Trustees / Directors

Transcription

1 ANNUAL REPORT 2012

2 Trustees / Directors Malcolm Short Alec Wilson Bishop Kingi (Chairman) Stuart Harris David Tapsell Jackie Aratema Secretary/Accountant Client Manager Property Manager Murray Patchell Peter Faulkner John Powell Office: Auditors: BDO (Rotorua) Bankers: Bank of New Zealand / ANZ HULTON PATCHELL LTD Chartered Accountants Pukeroa Oruawhata House 2/1176 Amohau Street, PO Box ROTORUA Phone (07) Fax (07) Website: Solicitors: Aurere Law Lance Lawson Holland Beckett Page 1

3 PUKEROA ORUAWHATA GROUP Page: CONTENTS 1. Directory 2. Contents 3. Agenda 4. Minutes AGM 19 November Group Chairman s Report 16. Group Structure 17. Financial Highlights 22. Group Capital Expenditure / Charts 23. Review of 2011 Owners Grant payment 24. Owners Grant Analysis 25. Owners Grant Policy 26. NWPOTT Chairman s Report 27. NWPOTT Grants policies 28. NWEET Report 32. Consolidated Financial Statements 54. Maori Land Court Successions ENTITIES: POT - Pukeroa Oruawhata Trust POHL - Pukeroa Oruawhata Holdings Ltd PLHL - Pukeroa Lakefront Holdings Ltd PPL - Pukeroa Properties Ltd PPL2 - Pukeroa Properties (No.2) Ltd WHL - Waihunuhunukuri Holdings Limited LHRDL - Lake House Resort Developments Limited Page 2

4 ANNUAL GENERAL MEETING held at Tamatekapua Meeting House, Ohinemutu, Rotorua on Saturday 17 th November 2012 at 10.00am. 1. Minutes. AGENDA 2. Annual Reports. 3. Appointment of Auditor. 4. Distribution. 5. Lunch. PLEASE NOTE THAT VOTING RIGHTS AT THE MEETING ARE RESTRICTED TO REGISTERED OWNERS OF THE TRUST. Page 3

5 PUKEROA ORUAWHATA TRUST MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 19 NOVEMBER 2011 AT 10.00AM. CHAIRMAN: SECRETARY: Malcolm Short. Murray Patchell. MIHI & KARAKIA: Bishop Kingi. ATTENDANCE: 160. APOLOGIES: 63. (Alec Wilson/Josie Scott) Carried MINUTES: Chairman took the meeting through the minutes of the last annual general meeting held on 20 November RESOLVED: That the minutes of the 2010 AGM be taken as read and confirmed. (Monty Morrison/Bryce Morrison) Carried CHAIRMAN S REPORT: Chairman tabled his annual report. RESOLVED: That the Chairman s report be adopted. (Malcolm Short/Walter Moore) Carried FINANCIAL REPORT: Murray Patchell tabled the audited consolidated financial statements and took the meeting through a presentation on screen of the continuing success of the Trust and its consolidated entities as reflected in the financial reports. He explained that the audit report was qualified due to some properties using the rating valuation rather than an independent valuation and that, due to cost the Trustees were of the opinion that the associated expenditure would have been an unnecessary use of shareholders funds. Matters arising: 1. A number of owners queried the payments of directors fees/ retirement allowance and Tony Wihapi thought the retirement allowance was for trustees not re-elected. Chairman said the policy approved by the owners in 2009 was implemented for trustees who have served more than 10 years and the payment is based on 3 times the annual trustees fee. 2. Tony Wihapi queried the additional cost of compliance to Page 4

6 obtain valuations to achieve an unqualified audit report. Murray Patchell indicated this would likely be $10,000- $15, Tony Wihapi queried the proportions of equity and whether the directors fees reflect the work in those companies. Stuart Harris explained that the pie charts Tony referred to were equity related whereas Directors fees were revenue related and Tony acknowledged that. Murray Patchell advised that directors fees are not based on equity split but were based on work involved and for the newer companies, this was extensive during the planning and consent stages prior to developments bringing income on to the books. 4. Tony Wihapi requested individual company accounts be provided. 5. Tupara Morrison queried the debt write off for QE Hospital. Murray explained that Pukeroa Lakefront Holdings Limited actually purchased the lessee s interested in the 99 year lease and settlement was by contra of outstanding interest and rent and that is how the write-off arose. 6. Tina Ngatai felt that the financial statements should not be qualified. 7. Tina Ngatai queried the disclosure of Hulton Patchell Limited fees. Murray advised that Hulton Patchell Limited is subject to contract between the Trust and the companies and the accounting standards did not require disclosure of those fees. Stuart Harris also explained that the operational companies required start up cash and considerable work was involved by the Administration team. Also, management fees are charged to the companies to reduce income for tax purposes. Tina Ngatai requested more open disclosure of administration costs be reported in the accounts. Dada Marama requested an increase in grants. Walter Moore suggested that details of unclaimed dividends be included in the booklet. Casey Fryer requested that individual financial reports be disclosed. She felt the Trust had done a good job but would like to see more information. Chairman noted these requests and advised that the trustees will look into them. RESOLVED: That the financial reports for the year ended 31 March 2011 be received. (Haetaetu Barrett/Alec Wilson) Carried DISTRIBUTION: Chairman referred to the summary of the 2010 owners grants and the proposal for the 2011 grant to be a 10% increase on 2010, and the increase in the minimum payment rate to be moved from $75 to Page 5

