chris is a member of the new Zealand institute of Chartered accountants and infinZ.

at tGh Chris is responsible for finance, treasury management, financial information systems and audit. during the year Chris has focused on refining the investment and funding strategy and also became a director in associate entity, hamilton riverview hotel limited.

married to Colleen, Chris has two children.

mike was appointed Chief executive officer in 2006. prior to joining tGh, mike held a number of senior management positions in companies including the port of tauranga, fonterra, new Zealand dairy Group and elders pastoral. mike gained an mBa from imd, switzerland in 1999 and is a member of both the new Zealand institute of Chartered accountants and institute of directors. he is a director of transpower and is also Chairman of BnZ regional partners (waikato), a member of the new Zealand initiative and a member of the property Council of new Zealand.

mike has two adult sons and is married to karen.

tama joined tGh in december 2009 as General manager, Corporate services and holds a practising solicitor’s certificate. tama has worked as a lawyer in the united states and new Zealand and is a graduate of Columbia university amongst other educational institutions. he has authored numerous articles and is a regular public speaker on constitutional and maaori development issues.

at tGh, tama is responsible for corporate governance and administration, legal issues, human resources/people, policy and procedures, and health and safety. tama was instrumental in implementing electronic governance reporting as well as automation of the shareholder’s payroll system.

tama is married to ariana and has three children.

nathan was appointed General manager of property in 2003. he has a Bachelor of management studies degree, an mBa from the university of waikato and is currently studying te reo maaori under the te tohu paetahi programme. nathan is also chairman of hamilton riverview hotel limited and a director of tainui auckland airport hotel Gp limited, the entities that contain the hotel joint venture investments on behalf of tGh.

nathan oversees all property investment and development operations for tGh. in the last year the property business units achieved strong portfolio returns, saw the continued development at the Base, new offices for tGh and substantial progress with various statutory planning processes.

nathan and his partner Briar have three children.

SENiOR maNagEmENT TEam


31

ou

r pe

ople

Joint Ventures

TGH is a partner in a number of joint ventures including the Tainui Auckland Airport Hotel Limited Partnership (with Auckland International Airport Limited and ACCOR), Hamilton Riverview Hotel Limited (with Hamilton City Council and ACCOR), Callum Brae Tainui Limited and Rotokauri Development Limited (both with Messrs Malcolm Macdonald and David Lugton). Each joint venture has its own governance entity with representatives from each joint venture partner.

people strategY

In the last 12 months, TGH has continued its people development plan entitled ‘People Strategy 2025’. The core goals of the strategy are to foster conditions where employees can perform to their individual potential, ensure that there is a ‘TGH way’ of doing the right things, and enhance the people capacity to support all strategy and service issues.

Over the reporting period, the company facilitated free vision checks, medical checks and flu injections for staff, as well as team-building through regular social activities. TGH interacts with the sole Shareholder on a weekly basis to ensure its corporate and administrative support is aligned to the Shareholder’s needs.

our team

training and development

The company encourages training and development for all team members, with a significant focus on practical engagement with its key partners and stakeholders. In the past year, Bell Gully, Willis and other partners have presented seminars on topical business and economic issues. External training priorities have also been clarified to better match course selection with TGH’s skill and competency requirements. All employees are required to have a training and development plan focusing on development and growth, and this is monitored during their performance management process.

health and safety

TGH is committed to providing a safe workplace and has promoted a higher degree of health and safety consciousness in the workplace. This has involved monthly hazard review processes being undertaken at key sites including The Base.

Over the past financial year, the company has had one work related incident with the loss of 22.5 work hours.

perFormance management

TGH continues to focus on performance management as a key platform for ensuring the company’s success. The performance management process focuses managers and employees on performance targets, measured over six monthly and annual periods.

organisational leVels 2013

60% individual contributors

16% middle management

3% First line supervisors/managers11%

graduates

10% senior managers

ethnicitY 2012

12% new Zealander (born overseas) 17%

Waikato-tainui

37% new Zealander

(born locally)

34% other iwi

ethnicitY 2013

10% new Zealander (born overseas) 24%

Waikato-tainui

37% new Zealander

(born locally)

29% other iwi

people

chieF executiVe oFFicer

property management

property development

legal and administrative

services

general manager corporate services

group treasury

chief Financial officer

corporate Financial services

general manager property

tgh corporate structure

32

amY Wharakura

You wouldn’t want to face former graduate programme member, Amy Wharakura, in a ‘do or die’ race. She’d probably win.

In late 2012 she was scheduled to sit part two of her professional accounting exams, and also expecting her first child. The night before the six hour test, her contractions started. Come the morning they subsided a little, and having studied hard for months, she was determined to carry on. Amy managed 4 hours’ worth, before the contractions got too much and she had to bow to the inevitable.

Now the proud mother of Wairua, she re-sat the exam in January and passed, making her a qualified Chartered Accountant. She has also picked up a part time contract with the Waikato Raupatu Lands Trust. Working for the tribe is a great motivation. “You know you’re contributing to something bigger, even though you’re working behind a desk.”

They couldn’t have a more dedicated person on the job.

numBer of emploYees bY age

24

age<30 age 30 - 50 age >50

7 7 74

24

2013 2012

numBer of emploYees bY gender

male Female

23

15

22

13

2013 2012

numBer of emploYees Who commenced serVice

permanent appointments Fixed-term appointments

28 252013 2012

numBer of emploYees Who leFt serVice

resignation end of fixed-term

25 4 12013 2012

numBer of emploYees bY length oF serVice

<2 years 2-4 years 5-10 years

13 1312 16

8 11

2013 2012


33

ou

r pe

ople

The graduate recruitment programme is designed to give two university graduates of Waikato-Tainui descent the opportunity to develop their education, knowledge, skills and work experience by working at TGH for a period of two years. The programme includes secondment to one of TGH’s key partners or advisors. Each year there is a fresh intake and with the programme now in its fifth rotation, it continues to be an attractive placement opportunity for Waikato-Tainui graduates.

kahlea tamati (waikato-tainui, ngaati porou and ngaati kahungunu) is the fifth accounting and finance Graduate and commenced at tGh in 2012. kahlea completed a Bachelor of management studies degree at the university of waikato with a major in accounting. kahlea is currently working towards becoming a qualified Chartered accountant.

ashleigh tukutuku turner (waikato-tainui, ngaati maniapoto and ngaati awa) joined tGh in 2012 as the property and Corporate services Graduate. working across both property and corporate services functions, the ‘hybrid’ graduate role suited ashleigh’s law and management academic background. she graduated in 2012 with a conjoint Bachelor of laws/Bachelor of management studies with first Class honours, majoring in law and strategic management from the university of waikato. during her tenure ashleigh’s key tasks involved property development and legal duties. ashleigh was recently appointed Business analyst with the waikato raupatu river trust.

taWa campbell-seYmour (ngaai tai, whakatoohea, and te aitanga-aa-maahaki) was appointed the property Graduate in 2011 as the fourth graduate to have worked in the tGh property team. tawa completed a Bachelor of management studies (hons) majoring in economics and finance, in conjunction with a Graduate diploma in te reo maaori at the university of waikato. during the year tawa undertook a secondment to westpac Bank, gaining exposure to property finance, business and institutional banking, as well as retail banking, over a period of six weeks.

marie hurinui (waikato-tainui and ngaati tuuwharetoa) is the fourth accounting and finance Graduate and commenced at tGh in 2011. marie completed a Bachelor of management studies degree at the university of waikato with a major in accounting. during the reporting period, marie successfully completed new Zealand institute of Chartered accountants foundations programme which is the first of two requirements necessary to become a Chartered accountant.

gRadUaTE pROgRammE

34

OUR directors

Appointed as an independent

Director in 2009, Mike has

considerable experience in

investment banking and general

management in New Zealand

and the United Kingdom. He

was previously the Head of the

Westpac Institutional Bank

in New Zealand and Head of

Mergers and Acquisitions at

Southpac.

entitY position

Canterbury spinners limited director

Coats plC Chairman

Godfrey hirst nZ limited director

Guinness peat Group plC director

nZwl – trh limited director

nZ windfarms limited director

tower limited director

trh services limited director

watercare services limited director

mike allen

entitY position

auckland arena Carpark Company director

Britomart Group of Companies director

Castlebrook investments limited director

Coliseum sports media management limited director

Cooper and Company nZ director

mountain landing project management limited director

tsavo limited director

Matthew was appointed as

an independent Director in

2011. Matthew is the CEO

and Principal of Cooper and

Company NZ, a highly successful

property development and

investment company based

in Auckland. Prior to that,

Matthew spent 20 years at law

firm Bell Gully specialising

in construction, commercial

property and major projects. He

was also the firm’s Chairman for

his last five years there.

mattheW cockram

entitY position

auckland international airport limited director

fonterra Co-operative Group limited director

manuka s.a. director

pascaro investment limited director

rabobank australia limited director

rabobank new Zealand limited director

Sir Henry is an independent

Director and was appointed

Chairman in 2012. A founding

Director of Fonterra Co-

operative Group in September

2002, he contributed to its

governance for nearly 20 years

both as Director and Chairman.

In 2009, Sir Henry was

honoured with a Distinguished

Companion of the New Zealand

Order of Merit for his extensive

services to agriculture.

sir henrY Van der heYden


35

entitY position

ngati tuwharetoa fisheries limited director

ngati tuwharetoa fisheries holdings limited director

waikato-tainui executive member te kauhanganui incorporated (te arataura)

Joanna perrY board adVisor (from 1 april 2012)

Ms Perry is a full time non-executive director. Her current roles include Deputy Chairman of Genesis Energy and independent director of TradeMe, The Co-operative Bank, Kiwi Income Property, Partners Life, Sport New Zealand and New Zealand Rowing. She also sits on the Interpretations Committee of the International Accounting Standards Board.

entitY position

waikato-tainui distributions limited director

waikato-tainui executive member te kauhanganui incorporated (te arataura)

Appointed in 2012, Paki is an

Iwi and Maaori development

consultant. He previously

managed the transfer of

fisheries assets to individual iwi

at Te Ohu Kaimoana and prior to

that was a General Manager of

the Waikato-Tainui commercial

fishing companies.

paki raWiri

Hemi was appointed to the

board in 2012. He was formerly

the CEO of the Waikato

Raupatu Lands Trust. Prior

to that, Hemi was the Deputy

Chair of the inaugural Tribal

Executive and he also served

as the Te Kotahitanga Marae

representative on the inaugural

Te Kauhanganui (now WTTKI)

in 1999.

hemi rau

36

The Board of Directors have pleasure in presenting the Annual Report including the Audited Financial Statements of TGH (the Company) and its subsidiaries (the Group) for the year ended 31 March 2013.

principal business activity

TGH’s principal business activity is to manage the commercial interests of the Shareholder, Waikato-Tainui Te Kauhanganui Incorporated which includes assets returned by the Crown through the Waikato Raupatu Claims Settlement Act 1995.

There have been no significant changes in the nature of these activities during the year.

results

The results for the year are reported in the statements of comprehensive income on page 45. The Group has recorded a net profit of $45 million (2012: $39 million).

The Group’s total equity as at 31 March 2013 was $477 million (2012: $374 million). Further information on the movements in equity is provided in notes 9 and 10 on pages 60 and 61.

The Directors are satisfied with the results for the year.

directors

The following persons were appointed, resigned or held office as Directors of the Company as at 31 March 2013:director appointed resigned

sir h w van der heyden

(Chairman) 1 july 2012 -

m n allen 1 june 2009 -

m Cockram 25 march 2011 -

r s papa 3 november 2010 30 april 2012

p rawiri 30 april 2012 -

h w rau 30 april 2012 -

r t m schaafhausen 1 june 2009 30 april 2012

j l spencer 30 january 2003 30 june 2012

hon. k t wetere 9 april 2002 30 june 2012

board advisor

j perry 1 april 2012 -

The Director’s profiles are reported on pages 34 and 35.

The Company has twelve (2012: twelve) subsidiaries as listed in note 3 of the financial statements on page 57. M Pohio and T Potaka are the Directors of nine of the subsidiaries. M Pohio and N York are Directors of two subsidiaries and one subsidiary is a limited partnership. M Pohio, T Potaka and N York do not receive any remuneration or other benefits as Directors of subsidiaries within the Group.

directors remuneration

The remuneration received by Directors during the year is as follows: consolidated & parent 2013 2012 $’000 $’000

sir h w van der heyden (Chairman) 60 -

m n allen 55 40

m Cockram 40 40

r s papa (resigned 30 april 2012) 3 40

h w rau (appointed 30 april 2012) 37 -

p rawiri (appointed 30 april 2012) 37 -

r t m schaafhausen (resigned 30 april 2012) 3 40

j l spencer (resigned 30 june 2012) 20 80

hon. k t wetere (resigned 30 june 2012) 10 40

j perry – Board advisor (appointed 1 april 2012) 40 -

305 280

use of company information by directors

There were no notices from Directors of the Company requesting to use company information received in their capacity as Directors which would not otherwise be available to them.

auditors

PricewaterhouseCoopers has indicated their willingness to continue in office. Audit fees paid to PricewaterhouseCoopers are outlined in note 5 of the financial statements on page 59.

shareholder resolution

The Shareholder of the Company has exercised its right under section 211(3) of the Companies Act 1993 and unanimously agreed that this Annual Report need not comply with paragraphs (e), (g) and (h) of section 211(1) of the Act.

