Ccos Committee Agenda (3 March 2020) - Agenda

CCOs Committee Agenda (3 March 2020) - Agenda

MEETING AGENDA

CCOs COMMITTEE

Tuesday, 3 March 2020 at 11.15am

COUNCIL CHAMBER LIARDET STREET NEW PLYMOUTH

Chairperson: Cr Richard Jordan Members: Cr Colin Johnston (Deputy) Cr Sam Bennett Cr Gordon Brown Cr Anneka Carlson Cr Murray Chong Cr Dinnie Moeahu Mayor Neil Holdom

1 CCOs Committee Agenda (3 March 2020) - Agenda

CCOS COMMITTEE PURPOSE

 Communicate the Council’s priorities and strategic outcomes to the Council’s CCOs

 Ensure delivery by CCOs through the development of Statement of Intent and integration of CCO outcomes with the Council’s Long-Term Plan and Annual Plan funding processes and decisions

 Monitoring the financial and non-financial performance and delivery on strategic outcomes of the Council’s CCOS through quarterly, half-yearly and annual reports.

Purpose of Local Government The reports contained in this agenda address the requirements of the Local Government Act 2002 in relation to decision making. Unless otherwise stated, the recommended option outlined in each report meets the purpose of local government and:

 Promote the social, economic, environmental, and cultural well-being of communities in the present and for the future.

 Would not alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or transfer the ownership or control of a strategic asset to or from the Council.

END

2 CCOs Committee Agenda (3 March 2020) - Health and Safety

Health and Safety Message

In the event of an emergency, please follow the instructions of Council staff.

Please exit through the main entrance.

Once you reach the footpath please turn right and walk towards Pukekura Park, congregating outside the Spark building. Please do not block the foothpath for other users.

Staff will guide you to an alternative route if necessary.

If there is an earthquake – drop, cover and hold where possible. Please be mindful of the glass overhead.

Please remain where you are until further instruction is given.

3 CCOs Committee Agenda (3 March 2020) - Apologies

APOLOGIES

 None advised

4 CCOs Committee Agenda (3 March 2020) - Deputations

ADDRESSING THE MEETING Requests for public forum and deputations need to be made at least one day prior to the meeting. The Chairperson has authority to approve or decline public comments and deputations in line with the standing order requirements.

PUBLIC FORUM Public Forums enable members of the public to bring matters to the attention of the committee which are not contained on the meeting agenda. The matters must relate to the meeting’s terms of reference. Speakers can speak for up to 5 minutes, with no more than two speakers on behalf of one organisation.

 None advised

DEPUTATIONS Deputations enable a person, group or organisation to speak to the meeting on matters contained on the agenda. An individual speaker can speak for up to 10 minutes. Where there are multiple speakers for one organisation, a total time limit of 15 minutes, for the entire deputation, applies.

 None advised

5 CCOs Committee Agenda (3 March 2020) - Previous Minutes

PREVIOUS COMMITTEE MINUTES Recommendation That the minutes of the CCOs Committee (26 November 2019), and the proceedings of the said meeting, as previously circulated, be taken as read and confirmed as a true and correct record.

END

6 CCOs Committee Agenda (3 March 2020) - Table of Contents

REPORTS

ITEMS FOR DECISION BY COMMITTEE

1. CCOs Quarter 2 Report to 31 December 2019

2. Papa Rererangi i Puketapu Financial Audit Update Report Outlining Actions Addressing their Audit Management Report for YE 30 June 2019

3. CCOs Interim Financial Statements

4. CCOs Draft Statements of Intent

END

7 1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

PERFORMANCE REPORTS FOR NPDC’S COUNCIL CONTROLLED ORGANISATIONS FOR THE QUARTER ENDED 31 DECEMBER 2019

PURPOSE

1. The purpose of this report is for the CCOs Committee to note the Quarter Two Performance Reports for the three main Council Controlled Organisations (CCOs) of New Plymouth District Council (NPDC, the Council).

2. The three main CCOs include New Plymouth PIF Guardians Ltd (NPG), Papa Rererangi i Puketapu Ltd (PRIP, the Airport) and Venture Taranaki Trust (VTT).

RECOMMENDATION That, having considered all matters raised in the report, the Quarter Two Performance Reports of the following NPDC Council-Controlled Organisations be noted: a) New Plymouth PIF Guardians Ltd b) Papa Rererangi i Puketapu Ltd c) Venture Taranaki Trust

SIGNIFICANCE AND ENGAGEMENT

3. This report is provided for information purposes only, and has been assessed as being of some importance.

DISCUSSION

4. The CCOs prepare Statements of Intent (SOI) each year. The SOIs form the basis for performance monitoring and these reports.

5. CCO half-yearly (Quarter Two) reports must be delivered to Council within two months of the end of the first half of each financial year. All reports were received within the deadline.

Summary of Perpetual Investment Fund Quarterly Report

6. Tasmanian Land Company Ltd Group wind up has been delayed due to dispute regarding a possible additional milk solids payment from Fonterra Australia. The claim is for AUD$2.3 million by Moon Lake Investments. There was no resolution at a pre-trial Court mediation in August 2019 and we are still awaiting confirmation of a Court hearing date.

8 1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

7. Attached is the summary report from Mercer New Zealand;

8. The fund is sitting within all its strategic asset allocation ranges as per the Statement of Investment Policy and Objectives.

Summary of Papa Rererangi i Puketapu Quarterly Report

9. Papa Rererangi i Puketapu (PRIP) has made a profit before tax of $307k which is above the re-forecast budget of $256k for the first six months of the financial year.

10. Passenger numbers are higher for the first six months FY2020 compared to the first six months FY2019 despite Jetstar decreasing then ceasing services during the period. This is due to an increase in passengers using Air NZ who have increased their passenger capacity.

11. The terminal project is near completion and expected to be within budget and operational by mid-March.

12. The management of Airport are watching the oversight of the proposed Civil Aviation Bill with interest which could have an impact on the operations of PRIP around settling landing charges and capital expenditure.

Summary of Venture Taranaki Trust Quarterly Report

13. Good progress was made on the performance measures and outcome and impact indicators.

9 1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

14. The Venture Taranaki Trust (VTT) budget summary shows significant leveraged revenue beyond what was forecast. This was largely due to funding received from Ministry of Business, Innovation & Employment (MBIE) for the National New Energy Development Centre establishment, and Turbocharging Tapuae Roa.

15. Key highlights from the quarter were:

a) Curious Minds Participatory Science Platform funding was extended for a further two years ($308,000)

b) Release of the Taranaki Innovation Ecosystem report

c) National New Energy Development Centre core establishment team recruited, funding confirmed and agreement with MBIE completed

d) $1.9m Callaghan grants and funding distributed in Taranaki in the first six months of the year (annual target $1m)

e) Economic Development NZ Award for VTTs Export Mapping project

f) Attraction Campaign reached over 1.5 million people across social, digital and traditional channels.

FINANCIAL AND RESOURCING IMPLICATIONS

16. This report is produced within existing resources and budgets.

IMPLICATIONS ASSESSMENT

17. This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:  Council staff have delegated authority for any decisions made;  Council staff have identified and assessed all reasonably practicable options for addressing the matter and considered the views and preferences of any interested or affected persons (including Māori), in proportion to the significance of the matter;  Council staff have considered how the matter will promote the social, economic, environmental, and cultural well-being of communities in the present and the future.  Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;  Any decisions made are consistent with the Council's plans and policies; and

10 1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

 No decisions have been made that would alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or would transfer the ownership or control of a strategic asset to or from the Council.

APPENDICES

Appendix 1: Perpetual Investment Fund Performance report to 31 December 2019 (ECM 8242845)

Appendix 2 Papa Rererangi i Puketapu Performance report to 31 December 2019 (ECM 8242986)

Appendix 3 Venture Taranaki Trust Performance report to 31 December 2019 (ECM 8242215)

Report Details Prepared By: Laura Harris (Financial Accountant), Kathryn Scown (Principal Adviser – Regional Economic Development) Team: Business Services, Strategy Group Approved By: Joy Buckingham (Chief Financial Officer) Ward/Community: District wide Date: 19 February 2020 File Reference: ECM 8242987

------End of Report ------

11 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

QUARTERLY REPORT NPDC PERPETUAL INVESTMENT FUND

Q4 2019

12 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

CONTENTS

• Fund overview – Fund size, returns and distributions – Financial markets update – Market outlook

• Fund performance

• Asset allocation

• Compliance statement

13 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

FUND OVERVIEW

14 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

FUND OVERVIEW

Fund size

$304.9m

Returns (after fees and taxes)

Since inception 5 years 1 year 3 months (Nov 2004) 6.8%p.a. 10.1%p.a. 15.0%p.a. 2.2%p.a.

Distributions to Council (Release payments) Since inception 5 years 1 year (Nov 2004) $217.1m $38.2m $8.6m

Nb – Implementation of Guardian and Full Outsource Agent (Mercer) model took effect March 1 2017. Results and distributions incorporate TIML results for period prior to March 1.

15 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

FINANCIAL MARKETS UPDATE

35.0 3 Months 31.6 12 Months 30.0 26.9 27.3

25.0 23.8 21.3

20.0

15.0

10.0 7.5 7.5 6.8 5.3 4.9 5.0 4.2 2.2 1.7 0.9 0.7 0.3 0.0 -0.6

-5.0 -2.9 NZ Shares Overseas Overseas Global Listed Global Property NZ Fixed Overseas Fixed Commodities Cash Shares Shares (Local Infrastructure Interest Interest Currency)

• In a sharp contrast to 2018, Q4 2019 ended on a high note for • In New Zealand, the NZX-50 jumped +5.3% over the quarter investors. Markets were encouraged by healthy U.S. supported by healthy wage growth, a labour market close to economic indicators including employment, consumer full employment, fiscal spending, coupled with existing spending and improved manufacturing data. Expectations that interest rate levels. The economic data was reflected in the global interest rates will remain low throughout 2020, coupled NZD which rebounded 5.1% against the trade weighted index with an improved US-China trade position also provided of currencies. further support. • The US Federal Reserve cut its Federal Funds Rate by • While the evolving relationship between the US and China 0.25% at the conclusion of its October meeting (to 1.50% - contributed to some intra-quarter volatility, it ultimately 1.75%), the third such cut in 2019 while the European Central finished the year on a positive note. In December the leaders Bank left its historically low deposit rate unchanged at -0.50% of the two nations announced the agreement of a ‘phase one in October, continuing to highlight the adverse economic deal’. Included in the scope was the phasing out of American climate across the continent. tariffs, while China would review its intellectual property • The Reserve Bank of New Zealand (RBNZ), in its November protections and commit to increased purchases of US monetary policy statement, left the Official Cash Rate agriculture. unchanged at 1.00%.