7 $ RESOLVED: That $550,000 be paid as owners grants as per the policy tabled. (Monty Morrison/Kimi Matthews) Carried Tina Ngatai requested that if trustees need to exercise their discretion under clause 13 to amend the owners grant policy, then these changes should be reported back to the owners. Chairman confirmed that would be the case. NGATI WHAKAUE PUKEROA ORUAWHATA TRIBAL TRUST: Chairman tabled the annual report on behalf of NWPOTT. Tony Wihapi asked if the Trust had paid its $50,000 contribution and the Chairman confirmed that it had. Tiro Rakoczy raised the matter that some other Trusts are paying kaumatua grants. The kaumatua are passing on and she felt it was not fair. Chairman explained that assistance was coming through owners grants and health grants. Bryce Morrison queried if there were still funds remaining that could assist with kaumatua grants. A motion was put that the trustees should consider a kaumatua grant. Moved by Willie Emery, seconded Renee Mitchell. Carried. In speaking to the motion Rawiri Te Kowhai requested support for struggling children. Tony Wihapi suggested a kaumatua grant of $250 to those that prove themselves to Ngati Whakaue at age 65 years. Peter Stait queried if kaumatua would still be eligible for a health grant as well as a kaumatua grant. Chairman said the detail would need to be worked through. NGATI WHAKAUE EDUCATION ENDOWMENT TRUST: Chairman tabled the copy of the annual report to the Minister of Education and referred to the newsletter that had also been made available. Matters arising: 1. Tony Wihapi said that with reference to earlier speakers could the Endowment look at assisting families in financial need to pay school fees, uniforms etc. Chairman explained that the Ngati Whakaue Education Taumata are working in that area with young children and the Endowment is increasing its support to the Taumata. The Taumata are also looking at job training. 2. Sindu Morrison asked if there was a provision for children with special needs. Chairman advised there was no policy for that and that would be something for the Endowment Page 6

8 trustees to consider. 3. Bev Anaru spoke regarding the project grants and provided examples of the work going on and the benefits being achieved from these targeted grants. 4. Bryce Morrison said he had concerns with rangatahi. He said he had a major concern with education and job training because it seemed only the academics get supported. He was working with the Taumata to establish a trade training school on this and good progress was being made. He felt this needed to be done to keep kids out of jail and going in the wrong direction. 5. Bishop Kingi supported this initiative. He said Tumahaurangi Trust had been doing this for years and also Waiariki Polytech were doing this. He did have questions however why another facility was required. 6. Rawiri Te Kowhai said he works with young people and the social problems are huge. This matter has been raised many times and nothing is happening. Many are struggling and there are dysfunctional families and he queried what the trustees were going to do about that. 7. Bishop Kingi said he was also Chairman of Te Utuhina Manaakitanga Trust which had been going for 20 years. This organisation can help with drug and alcohol. He said the problem of feeding children is Te Arawa wide. POT can look at school assistance where Ngati Whakaue are located but they need to be careful with assistance. Maybe there needed to be a joint approach. The issues are which schools should be helped as Ngati Whakaue are quite widely distributed. He suggested that people give this some thought and bring back their ideas to the trustees rather than leave it up to the trustees to work on. 8. Jackie Aratema supported Bryce s initiative. He felt Waiariki Polytech was limited. Bryce Morrison is looking at wider training and the Endowment is an appropriate body to assist with tertiary programmes of this nature. He said good work habits need to be learnt early. Drugs need to be controlled. School leavers are vulnerable and he put forward a plea to the Endowment to see how they can assist. 9. Bishop Kingi said that others have asked for assistance to help against suicide. POT is not a beneficial society and these things all need financial assistance and the question is where will it come from. Tony Haupapa said he is on Tumahaurangi Trust. He suggested that the Waikite group should come and talk to them and see how they can help. Page 7

9 Tony Wihapi felt the matter should be left with the Taumata and the Endowment to work through. Chairman advised that Tumahaurangi Trust will need to move to new premises as the Mega 10 development will take over that area and he confirmed the Taumata is working closely with them. Maramena Vercoe referred to the support for primary school children and felt that they should not lose the opportunity presented to them. She supported people presenting proposals to the trustees. Chairman explained that the Taumata are targeting the young children through their various programmes. AUDITOR: RESOLVED: That BDO Spicers be reappointed auditors for a further term of 1 year. (David Tapsell/Maureen Waaka) Carried TRUSTEES ELECTION: GENERAL BUSINESS: Murray Patchell explained that voting closed on 18 November and counting was now underway. Results should be available for notification in the Daily Post on Wednesday 23 November. The successful candidate will be referred to the Maori Land Court for appointment as a trustee. 1. Kingi Biddle was invited to speak to the meeting. He thanked POT and the other Trusts for assisting with his trip to Las Vegas to the World Toastmasters championships. The assistance relieved a lot of stress and enabled him and his whanau to go to the championships, which he won. He said there were 33,000 entrants in the competition and he could not have done this without this financial support. 2. Wena Kopae asked what happens to jobs for Ngati Whakaue at the hospital. She said there are a lot of jobless people and the hospital is being run by others. She also supported the Kaupapa regarding kaumatua grants and added a query as to why kaumatua could not get a van. 3. Tony Wihapi said this was the fourth Ngati Whakaue hui he had attended in the last month and he queried if the four bodies could work together for the good of the Tribe. He commended the Committee for its work this year. He suggested a common economic strategy for Ngati Whakaue to help provide financial support for iwi members. In closing the meeting, Bishop Kingi felt Ngati Whakaue should use Waiariki Institute more. There may possibly be a merger with Tauranga Polytech. He said the owners had heard about the work POT is doing today, it was just about a full time job for the Chairman and trustees and they realistically have little time for Page 8