Signed for and on behalf of the Directors of the Company on the 18th of June 2013.

directors‘ REpORT

Mike Allen Director


tainui group holdings limited (tgh)


37

The Board of Directors have pleasure in presenting the Annual Report including the unaudited Financial Statements of WTF for the year ended 31 March 2013.

principal business activity

WTF’s principal business activity is to manage the income shares held in Aotearoa Fisheries Limited under the terms defined in the Maori Fisheries Act 2004.

There have been no significant changes in the nature of these activities during the year.

results

The results for the year are reported in the statement of comprehensive income on page 78. WTF has recorded a net profit of $0.4 million (2012: $0.5 million).

WTF’s total equity as at 31 March 2013 is $13 million (2012: $14 million).

The Directors are satisfied with the results for the year.

directors

The following persons were appointed, resigned or held office as Directors of WTF as at 31 March 2013:director appointed resigned

sir h w van der heyden

(Chairman) 1 july 2012 -

m n allen 1 june 2009 -

m Cockram 25 may 2012 -

r s papa 26 november 2010 30 april 2012

h w rau 30 april 2012 -

p rawiri 30 april 2012 -

r t m schaafhausen 1 june 2009 30 april 2012

hon. k t wetere 9 april 2002 30 june 2012

board advisor

j perry 1 april 2012 -

The Director’s profiles are reported on pages 34 and 35.

directors remuneration

There was no remuneration received by Directors during the year ended 31 March 2013 (2012: nil).

use of company information by directors

There were no notices from Directors of WTF requesting to use company information received in their capacity as Directors which would not otherwise be available to them.

shareholder resolution

The Shareholder of WTF has exercised its right under section 211(3) of the Companies Act 1993 and unanimously agreed that this Annual Report need not comply with paragraphs (e), (g) and (h) of section 211(1) of the Act.

Signed for and on behalf of the Directors of WTF on the 18th of June 2013.

Waikato-tainui Fisheries limited (WtF)

Mike Allen Director


38

board audit remuneration and nomination inVestment

member attended possible attended possible attended possible attended possible

sir h w van der heyden 8 9 - - - - 2 3

m n allen 9 11 1 1 1 1 3 3

m Cockram 11 11 1 1 1 1 2 3

h w rau 10 10 1 1 - - - -

r t m schaafhausen 1 1 - - - - - -

p rawiri 9 10 1 1 - - - -

r papa - 1 - - - - - -

j l spencer 3 3 1 1 1 1 1 1

hon. k t wetere 3 3 1 1 - - - -

goVernance

The Board of TGH is committed to the highest standards of oversight, accountability and management. It accepts this commitment by supporting the increasing emphasis on corporate governance in New Zealand, regularly reviewing practices and making amendments where necessary.

TGH’s business practices reflect corporate governance best practice in the following manner:

external benchmarks

While TGH’s policies and Charter provide explicit expectations, the company has also adopted the nine principles of corporate governance prescribed by the Financial Markets Authority. These, as well as other prescriptive doctrines such as NZX Listing Rules, provide strong external benchmarks for developing governance structures and processes. These benchmarks are particularly useful to the Shareholder and key stakeholders as they demonstrate TGH’s commitment to ensuring that the Board operates effectively and in accordance with best practice guidelines.

The 9 principles in summary, are as follows:

Ethical standards

Board composition

Board committees

Reporting and disclosure

Remuneration

Risk management

Auditors

Stakeholder relations

Stakeholder interests

the board charter

The TGH Board operates in accordance with the Board Charter (‘Charter’). The Charter is an important document which outlines:

• Board composition and method by which members are appointed;

• Expected behaviour of the Board and its members;

• Discharge of authority to Board members;

• Commitment to compliance with all relevant laws and regulations; and

• Committees that sit under the Board being the Audit Committee, Remuneration and Nomination Committee, and Investment Committee.

ethical standards

Through robust policy, the Board collectively and individually promotes ethical and responsible decision making and behaviour. There have been no instances of unethical behaviour during the year ended 31 March 2013 (2012: nil).

board composition and performance

The Charter provides for a balance of independence, skill, knowledge, experience and perspectives among Directors so that the Board works effectively. The Board provides for six Directors. Of the six Directors, three are appointed by the Shareholder and three are Independent Directors. There is currently one Shareholder Director position which remains vacant. The Chair is always an Independent Director. The Directors consider that the six member Board is appropriate for both the size and business activity of TGH.

TGH is committed, through its Charter, to ensuring Directors have the knowledge and information

audit Committee – all members of the tGh Board are members of the tGh audit Committee investment Committee remuneration & nomination Committee


39

necessary to discharge their responsibility effectively through the provision of comprehensive information provided at monthly (excluding January) Board meetings.

director induction

There were three new appointments and four resignations from the TGH Board during the year ended 31 March 2013. New Directors went through an induction process which included:

• Meeting the senior management team (SMT), followed by presentations by each member of SMT to describe their roles and accountabilities;

• A tour of TGH’s major properties and investments; and

• Meeting with key members of the Shareholder’s governors who sit on Te Arataura.

• All Directors are covered by Directors and Officers Liability Insurance for the term of their directorship with TGH.

board committees

The Board uses Committees to enhance its effectiveness in key areas whilst retaining Board responsibility. These Committees allow detailed and expert examination of relevant issues to facilitate decision-making. The Committees make recommendations to the Board and have no decision-making ability unless specifically delegated by the Board.

There are three Board Committees: the Remuneration and Nomination Committee (RNC), the Audit Committee and the Investment Committee. Further detail on each Committee is provided on pages 40 and 41. All Committee members must abide by the terms of reference or Charter for that particular Committee. The Audit Committee is comprised of the Board of TGH. All Independent Directors are members of the RNC and the Investment Committee.

reporting and disclosure

The Board demands integrity both in financial reporting and in the timeliness and balance of disclosures on TGH’s affairs. The Board Charter creates effective policies and procedures to ensure the integrity of financial information, responsibility for which has been delegated to the Audit Committee. Independent external auditors are also appointed solely to provide statutory and other audit services. The Audit Committee ensures that the external auditor’s responsibilities are in accordance with the requirements of the Board Charter.

remuneration

Remuneration of Directors and senior management needs to be fair, transparent and reasonable. Adequate remuneration is necessary to attract, retain and motivate high quality directors and executives. The RNC oversees and recommends the process for performance evaluation of the CEO and other key executives. Further detail on the RNC is provided on page 41.

risk management

TGH accepts that risk is an essential feature of any business. TGH’s Risk Management Policy and practices ensure effective analysis, management and control of existing and potential risks. TGH maintains a programme, which is approved by the Board, for the identification, assessment, monitoring and management of risk to the business. The Board has overall responsibility for the internal controls with the Audit Committee being responsible for reviewing its effectiveness. TGH has engaged Ernst & Young as internal auditors. The Board approved programme they undertake focuses on providing internal audits on policy, procedures, internal controls and any other areas of concern. Effective risk management provides greater assurance that TGH’s vision and strategy will be achieved without surprises. One new policy was adopted in 2013, being the Business Continuity Policy.

auditors

External auditing is critical for integrity in financial reporting. To properly perform their role, auditors must observe the professional requirements of independence, integrity, and objectivity. They need to have access to all relevant information and individuals within an entity that play a role in its financial reporting processes.

The Board and the auditors are jointly responsible for ensuring that an entity’s audit is conducted in the context described above. TGH requires structures that promote auditors’ independence from the Board and executives, protect auditors’ professional objectivity in the face of other potential pressures, and facilitate access to information and personnel.

The Audit Committee has a crucial role in selecting and recommending Board and Shareholder appointment of auditors, and in overseeing all aspects of their work. PricewaterhouseCoopers continued as external auditors of the Group in the current financial year.

40

shareholder relations

TGH has an active relationship with its sole Shareholder, Waikato-Tainui Te Kauhanganui Incorporated. A Statement of Corporate Intent (SCI) formally documents the necessary understanding that must exist between TGH and its Shareholder and is a living representation of the expectations of each party. Although some of its provisions apply for several years, the SCI is revised annually.

The SCI sets out TGH’s key objectives, guiding principle and values. It highlights the importance of the company’s brand and reputation, provides financial reporting targets and sets out the accounting policies that will be maintained in accordance with the relevant statutory provisions. The SCI clarifies the requirements of the dividend policy. It also requires Shareholder approval should any capital expenditure, acquisition or divestment occur that exceeds 30% of the total assets of the parent entity. Finally, the SCI outlines the necessary information that TGH must provide to the Shareholder. A full description of the SCI can be found on the TGH website.

On an annual basis, TGH and Te Arataura conduct a joint strategic planning session. Both the TGH Board and the Shareholder Board fundamentally agree that a close working relationship should be nurtured to draw on each other’s respective commercial and social expertise to progress strategic initiatives.

TGH also provides its Shareholder with corporate services through a service level agreement which includes treasury management, financial services, property management and people support services. The provision of such services by TGH to the Shareholder creates cost efficiencies and cohesion.

The Board of TGH is committed to ensuring that the members of Waikato-Tainui, through the tribal parliament, are kept abreast of the ongoing performance of the company. This is prescribed in the Charter. TGH’s financial results are presented to the Shareholder’s executive on a monthly basis and to the tribal parliament every quarter. This is an opportunity to increase awareness and receive feedback on TGH’s development projects and its operational performance.

setting strategy

The aspirations of Waikato-Tainui span many generations. The vision and strategy of TGH is consistent with this long term view. Projects are forecast well in advance of turning the first sod. This

is achieved through a concerted and ongoing strategy setting process which utilises financial modeling and business intelligence tools. At a minimum, TGH maintains a 15 year outlook which recognises the completion of existing projects (i.e. what we know for sure), and the initiation of new ones (i.e. unchartered territory).

This process of strategy setting culminates with an annual, two day meeting with the TGH Board and senior management. Day one is an opportunity for senior management to present the strategy, and for the Board to challenge the proposed direction and offer guidance where appropriate. Te Arataura attends day two. This is a useful opportunity for the Shareholder governors to observe the alignment of TGH’s aspirations, with those of the Shareholder, as stipulated in the SCI.

stakeholder interests

Whilst the Shareholder relationship is paramount, TGH’s relationships with wider stakeholders, including the community, customers and suppliers are considered on page 27 and 28 to 29 respectively.

audit committee

All members of the TGH Board are members of the Audit Committee. The Audit Committee Charter is incorporated in the Board Charter. The Audit Committee has continual oversight for financial reporting, audit functions, risk management and internal controls. More specifically, the Audit Committee’s objectives include:

• Oversight for reporting of financial information;

• Application of accounting policies;

• Financial management;

• Internal control systems;

• Risk management systems;

• Business policies and practices;

• Protection of the Group’s assets; and

• Compliance with applicable laws, regulations, standards and financial disclosure best practice guidelines.

During the year, one meeting was dedicated to Audit Committee business for the purpose of approving the annual financial statements. All other Audit Committee business was addressed at regular Board meetings.


41

remuneration and nomination committee

As a sub-committee of the Board, the responsibility and role of the RNC is the appointment and remuneration of Directors and senior management and other related matters. The RNC’s objectives are to assist and advise the Board in relation to:

• The CEO appointment and remuneration;

• Performance management and appraisal of the CEO;

• Succession planning;

• Setting annual incentive targets and objectives for the CEO and the CEO’s direct reports;

• Approving the remuneration of the CEO’s direct reports;

• The appointment and succession of the Board Directors, especially Independent Directors and/or Advisors to the Board;

• Independent Directors’ and Advisors remuneration; and

• Any other matter referred to it by the Board.

Senior management’s annual incentives are determined by key performance indicators as stipulated in their individual employment agreements. Any changes in remuneration are based on performance and market comparisons.