16 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

MARKET OUTLOOK

• The global growth outlook remains broadly positive, despite downgraded growth projections by the International Monetary Fund (IMF). Some of the risk factors weighing on medium term growth have abated; in the Asia-Pacific, the signing of the ‘phase one’ agreement between the United States and China has provided some reassurance to markets.

• In Europe, the decisive election in the United Kingdom has ended the political paralysis around Brexit and provided more directional certainty.

• Supporting global growth is global administrations willingness to boost fiscal spending and maintain accommodative monetary policy. The United States ran a $984b fiscal deficit for the year ended 30 September (up 26% on the year prior) and expectations are that China will boost infrastructure spending throughout 2020.

• In New Zealand the economic environment remains positive. The economy grew by 0.7% over the September quarter and the NZ Treasury forecasts an increase in growth throughout 2020 & 2021 supported by fiscal spending and low interest rates; the RBNZ has expressed a willingness to cut interest rates further if growth declines.

17 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

MARKET OUTLOOK – IMPACT ON THE NPDC FUND • The Fund has an asset allocation designed to meet the investment objective of CPI+3.3% over a long term investment horizon.

• While over the near term we recognise there are a number of potential risks in the market, the diversification across asset classes, sector and country means the Fund is not overly exposed to any one risk or event.

• Examples of near term market factors that may impact the NPDC Fund: – Global/EM Equities: While geopolitical risks have eased modestly, market sentiment has been impacted as investors assess the potential impacts of the Novel coronavirus outbreak. We believe volatility will likely remain elevated in equity markets over the coming weeks as more news on the virus emerges. Although the virus may lead to short-term and potentially even medium-term disruptions, we retain our view that global growth should return to trend levels over the course of the year. – Fixed Interest: Given the low levels of interest rates around the world, a lower than normal return is expected from Fixed Interest. There is currently an underweight position in Fixed Interest in the Fund, however there is still a holding. The reason for this is it is a defensive asset that we still expect to perform in a significant equity market downturn.

18 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

FUND PERFORMANCE

19 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

FUND PERFORMANCE

• The Fund returned 2.2% for the 3 month period to 31 December 2019 (after fees). The Fund is ahead of its long term objective of CPI+3.3% for the quarter and over the year. The Fund is 5.5% p.a. ahead of the objective over 5 years.

• On a benchmark relative basis, which is the secondary objective, the Fund is outperforming over the quarter and the year.

5 years (p.a.) 1 year 3 months

Fund return 10.1%p.a. 15.0%p.a. 2.2%p.a. (net of fees)

Value add (total portfolio including legacy PE) • Relative to CPI + 3.3% +5.5% +9.8% +0.9%

• Relative to benchmark n/a +0.2% +0.5%

20 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

SECTOR PERFORMANCE ( 3 M O N T H S )

$ Value Excess over Return Gross Returns Weighting % Return % ($M) benchmark % attribution1 Overseas Shares (incl. PE Proxy) 134.1 44.0 4.2% +0.1 1.9%

Emerging Markets 15.5 5.1 4.1% +0.1 0.2%

Alternatives3 56.8 18.6 0.8% -0.9 0.1% Mercer Unlisted Property 9.1 3.0 1.2% -1.5 Mercer Unlisted Infrastructure 9.3 3.1 1.0% -2.8 Mercer Listed Property 6.1 2.0 1.7% +1.1 Mercer Listed Infrastructure 6.1 2.0 1.7% -0.5 Fund of Hedge Funds 26.2 8.6 0.1% -0.4

Private Equity 39.1 12.8 0.9% +2.6 0.1%

Fixed Interest 33.8 11.1 -0.2% +0.4 0.0% Mercer Overseas Sovereign Bonds 16.1 5.3 -1.3% +0.2 Mercer Global credit 17.7 5.8 0.8% +0.2

Cash 25.7 8.4 0.3% +0.0 0.0%

Total Portfolio 304.9 100.0% 2.4% 2.4% All sectors contributed positively over the quarter. 1 Weighted contribution to total fund return. 2 Gross returns for all sectors except Private Equity and Fund of Hedge Funds which are net of fees 3 The Alternatives Sector has a benchmark of CPI+4%, which is the long term target. CPI is reported with a 1 quarter lag. The Alternatives sub- sectors are also shown, versus their respective benchmarks.

21 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

SECTOR PERFORMANCE (12 MONTHS)

$ Value Excess over Return Gross Returns Weighting % Return % ($M) benchmark % attribution1 Overseas Shares (incl. PE Proxy) 134.1 44.0 24.0% -1.1 10.7%

Emerging Markets 15.5 5.1 19.5% +1.8 1.2%

Alternatives3 56.8 18.6 8.2% +2.7 1.5% Mercer Unlisted Property 9.1 3.0 6.9% -0.9 Mercer Unlisted Infrastructure 9.3 3.1 11.6% -0.7 Mercer Listed Property 6.1 2.0 25.5% +4.2 Mercer Listed Infrastructure 6.1 2.0 27.4% +3.6 Fund of Hedge Funds 26.2 8.6 2.2% +2.0

Private Equity 39.1 12.8 6.6% -3.7 0.8%

Fixed Interest 33.8 11.1 9.8% +2.4 1.1% Mercer Overseas Sovereign Bonds 16.1 5.3 8.9% +1.8 Mercer Global credit 17.7 5.8 10.5% +0.0

Cash 25.7 8.4 2.0% +0.4 0.2%

Total Portfolio 304.9 100.0 15.5% 15.5% All sectors contributed positively over the quarter. 1 Weighted contribution to total fund return. 2 Gross returns for all sectors except Private Equity and Fund of Hedge Funds which are net of fees 3 The Alternatives Sector has a benchmark of CPI+4%, which is the long term target. CPI is reported with a 1 quarter lag. The Alternatives sub- sectors are also shown, versus their respective benchmarks.

22 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

SECTOR PERFORMANCE (SINCE INCEPTION WITH MERCER)

$ Value Excess over Return Gross Returns Weighting % Return % ($M) benchmark % attribution1 Overseas Shares (incl. PE Proxy) 134.1 44.0 9.9% -0.9 4.8%

Emerging Markets 15.5 5.1 12.7% +1.0 0.8%

Alternatives3 56.8 18.6 5.9% +0.2 1.0% Mercer Unlisted Property 9.1 3.0 8.9% +2.2 Mercer Unlisted Infrastructure 9.3 3.1 10.4% +2.3 Mercer Listed Property 6.1 2.0 11.8% +4.1 Mercer Listed Infrastructure 6.1 2.0 11.1% -0.1 Fund of Hedge Funds 26.2 8.6 1.8% +0.5

Private Equity 39.1 12.8 5.5% -4.8 0.7%

Fixed Interest 33.8 11.1 5.5% +1.1 0.7% Mercer Overseas Sovereign Bonds 16.1 5.3 6.0% +1.6 Mercer Global credit 17.7 5.8 5.0% -0.0

Cash 25.7 8.4 2.3% +0.4 0.2%

Total Portfolio 304.9 100.0 8.2% 8.2% All sectors contributed positively over the quarter. 1 Weighted contribution to total fund return. 2 Gross returns for all sectors except Private Equity and Fund of Hedge Funds which are net of fees 3 The Alternatives Sector has a benchmark of CPI+4%, which is the long term target. CPI is reported with a 1 quarter lag. The Alternatives sub- sectors are also shown, versus their respective benchmarks.

23 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

SECTOR PERFORMANCE (12 MONTHS)

All sectors contributed positively over the 12 months. 1. Weighted contribution to total fund return. 2. Gross returns for all sectors except Private Equity and Fund of Hedge Funds which are net of fees

24 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

ASSET ALLOCATION

25 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

ASSET ALLOCATION

O v e r s e a s O v e r s e a s S h a r e s S h a r e s

40.2% 40.0%

E m e r g i n g E m e r g i n g 5.0% Markets Shares 5.1% Markets Shares

12.8% Private Equity 17.5% Private Equity Private Equity 4.7% P r o x y

18.6% 17.5% Alternatives Alternatives

F i x e d F i x e d 11.1% 15.0% I n t e r e s t I n t e r e s t C a s h C a s h 7.5% 5.0% Actual SAA • The NPDC portfolio continues to transition towards the long term Strategic Asset Allocation (SAA) as the Private Equity allocations are built up and the proxy is progressively reduced. PIP IV and Pioneer 3 made drawdowns and Barings 4, Direct Capital III and IV made distributions. • The Private Equity Proxy consists of 3.7% Listed Overseas Shares and 0.9% Cash. • The target hedging ratio for Overseas Shares is now 50% (effective 31 August 2019)

26 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

ASSET ALLOCATION RANGES

60%

50%

40%

30%

20%

10%

0% Overseas Shares Emerging Markets Private Equity Alternatives Fixed Interest Cash Shares (Incl. Proxy) SAA Maximum Minimum Actual

• All asset class allocations are within the ranges specified in the SIPO.

27 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

ASSET ALLOCATION

• The portfolio is well diversified by asset class, sector and region.

• Within Overseas Shares, there is an underweight relative to the benchmark in Pacific ex Japan, Japan and Europe, and an overweight to Emerging Markets, North America, and the UK. Note the Portfolio by Geography graph below includes the Schroders, LGIM and EM portfolios. Portfolio by asset class Portfolio by Geography Cash, 7.5% Emerging Markets, Fixed United 11.6% Interest, Kingdom, 11.1% 5.4% Overseas shares, Pacific ex 40.2% Japan, 2.9%

Alternatives, 18.6% Japan, 7.1% North America, 59.8%

Private Equity Europe, 13.2% (incl. proxy), 17.5% Emerging Markets shares, 5.1%

28 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Cash, 5.0% Fixed Interest, SECTOR IN FOCUS 15.0% Overseas EMERGING MARKETS SHARES shares, 40.0% • What are Emerging Market Shares? Emerging Market Shares are shares of companies from countries classified as Emerging, developing or middle income Alternatives countries. These countries are less mature than developed countries, but more , 17.5% developed than frontier countries. There are 1,402 shares in the index, spread across 26 emerging markets countries and diversified by sector (see below).

Private Emerging Equity (incl. Markets proxy), shares, 17.5% 5.0%

Manager BlackRock Investment Management

Benchmark MSCI Emerging Markets Index in NZD

• Role in portfolio: Emerging Market Shares are considered to be higher risk than developed market (Overseas Shares), and are expected to generate a higher return over the long term. They form part of the Growth Assets part of the portfolio. They help to diversify the developed market equity risk in the portfolio.

• Allocation: The long term emerging market shares allocation is 5.0%.