10 addressing other issues. He said combining the roopu had been tried by the groups don t seem to get on together very well. In his view, POT is the best of the organisations. There are some issues that the trustees are trying to resolve and he invited Tony Wihapi to advise on how this can be done. He also added that last year the meeting approved Mokoia Island trustees and POT owners have the authority to do this. Meeting closed at 12.45pm with karakia from Bishop Kingi. Signed as a correct record CHAIRMAN o:\clients\4270\external access\minutes\minutes2011\ agm.doc Page 9

11 Kia ora tatou Ngati Whakaue, PUKEROA ORUAWHATA GROUP CHAIRMAN S REPORT It is my privilege and pleasure to present my 27 th Annual Report to you today 27 years ago when I presented my first report we were a small trust with a lot of aspirations. Over the last 27 years we have worked hard to transform those aspirations into reality, whilst we are not there yet we are certainly making good progress. We are now entering into the 5 th year of global economic turmoil; with the problems of Europe looking no closer to be resolved than they were this time twelve months ago. Whilst we are half a world away, the European Sovereign Debt crisis continues to be an issue that we need to be mindful of as we do our business here in Rotorua. Closer to home, the effects of the Christchurch earthquakes continue to be felt both through significant increases in the cost and availability of insurance as well as changes to Building Codes. The impact of the introduction of the new Earthquake Prone Building policy is likely to have a significant impact on the commercial property industry, however I am pleased to advise that our developments meet or exceed the minimum standards required by the Act. Despite the economic uncertainty, our business continues to grow and demand for representation on our sites continues to increase. This year has seen new facilities opened for Westpac, starting new premises for ANZ, and completion of the Mega 10 facility on Pukeroa Properties No.2 s Pukuatua Street site. Our financial results continue to improve each year and it is with a sense of pride and satisfaction that I announce another strong result for the Group of $1.832 million surplus after tax. One of the key decisions that your Trustees make each year is on the level of funds to be distributed to owners whilst our cash surplus generated is significant, so too are the demands on those surpluses by external parties. The significance of the call on our cash surpluses is illustrated in the adjacent chart. In line with the request from the floor at last year s AGM, the Trustees have given full consideration to changing our distribution to include kaumatua grants as part of our distribution payments. As Trustees, our focus has been primarily on ensuring that all our owners, irrespective of the size of their shareholding, will receive benefit by way of the Trust s Minimum Grant policy. This approach has meant that this year those with small Page 10

12 group s surpluses than they would have under a share based grant scheme without a minimum payment. Under this year s proposed minimum grant, $125,000 of the total pool available for distribution will be paid to shareholders with less than 0.15 of a share. This means that nearly 700 owners who hold less than 0.02 of a share will each receive at least $80 more than would otherwise receive under a dividend scheme. Whilst we would like to make shareholder grants and kaumatua grants, the simple fact is that we could only do both if we significantly reduced the level of shareholder grants paid. On review, the Trustees consider that the current Minimum Grant approach is the most equitable to all shareholders and have decided to maintain our existing approach to distributions to owners. In terms of this year s distributions, the Trustees have resolved to recommend to: Increase the distribution to owners by 10% from $550,000 to $605,000; and, Increase the minimum grant payable from $82.50 to $90. This ensures that all shareholders, no matter the size of their shareholding, receive a financial benefit of some significance. TRUSTEES I would like to take the opportunity to acknowledge the efforts of your trustees over the last 12 months. It is through their hard work, wisdom and prudent decision making that we have been able produce the results that we have and I would like to extend a vote of thanks to them for their ongoing efforts. Jackie Aratema s appointment to the Trust was confirmed by the Maori Land Court in February this year. In addition to his role as Trustee and Director of the subsidiary companies, Jackie has joined Stuart Harris and David Tapsell on the Finance, Expenditure & Risk sub-committee. The Finance, Expenditure & Risk subcommittee and the Property & Development sub-committee, which comprises Alec Wilson and myself, work closely with our Property and Management support team from Hulton Patchell. Our approach to contracting in services on an as required basis has enabled us to maintain our total administration and operating costs to a level that is equal or significantly better than a number of comparable property based Maori & Listed Trusts. Page 11

13 We accept that we cannot rest on our laurels and we continue to look at ways of ensuring that the value delivered to owners continues to be maximised. PROPERTY AND DEVELOPMENT Last year I stated that we were starting an exciting phase of new developments, and this year we are continuing to see the results of this phase of our development cycle. Rotorua Central This year has seen the completion of Westpac Bank building in June and the commencement of new premises for ANZ, which are scheduled for completion early next year. In December last year the Warehouse Stationery building was completely destroyed by fire. Thankfully due to good design and building practices the fire was contained to the single site. Construction of replacement premises for the Warehouse stationery commenced in August and will be completed in December As part of the Warehouse stationery rebuild, we are modernising the southern entry to the Mall to bring it in line with the fresh, modern foodcourt. Page 12