The total remuneration paid to Directors is reported on page 36. The Directors do not participate in any profit based incentive system. No additional Directors fees are paid for Committee members. Additional fees are paid to Independent Directors where their services are required in excess of specified requirements.

investment committee

As a sub-committee of the Board, the responsibility and role of the Investment Committee is to assist and advise the Board in relation to investment activities with the following objectives:

• To review investment policy;

• To review the appointment of investment advisors and fund managers;

• To monitor investment and fund manager performance;

• To monitor compliance with investment policies and mandates;

• To recommend to the TGH Board on matters noted above; and

• To monitor the investment policy, strategy and framework for decision making.

The Investment Committee met three times during the year.

statement of investment policy and objectives (sipo)

The SIPO underpins TGH’s primary strategic objective: to maximise Shareholder wealth by implementing a sustainable asset portfolio supported by appropriate financing and distribution policies. Not surprisingly, this is also TGH’s mission statement. The SIPO responds to the choice between diversification and specialisation of TGH’s asset portfolio by assessing the company’s influence or control over an investment alternative, and the extent to which TGH has expertise.

Under certain conditions, the SIPO does permit TGH to invest in opportunities where there may not be a controlling interest, but where the investment is consistent with TGH’s commitment to furthering economic development. These may include pooled investments, for example minority holdings in listed securities, or iwi co-owned investments by arrangement.

Finally, the SIPO defines the responsibilities and delegation of the Board of Directors, the Investment Committee and senior management.

42

Financial iNfORmaTiONTaiNUi gROUp HOldiNgS aNd WaiKaTO-TaiNUi fiSHERiES limiTEd FiVe Year trend summarY fOR THE yEaR ENdEd 31 maRCH 2013

2013 2012 2011 2010 2009 ($’000) ($’000) ($’000) ($’000) ($’000)

income statement

net operating profit after tax 20,778 20,747 14,913 15,896 11,940

net profit/(loss) 45,146 39,852 23,073 34,069 (27,035)

revenue 62,734 55,274 35,069 30,141 26,287

finance cost - net (13,576) (13,216) (8,168) (4,711) (5,854)

net fair value gains/(losses) 24,368 19,105 8,160 18,173 (38,975)

distribution 11,500 11,000 10,500 10,000 10,000

balance sheet

total assets 738,706 693,661 658,440 529,402 497,182

net assets 490,219 387,731 345,367 327,722 304,286

Current assets (excluding shareholder advance) 17,497 23,583 17,442 11,762 14,195

non-current assets 716,832 670,078 640,998 517,640 482,987

Current liabilities (excluding shareholder advance) 46,271 42,466 92,639 33,375 10,656

non-current liabilities 202,216 189,437 146,407 94,278 108,212

non-controlling interest 5,675 8,921 9,300 1,539 -

Bank debt 186,671 179,622 186,650 87,700 74,845

net cash debt (179,068) (173,365) (184,399) (85,042) (68,913)

*cashFloW statement

net operating cash inflow 25,510 21,269 14,430 21,119 16,144

net investing cash outflow (21,074) (8,065) (103,287) (27,248) (7,771)

net financing cash inflow/(outflow) (3,090) (9,198) 88,450 2,855 (5,255)

keY ratios

return on shareholder funds 9% 10% 7% 10% -9%

return on shareholder funds – including advance 9% 9% 6% 8% -7%

return on total assets 6% 6% 4% 6% -5%

total asset growth 6% 5% 24% 6% -5%

debt/equity ratio 38% 46% 54% 27% 25%

debt/total assets 25% 26% 28% 17% 15%

* there are no cash flows transacted through wtf, as wtf does not have its own bank account. all receipts and payments for wtf are processed through the tGh bank account.

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


43

tainui Group holdings limited44 directory

45 statements of comprehensive income

46 statements of financial position

47 statements of changes in equity

48 statements of cash flows

49 notes to the financial statements

76 independent auditors’ report

waikato-tainui fisheries limited77 directory

78 statement of comprehensive income

78 statement of financial position

79 statement of changes in equity

80 notes to the financial statements

Financial STaTEmENTS

44

date of establishment 10 june 1998

shareholder waikato-tainui te kauhanganui incorporated

board of directors sir henry van der heyden (Chairman) michael allen matthew Cockram hemi rau paki rawiri

board advisor joanna perry

chief executive mike pohio

auditor pricewaterhouseCoopers private Bag 92162, auckland 1142

solicitors Bell Gully mcCaw lewis

banks Bank of new Zealand westpac Banking Corporation

registered office 6 Bryce street, hamilton 3204

postal address p o Box 19295, hamilton 3244

telephone +64 7 834 4880

Facsimile +64 7 834 4881

Website www.tgh.co.nz

TaiNUi gROUp HOldiNgS limiTEddirectorYfOR THE yEaR ENdEd 31 maRCH 2013


45

TaiNUi gROUp HOldiNgS limiTEdstatements oF comprehensiVe incomefOR THE yEaR ENdEd 31 maRCH 2013

parentconsolidated

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

revenue 4 62,364 54,775 222,839 7,814

expenses 5 (28,769) (22,033) (6,487) (5,738)

finance costs – bank loans (13,576) (13,216) (11,800) (11,754)

finance income - short term deposits 73 181 53 151

share of net profit of associates 6 316 541 - -

net operating profit/(loss) for the year 20,408 20,248 204,605 (9,527)

other gains – net 8 24,368 19,105 1,292 6,775

net profit/(loss) for the year 44,776 39,353 205,897 (2,752)

other comprehensive income for the year

(loss)/profit on revaluation of farm and other properties 10 (698) 2,872 (783) 2,872

other comprehensive income for the year (698) 2,872 (783) 2,872

total comprehensive income for the year, net of tax 44,078 42,225 205,114 120

profit is attributable to:

equity holders of tainui Group holdings limited 44,062 39,372

non-controlling interest 714 (19)

44,776 39,353

total comprehensive income for the year is attributable to:

equity holders of tainui Group holdings limited 43,364 42,244

non-controlling interest 714 (19)

44,078 42,225


46

parentconsolidated

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

equitY

Contributed equity 9 130,000 60,000 130,000 60,000

retained earnings 10 320,561 286,589 203,115 7,308

revaluation reserves 10 17,675 18,373 10,368 11,151

468,236 364,962 343,483 78,459

non-controlling interest 8,675 8,921 - -

total equity 476,911 373,883 343,483 78,459

assets

current assets

Cash and cash equivalents 7,603 6,257 5,032 2,054

trade and other receivables 11 4,745 2,681 536 666

inventories 12 3,941 4,202 - -

Biological assets - livestock 14 835 1,082 835 1,082

advances – related parties 15 4,377 8,448 420,249 254,339

total current assets 21,501 22,670 426,652 258,141

non-current assets

other financial assets 16 10,005 5,385 10,004 5,294

investments in associates 6 13,594 13,485 - -

trade and other receivables 13 1,617 1,287 - -

investments in subsidiaries - - 947 947

intangible assets 17 20,435 20,488 14,586 14,617

property, plant and equipment 18 80,658 84,895 19,828 20,365

investment properties 19 573,121 528,412 84,623 81,033

Biological assets - trees 14 4,467 3,191 - -

total non-current assets 703,897 657,143 129,988 122,256

total assets 725,398 679,813 556,640 380,397

liabilities

current liabilities

trade and other payables 20 15,401 11,325 2,735 3,446

interest bearing liabilities 22 30,336 30,228 30,336 30,228

other financial liabilities 23 162 - 162 -

advances – related parties 15 372 74,940 6,504 108,058

total current liabilities 46,271 116,493 39,737 141,732

non-current liabilities

trade and other payables 21 1,131 - - -

interest bearing liabilities 22 156,335 149,394 129,950 121,209

other financial liabilities 23 44,750 40,043 43,470 38,997

total non-current liabilities 202,216 189,437 173,420 160,206

total liabilities 248,487 305,930 213,157 301,938

total net assets 476,911 373,883 343,483 78,459


Sir Henry van der Heyden, Chairman

18 june 2013

Michael Allen, Director

18 june 2013

TaiNUi gROUp HOldiNgS limiTEdstatements oF Financial positionaS aT 31 maRCH 2013


47

TaiNUi gROUp HOldiNgS limiTEdstatements oF changes in equitYfOR THE yEaR ENdEd 31 maRCH 2013


Contributed revaluation retained non-controlling total equity reserves earnings total interest equity notes $’000 $’000 $’000 $’000 $’000 $’000

consolidated

balance as at 1 april 2011 60,000 15,501 247,217 322,718 9,300 332,018

comprehensive income

net profit/(loss) for the year - - 39,372 39,372 (19) 39,353

other comprehensive income

Gain on revaluation of farm and other properties 10 - 2,872 - 2,872 - 2,872

total comprehensive income - 2,872 39,372 42,244 (19) 42,225

partnership refund - - - - (360) (360)

balance as at 31 march 2012 60,000 18,373 286,589 364,962 8,921 373,883

balance as at 1 april 2012 60,000 18,373 286,589 364,962 8,921 373,883


net profit for the year - - 44,062 44,062 714 44,776


loss on revaluation of farm and other properties 10 - (698) - (698) - (698)

total comprehensive income - (698) 44,062 43,364 714 44,078

transactions with owner of parent

issue of ordinary shares 9 70,000 - - 70,000 - 70,000

dividend paid 15 - - (10,090) (10,090) - (10,090)

total transactions with owner of parent 70,000 - (10,090) 59,910 - 59,910

partnership refund - - - - (960) (960)

total transactions with owner of parent 70,000 - (10,090) 59,910 (960) 58,950

balance as at 31 march 2013 130,000 17,675 320,561 468,236 8,675 476,911

parent

balance as at 1 april 2011 60,000 8,279 10,060 78,339 - 78,339


net loss for the year - - (2,752) (2,752) - (2,752)


Gain on revaluation of farm and other properties 10 - 2,872 - 2,872 - 2,872

total comprehensive income - 2,872 (2,752) 120 - 120

balance as at 31 march 2012 60,000 11,151 7,308 78,459 - 78,459

Balance as at 1 april 2012 60,000 11,151 7,308 78,459 - 78,459


net profit for the year - - 205,897 205,897 - 205,897


loss on revaluation of farm and other properties 10 - (783) - (783) - (783)

total comprehensive income - (783) 205,897 205,114 - 205,114

issue of ordinary shares 9 70,000 - - 70,000 - 70,000

dividend paid 15 - - (10,090) (10,090) - (10,090)

total transactions with owner of parent 70,000 - (10,090) 59,910 - 59,910

balance as at 31 march 2013 130,000 10,368 203,115 343,483 - 343,483

attriButaBle to owner of the parent

48

TaiNUi gROUp HOldiNgS limiTEdstatements oF cash FloWsfOR THE yEaR ENdEd 31 maRCH 2013

parentconsolidated

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

cash flows from operating activities

receipts from customers 60,098 59,497 3,907 6,967

payments to suppliers (20,669) (25,193) (6,311) (3,930)

interest received 73 181 53 151

interest paid (13,576) (13,216) (11,800) (11,754)

net cash generated from/(used in) operating activities 24 25,926 21,269 (14,151) (8,566)

cash flows from investing activities

receipts from sale of investments in listed companies - 57,375 - 57,375

payments for investments in unlisted companies (2,364) (683) (2,364) (683)

amounts (paid to)/received from related parties (913) (7,949) 21,351 (26,649)

payments for property, plant and equipment (4,072) (8,230) (479) (287)

proceeds from sale of property, plant and equipment - 13 - 10

payments for intangible assets (111) (36) (89) (36)

payments for investment properties (16,785) (48,555) - -

proceeds from sale of investment properties 2,755 - - -

net cash generated from/(used in) investing activities (21,490) (8,065) 18,419 29,730

cash flows from financing activities

proceeds from borrowings 8,800 - 8,800 -

repayment of borrowings (1,800) (6,498) - (17,433)

dividends paid to Company’s shareholder 15 (10,090) (2,700) (10,090) (2,700)

net cash used in financing activities (3,090) (9,198) (1,290) (20,133)

net increase in cash and cash equivalents 1,346 4,006 2,978 1,031

Cash and cash equivalents at the beginning of the year 6,257 2,251 2,054 1,023

cash and cash equivalents at end of year 7,603 6,257 5,032 2,054



49

TaiNUi gROUp HOldiNgS limiTEdnotes to the Financial statementsfOR THE yEaR ENdEd 31 maRCH 20131 general inFormation

tainui Group holdings limited (the ‘Company’ or ‘parent’) and its subsidiaries (together referred to as ‘the Group’) have the following principal activities in new Zealand:

- property investment;

- property development;

- agriculture;

- hotels;

- fishing, and

- investments.

the Company is a limited liability company incorporated and domiciled in new Zealand.

these consolidated financial statements have been approved for issue by the Board of directors on the 18th of june 2013.

the Group’s directors do not have the power to amend the financial statements once they have been issued.