• What influences Emerging Market Shares? Emerging Market economies tend to * Other includes: Argentina, Chile, Colombia, Czech Republic, have high economic growth rates and favourable demographic trends. However Egypt, Greece, Hungary, Indonesia, Malaysia, Mexico, Pakistan, they also have higher risks associated with liquidity, political instability and conflict, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Thailand, Turkey, and the United Arab Emirates. inflation, less regulation, and more volatile currencies. Source: MSCI

29 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

EMERGING MARKETS SHARES AS AT 31 DECEMBER 2019 TOP 10 HOLDINGS The Mercer Emerging Markets Mercer Emerging Markets Shares Country Shares Portfolio invests in 416 stocks across 24 countries. ALIBABA GROUP HOLDING LTD China TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY Taiwan LIMITED TENCENT HOLDINGS LIMITED China

SAMSUNG ELECTRONICS COMPANY LTD South Korea

NK LUKOIL PAO Russia

BANCO BRADESCO S.A. Brazil

ITAU UNIBANCO HOLDING S.A. Brazil

NASPERS LIMITED South Africa

HON HAI PRECISION INDUSTRY COMPANY LTD Taiwan

PING AN INSURANCE (GROUP) COMPANY OF CHINA LTD China

*Active share shows the variation from the index. A positive active share reflects a greater allocation in the portfolio than the index.

30 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

ASSET CLASS RISK /RETURN CHART

31 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Compliance statement

Document Status

New Plymouth PIF Guardians SIPO There were no breaches reported in the quarter

Mercer Investment Trusts NZ SIPO There were no breaches reported in the quarter

Responsible Investment Policy There were no breaches reported in the quarter

Investments held in Mercer Investment Trusts NZ Status

Segregated mandates There were no breaches reported in the quarter

Mercer managed funds There were no breaches reported in the quarter

External managed funds There were no breaches reported in the quarter

32 1.1 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

DISCLAIMER

This document contains confidential and proprietary information of Mercer and is intended for the exclusive use of the named recipient. The document, and any opinions it contains, may not be modified, sold or otherwise provided, in whole or in part, to any other person or entity without Mercer’s prior written permission.

All services provided in this report are delivered strictly on the basis of advice to a wholesale client in terms of the Financial Advisers Act 2008.

Information on organisations contained herein has been obtained from the organisations themselves and other sources. While this information is believed to be reliable, no representations or warranties are made as to the accuracy of the information presented, and no responsibility or liability, including for consequential or incidental damages, can be accepted for any error, omission or inaccuracy in this report or related materials.

Opinions contained herein are not intended to convey any guarantees as to future performance. The value of any investments can go down as well as up and you may not get back the amount you have invested. In addition, past performance cannot be relied on as a guide to future performance.

33 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Papa Rererangi i Puketapu Ltd New Plymouth Airport

Report for the period ended 31 December 2019

Philip Cory-Wright Chair Wayne Wootton Chief Executive

New Plymouth Airport 192 Airport Drive New Plymouth 4373 Website: www.nplairport.co.nz

34 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Contents 1. Introduction ...... 3 2. Responsibilities ...... 3 3. Executive summary...... 4 4. PRIP establishment ...... 5 5. Operational summary ...... 5 6. Financial performance against Statement of Intent ...... 6 7. Stakeholder relations ...... 7 8. Terminal redevelopment project ...... 8 9. Civil Aviation Rule (CAA) Part 139 ...... 9 10. Proposed Civil Aviation Bill ...... 9 11. Strategic outlook ...... 9

PRIP Report – period ended December 2019 Page | 2

35 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

1. Introduction

This report for the period ended 31 December 2019 is presented by Papa Rererangi i Puketapu Ltd (PRIP) in accordance with the requirements of Sections 64 and 65 of the Local Government Act 2002 referencing the company’s Statement of Intent and PRIP’s monitoring and reporting requirements respectively.

2. Responsibilities

PRIP was established in July 2017 and is 100% owned by New Plymouth District Council (NPDC). The company operates as a Council Controlled Trading Organisation (CCTO) through an independent skills-based Board of Directors and employs its own Chief Executive and staff.

PRIP operates under a Statement of Intent (SOI) agreed to by its Directors and NPDC.

PRIP’s prime purpose is to operate New Plymouth Airport on a sustainable commercial basis and to ensure the ongoing safe and successful operation of the Airport. PRIP owns passenger terminals, aircraft hangars, airside infrastructure, car parking areas, roading and underground utilities. These facilities are sited on land occupied under lease from the New Plymouth District Council.

PRIP’s prime objectives are to:

 operate the Airport in full compliance with the regulations set down by the New Zealand Civil Aviation Authority  ensure that the business is run on a sustainable commercial basis  optimise the use of its assets  generate a reasonable rate of return on investment

The key to this is to ensure the ongoing safe and successful operation of the Airport, whilst also facilitating the growth of tourism and trade by working collaboratively with key stakeholders to sustainably increase passenger numbers.

The Airport provides services to allow the safe and efficient facilitation of travellers and freight and, ancillary to this, it leases terminal space and land at the Airport.

The Airport is viewed as an essential infrastructure asset for New Plymouth and has a key role to play in the economic performance, growth and development of the Taranaki region. As part of this, PRIP will work collaboratively with the airlines, NPDC, Venture Taranaki, the Chamber of Commerce and other local key stakeholders to work towards the region’s common strategic goals.

PRIP Report – period ended December 2019 Page | 3

36 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

3. Executive summary

The first six months of FY2020 has provided good results with overall Airport revenue slightly above budget at $2.94m and expenditure on budget at $1.49m. Whilst expenditure was 22% above the first six months of FY2019, revenue was 34% above the equivalent period last year, resulting in earnings before income tax and depreciation at $1.45m, being 2% above budget and 50% above FY2019.

The number of passengers passing through the Airport was 3.7% down as compared to the same period last year but on budget for FY2020, despite Jetstar decreasing services during the period and ceasing New Zealand regional operations altogether at the end of November. Whilst the stopping of the Jetstar flights is seen as a negative impact from a customer service point of view, the effect on the FY2020 Airport revenue budget will not be too excessive. Air New Zealand’s passenger numbers are currently tracking 5% ahead of forecast and the airline has announced that they will add further capacity in the New Year following December’s increase.

From an operational perspective, the Airport facilities were maintained during the period to avoid any disruption of scheduled commercial flights other than for weather or airline related problems and the Airport was managed in full compliance with the approved operating procedures of the Civil Aviation Authority Rule Part 139.

Work on the new terminal project is progressing well and, with the building structure now largely completed, the outstanding activities to be worked on early in the New Year will be the completion of the chevron ceiling, some floor finishes and fit-outs of the café and the two retail outlets. Commissioning will commence late January and run through to early March with a remaining final clean up in time for going operational mid-March.

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4. PRIP establishment

There are various agreements that have been established between the Council and PRIP for the ongoing operation of the Airport namely:

 Service Level Agreement  Loan Facility Agreement  General Security Deed  Intergroup Asset Transfer  Deed of Lease of Airport Land

The loan facility agreement is in place to fund the current Airport Terminal redevelopment and other short term projects through a working capital facility. All capital and interest repayments associated with this loan were covered during the period through Airport operational revenue and there has been no reliance on the general ratepayer.

With regards the Airport’s compliance with the New Zealand Civil Aviation Authority (CAA) Part 139, a three party agreement is in place between PRIP, NPDC and the CAA allowing PRIP to manage the Airport operations on behalf of NPDC as the Aerodrome Operator Certificate holder.

5. Operational summary

The following key performance measures are noted for the period ended 31 December 2019.

Revenue for the first six months was slightly above budget at $2.94m, representing a 36% increase in the equivalent period last year as a result of new landing charges being introduced at the beginning of July.

Operating expenditure at $1.49m was on budget and, coupled with slightly better revenue than forecast, meant that earnings before income tax and depreciation at $1.45m was 2% above budget and 50% above the same period of FY2019.

The total passenger numbers for the first six months of FY2020 was recorded at 224,836 which was 3.7% down on the first six months of FY2019 and 0.3% below the FY2020 budget.

Air New Zealand, despite a forecasted drop in numbers for FY2020 over FY2019, actually recorded an additional 3,517 passengers above the equivalent period last year. For the first

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half of FY2020, Air New Zealand is tracking 5% ahead of the Airport’s original forecast for the airline.

Jetstar ceased regional New Zealand operations at the end of November which has obviously affected the FY2020 numbers, however, with the increased capacity by Air New Zealand for December and better than forecast passenger numbers, the overall impact has been reduced.

During the first half of the financial year, the Airport facilities were effectively maintained to avoid any disruption of scheduled commercial flights other than for weather or airline related problems.

The table below summarises the performance for the first six months of FY2020.

Period ended 31 December 2019 FY2020 Full year Period Period Previous year SOI forecast Actual Budget

Operating revenue $ 6,620,000 $ 6,127,294 $ 2,936,998 $ 2,911,794 $ 2,186,753

Operating expenditure $ 3,440,000 $ 3,059,360 $ 1,488,428 $ 1,486,290 $ 1,219,647

EBITDA $ 3,180,000 $ 3,067,934 $ 1,448,570 $ 1,425,504 $ 967,106

Depreciation & amortisation $ 1,500,000 $ 1,500,000 $ 693,526 $ 750,000 $ 670,254

Finance expense $ 1,200,000 $ 1,200,000 $ 447,729 $ 420,000 $ 201,148

Passenger numbers 471,000 441,701 224,836 225,451 233,586

6. Financial performance against Statement of Intent

The FY2020 Statement of Intent (SOI) outlining PRIP’s anticipated financial performance was based on the assumed forecasted passenger growth and proposed Airport commercial activity at the time. Based on previous growth figures, a 3% increase on the FY2019 numbers was used, resulting in forecasted annual passengers for FY2020 of 471,000.

However, subsequent to the FY2020 SOI being finalised, the commercial airlines indicated that passengers numbers were predicted to fall from FY2019 levels, with Air New Zealand anticipating a 3% drop and Jetstar 6%. This had the effect of reducing the forecasted SOI FY2020 passenger numbers from 471,000 to 441,700 and a consequent drop in revenue.

During the second quarter of FY2020, Jetstar announced that the company would cease regional New Zealand operations at the end of November. This has compounded the

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39 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

reduction effect on the original forecasted SOI FY2020 passenger numbers and a more recent reforecast has now estimated the total passengers for the year at 434,500.

PRIP’s FY2020 budget was set using the previous revised numbers and at this time this is still being used to track against actuals as in the operational summary above. At this stage there has been no adjustment to the FY2020 SOI financials.

7. Stakeholder relations

NPDC, as the 100% Shareholder, has nominated an advisor who attends the PRIP Board meetings as an observer. The Council’s Chief Operating Officer (CCO) holds this position and, as well as the Board meeting attendance, the CCO meets regularly with the Chief Executive of PRIP to ensure strong communications and alignment between the Council and the Airport company.

PRIP management is also working in close collaboration with the Venture Taranaki Trust and the Chamber of Commerce to promote the district from tourism and economic development perspectives and, with the new terminal coming on stream in early 2020, to showcase the Airport as a strategic gateway to the Taranaki region.