14 In July the Board committed to the roofing over of the Northern portion of the Mall, with work on this expected to commence early In addition to the new builds, we have also completed significant refurbishment work on both The Warehouse and the former Breakers Building. Breakers has been completely refurbished and rebranded as The Kurious Kiwi. Negotiations are in progress with prospective tenants for the to be vacated Mitre 10 site and we are hopeful that we will be in a position to make an announcement on this shortly. Trade Central Work commenced on Stage 1 of this project late last year with the Mega 10 Building starting in March It is extremely pleasing to report that this stage of the project has been completed ahead of program and under budget. Mega 10 s official opening is scheduled for 6 December Stage 2 of the development is expected to commence early Lakefront The Board has been working closely with the Rotorua District Council on coordinating the plans for Hinemaru / Whakaue Street site with the overall redevelopment of the lakefront. The lakefront redevelopment is an exciting opportunity to make a defining statement for Rotorua and create an asset that benefits all of Rotorua, as well as our owners. Our primary focus to date has been on working to ensure that the Draft District Plan provides us with the flexibility to cater for the opportunities that will be identified. A full refurbishment of the former Te Ngakau building was completed in October for Te Aroha o Hinemaru Trust. Page 13

15 WHAKAREWAREWA As advised last year, negotiations with the Crown for the return of the Te Puia business had started. This process has been delayed by the need to resolve issues between Ngati Wahiao / Tuhourangi and Ngati Whakaue in relation to ownership. We remain optimistic that we will have a positive announcement on this in the near future. STRATEGIC ALLIANCES AND SPONSORSHIPS Building a strong, healthy and vibrant economy that benefits all of Rotorua is a cornerstone of our operating focus. With this in mind, I am pleased that this year we have added to our sponsorships and support as follows: Sponsorship of the Chamber of Commerce s Small Business Training programme Making a long term commitment to support QE Health Recognising the invaluable services provided by the Rotorua Community Hospice In addition, we continue to sponsor the Rotorua Business of the Year Awards, Lakeside Rotorua Concert, the BOP Steamers, and are supporting the 2013 Te Matatini festival. Our unique relationship with the Rotorua District Council is recognised by the Protocol Agreement with regular meetings held between the Trust and the Council on matters relating to the gifted lands. At an operational level, we continue to develop our already excellent working relationship with the Council s Senior Management team. As Trustees and Directors, we actively promote the Group s interests through our membership of FOMA, the NZ Property Council, the NZ Institute of Directors, the NZ Geothermal Association, and the Rotorua Chamber of Commerce. These memberships are a valuable source of professional development activities for the Trustees / Directors by ensuring that we keep abreast of best industry practices. OPERATING STRUCTURE The Pukeroa Oruawhata Group, with assets worth in excess of $142 million held within 6 separate entities, is fast becoming one of New Zealand s leading privately owned property operators. As we grow, and we fully expect our balance sheet to break through the $175 million barrier by March 2014, we recognise that our systems and support structures continue to match the needs of running a market leading business. In 2011 we established a sub-committee structure as follows: Property & Development - Malcolm Short, Alec Wilson Finance, Expenditure & Risk Stuart Harris, David Tapsell, Jackie Aratema Page 14

16 The operation of the sub-committees is supported by the resources of Hulton Patchell who provide the Group with Financial, Secretarial, Property Management and General Management support. Hulton Patchell are very much a key component of the Pukeroa Oruawhata Team and their efforts & contributions to our on-going success are much appreciated. CONCLUSION Overall, the Pukeroa Oruawhata Group is in very good shape. Developments that are in progress now will further strengthen our position and provide us will a strong platform from which we can work towards achieving future opportunities. Success does not occur through luck, it is the result of hard work, good planning and good advice. I would like to take this opportunity to thank on your behalf your Trustees and our advisers, all of whom have made significant contributions to our on-going success. Nga mihi nui, Malcolm Short ONZM Chairman 17 th November 2012 Page 15

17 Pukeroa Oruawhata Group Structure Pukeroa Oruawhata Trust Traditional lands (52 properties) Te Tuporo A Block (Lake Road) Pukeroa Lakefront Holdings Limited QE Hospital land Hinemaru Street 10 Houkotuku Street Pukeroa Properties No2 Limited Waihunuhunukuri Holdings Limited Lake House Tavern 47 Lake Road Pererika St land & buildings Amohau St (ex Railways) Action Truck lease Mega 10 Te Hope o Tutanekai Trust Pukeroa Oruawhata Holdings Limited Rotorua Central land & buildings Best Drycleaners building Pukeroa Properties Limited Amohau St (Mill Liquorsave lease) Ti Street Te Kura Kaupapa o Te Koutu * POHL also holds shares in inactive companies Rotorua Casino Limited and Casino Rotorua Limited * Waihunuhunukuri Holdings Limited also holds shares in inactive company Lake Tavern Limited Page 16