2 summarY oF signiFicant accounting policiesthese consolidated financial statements have been prepared in accordance with Generally accepted accounting practice in new Zealand (‘nZ Gaap’). they comply with the new Zealand equivalents to international financial reporting standards (‘nZ ifrs’) and other applicable financial reporting standards as appropriate for profit-oriented entities that qualify for and apply differential reporting concessions.

the principal accounting policies adopted in the preparation of the financial statements are set out below. these policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparationthe financial statements include separate financial statements for tainui Group holdings limited as an individual entity and the consolidated Group consisting of tainui Group holdings limited and its subsidiaries.

the Company and Group are designated as profit-oriented entities for financial reporting purposes.

statutory base

tainui Group holdings limited is a company registered under the Companies act 1993. the financial statements have been prepared in accordance with the requirements of the financial reporting act 1993 and the Companies act 1993.

historical cost convention

the consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of farm land and buildings, investment properties, biological assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss which are carried at fair value.

differential reporting

the Company and Group are qualifying entities within the framework for differential reporting. the Company and Group qualify on the basis that they are not publicly accountable and there is no separation between the owners and governing body of the Company. the Company and Group have taken advantage of all differential reporting exemptions, except for the following with which they have fully complied:

- nZ ias 7 – statements of Cashflows

- nZ ias 18 – revenue

- nZ ias 41 – agriculture

2.2 Changes in accounting policy and disclosuresnew and amended standards adopted by the group

the Company and Group have not adopted any new standards during the year.

changes in accounting policies

during the year the Group changed the accounting policy for depreciation on property, plant and equipment from diminishing value to straight line. there has been no material impact as a result of the change in accounting policy.

comparatives

where necessary, certain comparative information has been reclassified in order to conform to changes in the current year.

notes to the Financial statements CONTiNUEd

50

2.3 Critical accounting estimatesthe preparation of financial statements in conformity with nZ ifrs requires the use of certain critical accounting estimates. it also requires management to exercise its judgement in the process of applying the Group’s accounting policies. the estimates and judgements are reviewed by management on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised. the following are the critical estimates and judgements management has made in the process of applying the Group’s accounting policies and that have the most significant impact on the amounts recognised in the financial statements.

(a) Fair value of assets and liabilities

the Company and Group record certain assets and liabilities at fair value in the statement of financial position as follows:

investment properties (note 19), farm and other properties (note 18) have been valued by independent valuers as at 31 march 2013 and 31 march 2012 using a mixture of market evidence of transactional prices for similar properties, direct comparison, capitalisation and discounted cash flow approaches.

Biological assets (note 14) comprise livestock and forests. Both are valued by independent valuers using current market prices less point of sale costs (livestock) and expectation value method less point of sale costs (forests).

other financial assets at fair value through profit or loss (note 16) include shares in unlisted companies held at fair value. the fair value of these shares, in the absence of quoted prices, has been determined using valuation techniques.

interest rate swaps (note 23) are valued using discounted cash flow techniques.

the determination of fair value for each of the assets and liabilities above requires significant estimation and judgement which have a material impact on the statement of comprehensive income and statement of financial position.

(b) impairment testing

intangible assets with indefinite useful lives being quota (note 17) are required to be tested for impairment at least annually. this requires an estimation of the recoverable amount of the quota based on the higher of value in use or fair value less costs to sell. the determination of the recoverable amount of the quota requires significant estimation and judgment.

2.4 principles of consolidation

(a) subsidiaries

subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. subsidiaries are fully consolidated from the date on which control is transferred to the Group. they are de-consolidated from the date that control ceases.

the Group uses the acquisition method of accounting to account for business combinations. the consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. the consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. acquisition-related costs are expensed as incurred. identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. on an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. if this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. unrealised losses are also eliminated. accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.


51

(b) transactions with non-controlling interests

the Group treats transactions with non-controlling interests as transactions with equity owners of the Group. for purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

when the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. the fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. in addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. this may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

if the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(c) associates

associates are all entities over which the Group has significant influence but not control, generally evidenced by holding of between 20% and 50% of the voting rights. investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. the Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition (refer to note 6).

the Group’s share of its associates’ post-acquisition profits or losses is recognised in the statement of comprehensive income, and the Group’s share of post-acquisition revaluation in property, plant and equipment is recognised in reserves. the cumulative post-acquisition movements are adjusted against the carrying amount of the investment. dividends receivable from associates are recognised as a reduction in the carrying amount of the investment.

when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(d) Joint ventures

the proportionate interests in income of a jointly controlled operation have been incorporated in the financial statements under the appropriate headings.

the Group’s interests in jointly controlled entities are accounted for by proportionate consolidation. the Group combines its share of joint ventures’ individual income and expenses, assets and liabilities on a line by line basis with similar items in the Group’s financial statements.

the Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. the Group does not recognise its share of the profits or losses from the joint venture that result from the Group’s purchase of assets from the joint venture until it sells the assets to an independent party. however, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets, or an impairment loss.

joint ventures’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.

(e) Functional and presentation currency

items included in the financial statements of each of the subsidiaries’ operations are measured using the currency of the primary economic environment in which it operates (‘the functional currency’). the consolidated financial statements are presented in new Zealand dollars, which is the Company’s functional currency and the Group’s presentation currency.

2.5 revenue recognitionrevenue comprises the fair value of the sale of goods and services, net of Goods and services tax (Gst), rebates and discounts and after eliminating sales within the Group. revenue is recognised as follows:


52

(a) hotel income

revenue from hotels comprises amounts earned in respect of services, facilities and goods supplied. any revenue not recognised, but received by the reporting date, is treated as deposits in advance, and shown as a liability in the statement of financial position.

(b) rental income

rental income is recognised on a straight line basis over the lease term. lease incentives which are offered to tenants as an inducement to enter into non-cancellable operating leases are recognised as current prepayments and non-current lease fitout contributions and are subsequently amortised over the term of the lease as a reduction of rental income.

(c) sales of goods

sales of goods are recognised when the Group has transferred the significant risks and rewards of ownership of the goods sold. for sections, recognition is on the sale contract becoming unconditional and the title passing. the recorded revenue is the gross amount of the sale.

(d) quota lease income

quota lease income is recognised on a straight line basis over the lease term.

(e) dairy income

dairy income is recognised when the Group has transferred the significant risks and rewards of ownership of the goods sold.

(f) interest income

interest income is recognised on a time-proportion basis using the effective interest method. when a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. interest income on impaired loans is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

(g) dividend income

dividend income is recognised when the right to receive payment is established.

(h) emission trading scheme allocation

emission trading scheme allocation is 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 operating activities of the Group. the Group was eligible for and has received units under the new Zealand emission trading scheme as part of the fisheries allocation for quota owned. the fair value of units received is recognised in the statement of comprehensive income on allocation by the Government to the Group.

2.6 employee benefitsliabilities are recognised for benefits accruing to employees in respect of wages and salaries, annual leave, and sick leave where it is probable that settlement will be required and they are capable of being measured reliably.

liabilities in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

liabilities in respect of employee benefits which are not expected to be settled within 12 months are measured at the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

the Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the achievements of agreed key performance indicators, including the achievement of financial budget targets. the Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.7 leasesleases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

property interests held by a lessee under an operating lease are recognised as part of the carrying amount of the investment property with a corresponding liability at fair value through profit or loss being recorded.

note 2.5 continued


53

2.8 Borrowing costsBorrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. other borrowing costs are expensed.

the capitalisation rate used to determine the amount of borrowing costs to be capitalised is the rate associated with project related borrowings or the weighted average interest rate applicable to the Group’s outstanding borrowings during the year.

2.9 Cash and cash equivalentsCash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

2.10 trade and other receivablestrade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts.

Collectability of trade receivables is reviewed on an ongoing basis. debts which are known to be uncollectible are written off. a provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. the amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. the amount of the provision is recognised in the statement of comprehensive income within expenses.

when a trade receivable is uncollectible, it is written off. subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income.

2.11 inventoriesinventories are stated at the lower of cost and net realisable value. Cost of inventory is comprised of section costs and other direct costs using the weighted average cost basis. net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.

2.12 Biological assetsBiological assets are measured at fair value less estimated point of sale costs. the fair value of livestock is determined based on market prices of livestock of similar age, breed and genetic merit. the fair value of trees is determined annually by independent valuers by calculating the crop expectation and future value discounted back to the present value, based on the rotation age of the crop and the current market prices of the logs. the valuation of redwood trees is based on the current replacement cost method used for young trees.

2.13 financial assets and liabilitiesrecognition and measurement

a financial asset or liability is recognised if the Group becomes party to the contractual provisions of the instrument. regular purchases and sales of financial assets and liabilities are recognised on the trade date, the date on which the Group commits to purchase or sell the asset or liability. a financial asset or liability is recognised initially at its fair value and in the case of a financial asset or liability measured at amortised cost includes transaction costs that are directly attributable to the acquisition or issue of the instrument.

financial assets and liabilities recorded at fair value through the profit and loss are designated at initial recognition.

Financial assets and liabilities measured at amortised cost

financial assets and liabilities measured at amortised cost are non-derivative financial assets and liabilities which meet the following criteria:

a) held within a business model whose objective is to hold an instrument in order to collect contractual cash flows; and

b) the contractual terms of the instrument gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

a gain or loss on a financial asset and liability that is measured at amortised cost and is not part of a hedging relationship is recognised in profit and loss when the instrument is derecognised, impaired or reclassified and through the amortisation process.


54

trade and other receivables are classified as financial assets measured at amortised cost. trade and other payables and debt instruments are classified as financial liabilities measured at amortised cost.

Financial assets and liabilities measured at fair value through profit or loss

financial assets and liabilities are measured at fair value unless measured at amortised cost. at initial recognition, the Group may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of nZ ifrs 9 ‘financial instruments’ that is not held for trading. if the Group makes this election, it shall recognise in profit or loss dividends from that investment when the Group’s right to receive payment of the dividend is established in accordance with nZ ias 18 ‘revenue’. the Group may also at initial recognition, designate an instrument as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring the instruments or recognising gains and losses on them on different bases.

the fair values of quoted investments are based on current bid prices. if the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. these include the use of recent arm’s length transaction pricing models refined to reflect the Group’s specific circumstances.

a gain or loss on a financial asset or liability that is measured at fair value and is not part of a hedging relationship shall be recognised in profit and loss unless the financial asset is an investment in an equity instrument and the Group has made an irrevocable election to present gains and losses on that investment in other comprehensive income.

financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. financial liabilities are de-recognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

investment property liabilities are classified as financial liabilities measured at fair value through profit or loss. derivative financial instruments are classified as either financial assets or financial liabilities measured at fair value through profit or loss.

2.14 investments in subsidiariesinvestments in subsidiaries are valued at cost less impairment in the Company.

2.15 intangible assets

(a) computer software

separately acquired computer software and licenses at a cost greater than $10,000 are capitalised on the basis of the costs incurred to acquire and bring to use the specific asset. these costs are amortised on a straight line basis over their estimated useful lives of two years.

Costs under $10,000 associated with maintaining computer software programmes are recognised as an expense as incurred.

(b) quota

separately acquired fishing quota has an indefinite useful life and will generate economic benefits beyond one year. fishing quota is tested annually for impairment and is carried at cost less accumulated impairment. the useful life is assessed annually to determine whether the indefinite useful life assessment continues to be supportable.

(c) carbon credits

intangible assets include carbon credits acquired by way of a Government grant and are initially recognised at fair value at the date of acquisition. following initial recognition, these intangible assets are carried at cost less any accumulated impairment losses.

the Group is able to either hold the new Zealand units (nZu) within the carbon register or alternatively trade the nZu’s in domestic and international carbon markets.

Carbon credits are not consumed in the production and are therefore not amortised. the nZu’s are not amortised but are tested for impairment on an annual basis or when indications of impairment exist.

2.16 property, plant and equipmentfarm and other properties are comprised of land, buildings and plant held on the farms as well as the building occupied by the parent, and are shown at fair value, based on periodic, but at least triennial, valuations by

note 2.13 continued


55

external independent valuers, less subsequent depreciation. any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. land at cost, hotels, development properties, vehicles, equipment, fixtures and fittings are stated at historical cost less depreciation and impairment. historical cost includes expenditure that is directly attributable to the acquisition of the items.

subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. all other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

increases in the carrying amounts arising on revaluation of farm and other properties are credited to the revaluation reserve in shareholders’ equity. to the extent that the increase reverses a revaluation decrease previously recognised in the statement of comprehensive income, the increase is first recognised in statement of comprehensive income. decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the statement of comprehensive income.

development property and land is not depreciated. depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives. estimated useful lives are as follows:

Computers 2 - 6 years

farm (buildings) 50 years

furniture and fittings and office equipment 1 - 17 years

hotel (other assets) 3 - 33 years

other building 100 years

plant and equipment 1 - 14 years

Vehicles 2 - 11 years

the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. these are included in the statement of comprehensive income. when revalued assets are sold, it is Group policy to transfer the amounts included in revaluation reserves in respect of those assets to retained earnings.