PRIP will continue to build upon the strong relationship with Puketapu Hapu that has developed with the Airport over the years and, in particular, with the close involvement during the Airport Terminal Redevelopment project.

Regular meetings are still continuing with the Hapu and the Project team and the Hapu are now focused on the creation and manufacture of the new terminal’s internal art works. Further, a group consisting of representatives from the Airport, Puketapu Hapu and NPDC has been established to work on the proceedings for the opening of the new terminal.

A critical project of concern for the Hapu is the Airport’s proposal to extend the sealed main runway. During the period, a feasibility study commenced which included a multi criteria analysis (MCA) workshop being held, attended by members of the Airport team, Puketapu Hapu, Air New Zealand and other key stakeholders with specialist consultancy input. The study will be finalised early in the new year.

PRIP is aware of future decisions that may impact on local Iwi and Hapu and will ensure an appropriate level of consultation at all times. PRIP is also aware of the statutory obligations of the Council and will act at all times in a manner that is consistent with these and also those pursuant to agreements with third parties, including Iwi, Hapu, or other Maori organisations.

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8. Terminal redevelopment project

A key focus for both management and governance at the current time is the completion and delivery of the new Airport terminal. The Project team, under the direction of the PRIP Chief Executive, are closely monitoring all aspects of the build and are confident that the development will be delivered to the required quality, scope and within budget.

Work on the project is progressing well and, following extensive services relocations and replacement, a new approach road to the terminal is well underway. Roading works outside the terminal entrance have also commenced.

Inside the terminal the ceiling install, plastering and painting is 90% completed with only the area above the café outstanding. Floor tiling install is progressing to plan with work ongoing in the final zone. The chevron ceiling blade install, which needs to fit around tiling works and install of mechanical ducting, is 70% completed.

The installation of both baggage handling systems has commenced and the commissioning and testing of the systems is expected late January early February.

The design and extent of window manifestations for the mezzanine, departures lounge and lobbies has been confirmed and, after consultation with Venture Taranaki and Airport management, the regional logo “Taranaki Like No Other” will be installed at strategic locations in the arrivals and departure lobbies.

Fit-out has commenced on the new retail and café operations and work is progressing linking up electrical, data and communications. Contractors working for Air New Zealand have completed the airline’s regional lounge fit-out and will move into their main office space and check in areas in the New Year.

On the exterior, work on the airside soffit linings under the roof overhang is advancing to plan and installers will move to the landside linings in co-ordination with the landscaping programme of work.

With the building structure largely completed, the outstanding activities to be worked on during January and February will be the completion of the chevron ceiling, some floor finishes and the fit-outs of the café and two retail outlets. Commissioning will commence late January and run through to early March with a final clean up in time for going operational mid-March.

The Project team are aware of the need to keep Airport customers and the community well- informed of the status of the project and, in conjunction with the Council’s communications team, are continuing to work on a series of communication bulletins that are being released through the press and social media giving details of project progress.

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9. Civil Aviation Rule (CAA) Part 139

Following the successful application by PRIP management to renew the CAA aerodrome operator certificate (AOC) until 30 April 2024, the Airport Safety Manager, who took a leading role in the development of the Airport’s Safety Management System, has resigned from the company.

A recruitment process has been carried out and management have been successful in appointing a new Airport Safety Manager who will commence in April 2020. The new employee comes from a background in aviation safety having worked for the Royal Air Force in the UK for a number of years and more recently in the capacity of Safety Manager for another New Zealand regional airport.

10. Proposed Civil Aviation Bill

Government officials have drafted a new Civil Aviation Bill which aims to repeal and replace the Civil Aviation Act 1990 and also the Airport Authorities Act 1966 with a single statute. It carries forward policy decisions made by government as a result of work completed by the Ministry on a number of projects.

PRIP continues to watch the proposed Civil Aviation Bill with interest. The Bill is expected to be introduced to Parliament in the near future. An earlier exposure version for industry consultation highlighted a number of changes that may affect PRIP and the Council, particularly around significant capital expenditure and setting landing charges. PRIP will keep the Council informed on the progress of this Bill and may ask that you join with us in making a submission on this Bill once it has been introduced to Parliament.

11. Strategic outlook

Car parking

Car parking is the biggest portion of the Airport’s non-aeronautical revenue and the ability to create sufficient parking spaces and set appropriate charges are critical elements.

As previously advised, a car parking management strategy is being developed to explore options to increase the number of car parking spaces, including a review of the existing layout and various options to either extend or construct new areas. The strategy is aimed at taking

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42 1.2 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

a more holistic Airport precinct approach and considers the whole customer experience from when entering the gate on Airport Drive.

Phase 1 of this strategy is a proposal to construct a new car parking area on the site of the old terminal. The proposal has been put before the Board and approved by Directors, with work commencing once the old building has been demolished and materials removed from site.

In developing the design, it became clear that it would be impractical to develop the car park in isolation without also addressing the broader vehicular circulation of the entire Airport site. Therefore, the new design will see Katatore Road (Airport perimeter road) become two-way along its full length, removing the need for service vehicles to drive directly across the frontage of the new terminal through the drop-off/pick up area. The design also provides for improved taxi and shuttle facilities, both in number and location, and an outdoor public airside viewing area.

As advised, and in line with the business case, a further review of car parking charges will be undertaken mid-2020, once the Airport terminal redevelopment is completed.

Route development

Following the statement by Jetstar Airways to cease New Zealand regional services at the end of November, Air New Zealand announced that they will add additional capacity on the sectors previously serviced by Jetstar for the month of December.

For New Plymouth this added an extra 19 return flights between the Airport and Auckland for the month and, after a further review, the airline has now extended this additional capacity through to the end of March.

Following consultation with Air New Zealand prior to the holiday break, the airline has made changes to their winter schedule (April to October 2020) which will effectively see an overall 5% increase in capacity during the period over the previous year.

This will mainly be on the New Plymouth to Auckland route with timing changes on the New Plymouth to Wellington sector. Unfortunately, due to poor demand on the New Plymouth to Christchurch route, there will be a small decrease in capacity on this sector from April onwards.

The third tier airline operator, Originair, was successful in obtaining an air operator certificate for commercial flights in December and is proposing to recommence the Nelson to New Plymouth service once the new terminal building is fully operational. Previously the airline used Jetstar’s ground handling services, however, Originair is currently establishing its own team with training now in progress.

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Runway extension

At the current time the Airport’s main runway 05 – 23 (1,310m long) is the shortest runway in the country that Air New Zealand operate their ATR72 aircraft and, under certain weather conditions, take-off and landing weight restrictions may apply.

For some time now proposals to extend the runway both in easterly and westerly directions have been looked at, but not in great detail. Issues complicate the extensions due to a significant cultural feature at the western end and a drop-off in surface levels to the east.

PRIP is keen to pursue all runway extension possibilities as it is vital to consider the long-term sustainability of the facility. This strategic proposal is an important aspect in safeguarding the Airport for the benefit of the Taranaki region.

The overall project can be broken down into four stages:

Stage one

Undertake a multi-criteria analysis (MCA) workshop attended by key stakeholders with specialist consultancy input. The workshop was held during the period and Puketapu Hapu were very appreciative of being invited to be involved at the beginning of such an important project. There was an excellent briefing given of the history of the land and the Hapu’s beginnings.

Currently, the consultants are assessing the outcomes of the workshop and reviewing options for extending on the existing alignment to see what length of runway is achievable to improve safety (inclusion of modified runway end safety areas) but have a minimal impact of the significant cultural features.

A report will be completed early in the New Year recommending options to take forward to Stage 2.

Stage two

This will be far more complex and involve:

 Planning requirements  Public consultation  Stakeholder engagement  Concept design

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 Noise contour analysis  Preliminary geotechnical work  Analysing reverse sensitivity issues of existing properties

Stage three

Detailed design of the preferred option.

Stage four

Tender and construction

The current draft timeline for the project is to finalise a preferred option to take forward to Stage 2 during FY2021 with Stage 3 commencing FY2022 and construction programmed to be completed during FY2023.

Sustainability

The Zero Carbon Bill is currently being considered by the Environment Selection Committee. The proposed power enables the Minister to request certain organisations to provide information on climate change adaptation, with the aim to ensure that organisations prepare effectively for climate change and report publicly on their work. The Airport meets the criteria through being a Council Controlled Organisation and a lifeline utility.

At present there is no formal requirement for organisations to report on the risks that climate change could pose to their operations, however, the Bill will formalise a process of risk assessment and management in climate change adaptation that the new proposed Climate Change Commission would use to develop its national adaptation plan and report progress on its implementation.

The Airport has achieved significant support from tenants and key stakeholders and the initial Green Lease agreement between the Airport and Air New Zealand as part of the airline’s new lease arrangements at New Plymouth Airport, has now expanded to include measuring, monitoring and targeted reduction philosophy being rolled out to other tenants within the new terminal as a result of similar Green Lease appendices within their individual leases.

Management are ensuring processors are in place within the new terminal to accurately capture data to begin measuring and assessing a baseline position. By capturing and mapping this data, management will be in a position to understand the terminal’s emission profile which will assist the continued development of the Airports Sustainability Policy framework.

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New Plymouth Airport is working towards the Airport’s Council International Airports Carbon Accreditation and a working template has been developed to capture emission data and associated source categories.

The collection and mapping of emissions data is the first stage in the journey and, once accurate base data has been captured for the new terminal, the focus can move towards stage two, the formulation of a carbon emissions reduction target and the development of a Carbon Management Plan to achieve these targets.

 Stage 1 Mapping  Stage 2 Reduction  Stage 3 Optimisation  Stage 4 Neutrality

New Plymouth Airport has also recently joined Auckland, Wellington, Christchurch and Dunedin airports to form the New Zealand Airports Association Sustainability Committee and the group is currently looking at strategies and what role New Zealand Airports can play in developing and facilitating a nationwide sustainability programme for airports.

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Venture Taranaki Trust Quarterly Report

New Plymouth District Council

Quarter Two 2019-2020

A destination campaign encouraging visitors to “make a weekend of it” was launched in Q2.

47 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Message from the Chief Executive

Venture Taranaki’s second quarter report for the 2019 – 2020 financial year captures a busy period for the region’s development agency. Significant progress was made across a number of Tapuae Roa initiatives, including the Taranaki Story, Regional Events Strategy, Taranaki Investment Prospectus, and Attraction Campaign, while establishing the National New Energy Development Centre also progressed with the appointment of the establishment project team and work commenced on entity form and operating model. Similarly, the Taranaki 2050 Roadmap to guide our region’s transition to a low-emission economy gathered significant momentum this quarter, with the publication of the first Transition Pathway Action Plan that starts the Roadmap’s implementation journey (subject to project funding).