18 Financial Highlights For 2012 Gross Revenue Equity Growth per share +$10,231 +$309,300 Net Surplus after tax +22.9% Stage 1 Mall Roof over and BNZ / Postie Plus completed Value Distribution to Owners +10% 6 new $24.300m in progress Balance Sheet Growth $17.75m Financial Performance: The 2012 year saw several new projects move off the drawing board with work on roofing over of the Foodcourt and the BNZ / Postie Plus buildings completed late 2011 and several other developments in progress at Balance Date. The impact of funding these new developments on our cash flows, due to our needing to pay for these developments before the new rental income streams started, has been to increase our expenses. In addition, following the Warehouse Stationery fire in December 2011, there were a number of one-off costs arising that were also recognised. Page 17

19 Our maintenance costs on the Lakefront site increased significantly during the year as we addressed a number of deferred maintenance items on the site. Whilst we are having to pay for years of minimal maintenance, the state of the asset was fully reflected in the value at which it was transferred back at. After protracted negotiations with QE Health, a settlement was reached which saw the company agreed to forgive historical rent arrears and interest accrued on those arrears. As part of our arrangement, QEH have agreed to shorten the term of their Ground lease to a 5 year term which will accommodate our development intentions for this site. The market value of the site has increased significantly as a result of this agreement. The removal of depreciation allowances on commercial buildings took effect from 1 April 2012, significantly reducing the amount of depreciation that could be claimed as a tax deductable expense. We completed a comprehensive review of our Tax Management and as a result have implemented tax management strategies that have allowed the Group to significantly reduce its tax burden in the current year. The 2012 Net Tax Paid Surplus of $1.832m, at 18% of operating revenue compares well with the 13.7% achieved in Cashflow: Management of the Group s cash flows reflect the trade off between short term requirements of the owners and the strategic focus to provide for the long term growth of the Group s wealth for the benefit of future generations. As all of the Group s new developments are funded by Bank debt, repayments to our bankers represent a major component of our annual cash flow commitments. In dollar terms, our loan repayments account for nearly $2.7m of our available cash. In 2012 the level of scheduled debt repayments represented 59% of the available cash surpluses with the Group. This level of repayment is designed to ensure the long term viability of the Group and to provide us with the ability to fund future growth opportunities. To ensure that the Group has sufficient funds available to fund its on-going growth 13% of our available cash is held to for operating the business, reinvestment and funding growth opportunities. We remain committed to the long term strategy of sustaining meaningful distributions to owners which increase at rate equal to or greater than the rate of inflation. Page 18

20 Asset Growth and increase in Shareholder Wealth: Our long-term equity growth has been achieved through a combination of using cash surpluses to repay debt and locking in developer s gains as we successfully complete each development. Over the last 18 months, the increase in the value of the underlying assets has reflected the development work that has been in progress on both the POHL & PPNo2 sites, together with the negotiated settlement with QEH. The full extent of the growth in assets has been partially offset by a reduction in the value of the Trust s corpus lands. Last year our Financial Statements were Qualified by our Auditors due to the use of Rating Valuations rather than Registered Valuations. To meet Audit requirements, the basis of valuation used for Trust s land holdings was changed from Rating Valuation to Registered Valuations (at a cost of $13,690), resulting in a $4m reduction on the 2011 book value of corpus lands. The long term and sustained trend in growth in both asset value and equity per share is illustrated in this graph. Banking Relationships and Covenant Compliance: Our Bankers play a major part in the on-going success of our operations. Our banking relationship contains certain performance covenants (rules) that the Group must achieve. The performance against these covenants is measured quarterly and Group s performance as at 31 March 2012 is summarised as follows: Bank Financial Ratios: Required Actual Equity/Assets: 50% 63.5% Interest Cover: 1.75 times 3.52 times Bank loans as at 31 March 2012 totalled $46,062,394. POHL loans are secured by first mortgage over Rotorua Central Land and amortised (repaid) over 15 year periods. PPNo2 & PLHL loans are secured over Trade Central and Lakefront properties. As interest on our borrowing represents our single largest cost, the Group has an interest rate risk management strategy in place that uses a mix of fixed and floating interest rates. Page 19

21 Risk Management: In addition to managing our exposure to interest rate risk, a strategic focus of the Group has been to reduce the reliance on the Rotorua Central site. This year we have seen the benefits of our strategic focus reflected in a significant and sustainable operating cash surplus achieved by the Trust. A number of the Trust s properties have been progressively developed to enhance their income generating capacity and produce a healthy operating surplus for the Trust in its own right. Late 2011 development started on the PPNo2 Trade Central site at Pukuatua Street. Mega 10, which is the first and the anchor tenant for the site, is scheduled for opening in December on time and under budget. As the rentals from this development come on board and our income streams diversify, the reliance on POHL s Rotorua Central to support the Group s operations will lessen. Distributions: Last year, distributions to owners were made by way of Owners Grants at a rate equivalent to $ per share (up from $ in 2010) with a minimum Grant of $82.50 ($75 in 2010). By adopting a minimum grant approach, the Trustees have ensured that all identified shareholders receive a payment of some significance. Cash Distribution per share $800 $600 $400 $ $ This year the Trustees have increased the owners distribution amount from $550,000 to $605,000 and lifted the minimum grant from $82.50 to $ Over the last 8 years the cash distribution per share has increased by 553% and the equity per share increased by 203%. Page 20