2.17 investment propertiesinvestment properties include properties held to earn rental income, and/or for capital appreciation as well as investment properties under construction. a property is also classified as an investment property if it does not have an operating lease in place, but is held with the intention of attaining an operating lease.

investment properties are initially recognised at cost, including transaction costs. subsequent to initial recognition, investment properties are carried at fair value, representing open-market value determined annually by external valuers. Changes in fair value are recorded in the statement of comprehensive income.

where a property interest is held under an operating lease, and is classified as an investment property, the property is recognised at the lower of fair value of the property and the present value of the minimum lease payments, with an equivalent amount being recognised as a liability. subsequent to initial recognition, the asset and liability are measured at fair value with changes in fair value recognised in profit or loss.

2.18 impairment of non-financial assetsassets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. an impairment loss is recognised when the asset’s carrying amount exceeds its recoverable amount. the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

impairment losses are recognised first against the revaluation reserves in respect of the impaired asset, and second as an expense in the statement of comprehensive income.

where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying


56

amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. a reversal of an impairment loss is recognised in the statement of comprehensive income immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

for the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). non-financial assets that suffered impairment, with the exception of fishing quota, are reviewed for possible reversal of the impairment at each reporting date.

2.19 trade and other payablestrade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. the amounts are unsecured. Current trade and other payables are usually paid within 30 days of recognition. non-current other payables are usually paid between one and two years. trade and other payables are recognised initially at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest method.

2.20 interest bearing liabilitiesinterest bearing liabilities are initially recognised at fair value, net of transaction costs incurred. interest bearing liabilities are subsequently measured at amortised cost. any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

2.21 Contributed equityordinary shares are classified as equity. transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instrument. transaction costs are the costs arising on the issue of equity instruments, incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.

2.22 dividendsdividend distribution to the Company shareholder is recognised as a liability in the Company’s and the Group’s financial statements in the period in which the dividends are approved by the directors and notified to the Company’s shareholder.

provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date.

2.23 Current income taxthe inland revenue department approved the Company as charitable for the purposes of the income tax act 1994. accordingly, no income tax is payable. see note 3 for details of entities that have charitable status.

however some subsidiary and associate entities are taxable. in the instances where an entity is taxable, current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. it is calculated using tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

the Group is not liable for tax on profits or losses from joint ventures as all entities within the Group that are partners of a joint venture through a joint venture agreement have charitable tax status.

2.24 statement of cash flowsthe statement of cash flows are prepared exclusive of Gst. for the purposes of the statement of cash flows, cash and cash equivalents include cash in banks and investments in money market instruments, net of outstanding bank overdrafts.

operating activities include all transactions and other events that are not investing or financing activities.

investing activities are those activities relating to the acquisition and disposal of current and non-current investments and any other non-current assets.

financing activities are those activities relating to changes in the equity and debt capital structure of the Company and Group and those activities relating to the cost of servicing the Company’s and Group’s equity capital.

note 2.18 continued


57

2.25 Goods and services tax (Gst)the profit and loss component of the statement of comprehensive income has been prepared so that all components are stated exclusive of Gst. all items in the statement of financial position are stated net of Gst, with the exception of receivables and payables, which include Gst invoiced.

3 consolidationsubsidiaries: CharitaBle operatinG ownership and VotinG interest BalanCe status diVision 2013 2012 date

Boat harbour Ventures limited no property 100% 100% 31-mar

raukura moana seafoods limited Yes fisheries 100% 100% 31-mar

ruakura fee simple limited no property 100% 100% 31-mar

ruakura limited no property 100% 100% 31-mar

tainui auckland airport hotel lp no investment 70% 70% 31-mar

tainui auckland airport hotel Gp limited no investment 70% 70% 31-mar

tainui Corporation limited Yes property 100% 100% 31-mar

tainui development limited Yes property 100% 100% 31-mar

tdl no. 1 limited Yes investment 100% 100% 31-mar

te rapa 2002 limited Yes property 100% 100% 31-mar

tGh no. 1 limited no investment 100% 100% 31-mar

the Base limited Yes property 100% 100% 31-mar

associates: CharitaBle operatinG interest held BalanCe status diVision 2013 2012 date

hamilton riverview hotel limited no investment 41% 41% 31-dec

unincorporated Joint Ventures: CharitaBle operatinG ownership and VotinG interest BalanCe status diVision 2013 2012 date

Callum Brae tainui no property 50% 50% 31-mar

rotokauri development limited no property 70% - 31-mar

taG forestry joint Venture no property 50% 50% 31-mar

the subsidiaries, interest in associates and joint ventures with reporting dates other than 31 march have been included based on their actual results and balances at 31 march 2013 and not the results and balances at their respective reporting dates. hamilton riverview hotel limited has a balance date of 31 december to align with its other shareholders operations.

the country of incorporation for all subsidiaries, associates and joint ventures is new Zealand.

during the financial year, 40 hectares of land at rotokauri, hamilton, was sold from tainui development limited to rotokauri development limited joint venture for the purposes of residential sub-division. the sale transaction resulted in a total gain on sale of $7m. in the year ended 31 march 2013, $2m or 30% of the $7m gain on sale is recognised, representing the external joint ventures partners proportion of the gain. the balance of $5m of the gain on sale will be recognised in future financial years when the land is sub-divided and sold to external parties and will be based on the proportional share of the land (see also notes 11 and 15).


58

the Group’s interest in the joint ventures had the following effect on the financial statements:

4 reVenue

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

rental income 33,935 31,441 2,414 2,642

amortisation of capitalised lease incentives (167) (28) - -

hotel income 19,237 14,397 - -

sale of sections 3,781 2,409 - -

other income 15 2,846 2,144 2,386 2,505

quota leasing income 1,708 1,745 - -

dairy income 840 1,056 840 1,056

dividends from listed investments - 918 - 918

dividends from unlisted investments 65 - 65 -

dividends from subsidiaries 15 - - 217,015 -

other operating gains 14 119 693 119 693

62,364 54,775 222,839 7,814

consolidated parent

consolidated

2013 2012 $’000 $’000

statement of financial position

Current assets 1,638 2,442

non-current assets 5,908 210

total assets 7,546 2,652

less current liabilities 1,885 245

net assets 5,661 2,407

statement of comprehensive income

revenues 1,407 2,413

expenses (1,111) (1,252)

profit before income tax 296 1,161

note 3 continued


59

5 expenses

2013 2012 2013 2012 $’000 $’000 $’000 $’000

audit fees paid to parent and Group auditors 68 75 24 23

other fees paid to auditor 68 26 59 -

audit fees paid to other auditors 9 16 - -

Bad debt written off 82 14 - -

Consultancy fees 577 592 432 450

Cost of sales 9,140 6,893 703 639

depreciation, amortisation and impairment 2,812 2,541 308 489

direct costs from rental income 2,890 1,462 549 449

direct costs from investment properties (non-income generating) 180 425 3 3

directors fees 305 280 305 280

doubtful debt provision 159 12 1 1

employee benefits 9,012 7,583 3,656 3,191

operating lease expenses 86 52 46 45

other expenses 3,381 2,062 401 168

28,769 22,033 6,487 5,738

other fees paid to the auditor consists of treasury and consultancy services for the Group.

consolidated parent

depreciation, amortisation and impairment 2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

amortisation and impairment of intangibles 17 133 220 89 211

depreciation and impairment of:

Computer, office equipment, furniture and fittings 18 300 283 107 87

farm and other properties 18 107 167 81 167

hotel 18 2,241 1,847 - -

motor vehicles 18 31 24 31 24

total depreciation, amortisation and impairment 2,812 2,541 308 489

consolidated parent

consolidated parent

6 inVestments in associates

2013 2012 2013 2012 $’000 $’000 $’000 $’000

investments in associates 13,594 13,485 - -

carrying value of associates

Carrying value at beginning of year 13,485 13,151 - -

share of net profit of associates 316 541 - -

dividend received (207) (207) - -

carrying value at end of year 13,594 13,485 - -


60

7 income taxthe taxable members of the Group have sufficient losses to carry forward to meet any potential income tax liability. the taxable losses are not recorded in the financial statements due to the lack of probability that the losses will be recovered. the approximate unrecognised tax losses carried forward are $0.9m (2012: $0.9m).

as at reporting date there is no current tax expense, tax payable or tax receivable (2012: nil).

8 other gains - net

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

Biological assets – fair value gains unrealised 14 1,276 497 - -

financial liabilities designated at fair value through profit or loss – increase in investment property liability (3,730) (4,313) (3,730) (4,313)

interest rate swaps – fair value losses unrealised (1,140) (3,973) (906) (2,927)

investment properties – fair value gains unrealised 19 25,686 23,624 3,590 9,255

investment properties – realised gain on sale 28 - - -

property, plant & equipment – impairment of land at cost 18 - (1,400) - -

shares in listed companies – fair value gains realised - 4,050 - 4,050

shares in listed companies – fair value gains unrealised 964 - 964 -

shares in unlisted companies – fair value gains/(losses) realised 8 (53) 8 (53)

shares in unlisted companies – fair value gains unrealised 1,276 673 1,366 763

24,368 19,105 1,292 6,775

consolidated parent

9 contributed equitY

2013 2012 2013 2012 share no. share no. $’000 $’000

share capital

ordinary shares

Balance at beginning of year 60,000,000 60,000,000 60,000 60,000

issue of shares 70,000,000 - 70,000 -

balance at end of year 130,000,000 60,000,000 130,000 60,000

all shares rank equally with one vote attached to each fully paid ordinary share. ordinary shares do not have a par value. on wind-up of the Company, all proceeds will be paid to the shareholder.

on 21 february 2013, the parent issued a further 70,000,000 shares at $1 per share to the shareholder, waikato-tainui te kauhanganui incorporated.

consolidated and parent consolidated and parent


61

parentconsolidated

parentconsolidated

10 reserVes and retained earnings

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

(a) reserves

farm and other properties 10,453 11,151 10,368 11,151

associates 7,222 7,222 - -

17,675 18,373 10,368 11,151

Farm and other properties

Balance at beginning of year 11,151 8,279 11,151 8,279

revaluation gain/(loss) during the year 18 (698) 2,872 (783) 2,872

balance at end of year 10,453 11,151 10,368 11,151

associates

Balance at beginning of year 6 7,222 7,222 - -

balance at end of year 7,222 7,222 - -

nature and purpose of reserves

farm and other properties recognises the change in fair value of properties held in this category. associates reserves comprises of the Group’s share of revaluation of property, plant and equipment in associate entity, hamilton riverview hotel.

(b) retained earnings

movements in retained earnings were as follows:

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000



dividend 15 (10,090) - (10,090) -


parentconsolidated

11 trade and other receiVables

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

trade receivables 1,775 1,610 264 477

property settlements 15 2,219 562 - -

less provision for impairment (205) (68) (2) (1)

trade receivables from related parties 15 231 158 225 150

prepayments 725 419 39 25

Gst - - 10 15

4,745 2,681 536 666

property settlements include $1.2m owing by the joint venture partners of rotokauri development limited, (see note 15).


62

the livestock consists of mixed age sheep, cattle and cows, which are held for dairy and dry stock farming. m Gaustad from pGG wrightson determined the fair value of sheep, cattle and cows at 31 march 2013 (2012: C heggie from pGG wrightson). Both valuers provided valuations based on reference to market evidence of current market prices less point-of-sale costs. at balance date there were 2,486 sheep, 471 cattle and 197 cows (2012: 2,864 sheep, 428 cattle and 161 cows).

the trees are comprised of a 374 hectare pinus radiata (2012: 374 hectares) forest planted from 1996 to 1997, 150 hectares pinus radiata (2012: 150 hectares) forest planted from 2001 to 2002 and 270 hectares of Californian Coast redwoods (2012: 270 hectares) planted from 2005 to 2007. it is expected that the rotation age for the pinus radiata crop will be 27 years and 30 years for the Californian Coast redwoods, at which time the crop will be harvested. the 374 hectares and 150 hectares of pinus radiata was valued using the Crop expectation Value method at a 7.0% post-tax discount rate to determine fair value, less point-of-sale costs. the 270 hectares of Californian Coast redwoods was valued using current replacement cost method used for young trees at a 7.0% compounded rate. the non-current biological assets are held for investment. all non-current biological assets were valued by p silcock from nZ forestry limited (2012: r h webster from nZ forestry limited valued 374 and 270 hectares and alan Bell valued 150 hectares).

all valuers are independent registered valuers not related to the Company or Group. all valuers hold recognised and relevant professional qualifications and have recent experience in the categories of biological assets they have valued.