Our latest Taranaki Business Survey was undertaken in late November, and found that the region’s confidence is overall positive, with around half of the region’s enterprises expecting our economy to stay the same over the coming year, and a further quarter expecting improvement. Outlook was then slightly better at industry level, with those expecting improvement outweighing those anticipating deterioration by a significant margin: 45 percent of respondents expected their industry conditions to stay the same, while 32 percent expect improvement and 19 percent expect things to deteriorate. Over the shorter term, sales outlook is significantly better, with 47 percent expecting sales to improve over the next six months, ahead of 39 percent expecting sales to remain flat, and 9 percent expecting a drop in sales. This represents a very different picture to a year ago, when just 30 percent of businesses expected an improvement in sales, and also bucks some national trends. The number of businesses expecting to take on more staff in the next six months remains strong, with 58 percent expecting numbers to remain constant and 29 percent expecting staff growth. The availability and cost of labour remain amongst the biggest concerns for business, alongside the prices of petrol and electricity. Over a third of the region’s businesses report trouble finding the skilled staff they need, and this shortage is spreading across a wider range of sectors and pay scales. The latest unemployment figure of 4.2% for the December quarter also illustrates this challenge. Talent attraction will be a strong focus for Venture Taranaki over the next quarter, with our attraction campaign focusing on attracting people to live and work in our great region, and work progressing on regional workforce planning.

During the quarter we also revitalised the Venture Taranaki brand to strengthen Maunga Taranaki as central to our identity as the development and promotion agency for Taranaki, realigned our internal structure to better reflect the Impact Strategy developed earlier in the year and what Taranaki wants VT to focus on, and relocated premises. Your regional development agency is now positioned strongly to support Taranaki’s transition into the next decade and beyond. – Justine Gilliland

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Financial overview

Budget Summary 2019 – 2020 Year Actual 2019 – 2020 Year Budgeted End of Q2 2019-2020

Total NPDC Leveraged Total NPDC Leveraged Expenditure Expenditure Revenue Investment Revenue Revenue Investment Revenue

Total $4,682,470 $2,680,533 $2,001,937 $2,615,757 $3,416,414 $2,417,700 $998,714 $2,386,411

2019 - 2020 Year Actual 2019 - 2020 Year Budgeted

$998,714 29%

$2,001,937 43%

$2,680,533 57%

$2,417,700 71%

NPDC Investment Leveraged Revenue NPDC Investment Leveraged Revenue

49 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Promoting investment in Taranaki

Opportunities to attract investment Facilitating opportunities for development 1. A discussion paper focusing on a renewable energy option neared completion, for release in 2020. One client supported with investigating potential value-add food development facility. 2. A complementary food and fibre value chain project, commencing soon, will include opportunity identification Three renewable energy projects supported. and blueprint development, and secured central government funding.

3. Development of the Regional Investment Prospectus neared completion – highlighting investment and high- level regional opportunities. Annual Activity Measure YTD Target 4. Venture Taranaki worked with BERL and attended the Parihaka hui regarding the proposed visitor centre Identifying opportunities to Number of engagements related to development. attract investment into Taranaki attracting investment to Taranaki 5 4

Number of engagements related to Facilitating opportunities for facilitating opportunities for investment into Taranaki 5 4 investment in Taranaki

50 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Research and thought leadership

Championing innovation and sustainability

1. Planning for enterprise start-up and scale-up initiatives for 2020 underway, including Idea Summit Taranaki 2020.

2. Taranaki TechWeek 2020 planning underway. Building on two very successful Taranaki Techweek events, initial discussions with previous event organisers and stakeholders on shape for 2020 have begun. Taranaki Trends released in October 2019, and Taranaki Business 3. Curious Minds Participatory Science Platform funding for Survey Results, released in December 2019. Taranaki extended for further two years, providing additional Click on images to view and download the documents $308,000 of project funding toward Curious Minds community science projects in Taranaki (see project update). Annual Activity Measure YTD Target Undertaking environmental Number of regional monitoring scans and regional economic updates released 4 2 monitoring

Number of initiatives targeting or Championing innovation and supporting innovation and sustainability 4 3 sustainability.

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Research and thought leadership

Curious Minds Participatory Science Platform

Twelve projects were active in Q2 throughout the region, including two projects in New Plymouth District.

• Pekapeka in Purangi – Experience Purangi - an investigation into the distribution of long-tail bats at Purangi • Sustainable Energy Generation – NPGHS – investigating renewable energy generation efficiency • Te Āhua o ngā Kūrei – Te Rūnunga o Ngāti Mutunga – understanding the health of Urenui and Mimitanigiatua Estuaries through scientific methodology and mātauranga • Seachange Survey – Wild for Taranaki - comparing kaimoana abundance and diversity between protected and unprotected intertidal areas in coastal Taranaki • Healthy Living Soil – Organic Farm NZ - supporting local growers to better understand their soil composition through scientific process • Our Mountain, our Volcano – Cynthia Werner – an investigation into volcanic geochemistry on Taranaki Mounga Students from New Plymouth Girls’ High School put their project on the • Trashformers – Upcycle Taranaki – engineering a process for start grid. The girls were investigating the efficiency of renewable recycling and repurposing beach plastic energy generation. • Project Litter – quantifying beach litter and identifying its origin through oceanographic modelling

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Research and thought leadership

Massey University Partnership

The Venture Taranaki partnership with Massey University has resulted in added momentum and focus in the following areas:

• Food & Fibre sector workstream projects, including a major Food and Fibre value chain project with Venture Taranaki; and meetings on regenerative agriculture; • Presenting to the Agrifood-focused Teachers’ Day Out 14 November; • Support for the inaugural funding round for the Massey University-Bashford Nicholls jointly funded Pivot: Enabling Innovation in Agriculture Research Award (winners to be announced in Q3); Massey graduates at BeGin Distilling 14 Nov 2019 • Working with Massey’s MBA Design Thinking students and course leaders in Wellington 11-13 Oct towards developing concepts for enhancing Food Tourism Taranaki. Clients were assisted with finding resources (students and funding) for 32 potential projects, of which 22 look set to proceed, with 15 During Q2 there were 13 new client companies and a marked (68%) of these to be ‘staffed’ by Massey students/graduates. This increase in student summer internship placement activity has resulted in internships, innovation and project resourcing of compared with previous years. approximately $186,120.

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Research and thought leadership

Fostering sector diversification and growth

1. NNEDC Establishment enters next phase (see project 5. Major Regional Food Opportunity presentations – results of update) investments, made possible through Tapuae Roa to some 2. Support and involvement in a Regenerative farming event high growth local food projects, were showcased in New th held 27 November, Inglewood Plymouth on 12 November and in South Taranaki on 25th 3. Energy and Industrial Group (EIG) met twice in Q2, November. facilitated by Venture Taranaki. The group have developed a strategic plan; showcased their capabilities at the Water NZ Conference; sponsored the Energy Technology of the Year award at the NZ Energy Awards and will be attending the APPEA Conference and Exhibition in May 2020 (largest oil and gas conference in Australasia) including investigating trans-Tasman opportunities in energy, industrial and environmental sectors. 4. The following Taranaki food companies have formed a collective to showcase their respective food brands and the Taranaki region at the 2020 Food Show in Auckland – New Zealand’s largest food trade event. The companies are; Annual Activity Measure YTD Marcels; Begin Distilling (Juno Gin); Maison Aotearoa Target Charcuterie; Little Liberty (ice cream); LWF Distilling; Egmont Honey; Three Sisters brewery; Kaitahi. Fostering sector diversification Number of initiatives targeting and growth sector diversification and growth 4 5

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Facilitating and connecting regional strategies

55 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Facilitating and connecting regional strategies

Taranaki 2050 Powering up the Taranaki Innovation

Following the launch Ecosystem of the Taranaki 2050 Roadmap in August The Taranaki Innovation Ecosystem report was released during 2019, Transition quarter two, recommending that the region ‘power-up’ its Pathway Action innovation ecosystem. The report advocates for a focus on GROW, Planning (TPAP) CONNECT and TELL to foster and grow Taranaki’s Innovation workshops were held Ecosystem. Next steps are to consult and engage with the from September - innovation community and stakeholders, develop the investment November 2019 for proposition, secure funding commitments, plan and implement. six of the twelve Roadmap pathways: Energy, Food & Fibre, People & Talent, Innovation & R/D, Infrastructure & Transport and Arts.

The Energy Transition Pathway Action Plan was published in December 2019, with action plans for subsequent workshops to be published in early 2020. The remaining six TPAP workshops for Māori Economy, Health & Well-being, Environmental Sciences, Tourism, Regulatory and Metrics & Evaluation will be held progressively, with action plans published sequentially until mid-2020.

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Project update | Establishing the National New Energy Development Centre

The National New Energy Development Centre (NNEDC) will be a nationwide energy hub, providing a whole of system and collaborative approach to new energy innovation. It will support New Zealand’s transition to a low emissions future, connecting industry, government, research expertise and leaders, both nationally and globally.

The Venture Taranaki NNEDC Establishment Project gained significant momentum in Q2, with the core establishment team recruited, funding released/confirmed, the establishment agreement with MBIE completed, and work underway to ensure the Centre is fit for purpose and aligned to its core mission of:

Leading and facilitating New Zealand’s transition to a low emissions future, through fostering a new energy eco-system, leveraging national and global knowledge and expertise to reduce the time, cost and risk associated with the development and commercialisation of new energy innovation.

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Enterprise support and enablement

Enterprise Engagement Highlights Referrals and connections between New Plymouth District 122 people and enterprises, including those operating Taranaki-wide, In December, Venture Taranaki held a mentoring for the six months ending 31 December 2019. programme function to thank the programme’s volunteer mentors for the contribution of their time during the course of the year. Client support engagements with New Plymouth District people He Toronga Pakihi ki Taranaki 2419 and enterprises, including those operating Taranaki-wide, for the six months ending 31 December 2019. The Māori Business Network of Taranaki held its quarterly networking hui on 5 December at BDO in New Plymouth. The kaupapa of the event was “preparing rangatahi Māori for the workplace of the future”, and took the form of a discussion panel comprising Annual Activity Measure Q1 Q2 YTD Spotswood College Principal Nicola Ngarewa, Waitara Target High School principal Daryl Warburton, General Manager Number of referrals and Enterprise Connection of WhyOra Tanya Anaha, and Maori & Pasifika Trade connections made by and Signposting 200 54 104 158 Training Coordinator Melody Te Patu. The event was Venture Taranaki staff attended by 30+ people from the Māori business Number of support community Enterprise Support engagements 4000 1688 1460 3148

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Enterprise support and enablement

Enterprise support activities include, but are not restricted 4 mentor matches made in New Plymouth to; District in Q2, totalling 21 mentor matches in the six months ending 31 December 2019. 23 1. enterprise advisory mentor matches made throughout Taranaki 2. start-up guidance YTD. 3. mentoring programme 4. Export Taranaki programme 5. talent services 6. investment ready support startup clinics delivered in New Plymouth 28 7. innovation support District in Q2, totalling 75 delivered in the six 8. connections and signposting months ending 31 December 2019. A total of 9. Capability Development Voucher Scheme facilitation 93 startup clinics delivered throughout 10. research and development support and funding Taranaki YTD. facilitation.