22 Trustees/Directors Remuneration: Trustees/Directors remuneration before taxation for the 12 months to 31 March 2012 was: Malcolm Short (Chairman) POT POHL PLHL PPNO2 TOTAL $23,420 $30,230 $12,002 $10,640 $76,292 Alec Wilson $19,668 $24,184 $8,440 $7,366 $59,658 Pihopa Kingi $16,388 $20,154 $5,986 $5,463 $47,991 Stuart Harris $16,406 $20,154 $6,509 $5,985 $49,054 Jackie Aratema (Appointed 2/2012) $ 1,362 $ 1,679 $ 639 $ 639 $ 4,319 David Tapsell $19,113 $20,154 $4,417 $4,416 $48,100 TOTAL $116,555 $96,357 $37,993 $34,509 $285,414 Owners: This chart reflects the number of owners on the register and number of addresses and bank accounts held. Murray Patchell Secretary/Accountant Page 21

23 CAPITAL EXPENDITURE PUKEROA LAKEFRONT HOLDINGS LIMITED Property Purpose Amount Hinemaru Street (1 Priest Refurbishment $ 5,211 Rd) PUKEROA PROPERTIES (NO 2) LTD Property Purpose Amount Trade Central Site Development $1,586,785 PUKEROA ORUAWHATA TRUST Property Purpose Amount Pukuatua St (Kidicorp) Various $ 127, Froude Street Vinyl $ 1,704 2b Ranolf Street Building $ 10,611 8 Froude Street House $ 28,735 $168,373 PUKEROA ORUAWHATA HOLDINGS LTD Property Purpose Amount 1308 Amohau St Flooring $ 4,102 The Warehouse Upgrade $ 14,967 Burger King Refurbishment $ 50,000 Kurious Kiwi Refurbishment $ 75,456 Fenton Food & liquor Veranda $ 13,121 Foodcourt Carparks Van Dyks Refurbishment Airconditioning $3,581,823 $ 147,610 $ 112,905 Credit Union Alterations $ 94,646 BNZ New Build $3,033,858 TOTAL $7,128,488 WAIHUNUHUNUKURI HOLDINGS LIMITED Property Purpose Amount 47 Lake Road Bar Conversion $ 53,141 PUKEROA PROPERTIES LIMITED 9 Froude Street Land $ 217, Meade Street Land $ 133,000 $ 350,000 TOTAL CAPITAL EXPENDITURE $9,291,998 ( $ 2,159,854) Page 22

24 PUKEROA ORUAWHATA TRUST REVIEW OF 2011 OWNERS GRANTS In 2007 the Trust adopted a shareholders grant instead of a dividend. The grant is paid in bands to owners who provide their addresses and bank accounts. In 2011, $550,000 was approved to meet owners grants with the minimum grant established at $ Highlights: Shareholder Grant payments were $473,457 an increase of 34% over what would have been paid as a dividend. - Actual Grant payments were 4.6% ahead of projected payments Owners who would have received less than $20 under a dividend payment received $82.50 each. - Balance of allocation not distributed was $76, Unclaimed Dividends balance dropped 3.4% from $235,664 to $227,939 last year. COMPARATIVE PAYOUT $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Dividend 2008 Budgeted 2008 Actual 2009 Budgeted 2009 Actual 2010 Budgeted 2010 Actual 2011 Budgeted 2011 Actual Page 23

25 PUKEROA ORUAWHATA TRUST Minimum $ Total Grant $605,000 Indicative grant structure for owners grant in lieu of dividend on basis of providing addresses and bank accounts OWNERS GRANT PAYMENT CATEGORY 1 CATEGORY 2 CATEGORY 3 Owners Owners Owners Grant Total grants Exposure Maximum DIVIDEND PAYMENT Total Number with address with address and with no address to be payable to to dividend Owners Total dividends Number with address and bank a/c without bank A/c and no bank account paid Category 1 Category 2 would have got payable Share Range 0 to $ 90 $ 62,730 $ 28,890 $12.13 $2, to $ 90 $ 10,260 $ 4,140 $18.19 $1, to $ 90 $ 14,040 $ 3,420 $30.32 $3, to $ 90 $ 15,120 $ 3,330 $48.52 $6, to $ 90 $ 6,030 $ 1,620 $60.65 $3, to $ 91 $ 8,734 $ 1,729 $90.98 $7, to $ 121 $ 6,793 $ 1,334 $ $6, to $ 182 $ 20,199 $ 1,638 $ $15, to $ 243 $ 14,072 $ 3,397 $ $11, to $ 303 $ 13,648 $ 2,730 $ $12, to $ 364 $ 5,823 $ 728 $ $4, to $ 425 $ 10,615 $ 1,698 $ $9, to $ 485 $ 7,279 $ 1,941 $ $7, to $ 546 $ 6,005 $ 1,092 $ $5, to $ 607 $ 4,853 $ 3,033 $ $4, to $ 910 $ 50,953 $ 6,369 $ $42, to $ 1,213 $ 36,395 $ 3,639 $1, $35, to $ 1,516 $ 25,780 $ 6,066 $1, $23, to $ 1,820 $ 12,738 $ 3,639 $1, $11, to $ 2,123 $ 27,599 $ 4,246 $2, $25, to $ 2,426 $ 7,279 $ - $2, $9, to $ 2,730 $ 21,837 $ - $2, $20, to $ 3,033 $ 15,165 $ 9,099 $3, $14, to $ 3,336 $ 16,681 $ - $3, $15, to $ 3,639 $ 3,639 $ - $3, $3, to $ 3,943 $ 19,714 $ - $3, $19, to $ 4,246 $ 12,738 $ - $4, $12, to $ 4,549 $ 13,648 $ - $4, $13, to $ 4,853 $ 4,853 $ - $4, $4, to $ - $ - $ - $5, $ to $ - $ - $ - $5, $0.00 9to $ - $ - $ - $5, $ to $ - $ - $ - $6, $ to $ - $ - $ - $7, $ to $ 8,492 $ 8,492 $ - $8, $8, to $ 12,132 $ 12,132 $ - $12, $11, TOTALS $ 495,844 $ 93,778 $ 374, Total $ 589,622 Payable O:\Clients\4270\Annual Reports (Internal)\2012\2012 Dividend Grant calc.xls 12/11/2012 Page 24