14 biological assets

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

current – livestock

Balance at beginning of year 1,082 843 1,082 843

additions 200 160 200 160

decreases due to sales (566) (614) (566) (614)

Changes in fair value 4 119 693 119 693

balance at end of year 835 1,082 835 1,082

non-current – trees

Balance at beginning of year 3,191 2,694 - -

Changes in fair value 8 1,276 497 - -

balance at end of year 4,467 3,191 - -

parentconsolidated

12 inVentories

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

land – sections for sale 3,905 4,159 - -

other inventories at cost – food and beverage 36 43 - -

3,941 4,202 - -

the Bank of new Zealand currently holds a registered first mortgage over property situated at huntington/Gordonton road, hamilton. this property is part of the Callum Brae tainui joint venture.

13 trade and other receiVables (non-current)

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

other receivables 458 466 - -

lease fitout contribution 1,159 821 - -

1,617 1,287 - -

parentconsolidated

parentconsolidated


63

15 related partY transactionsamounts outstanding with related parties are:

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000

advances owing by related parties:

tainui auckland airport hotel lp - - 18,620 20,860

tainui Corporation limited - - 123,742 -

tainui development limited - - 100,413 42,536

te rapa 2002 limited - - 37,292 37,155

the Base limited - - 135,805 145,340

waikato raupatu lands trust 4,377 8,400 4,377 8,400

waikato raupatu river trust - 23 - 23

waikato-tainui distributions limited - 25 - 25

4,377 8,448 420,249 254,339

advances owing to related parties:

raukura moana seafoods limited - - 351 6,306

tainui Corporation limited - - - 45,897

tGh no. 1 limited - - 5,780 5,780

waikato raupatu lands trust - 74,027 - 49,162

waikato-tainui fisheries limited 372 913 373 913

372 74,940 6,504 108,058

trade and other receivables owing by related parties

waikato raupatu lands trust 11 125 150 125 150

waikato raupatu river trust 11 55 8 52 -

waikato-tainui distributions limited 11 44 - 44 -

other joint ventures 11 7 - 4 -

rotokauri development limited joint venture 11 1,185 - - -

1,416 158 225 150

trade and other payables owing to related parties

other joint ventures 20 7 - 4 -

7 - 4 -

the Company’s shareholder, waikato-tainui te kauhanganui incorporated is the trustee of the waikato raupatu lands trust (the ‘trust’ or the ‘shareholder’). the trust is the ultimate parent entity of the Group. all members of the Group are considered to be related parties of the trust.

transactions between related entities include loans and advances to and from the shareholder, certain subsidiaries and associates.

all amounts owing by and to the Company and Group and ultimate parent are repayable on demand and are interest free. there is no impairment of any related party balances. the amount owing to the ultimate parent by the Group is subordinated to the westpac and BnZ bank loans (see note 22).

the Company charged its subsidiaries $1m, shareholder $0.5m and the waikato raupatu river trust $0.3m (2012: subsidiaries $0.9m, shareholder $0.8m and the waikato raupatu river trust $0.3m) for administration services and financial charges which is reported in other income (see note 4). there were no purchases of goods or services from the Group’s subsidiaries.

the Company declared a dividend of $10.1m for the year ended 31 march 2013 (2012: nil) to the shareholder,

parentconsolidated


64

17 intangible assets

consolidated Computer nZ units software quota ets total $’000 $’000 $’000 $’000

Year ended 31 march 2012

opening balance 227 20,340 105 20,672

additions 36 - - 36

amortisation and impairment charge (146) - (74) (220)

closing balance 117 20,340 31 20,488

at 31 march 2012

Cost 448 20,340 105 20,893

accumulated amortisation and impairment (331) - (74) (405)

net book value 117 20,340 31 20,488


opening balance 117 20,340 31 20,488

additions 111 - - 111

disposals (31) - - (31)

amortisation and impairment (110) - (23) (133)

closing balance 87 20,340 8 20,435

at 31 march 2013

Cost 455 20,340 105 20,900


net book value 87 20,340 8 20,435

waikato-tainui te kauhanganui incorporated. the Company also declared a dividend of $11.1m on 18 june 2013 (see note 29).

tainui Corporation limited, tainui development limited and raukura moana seafoods limited declared dividends of $161.2m, $46.9m and $8.9m respectively, for the year ended 31 march 2013 (2012: nil) to the Company (see note 4).

the advance account movement between the Company and its subsidiaries represents cash received and payments made by the Company on behalf of its subsidiaries as well as dividends payable by the subsidiaries.

there are operating leases in place between the shareholder and the Company for land owned by the shareholder where the Group has developed and leased properties at the Base and the university of waikato respectively. the interest held under the operating lease has been accounted for as an investment property and financial liability (see also notes 19 and 22 respectively).

during the financial year, tainui development limited sold 42 hectares of land at rotokauri to the joint venture partnership, rotokauri development limited for residential sub-division. as at 31 march 2013, $1.2m is outstanding and has since been paid (see note 11).

16 other Financial assets

2013 2012 2013 2012 $’000 $’000 $’000 $’000

at fair value through profit or loss:

listed companies 2,426 - 2,426 -

unlisted companies 7,579 5,385 7,578 5,294

10,005 5,385 10,004 5,294

parentconsolidated

note 15 continued


65

parent Computer nZ units software quota ets total $’000 $’000 $’000 $’000


opening balance 207 14,492 93 14,792

additions 36 - - 36



at 31 march 2012

Cost 428 14,492 93 15,013


net book value 97 14,492 28 14,617


opening balance 97 14,492 28 14,617

additions 89 - - 89

disposal (31) - - (31)



at 31 march 2013

Cost 414 14,492 93 14,999


net book value 87 14,492 7 14,586

the Group is deemed a participant in the new Zealand emission trading scheme (ets) as it is an owner of fishing quota. nZu’s relate to 3,701 (parent) and 490 (Group) units that were allocated by the ministry for the environment as part of the fisheries allocation for quota owned. the units were valued at $1.90 per unit (2012: $7.50) resulting in an impairment charge to the Group of $23,470 (2012: $73,342) and parent of $20,725 (2012: $64,768).

quota benefits are expected to be received in perpetuity, therefore the useful life has been assessed as indefinite.


66

18 propertY, plant and equipment

consolidated Computer, office farm and equipment, other development land at motor furniture properties properties cost hotel vehicles and fittings total

notes $’000 $’000 $’000 $’000 $’000 $’000 $’000


opening net book value 18,878 51,996 4,640 - 91 806 76,411

additions 205 7,436 - - 19 321 7,981

depreciation 5 (167) - - (1,847) (24) (283) (2,321)

disposals (1) - - - (7) - (8)

net revaluation 10 2,872 - - - - - 2,872

transfer from investment properties 19 - 1,360 - - - - 1,360

impairment of land at cost 8 - - (1,400) - - - (1,400)

reclassification - (59,170) - 59,170 - - -

closing net book value 21,787 1,622 3,240 57,323 79 844 84,895

at 31 march 2012

Cost 41 1,622 3,240 59,170 227 1,473 65,773

Valuation 22,952 - - - - - 22,952

accumulated depreciation (1,206) - - (1,847) (148) (629) (3,830)

closing net book value 21,787 1,622 3,240 57,323 79 844 84,895


opening net book value 21,787 1,622 3,240 57,323 79 844 84,895

additions 3,000 - - 415 123 534 4,072

reclassification 1,536 (1,622) - - 44 42 -

disposals (43) - - - - (27) (70)

depreciation 5 (107) - - (2,241) (31) (300) (2,679)

net revaluation 10 (698) - - - - - (698)

transfer to investment properties 19 (1,622) - (3,240) - - - (4,862)

closing net book value 23,853 - - 55,497 215 1,093 80,658

at 31 march 2013

Cost 27 - - 59,585 433 1,912 61,957

Valuation 23,849 - - - - - 23,849

accumulated depreciation (23) - - (4,088) (218) (819) (5,148)

closing net book value 23,853 - - 55,497 215 1,093 80,658


67

parent Computer, office farm and equipment, other motor furniture properties vehicles and fittings total notes $’000 $’000 $’000 $’000


opening net book value 17,256 91 146 17,493

additions 182 19 86 287

disposals (1) (7) (1) (9)

depreciation 5 (167) (24) (87) (278)

net revaluation 10 2,872 - - 2,872

Closing net book value 20,142 79 144 20,365

at 31 march 2013

Cost - 226 464 690

Valuation 21,330 - - 21,330

accumulated depreciation (1,188) (147) (320) (1,655)

closing net book value 20,142 79 144 20,365


opening net book value 20,142 79 144 20,365

additions 89 123 267 479

reclassification (86) 44 42 -

disposals (14) - - (14)

depreciation 5 (81) (31) (107) (219)

net revaluation 10 (783) - - (783)


at 31 march 2013

Cost - 432 747 1,179

Valuation 19,269 - - 19,269

accumulated depreciation (2) (217) (401) (620)



68

development properties and land at cost

in 2012, development properties relating to the development of the novotel auckland airport hotel, which was completed in may 2011, had been transferred to a separate hotel category within property, plant and equipment (see also note 22 for asB Bank security agreement over the hotel assets).

the transfer to development properties relates to a property previously classified as investment property. the property will be developed as the Company’s new offices, therefore owner occupied, and as such the property has been reclassified to property, plant and equipment.

in 2013, the property developed as the Company’s new offices has been transferred from development to farm and other properties. the Company’s prior office property has been transferred to investment properties.

land at cost includes two properties which were to be developed but are now considered investment properties. the properties are located in taupo and ruakiwi road, hamilton.

Valuations of farm and other properties

telfer Young (waikato) limited and Curnow tizard were contracted as independent valuers to value farm and other properties. fair value has been assessed as the amount for which an asset could be exchanged or a liability settled between knowledgeable willing parties in an arms length transaction.

the significant methods and assumptions applied in estimating the fair value were:

- the direct comparison approach (based on analysis of sales of vacant property. this analysis includes determination of land value, other improvements and residual value for principal improvements);

- the traditional capitalisation approach (focusing on the net maintainable income and the level of investment return);

- the discounted cash flow approach (based on establishing a cash flow budget for the property having particular regard to the length of lease term and nature of the leasehold interest and the following factors; discount rate, land inflation and rental rates); and

- comparing market evidence of transaction prices for similar properties.

the total value of farm properties valued by telfer Young (waikato) limited at 31 march 2013 for the Group and parent is $19.3m (2012: $20.1m).

the total value of other properties by Curnow tizard limited for the Group at 31 march 2013 is $4.6m (2012: $1.7m).

all valuers are independent registered valuers not related to the Company or Group. all valuers hold recognised and relevant professional qualifications and have recent experience in the locations and categories of farm and other properties they have valued.