857 new jobs listed in Taranaki in Q2, of Annual Activity Measure YTD which 742 in New Plymouth, and an average Target of 162 live jobs, of which 143 in New Plymouth. Breadth of enterprise support Enterprise support activity undertaken (number of 5 10 different support initiatives)

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Enterprise support and enablement

Demand has been steady for training in leadership, Capability Development Vouchers distributed managing resources, social media, succession planning, $191,077.75 throughout Taranaki in the six months ending strategic planning with an angle on financial literacy, cash- 31 December 2019. flow and financial decision-making for the growth and sustainability of the business in question. This trend is Capability Development Vouchers distributed in evident for both start-up and early stage enterprises, as well $119,784.50 New Plymouth District in the six months ending 31 as well-established enterprises. December 2019.

Venture Taranaki’s enterprise team has seen particular Callaghan grants and funding distributed to interest from the agricultural/food and fibre, and trades $1,857,305.80 Taranaki enterprises in the six months ending 31 sectors during the quarter. Compliance has been high on the December 2019. minds of a number of enterprises. There is also a continuation of the increasing interest in land use and diversification (not replacement, but diversification). Annual Activity Measure YTD Target

The level of annual investment in Enterprise Connection regional businesses (subject to central and Signposting $1m $1.9m government policy).

The level of annual investment in the Enterprise Support management capability of Taranaki’s $240K $191K small and medium sized businesses.

60 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Project update | Export Mapping project wins national award

Venture Taranaki’s innovative Export Mapping project won the Best Practice Award for Taranaki Export Summary Dec 2019 Primary Research award at the national Economic Development NZ awards in November 2019. The project enables a better understanding our region’s export landscape and uses this information to better assist exporting enterprises. The mapping project has brought about the introduction of the Export Taranaki network and programme facilitated by Venture Taranaki to add value to the region’s export community. A workshop on Latin America was held by Export Taranaki during the quarter. The latest results of the award-winning annual export survey were also published in December, as the survey completed its second year of data collection. The updated infographics, which showcase the combined export data supplied by Taranaki export community are available on Venture Taranaki’s website, with one of the interesting changes Winner of the EDNZ Best Practice Award for Primary being that China has been Research, Venture Taranaki for the Taranaki Export Map knocked out of the top three Left to Right: Justine Gilliland (CE VTT), Mark Rawson and export countries for Taranaki. Pam Ford (Deputy Chair & Chair EDNZ)

61 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

News and feedback | Enterprise support and enablement

Performance receives national recognition Thanks for meeting with me today - I definitely got a lot Venture Taranaki was recognised as the ‘Best Performing Region in New out of our meeting and thanks for the information below. Zealand’ for the year in November, acknowledging the team’s consistent – capability support client delivery of outstanding performance across the year, both in terms of delivering the Regional Business Partner and Business Mentor New Zealand services, and a positive customer experience.

This is great recognition of the work Venture Taranaki does in support of Taranaki’s enterprises. “The startup clinic was really helpful, the advisor put me in touch with a great contact at the IRD. She also spoke in a language that I could understand which made things much easier for me. I appreciate this service so Thank you! – Jan, startup clinic

Receiving the award, from left: Kayleen Schoeman, Zara Ryan, “The Mark and Measure course gave us a really good Natacha Dunn, Nick opportunity to step back and reassess where we are at Field, Jennifer with our strategic direction and consider the options Patterson, Jane Moffitt, available to us.” – Rural Taranaki business Matt Wooster (NZTE)

62 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Promoting Taranaki as a great place to learn, live, work, play, visit and create

Visitor spend

• Visitor spend in Taranaki increased 5% to $424m in the 12 months to end December 2019*.

• Visitor spend in New Zealand increased 3.51% to $30b in the 12 months to end December 2019*.

• Visitor spend in New Plymouth District increased 4.42% to $344m in the 12 months to end December 2019*.

Retail spend

• Retail spend in Taranaki totalled $1.4 billion in the 12 months to end December 2019, up 3% on previous 12 Months**.

• Retail spend in New Plymouth District totalled $1046.4m in the 12 months to end December 2019, up 4% on previous 12 Months **.

Sources: *MBIE monthly regional tourism estimates (MRTE) **Marketview (NB: Spend includes EFTPOS and Credit Card analysis but excludes cash)

63 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Promoting Taranaki as a great place to learn, live, work, play, visit and create

Major events funded Regional events strategy

Events funded by the Major Event Fund in this quarter include: The project is well down the track with a first draft • The ITU Sprint Distance Triathlon. (Note: the wider completed and circulated for review by triathlon festival now includes the NZ Sprint Distance stakeholders. Champs, the Oceania Junior Championships and the Oceania Mixed relay). Venture Taranaki recorded 115 engagements relating to this project to date, including 22 • ANBL Match between the NZ Breakers and the Sydney stakeholder meetings. Kings. This brings the total events funded YTD to three. An event toolkit has also been drafted in preparation for launch once the strategy is completed. Venture Taranaki supported the Dirty Detours cycle event run along State Highway 43 in October 2019, which ran very successfully and has been confirmed as returning in 2020. Annual Activity Measure YTD The Trust also liaised with Hockey NZ around delivery of the Target test series against Japan and the Olympic Qualifier against Number of engagements related to the Lead regional events Korea. development and implementation of a strategy 25 115 In addition, five smaller conferences and events with a large regional events strategy proportion of out-of-region attendees were supported. These Number of events funded in accordance Administer the Major with the criteria of NPDC’s major events ranged from car club AGMs through to a conservation hui. Events Fund 4 3 fund

64 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Promoting Taranaki as a great place to learn, live, work, play, visit and create

Attraction campaign

A holistic attraction campaign is underway comprising three integrated focus areas: • Visitor – launched November 2019 • Live & Work – scheduled for February 2020 • Investment – March 2020 The initial visitor campaign phase has been delivered primarily through social channels, backed up with traditional media and a partnership with Air New Zealand. The focus has been on breaking down pre-conceived ideas about the region, and initiating reconsideration by positioning Taranaki as a vibrant, creative destination with a breadth of experiences. Primary targets are Annual Activity Measure YTD families, art and culture lovers, and the outdoor adventurer. Target To date, the campaign has reached over 1.5M people across social, digital Destination Number of destination promotion campaigns and traditional channels, and achieved 5.4M GIPHY views on Instagram promotion 2 1 thanks to our new Taranaki GIPHY suite. The next campaign phase, live Number of engagements with visitor industry Destination and work, is due to start late February. operators (including local operators, other RTOs, promotion 100 86 national and international tourism agencies)

65 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Promoting Taranaki as a great place to learn, live, work, play, visit and create

Taranaki Story Talent initiatives

The development of a regional brand toolkit, based on the • Venture Taranaki secured funding from Education NZ for a successful New Zealand Story and supported by the Provincial tertiary student employability project on behalf of Venture Growth Fund, progressed strongly during quarter two. Taranaki, Whanganui and partners and CEDA (Palmerston North). Learning Works, a company that specialises in The steering group, featuring representatives of all district developing educational resources for tertiary learners, has councils, iwi, and business, industry and community leaders, met, been contracted to deliver the project. and two of the planned eight brand development workshops were undertaken for the visitor and exporter sectors. • Chairing ‘International Education Co-Design Working Group’ for new NZ Institute of Skills and Technology. Through a co- The result will be a comprehensive brand toolkit made freely design process, the workstream has developed an early draft available to the region’s enterprises to help position, distinguish of recommendations and thinking which was forwarded to and promote the region and the businesses within it. the Establishment Board in December.

• The final draft of lifestyle toolkit was completed, and the publication is on track for launch in the first quarter of 2020.

Annual Activity Measure YTD Target

Facilitate talent attraction and Number of talent initiatives retention 2 3

66 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Impact strategy | short-term and medium-term outcomes

Venture Taranaki’s Impact Strategy connects the activities we do every day to our long-term goal of contributing to a Taranaki economy that supports the well-being of our people and environment, though resilient communities, enterprises and economies. We do this by setting measures around the short and medium-term outcomes we want to see along the way.

These outcomes are outside the direct control of Venture Taranaki or its people, but we track them to ensure our activities are making a positive contribution. Some of these measures rely on data that is still to be collected, and it may be some years before we start to see patterns and trends. This is the first step to understanding the long-term contribution that Venture Taranaki makes towards achieving our region’s goals.

We report on these measures six-monthly.

67 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Outcomes | how are we tracking?

Short-term outcome Measure Comment

Public and Private sector invest in Taranaki % that report increased investment after engagement with VT support A revised client survey will run in July 2020 with results included in end-of-year reports. This is an annual measure. Taranaki has appropriate infrastructure for enterprise Enterprises rank Taranaki infrastructure at least 7 out of 10 to flourish Relevant data produced in the last 12 months* Reports page of Taranaki.info Google Analytics: Regional economic intelligence supports decision- Taranaki Trends and Business Survey published every 6 months. Other 384 users, 196 sessions, 638 page views (1 Jul-31 Dec 2019) making reports as and when ready. 9.3 billion (8th in NZ), $75,524 GDP per capita (2nd in NZ) Regional GDP Infometrics 2019

Regional Domestic Product is more evenly spread across industries Breakdown provided in Taranaki Trends Diverse local economy Number of people involved in key target industries e.g. tourism; food production, renewable energy etc Breakdown provided in Taranaki Trends Data methodology under review. To be provided in upcoming Funding received as a result of a Venture Taranaki referral reports % of enterprises that report Venture Taranaki support has led to increased capability % of enterprises that report Venture Taranaki support has led to increased capability % reporting enterprise better positioned as result of interaction with Venture Taranaki A revised client survey will run in July 2020 with results % that report improved confidence after engagement with Venture included in end-of-year reports. This is an annual measure. Increased enterprise capability and confidence Taranaki support % reporting increased connectivity as result of Venture Taranaki interaction

Net Promoter Score of supported enterprises

Number of people or enterprises who identify as Māori receiving support from Venture Taranaki

68 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Short-term outcome Measure Comment

A revised client survey will run in July 2020 with results % that report increased innovation after engagement with Venture Innovation is integrated into enterprise included in end-of-year reports. Taranaki support

Number of events across Taranaki that Venture Taranaki has supported either financially or in capability development

Number of those events that continue for 3 years, following funding/support Data methodology under review by VT. To be provided in in Ratio of events held in/out of New Plymouth that Venture Taranaki has end-of-year reports. Taranaki has a diverse and vibrant events portfolio supported either financially or in capability development

Number of distinct sectors covered by events

Regional Events Strategy currently underway. Due to be Diversified portfolio of events as defined in the Regional Events Strategy finalised March 31

Current national data-set has been discontinued. New Annual visitor guest nights (Commercial accommodation) indicator/s to be developed as part of national tourism data People choose to visit Taranaki work.