26 PUKEROA ORUAWHATA TRUST 2012 OWNERS GRANT POLICY An Owners grant in lieu of a dividend was approved at the AGM on 17 th November This grant is payable to the Owners registered at 17 th November 2012 who have supplied their bank account numbers and addresses. The grant is also available to Owners, subject to the terms of the grants policy, up to the next AGM. The current policy in respect of the 2012 Owners Grant is as follows:- 1. For identification purposes the grant will be called the 2012 Owners Grant. 2. The sum of $605,000 has been set aside for 2012 Owners Grants. 3. Payments will only be made to bank accounts and Owners addresses must be held. 4. Payments will be calculated according to shareholding bands as per the attached schedule. 5. This Grant will be paid from tax free capital reserves. 6. All Owners with addresses are to be advised of the Owners Grant and those who have not provided bank account details will be asked to do so. 7. Sufficient funds will be retained to cover any Owners who are located after the payment date up until the 2013 AGM. 8. The Trustees reserve the right to make only one payment to a shareholder whose name may appear more than once on the share register where it is evident that those multiple names refer to one person. 9. Any Owners who are located after the payment date will be entitled to the payment they would have received had their address and bank account details been known at the distribution date. 10. Any owners who succeed to shares after the payment date will be entitled to payment of the current Owner s grant based on their shareholding where it has not been paid to the deceased shareholder. 11. Entitlement to the payment will expire at the 2013 AGM. 12. Payments to overseas Owners will be subject to deduction of bank charges. 13. The Trustees reserve the right to amend this policy or draft new policy to cover any circumstance not covered or anticipated by this policy, in respect of payments to all owners or to any one or more owners and the Trustees decision in these matters will be final. Approved.. Chairman.. Page 25

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28 NGATI WHAKAUE PUKEROA ORUAWHATA TRIBAL TRUST (Registered as a charitable entity under the Charities Act 2005 No ) GRANTS POLICIES Marae Insurance (04/05 and 02/06) That requests for funding for Marae insurance will not be considered without the applicant producing a copy of proper financial statements for the Marae, and that amounts granted under this policy will be fixed by the trustees on a case by case basis. Repairs to residential properties (04/05) That the trust will not fund the cost of repairs/improvements to privately owned residential properties. Tangi Grants (07/05) That tangi grants of $200 be available on application for deceased shareholders of Pukeroa Oruawhata Trust or Ngati Whakaue Tribal Lands. Health (01/06 and 10/06 reviewed 06/09) That health grants will be subject to a maximum of $300 to individual applicants for personal health related matters, and that applications will be limited to one per person in any financial year. Education (05/06 and 07/06) That grants for education purposes from individuals be subject to a maximum of $200 per person per annum and be limited to applicants aged 18 or over. Sporting (05/06 and 07/06) That grants for sporting purposes from individuals be subject to a maximum of $200 per person per annum and be limited to applicants aged 18 or over. Cultural (07/06) That grants be limited to applicants aged 18 or over. Travel (06/08) That applications by any group to fund travel by any means where the group is supporting/representing Ngati Whakaue will be funded to a maximum of 50% of the travel costs only, with the trustees reserving the right to fund an additional amount if they believe the circumstances of the application warrant it. No funding will be made retrospectively. Other Time limit on uplifting grants (03/08) Applicants will have 6 months from the date of approval to uplift grants. If the grant is not uplifted within that time, the applicant will be advised that the previous approval is withdrawn and they will need to re-apply. Large grants (10/09) Recipients of large grant funds be requested to report to the Trust on the use of the grant as soon as completed. Minimum grant amounts (08/10) Grant s will be paid up to a maximum of $300 per applicant to cover any category in any one year. Updated August 2010 Page 27