Valuation basis of investment properties

investment property valuations were completed as follows:

d.j. saunders from telfer Young (waikato) limited valued properties at fair value of $76m and parent $24m on 31 march 2013 (31 march 2012: $131m and parent: $24m) using a mixture of market evidence of transaction prices for similar properties, direct comparison, capitalisation and discounted cash flow approaches.

t. arnott from CB richard ellis limited valued properties at fair value of $310m and parent $61m on 31 march 2013 (31 march 2012: $282m and parent: $57m) using a mixture of market evidence of transaction prices for similar properties, capitalisation and discounted cash flow approaches.

m. j. snelgrove from Curnow tizard limited valued properties at fair value of $109m on 31 march 2013

19 inVestment properties 2013 2012 2013 2012 notes $’000 $’000 $’000 $’000


development 16,785 48,420 - -

net gain from fair value adjustment 8 25,686 23,624 3,590 9,255

transfer from/(to) property, plant and equipment 18 4,862 (1,360) - -

disposals (2,624) - - -


parentconsolidated

note 18 continued


69

20 trade and other paYables

2013 2012 2013 2012 note $’000 $’000 $’000 $’000

trade payables 810 2,092 15 1,284

related party payables 15 7 - 4 -

income received in advance 1,590 1,094 - -

accrued expenses 11,306 7,041 2,423 1,850

employee entitlements 542 468 293 272

Gst 742 346 - -

other payables 404 284 - 40

15,401 11,325 2,735 3,446

(31 march 2012: $107m) using a mixture of market evidence of transaction prices for similar properties, direct comparison, capitalisation and discounted cash flow approaches.

k sweetman from Colliers international nZ limited valued properties at fair value of $75m on 31 march 2013 (31 march 2012: nil) using a mixture of market evidence of transaction prices for similar properties, direct comparison, capitalisation and discounted cash flows approaches.

r. h. martin from property Valuations limited valued properties at fair value of nil on 31 march 2013 (31 march 2012: $1m) using a mixture of market evidence of transaction prices for similar properties and the direct comparison approaches.

r. peters from seagar & partners valued properties at fair value of nil on 31 march 2013 (31 march 2012: $2m) using a mixture of market evidence of transaction prices for similar properties and the direct comparison approaches.

all valuers are independent registered valuers not related to the Company or Group. all valuers hold recognised and relevant professional qualifications and have recent experience in the locations and categories of the investment property they have valued.

the Group also incurred work in progress, which is held at cost, as at 31 march 2013 of $3m (2012: $6m) in relation to the property located at the Base, parent nil (2012: nil).

parentconsolidated

22 interest bearing liabilities

2013 2012 2013 2012 $’000 $’000 $’000 $’000

secured

Bank loans 30,336 30,228 30,336 30,228

total current interest bearing borrowings 30,336 30,228 30,336 30,228

Bank loans 156,335 149,394 129,950 121,209

total non-current interest bearing liabilities 156,335 149,394 129,950 121,209

total interest bearing liabilities 186,671 179,622 160,286 151,437

21 trade and other paYables (non-current)

2013 2012 2013 2012 $’000 $’000 $’000 $’000

income received in advance 1,131 - - -

1,131 - - -

parentconsolidated

parentconsolidated


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total interest bearing liabilities for the Group is net of prepaid borrowing costs of $0.5m (2012: $0.5m).

the Company holds a multi option credit line facility agreement with westpac new Zealand limited for $50m (2012: $50m) which matures on 15 march 2014. Borrowings of $30m of the available facility had been drawn at balance date (2012: $26m).

the Company holds a multi option credit line facility agreement with westpac new Zealand limited for $25m (2012: $25m) which matures on 16 june 2015. no borrowings had been drawn at balance date (2012: nil).

the Company holds a wholesale term loan facility with westpac new Zealand limited for $50m (2012: $50m) which matures on 27 july 2015. Borrowings of $50m had been drawn at balance date (2012: $50m).

the Company holds a Committed Cash advances facility tranche a agreement with the Bank of new Zealand for $75m (2012: $75m) which matures on 31 july 2016. Borrowings of $48m of this facility had been drawn at balance date (2012: $46m).

the Company holds a Committed Cash advances facility tranche B agreement with the Bank of new Zealand for $50m (2012: $50m) which matures on 30 november 2017. Borrowings of $32m of the available facility had been drawn at balance date (2012: $30m).

tainui auckland airport hotel holds a Committed Cash advance facility with asB Bank limited for $33m (2012: $33m) which matures 27 may 2014. Borrowings of $26m of the available facility had been drawn at balance date (2012: $28m). the asB Bank has a first and exclusive security agreement over the assets and undertakings of tainui auckland airport hotel lp and tainui auckland airport hotel Gp limited.

the Company and guaranteeing subsidiaries (tainui Corporation limited, tainui development limited, tGh no.1 limited, raukura moana seafoods limited, the Base limited and te rapa 2002 limited) have granted to westpac new Zealand limited and Bank of new Zealand a charge in and over all present and future assets and present and future rights and interest in any asset as security for the finance facilities.

23 other Financial liabilities

2013 2012 2013 2012 $’000 $’000 $’000 $’000

at fair value through profit or loss

interest rate swaps 162 - 162 -

total current other financial liabilities 162 - 162 -

interest rate swaps 12,740 11,763 11,460 10,717

investment property liability 32,010 28,280 32,010 28,280

total non-current other financial liabilities 44,750 40,043 43,470 38,997

44,912 40,043 43,632 38,997

the notional amount of interest rate swaps is $150m (parent: $135m) with maturity dates that range from 1-9 years (parent: 1-8 years), (2012: $150m for the Group and $135m for the parent, maturing between 1-10 years).

the Base and university of waikato land is owned by the shareholder. there is an operating lease in place between the shareholder and the Group. the interest held under the operating lease has been recognised as a financial liability and investment property (see note 15 and note 19).

parentconsolidated

note 22 continued


71

24 reconciliation oF proFit/(loss) For the Year to net cash inFloW/(outFloW) From operating actiVities

2013 2012 2013 2012 notes $’000 $’000 $’000 $’000


non-cash items:

depreciation, amortisation and impairment 5 2,812 2,541 308 489

Bad debts written off 5 82 14 - -

movement in doubtful debt provision 5 159 12 1 1

Gain on revaluation of biological assets 8, 14 (1,395) (1,190) (119) (693)

Gain on shares in listed companies – unrealised (964) - (964) -

Gain on shares in listed companies – realised 8, 16 - (4,050) - (4,050)

realised (gain)/loss on shares in unlisted companies 8, 16 (8) 53 (8) 53

unrealised gain on shares in unlisted companies 8, 15 (1,276) (673) (1,366) (763)

loss on interest rate swaps 8, 16 1,140 3,973 906 2,927

movement in investment property liability 8 3,730 4,313 3,730 4,313

share of total profits of associates 6 (109) (334) - -

Gain on revaluation of investment properties 8, 19 (25,686) (23,624) (3,590) (9,255)

impairment of land at cost 8 - 1,400 - -

dividends from subsidiaries 15 - - (217,015) -

other non-cash items in relation to investing and financing activities (775) 2,693 (1,716) 2,190

(increase)/decrease in current assets:

trade and other receivables (2,394) 5,063 130 254

inventories 261 415 - -

Biological assets 247 (239) 247 (239)

trade and other receivables – non-cash fair value gain 119 693 119 693

increase/(decrease) in current liabilities:

trade and other payables 5,207 (9,144) (711) (1,734)

net cash inflow from operating activities 25,926 21,269 (14,151) (8,566)

parentconsolidated

25 Financial risk management

25.1 financial risk factorsexposure to credit, liquidity and market (currency, interest and price) risks arise in the normal course of the Group’s business. the Company and Group have various financial instruments with off-balance sheet risk.

senior management are required to identify and report major risks affecting the business and develop strategies to mitigate these risks. the board reviews and approves overall risk management strategies covering specific areas.

(a) credit risk

Credit risk is the risk that a third party will default on its obligations to the parent or Group, causing the parent or Group to incur a loss. the parent and Group do not have any significant concentrations of credit risk. the


72

maximum exposure to credit risk at reporting date is the carrying amount of the financial assets as shown in the statement of financial position. the Group does not require any collateral or security to support financial instruments as it only deposits with, or lends to, banks and other financial institutions with high credit ratings except for funds lent to a related party and an external entity for which the Group has appropriate security and guarantees. the Group further minimises credit exposure by limiting the amount of surplus funds placed with any one financial institution. the Group does not expect non-performance of any obligations at balance date. there are no material financial assets held by the Company and Group at balance date which are past due but not impaired.

(b) market risk

(i) currency

the Group has no exposure to currency risk at balance date.

there are no notional principal or forward foreign exchange contracts at 31 march 2013 (2012: nil).

the Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rate expose the Group to fair value interest rate risk.

(ii) interest rate risk

the Company and Group adopt a policy of ensuring that between 25 and 90 per cent of its exposure to changes in interest rates on borrowings is on a fixed rate basis.

the Group manages its cash flow interest rate risk by using floating to fixed interest rate swaps. such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

under interest rate swap contracts, the Group agrees to exchange the difference between fixed contract and floating rate interest amounts calculated by reference to the agreed notional principal amounts. such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow exposures on the issued variable rate debt held. the fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows at reporting date and the credit risk inherent in the contract, and are disclosed below. the average interest rate is based on the outstanding balances at the start of the financial year.

(iii) price risk

the Group and the parent are exposed to equity securities price risk. this arises from investments held by the Group and parent that are classified at fair value through profit or loss. neither the Group nor the parent are exposed to commodity price risk.

(c) liquidity risk

liquidity risk is the risk that the Group will encounter difficulty raising liquid funds to meet commitments as they fall due. the Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

(d) Financial risk management strategies relating to agricultural activities

the Group undertakes agricultural activities through its farm operations and forestry land. these operations are exposed to business risks, including the volatility of revenue and valuation of its assets.

the Group utilises the skills of appropriately qualified and experienced farm consultants, farm managers and sharemilkers to mitigate the financial risk relating to farming activities.

the Group utilises the skills of appropriately qualified and experienced forestry consultants and forestry contractors to mitigate the financial risk relating to forestry activities.

(e) Fair value estimation

the fair value of financial instruments traded in active markets is based on quoted market prices at balance date. the quoted market price used for financial assets held by the Group is the current bid price.

the carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short term nature. the fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

note 25.1 continued


73

assets at fair assets at value through amortised profit or loss cost total $’000 $’000 $’000

Financial assets as per statement of financial position

consolidated

at 31 march 2013other financial assets 10,005 - 10,005trade and other receivables (current and non-current) - 4,478 4,478Cash and cash equivalents - 7,603 7,603 10,005 12,081 22,086

at 31 march 2012other financial assets 5,385 - 5,385trade and other receivables (current and non-current) - 2,728 2,728Cash and cash equivalents - 6,257 6,257 5,385 8,985 14,370parent

at 31 march 2013advances to subsidiaries and shareholder - 420,249 420,249other financial assets 10,004 - 10,004trade and other receivables (current) - 487 487Cash and cash equivalents - 5,032 5,032 10,004 425,768 435,772at 31 march 2012advances to subsidiaries and shareholder - 254,339 254,339other financial assets 5,294 - 5,294trade and other receivables (current) - 626 626Cash and cash equivalents - 2,054 2,054 5,294 257,019 262,313

(f) Financial instruments by category

consolidated

at 31 march 2013Borrowings - 187,151 187,151interest rate swaps 12,902 - 12,902investment property liability 32,010 - 32,010trade and other payables (current and non-current) - 12,527 12,527 44,912 199,678 244,590at 31 march 2012Borrowings - 180,152 180,152interest rate swaps 11,763 - 11,763investment property liability 28,280 - 28,280trade and other payables (current and non-current) - 9,417 9,417 40,043 189,569 229,612parent

at 31 march 2013Borrowings - 160,766 160,766interest rate swaps 11,622 - 11,622investment property liability 32,010 - 32,010trade and other payables - 2,442 2,442 43,632 163,208 206,840at 31 march 2012Borrowings - 151,967 151,967interest rate swaps 10,717 - 10,717invetsment property liability 28,280 - 28,280trade and other payables - 3,174 3,174 38,997 155,141 194,138

liabilities at fair liabilities at value through amortised profit or loss cost total $’000 $’000 $’000


74

26 leases

(a) group and company as lessee

Commitments for minimum lease payments/receipts in relation to non-cancellable operating leases are payable/receivable as follows:

2013 2012 2013 2012 $’000 $’000 $’000 $’000

within one year 118 106 45 29

later than one year but not later than five years 292 156 96 23

later than five years 210 347 - 1

620 609 141 53

there are no options to purchase attached to any lease agreements.

the operating leases that exist between the shareholder and the Company for land owned by the shareholder at the Base and the university of waikato are rent free until the first rent review date which is in 2019 and 2022 respectively.

(b) group and company as lessor

the lease amounts due from leasees are as follows:

2013 2012 2013 2012 $’000 $’000 $’000 $’000

within one year 32,820 31,518 1,743 2,000

later than one year and not later than five years 96,984 104,238 6,858 8,000

later than five years 117,269 139,239 48,401 58,942

247,073 274,995 57,002 68,942

the majority of lease agreements are renewable at the end of the lease period at market rates. there are no options to purchase attached to any lease agreements.

25.2 capital risk managementthe Group’s capital is its equity plus debt, which is comprised of contributed capital, retained earnings and other reserves. equity is represented by net assets. the Group manages its revenues, expenses, assets and liabilities, investments and general financial dealings prudently. the Group’s equity is largely managed as a by-product of managing revenues, expenses, assets, liabilities, investments and general financial dealings. the objective of managing the Group’s equity is to ensure the Group effectively achieves its objectives and purpose, whilst remaining a going concern in order to provide returns for the shareholder and to maintain an optimal capital structure to reduce the cost of capital. in order to maintain or adjust the capital structure, the Group may adjust the amount of dividend paid to the shareholder, return capital to the shareholder, issue new shares or sell assets to reduce debt. the Group has not breached any bank covenants as required by the Bank of new Zealand and westpac new Zealand ltd during the reporting period (2012: no breach). there are no externally imposed capital requirements at balance date (2012: nil).