Visitor spend in Taranaki $424m (+5%) to end Dec2019 (MBIE)

Working age population % 61.63% (census 2018)

Working age population # 72,465 (census 2018)

Population # (and projections from Census) 117,561 (census 2018) Talent is attracted to, grown and retained in Taranaki Population growth rate % (and projections from Census) 7.30% (census 2018)

People living in Taranaki who were not residing in region 5 years prior 1.29% (census 2018)

Data methodology under review by VT. To be provided in Net growth in international migrants to the region upcoming reports

69 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Medium-term outcome Measure Comment

Number of enterprises that begin trading following VT support

Number of enterprises who have increased their revenue in the year A revised client survey will run in July 2020 with results following Venture Taranaki interaction included in end-of-year reports. This is an annual measure. Enterprises, including Māori enterprise, start, grow, Number of enterprises who have increased their staff numbers one year relocate and succeed in Taranaki following Venture Taranaki interaction

# of enterprise 'births' and 'deaths' - annual change

Number of Māori enterprises registered in Taranaki

Data methodology under review by VT. To be provided in in # people employed in highly skilled; skilled; semi-skilled and low-skilled end-of-year reports. jobs % people employed in highly skilled; skilled; semi-skilled and low-skilled jobs

Employment by occupation of target occupations

NEET Rate (Not in employment training etc) 15% (2019 infometrics) An increase in the number of meaningful, secure and well-paid jobs 59,030 filled jobs, 5% unemployment (2019 infometrics Employment rate; unemployment rate; participation rate annual rate) $58,400 median household income, $57,378.40 personal Median Incomes - households and personal earnings (Infometrics 2019)

Number and growth of employment of those identifying as Māori in 7,292 Māori employed in 2019. Growth rate av. 1.8% over the Taranaki past five years (Infometrics 2019) 54% low skilled, 14% semi-skilled, 10% skilled, 22% highly Skill levels of those identifying as Maori in Taranaki skilled. (Infometrics 2019)

Tourism spend in Taranaki $424m (+5%) to end Dec2019 (MBIE) Increased tourism spending $1.4billion (YE Dec 2019) Retail spend in Taranaki - $ and % growth Up 3% on previous 12 months (MarketView)

Confidence in Taranaki and its economy Confidence in Taranaki and its economy Breakdown provided in Business Survey

70 1.3 CCOs Committee Agenda (3 March 2020) - Decision - Q2 CCOs Performance Reports

Coming up in quarter three

• Release of the new Investment Prospectus February/March 2020 25 Dawson Street • Live & Work campaign launch February 2020 New Plymouth 4310 • Taranaki Trends scheduled for publication end March Tel. 06 759 5150 2020 www.taranaki.info • Release of a renewable energy discussion paper February 2020

• Announcement and commencement of the Food & Fibre value chain diversification project February 2020

71 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2

PAPA RERERANGI I PUKETAPU LTD FINANCIAL AUDIT UPDATE REPORT OUTLINING ACTIONS ADDRESSING THEIR AUDIT MANAGEMENT REPORT FOR THE YEAR ENDED 30 JUNE 2019

PURPOSE

1. The matter for consideration is to note the updated Financial Audit Update Report provided by Papa Rererangi i Puketapu Ltd (PRIP, the Airport) outlining how they are addressing the audit issues included in their Audit Management Report (Management report) presented to the Finance Audit and Risk Committee (FAR Committee) on 10 December 2019.

RECOMMENDATION

That, having considered all matters raised in the report, the report be noted.

SIGNIFICANCE AND ENGAGEMENT

2. This report is provided for information purposes only, and has been assessed as being of some importance.

DISCUSSION

3. Each year, Audit New Zealand (Audit NZ) conducts an audit of PRIP’s Annual Report. After the completion of their audit, Audit NZ prepare a Management report which communicates to the entity’s governance recommendations and issues associated with the audit process and internal controls. These matters are expected to be addressed during the following financial year.

4. The Management report contains issues identified by Audit NZ while conducting the audit of PRIP’s financial statements for the year ended 30 June 2019.

5. On 10 December 2019, PRIP’s Management report was presented at the Finance Audit and Risk Committee who requested that PRIP report back to Council with how they are dealing with the issues outlined in the report.

6. The Financial Audit Update Report includes the following actions that PRIP have addressed from the Audit Management Report to prepare for the 30 June 2020 audit;

a) Quality and timeliness of information provided for audit

b) Property, plant and equipment year-end processes

c) Share capital on issue

72 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2

d) Deferred taxation

e) Previous audit recommendations

NEXT STEPS

7. PRIP are to have these issues resolved in time for their audit of their 30 June 2020 financial statements.

FINANCIAL AND RESOURCING IMPLICATIONS

8. This report is produced within existing resources and budgets.

IMPLICATIONS ASSESSMENT

9. This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:  Council staff have delegated authority for any decisions made;  Council staff have identified and assessed all reasonably practicable options for addressing the matter and considered the views and preferences of any interested or affected persons (including Māori), in proportion to the significance of the matter;  Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;  Any decisions made are consistent with the Council's plans and policies; and  No decisions have been made that would alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or would transfer the ownership or control of a strategic asset to or from the Council.

APPENDICES

Appendix 1: PRIP Financial Audit Update Report YE 30 June 2019 (ECM 8237850)

Appendix 2: PRIP Audit Management Report YE 30 June 2019 (ECM 8168459)

Appendix 3: PRIP Financial Statements YE 30 June 2019 (ECM 8136542)

73 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2

Report Details Prepared By: Wayne Wootton (PRIP Chief Executive Officer) Team: Papa Rererangi i Puketapu, the Airport Approved By: Kelvin Wright (Chief Operations Officer) Ward/Community: District wide Date: 3 March 2020 File Reference: ECM 8237933

------End of Report ------

74 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.1

Papa Rererangi i Puketapu Ltd New Plymouth Airport

Financial Audit for the year ended 30 June 2019 Update report

Wayne Wootton Chief Executive

New Plymouth Airport 192 Airport Drive New Plymouth 4373 Website: www.nplairport.co.nz

75 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.1

Introduction

PRIP has been requested to prepare a paper to be presented to the Council CCO Committee on 3 March 2020, specifying how the FY2019 financial audit process went and how the Auditor’s recommendations in their report to the Board are currently being addressed for the 2020 financial year.

Audit for the period ended 30 June 2019

Audit New Zealand commenced PRIP’s financial audit for FY2019 at the beginning of August noting that the accounting function was transferred to the Airport Company’s accountants, the Tandem Group, from the parent NPDC as from 1 March 2019.

For financial records prior to March, the Auditors performed testing at the Council and for the remainder of the year information was directly obtained from PRIP’s accounting software system called Xero. As transactions were processed through different systems with different controls, the audit process took longer than anticipated causing delays in the overall auditing process.

Other matters that arose during the audit such as a prior work in progress issue, depreciation differences and a material change in the value of the land that PRIP leases from NPDC, compounded the situation and, consequently, the Financial Statements were not finalised in time to be presented at the Council’s Committee meeting on Tuesday 24 September 2019.

However, following approval by the Board of Directors, the Financial Statements were completed and forwarded to NPDC by the statutory deadline of Monday 30 September.

The Financial Statements were presented and adopted at an extraordinary meeting of Council on Thursday 10 October 2019.

A key item identified during the audit was the treatment of a prior work in progress (WIP) issue that has been outstanding for a period of time. This WIP stems back from work undertaken prior to the establishment of PRIP and the Airport Company is current working with NPDC on a resolution to the matter which will be finalised prior to the end of June 2020.

76 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.1

Recommendations

1. Quality and timeliness of information provided for audit

The Auditors recommended that PRIP perform a detailed quality review of the draft annual report before submission for audit on the basis that this will reduce the amount of corrections required.

For FY2020, the draft annual accounts and report will be reviewed by a Tandem Group Senior Accountant, the PRIP Chief Executive and a PRIP Director prior to release for audit.

For the FY2019 audit, the accounts were prepared using the NPDC 2018 prepared accounts as a template, however, it is envisioned that for FY2020 there will be less errors as all templates will be established and the full year of accounting data will be in Xero.

2. Property, Plant and Equipment year-end processes

The Auditors recommended that PRIP obtain formal technical accounting advice when appropriate to ensure that adequate support for assessments and schedules are available in time for the audit.

During the course of the audit it was identified that processes around property, plant and equipment need to be formalised to ensure year-end procedures include for:

 a reconciliation of work in progress per project  a fair value assessment  an impairment assessment  a schedule of capital commitments at year end, detailing the contractual obligation less any payments made

Reconciliation of work in progress is now updated monthly and having the FY2020 full years’ accounting data in Xero will help with this process. Formal technical accounting advice is being sought as appropriate.

The Tandem Group have started work on reformatting the accounts, with automation as much as possible of the notes. This will leave more time for the reviewing of the accounts which be undertaken by a Tandem Group Senior Accountant and also by the PRIP Chief Executive and a PRIP Director. To bolster the Tandem team, two new members will be employed during FY2020 with specific audit knowledge.

77 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.1

3. Share capital on issue

The Auditors recommended that PRIP checks and updates as necessary all statutory details pertaining to the Company.

The Intragroup Asset transfer Deed between the Council and the Airport Company states that PRIP will satisfy the transfer price by issuing 13,000,000 shares to the Council. However, on a review of the Companies Register only 100 shares were on issue.

It is important that the Companies Register is kept up to date with all shares issued and, as a result of the recommendation, the records with the Companies Office have now been updated and represent the correct 13,000,000 shares issued.

4. Deferred taxation

The Auditors recommended that accurate figures will be required for deferred taxation calculations.

The deferred tax calculation for the Airport Company includes a large exception adjustment to reduce the accounting value of assets. The deferred tax calculation prepared by the Company for FY2019 used the exception adjustment from the previous year, however, due to depreciation and additions, this figure was incorrect for 2019.

The Auditors produced an estimated figure for the year which was subsequently used for the Company’s amended deferred tax calculation. It is noted that the Auditors would expect the Company to be able to produce a more accurate figure moving forward as it is unlikely that another estimate would be accepted for the adjustment in FY2020.

Following major changes due during FY2020 in PRIP’s assets, with the new terminal becoming operational and the old buildings being decommissioned, additional work will be required with regards deferred taxation calculations. PRIP will seek taxation advice on the matter and will cooperate with the Auditors to ensure accurate figures are used rather than estimates. Further, the Tandem Group have employed two new members in their team with specific taxation knowledge.