29 2012 CHAIRMAN S REPORT The Minister of Education NZ Government Wellington Tena koe Minister ANNUAL REPORT On behalf of the Board I am delighted to present our statutory annual report, my 16 th annual report since return of the Endowment in It is a privilege to continue working with such a strong and capable Board supported by an excellent administration team. There have been no changes to the Board over the last year and the consistently high attendance by Board members at monthly meetings and subcommittees reflects their enthusiasm to ensure the legacy of our Ngati Whakaue Tupuna is managed to provide the maximum outcomes to our beneficiaries. The strategic vision written in 1996 still strongly underpins the Endowment strategy: To enhance the vision of Ngati Whakaue Tupuna by the responsible, effective and prudent management of the Endowment and the provision of financial support to the beneficiaries of the Trust for Educational opportunities of significant identified need. Financially the Board s net cashflow revenue and expenditure is consistent and has benefited from the build up of a significant investment reserve. That reserve fund now stands at $16,332,803 and increased by 3.26% over the last year. The income from that reserve offsets the static rental from the Rotorua perpetual ground leases that have 21 year rent reviews. The next 21 year rent reviews are in 2017 but the indications are that any increase is likely to be modest given difficult economic trading conditions for provincial cities such as Rotorua. That emphasises the importance of growing the reserves to enable the Board to grow its distributions annually, to meet ncreasing demands and expectations from its beneficiaries. Lower interest rates and dividend yields and global investment pressuress add further complications to income growth. Operating surplus for the year ended 31 December 2011 was $2,132,231 compared to $2,130,532 in the previous financial year. Realised investment losses and currency losses of $349,945 decreased net surplus to $1,782,286. A revaluation of the land has been reflected in the write down of asset valuation this year by $5,991,887. This is based on the rating valuation. The Board does not accept the accounting standard requiring market valuation of the land which it can never control and accordingly Page 28

30 the financial statements do have a qualification from Audit New Zealand in that regard. The Board s view is that the money that would otherwise be paid to valuers is better to be applied to grants or reserve buildup. The net equity of the Endowment as at 31 December 2011 was $50,312,793 ($55,752,850 in 2010). The Endowment has a diversified range of grant programmes as summarised on page {6}. While the obligation for education of the community remains the responsibility of central Government there are many areas that we have been able to support the educational system whether through teaching tiny tots to swim, transporting school children to the Museum, supporting underachievers literacy skills or helping tertiary students through their degrees. The Endowment is playing a small but much needed part in strengthening education outcomes in the Rotorua district. As at 31 December 2011 the Board has distributed in excess of $12,127,588 in grants since inception in The ratio of grants distributed is: Tertiary 42.3% School Projects 38.4% Ngati Whakaue Education Taumata 9.0% Other Grants 10.3% The current annual grants budget is $ 1,558,657 and this has been increased by 6% p.a. to exceed the rate of inflation and to keep up with the growing population base and the demand for assistance. The forecast financial models indicate that rate of growth may not be sustainable through the next quartile of this century and this rate will be reviewed in the current financial year. Significant investment has been made into a new interactive website development and database storage to manage online grant application processing, monitoring and information storage and retrieval. That development has now been completed and the benefits will follow in the coming years. Recently our longstanding education consultant of 11 years Bev Anaru announced her intention to retire at the end of this year. Bev has provided outstanding service and guidance to the Board and will be difficult to replace. A process is underway to find a suitable replacement for this position. No progress has been made on the repatriation of the overall control of the Endowment to Ngati Whakaue Iwi accountability. This is currently with the Office of Treaty Settlements and we will continue to progress this as best we can. Nga Mihi Malcolm Tukino Short, ONZM CHAIRMAN Page 29

31 DISTRIBUTIONS YEAR Tertiary Projects Ngati Other Whakaue education , ,653 5,136 8, , ,294 7,988 7, , ,194 31,096 20, , ,759 19,075 18, , ,555 38,450 70, , ,000 51,658 92, , ,435 48,099 50, , , ,056 59, , ,000 60,000 57, , , , , , , , , , , , , , , , , , , , ,399 TOTALS 5,130,308 4,660,170 1,095,558 1,241,552 Total Distributions to 31 December 2011 = $12,127, Other Ngati Whakaue Projects Tertiary Page 30

32 TERTIARY STUDENTS - FIRST YEAR AND TOTAL STUDENTS TREND st Year Total Students VALUE OF INVESTMENTS (Excluding Land) Millions $ Page

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55 Q. How do I apply for succession? MAORI LAND COURT SUCCESSIONS A. You need to file an application for succession at the Maori Land Court. You will need to provide the following: Original death certificate or a certified copy Original will (or grant of administration) if there is one Fully completed application papers Application fee of $61.00 Details of the deceased's whanau, that is parents, brothers, sisters and children. When obtaining Court land records you must tell them if the deceased person is in an Incorporation as the Court does not maintain registers for Incorporations. They will then ask the Incorporation Secretary for details of that shareholding. Q. How much does it cost? A. The application fee is $ That is the only cost payable to the Maori Land Court. You may incur other costs obtaining copies of death certificates and if you have to consult a lawyer. You should discuss this with Court staff. Q. What happens when I lodge my application? A. The application is searched by Maori Land Court staff to obtain full details of the deceased's land interests. You will receive a copy of that search and will be advised by letter when you have to go to court. A court hearing will be arranged at the court venue closest to where the land is located or, if you prefer, closest to where you live. When you arrive at court, you will firstly speak to a Court officer who will confirm the details of your application. The Judge of the Court will then re-confirm those details in court. Following the court sitting, you will receive a copy of the court minutes, which is a record of the hearing. This is confirmation of what happened at the hearing. Q. Do I have to get a lawyer? A. In most cases, you can complete succession yourself. You should discuss whether or not you need a lawyer with Court staff. Q. What is probate? A. When the High Court confirms the appointment of an executor to look after the affairs of a deceased person, the court's authority for that person to act is given in a grant of probate. Page 54

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