2013 2012 2013 2012 note $’000 $’000 $’000 $’000

total borrowings 22 186,671 179,622 160,286 151,437

less: cash and cash equivalents (7,603) (6,257) (5,032) (2,054)

net debt 179,068 173,365 155,254 149,383

total equity 476,911 373,883 343,483 78,459

total capital 655,979 547,248 498,737 227,842

gearing ratio 27% 32% 31% 66%

parentconsolidated

parentconsolidated

parentconsolidated


75

27 contingent liabilities and gainsthe parent and Group had contingent liabilities at 31 march 2013 in respect of:

the shareholder has first priority security of $15m over the present and future undertakings, property, assets, revenues and capital of raukura moana seafoods limited, tainui Corporation limited, tainui development limited and tainui Group holdings limited. each company jointly and severally, unconditionally and irrevocably guarantees to the shareholder all secured monies.

the directors believe that the expectation of a liability arising due to the guarantees and mortgages in place is remote.

29 eVents subsequent to the reporting periodon 20 may 2013, raukura moana seafoods limited entered into a joint venture agreement with sealord Group limited to manage the fishing activities. the agreement is subject to overseas investment office approval which is yet to be issued. the joint venture will have no material impact on the financial statements.

the Company declared a dividend of $11.1m on 18 june 2013 (2012: $10.1m).

28 capital commitmentsCapital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:

2013 2012 2013 2012 $’000 $’000 $’000 $’000

property, plant and equipment - 2,157 - -

other financial assets 583 1,440 - -

583 3,597 - -

investment properties - 2,298 - -

- 2,298 - -

parentconsolidated

76

independent auditors’ report TO THE SHaREHOldER Of TaiNUi gROUp HOldiNgS limiTEd

report on the financial statementswe have audited the financial statements of tainui Group holdings limited on pages 45 to 75, which comprise the statements of financial position as at 31 march 2013, the statements of comprehensive income and statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information.

directors’ responsibility for the financial statementsthe directors are responsible for the preparation of these financial statements in accordance with generally accepted accounting practice in new Zealand and that give a true and fair view of the matters to which they relate and for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

auditors’ responsibilityour responsibility is to express an opinion on these financial statements based on our audit. we conducted our audit in accordance with international standards on auditing (new Zealand) and international standards on auditing. these standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditors consider the internal controls relevant to the Company and the Group’s preparation of financial statements that give a true and fair view of the matters to which they relate, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.

we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

other than in our capacity as auditors, tax advisor, and providers of other assurance services, we have no relationship with, or interests in, tainui Group holdings limited or any of its subsidiaries. these services have not impaired our independence as auditors of the Company and the Group.

opinionin our opinion, the financial statements on pages 45 to 75:

(i) comply with generally accepted accounting practice in new Zealand; and

(ii) give a true and fair view of the financial position of the Company and the Group as at 31 march 2013, and their financial performance and cash flows for the year then ended.

report on other legal and regulatory requirementswe also report in accordance with sections 16(1)(d) and 16(1)(e) of the financial reporting act 1993. in relation to our audit of the financial statements for the year ended 31 march 2013:

(i) we have obtained all the information and explanations that we have required; and

(ii) in our opinion, proper accounting records have been kept by the Company and the Group as far as appears from an examination of those records.

restriction on distribution or usethis report is made solely to the Company’s shareholder, as a body, in accordance with section 205(1) of the Companies act 1993. our audit work has been undertaken so that we might state to the Company’s shareholder those matters which we are required to state to them in an auditors’ report and for no other purpose. to the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholder, as a body, for our audit work, for this report or for the opinions we have formed.

Chartered accountants auckland 18 june 2013


77

date of establishment 31 march 2008

shareholder waikato-tainui te kauhanganui incorporated

board of directors sir henry van der heyden (Chairman) michael allen matthew Cockram hemi rau paki rawiri

board advisor joanna perry

chief executive mike pohio

solicitors Bell Gully mcCaw lewis

registered office 6 Bryce street, hamilton 3204

postal address p o Box 19295, hamilton 3244

telephone +64 7 834 4880

Facsimile +64 7 834 4881

WaiKaTO-TaiNUi fiSHERiES limiTEddirectorYfOR THE yEaR ENdEd 31 maRCH 2013

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WaiKaTO-TaiNUi fiSHERiES limiTEdstatements oF comprehensiVe income (unaudited)fOR THE yEaR ENdEd 31 maRCH 2013

WaiKaTO-TaiNUi fiSHERiES limiTEd statement oF Financial position (unaudited) aS aT 31 maRCH 2013

Sir Henry van der Heyden, Chairman

18 june 2013

Michael Allen, Director

18 june 2013

2013 2012 notes $’000 $’000

equitY

Contributed equity 3 - -

retained earnings 4 13,308 13,848

total equity 13,308 13,848

assets

current assets

advances 6 373 913

non-current assets

other financial assets 5 12,935 12,935

total assets 13,308 13,848

total net assets 13,308 13,848

2013 2012 $’000 $’000

revenue 370 499

net operating profit for the year 370 499

fair value gains/(losses) - -

net profit for the year 370 499

other comprehensive income for the year

other comprehensive income for the year - -

total comprehensive income for the year 370 499



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WaiKaTO-TaiNUi fiSHERiES limiTEdstatements oF changes in equitY (unaudited)fOR THE yEaR ENdEd 31 maRCH 2013

contributed retained total equity earnings equity

$’000 $’000 $’000

balance as at 1 april 2011 - 13,349 13,349


net profit for the year - 499 499

total comprehensive income for the year - 499 499

balance as at 31 march 2012 - 13,848 13,848

comprehesive income

net profit for the year - 370 370

total comprehensive income for the year - 370 370

transactions with owner

dividend paid - (910) (910)

total transactions with owner - (910) (910)

balance as at 31 march 2013 - 13,308 13,308


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1 general inFormationwaikato-tainui fisheries limited’s (the ‘Company’) principal activity is to receive, hold and manage, for so long as they are to be retained, the income shares of aotearoa fisheries limited (afl), as that term is defined in the maori fisheries act 2004, allocated by te ohu kai moana trustee limited to, or otherwise acquired by the Company.

the Company is a limited liability company incorporated and domiciled in new Zealand.

the financial statements were authorised for issue by the directors on the 18th of june 2013.

2 summarY oF signiFicant accounting policiesthe financial statements have been prepared in accordance with Generally accepted accounting practice in new Zealand (‘nZ Gaap’). they comply with the new Zealand equivalents to international financial reporting standards (‘nZ ifrs’) and other applicable financial reporting standards as appropriate for the profit-oriented entities that qualify for and apply differential reporting concessions.

the principal accounting policies applied in preparation of these financial statements are set out below. these policies have been consistently applied for all years presented, unless otherwise stated.

2.1 Basis of preparation

entities reporting

the financial statements are for the Company as a separate legal entity.

the Company is designated as profit-oriented for financial reporting purposes.

statutory base

waikato-tainui fisheries limited is a company registered under the Companies act 1993. the financial statements have been prepared in accordance with the requirements of the financial reporting act 1993 and the Companies act 1993.

historical cost convention

the financial statements have been prepared under the historical cost convention, as modified by the revaluation of other financial assets at fair value through the profit or loss which are carried at fair value.

differential reporting

the Company is a qualifying entity within the framework for differential reporting. the Company qualifies on the basis that it is not publicly accountable and there is no separation between the owner and governing body.

the Company has taken advantage of all differential reporting exemptions except for nZ ias 18 - revenue, for which it has fully complied.

2.2 Critical accounting estimates and judgmentsthe preparation of financial statements in conformity with nZ ifrs requires the use of certain critical accounting estimates. it also requires management to exercise its judgement in the process of applying the Company’s accounting policies.

the estimates and judgements are reviewed by management on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised.

the following are the critical estimates and judgements management has made in the process of applying the Company’s accounting policies and that have the most significant impact on the amounts recognised in the financial statements.

Fair value of assets

financial assets at fair value through profit or loss (note 5) are comprised of shares in an unlisted company held at fair value. the fair value of these shares, in the absence of quoted prices, has been determined by using valuation techniques.

2.3 financial assets and liabilities

recognition and measurement

a financial asset or liability is recognised if the Company becomes party to the contractual provisions of the instrument. regular purchases and sales of financial assets and liabilities are recognised on the trade date, the date on which the Company commits to purchase or sell the asset or liability. a financial asset or liability is

WaiKaTO-TaiNUi fiSHERiES limiTEdnotes to the Financial statementsfOR THE yEaR ENdEd 31 maRCH 2013


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recognised initially at its fair value and in the case of a financial asset or liability measured at amortised cost includes transaction costs that are directly attributable to the acquisition or issue of the instrument.

financial assets and liabilities recorded at fair value through the profit and loss are designated at initial recognition.

Financial assets and liabilities measured at amortised cost

financial assets and liabilities measured at amortised cost are non-derivative financial assets and liabilities which meet the following criteria:

a) held within a business model whose objective is to hold an instrument in order to collect contractual cash flows; and b) the contractual terms of the instrument gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

a gain or loss on a financial asset and liability that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit and loss when the instrument is derecognised, impaired or reclassified and through the amortisation process.

trade and other receivables are classified as financial assets measured at amortised cost. trade and other payables and debt instruments are classified as financial liabilities measured at amortised cost.

Financial assets and liabilities measured at fair value through profit or loss

financial assets and liabilities are measured at fair value unless measured at amortised cost. at initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of this nZ ifrs that is not held for trading. if an entity makes this election, it shall recognise in profit or loss dividends from that investment when the entity’s right to receive payment of the dividend is established in accordance with nZ ias 18 ‘revenue’. an entity may also at initial recognition, designate an instrument as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring the instruments or recognising gains and losses on them on different bases.

the fair values of quoted investments are based on current bid prices. if the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. these include the use of recent arm’s length transaction pricing models refined to reflect the Company’s specific circumstances.

a gain or loss on a financial asset or liability that is measured at fair value and is not part of a hedging relationship shall be recognised in profit and loss unless the financial asset is an investment in an equity instrument and the entity has made an irrevocable election to present gains and losses on that investment in other comprehensive income.

financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. financial liabilities are de-recognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

2.4 revenue recognitionrevenue is comprised of the fair value for the sale of goods and services, net of goods and services tax (Gst), rebates and discounts. revenue is recognised as follows:

(a) financial assets are classified as revenue on initial recognition; and

(b) dividend income is recognised when the right to receive payment is established.

2.5 dividendsdividend distribution to the Company shareholder is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the directors and notified to the Company’s shareholder.

provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date.

2.6 Current income taxthe inland revenue department approved the Company as a maaori authority for the purposes of the income tax act 1994. accordingly, income tax is payable at a rate of 17.5%. the company currently has $1.9m in its


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maori authority Credit account, which are the tax credits available to pass onto its shareholder (2012: $0.2m). these future accounts recoverable are unrecognised at 31 march 2013 (2012: nil).

2.7 gSTthe Company is not registered for Gst. revenue and expenses are reported gross of Gst (if any).

3 contributed equitY 2013 2012 no. $’000 no. $’000

ordinary shares

Balance at beginning of year 100 - 100 -

balance at end of year 100 - 100 -

all fully paid ordinary shares carry one vote per share and carry the right to dividends. ordinary shares do not have a par value. on wind-up of the company, all proceeds will be paid to the sharehoder.

4 retained earningsmovement in retained earnings were as follows:

2013 2012 $’000 $’000

Balance at beginning of year 13,848 13,349

net profit for the year 370 499

dividend (910) -

balance at end of year 13,308 13,848

5 other Financial assets 2013 2012 $’000 $’000

at fair value through profit or loss

shares in unlisted company – afl income shares 12,935 12,935

the shares comprise of 6,851 income shares in afl. these income shares received on 31 march 2008 have no voting rights attached and can be traded amongst iwi.

the fair value of afl income shares is based on a calculation of the equity value of afl as determined at 31 march 2013. the calculation of equity value considers the average eBit over the period from 2010 to 2012 and uses a market multiple to determine the enterprise value and deductng net debt to derive the equity value of each income share held at 31 march.

6 related partiestransactions between related entities include advances to and from other entities owned by the shareholder. all amounts are repayable upon demand and are interest free. there is no impairment of any related party balances.

the advance account movement of $0.5m represents cash received and payments made on behalf of the Company by tainui Group holdings limited (2012: $0.5m).

7 contingent liabilitiesthe Company has no contingent liabilities at balance date (2012: nil).

8 capital commitmentsthe Company has no capital commitment at balance date (2012: nil).

9 eVents subsequent to the reporting periodthe Company declared a dividend of $0.4m on 18 june 2013 (2012: $0.9m)

note 2.6 continued


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notes


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