78 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.1

Previous audit recommendations

In the FY2019 report, the Auditors noted the status of recommendations from previous audits as follows:

 Loan arrangements o now more formalised although a prior work in progress issue is still to be resolved

 Incorrect coding of expenditure o more accurate since Xero accounting software fully utilised

 Approval of sensitive expenditure o sensitive expenditure policy implemented

 Company policies o following Company policies implemented . Delegation of Authority . Fraud and Corruption . Credit Card . Sensitive Expenditure . Monetary Transaction and Cash Handling

 Formal fraud risk assessment o no assessment during FY2019

 Legislative compliance o reporting as per NPDC and Statement of Intent requirements

 Landing fees and passenger numbers o random checks being undertaken

 Coding of expense claims o no coding issues identified

79 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Report to the Board on the audit of

Papa Rererangi I Puketapu Limited

For the year ended 30 June 2019

PRIP 19J_ Report to Governors - manegment comments

80 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Contents

Key messages ...... 3

1 Recommendations ...... 5

2 Our audit report ...... 7

3 Matters raised in the Audit Plan ...... 11

4 Other matters ...... 13

5 Public sector audit...... 16

6 Useful publications ...... 17

Appendix 1: Status of previous recommendations...... 20

Appendix 2: Disclosures ...... 24

81 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Key messages

We have completed the audit for the year ended 30 June 2019. This report sets out our findings from the audit and draws attention to areas where the Company is doing well and where we have made recommendations for improvement.

Audit opinion

We have issued an unmodified audit opinion dated 30 September 2019.

Matters identified during the audit

Terminal Project

The project to develop a new terminal is nearing completion. The Company continues to incur significant capital expenditure which is classified as work-in-progress (WIP) in the financial statements.

Our audit testing included reviewing a sample of transactions to ensure the classification was appropriate. We requested the Company to prepare a WIP reconciliation and impairment assessment at year-end. We reviewed the Company’s assessment of indicators of impairment and confirmed no impairment was necessary. We concluded that WIP was fairly stated at 30 June 2019.

We recommend that management prepare a reconciliation of WIP and an impairment assessment as part of the Company’s year-end processes. This will avoid delays in the audit process and ensure that the financial statements are adequately supported.

Fair value of Property, Plant and Equipment

The accounting policy for Property, Plant and Equipment is to recognise property, plant and equipment at fair value and revalue relevant assets with sufficient regularity to ensure the carrying value is not significantly different to the fair value. The Company did not prepare a fair value assessment for its Property, Plant and Equipment at year-end. On our request, the Company engaged an expert to prepare a valuation of property, plant and equipment at 30 June 2019. We determined that there was a material movement in the fair value of land which was subsequently recognised by the Company.

We recommend that management prepare an assessment of the fair value movement of relevant Property, Plant and Equipment as part of the Company’s year-end processes in future.

Year-end reporting processes

A number of adjustments were required to the annual report, as detailed in sections 2.3, 2.4 and 2.5. In addition, information to support the financial statements was not always readily available. We recommend that Company perform a detailed quality review of the draft annual report before submission for audit. We also recommend that the Company formalise year-end reporting processes to ensure information is available at the start of the audit.

82 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Thank you

We would like to thank the Board, management and staff for assistance received during the audit.

Debbie Perera Appointed Auditor Draft - 22 October 2019

83 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

1 Recommendations

Our recommendations for improvement and their priority are based on our assessment of how far short current practice is from a standard that is appropriate for the size, nature, and complexity of your business. We use the following priority ratings for our recommended improvements.

Priority Explanation

Urgent Needs to be addressed urgently These recommendations relate to a significant deficiency that exposes the Company to significant risk or for any other reason need to be addressed without delay.

Necessary Address at the earliest reasonable opportunity, generally within six months These recommendations relate to deficiencies that need to be addressed to meet expected standards of best practice. These include any control weakness that could undermine the system of internal control.

Beneficial Address, generally within six to 12 months These recommendations relate to areas where the Company is falling short of best practice. In our view it is beneficial for management to address these, provided the benefits outweigh the costs.

1.1 New recommendations

The following table summarises our recommendations and their priority.

Recommendation Reference Priority

Property, Plant and Equipment year-end processes 4.1 Urgent Formalise processes around property, plant and equipment and ensure year-end procedures include:  A reconciliation of WIP per project.

 A fair value assessment.

 An impairment assessment.

 A schedule of capital commitments at year end, detailing the contractual obligation less any payments made.

84 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Recommendation Reference Priority

We also recommend that the Company obtain formal technical accounting advice when appropriate, to ensure that adequate support for the above assessments and schedules are available in time for the audit.

Information provided for audit 2.6 Necessary Perform a detailed quality review of the draft annual report before submission for audit. This will reduce the amount of corrections required.

Share Capital on issue 4.2 Necessary Ensure the Companies Register be updated to reflect the correct number of shares on issue.

Deferred taxation 4.3 Necessary Calculate accurately the exception adjustment included in the deferred tax calculation. Obtain taxation advice when necessary and that this is done in time to ensure the relevant support is available for the audit.

1.2 Status of previous recommendations

Set out below is a summary of the action taken against previous recommendations. Appendix 1 sets out the status of previous recommendations in detail.

Priority Priority

Urgent Necessary Beneficial Total

Open 2 4 1 7

Implemented or closed - 3 2 5

Matters that will be followed up during our - - - - next audit visit

Total 2 7 3 12

85 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

2 Our audit report

2.1 We issued an unmodified audit report

We issued an unmodified audit report on 30 September 2019. This means we were satisfied that the financial statements and statement of service performance present fairly the Company’s activity for the year and its financial position at the end of the year.

In forming our audit opinion, we considered the following matters. Refer also to sections 3 and 4 for further detail on these matters.

2.2 Uncorrected misstatements

The financial statements are free from material misstatements, including omissions. During the audit, we have discussed with management any misstatements that we found, other than those which were clearly trivial. The misstatements that have not been corrected are listed below along with management’s reasons for not adjusting these misstatements. We are satisfied that these misstatements are individually and collectively immaterial.

Current year uncorrected Reference Assets Liabilities Equity Financial misstatements performance

Dr (Cr) Dr (Cr) Dr (Cr) Dr (Cr)

Expenditure 1 (12,311)

Payables 12,311

Expenditure 2 (31,980)

Accumulated surplus 31,980

Expenditure 3 14,907

Property, Plant and (14,907) Equipment

Property, Plant and 4 (34,733) Equipment

Expenditure 34,733

Personnel costs 5 11,541

Accruals (11,541)

Expenditure 6 4,939

Payables (4,939)

Total (49,640) (4,169) 31,980 21,829

86 CCOs Committee Agenda (3 March 2020) - Decision - PRIP report - addressing audit issues 2.2

Explanation of uncorrected misstatements

1 Expenditure related to 2019/20 included in the accounts. This was not corrected as it is a projected error.

2 Expenditure related to 2017/18 included in the accounts. This was not corrected as it is a projected error.

3 Operational expenditure incorrectly capitalised to property, plant and equipment. This was not corrected as it is a projected error.

4 Operational expenditure incorrectly included in work in progress. This was not corrected as it is a projected error.

5 Salaries and wages accrual not recognised to end of June 2019. This was not corrected as this was an estimate and due to time constraints.

6 Expenditure incorrectly removed from operational expenditure on adjustment of the accounts.

2.3 Corrected misstatements

We also identified misstatements that were corrected by management.

Current year corrected Reference Assets Liabilities Equity Financial misstatements performance

Dr (Cr) Dr (Cr) Dr (Cr) Dr (Cr)

Trade receivables 1 35,101

GST (4,578)

Revenue (30,523)

Depreciation expense 2 45,322

Accumulated (45,322) depreciation

Repairs and maintenance 3 112,815

WIP (112,815)

Revenue 4 (108,970)

WIP 108,970

WIP 5 (13,785)

Expenditure 19,331

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Current year corrected Reference Assets Liabilities Equity Financial misstatements performance

Dr (Cr) Dr (Cr) Dr (Cr) Dr (Cr)

Revenue (5,546)

Expenditure 6 33,409

Accruals (33,409)

Tax expense 7 28,528

Tax payable/receivable (28,528)

Tax expense 131,659

Deferred tax asset (131,659)

Property, Plant and 8 2,069,394 Equipment – Land

Gain on revaluation (2,069,394)

Total 2,041,543 (198,174) - (1,843,369)

Explanation of corrected misstatements

1 To recognise revenue - Landing charges for the month of June - invoiced in July.

2 Correction of depreciation differences identified.

3 Correction of operational expenditure incorrectly included in WIP.

4 To recognise Air NZ reimbursement for changes to terminal design as revenue rather than offsetting costs.

5 To recognise the NPDC revenue paid for feasibility studies and transfer the expenditure to opex as it is not capital.

6 Accrual for 2018/19 audit fee.

7 Correction of current and deferred taxation.

8 To recognise the gain on revaluation of land.

2.4 Corrected performance reporting misstatements

Detail of misstatement

Changes to budget information to agree to the Statement of Intent.

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2.5 Corrected disclosure deficiencies

Detail of disclosure deficiency

WIP disclosure – breakdown of WIP capitalised included

Property, Plant and Equipment accounting policy – correction of asset useful lives

Capital commitments disclosure reduced by $11,299,991 to reflect only contracted commitments and not planned capital expenditure.

Operating lease commitments – correction of disclosure One year - $49k Three to Five years - $14k Greater than Five years - $132k

Related party payable, increased from $4k to $34k

2.6 Quality and timeliness of information provided for audit

Management needs to provide information for audit relating to the annual report of the Company. This includes the draft annual report with supporting working papers.

The Company provided us with pro-forma accounts on 21 June 2019. This enabled us to perform high level review of the financial statements format and provide comments.

The accounting function was transferred to Tandem Group from the parent District Council from 1 March 2019. For financial records prior to this, we performed testing at the District Council. For testing on the remainder of the year, we were able to obtain information directly from Xero, including supporting invoices. We obtained assurance that balances were transferred correctly in to the new accounting system. As transactions were processed through different systems with different controls, as a result we had to perform additional testing this year.

We identified a number of corrections to the financial statements in section 2.3; 2.4 and 2.5.

We recommend that the Company perform a detailed quality review of the draft annual report before submission for audit. This will reduce the amount of corrections required. We also noted a number of year-end reporting processes that can be improved. These are detailed in section 3 and 4.

Management comment

The draft annual accounts and report will be reviewed by a Tandem Group Senior Accountant, the PRIP Chief Executive and a PRIP Director prior to release for audit. It is

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envisioned that for FY2020 there will be less errors as all templates are now established and the full year of accounting data will be in Xero. Note that the 2019 accounts were prepared using the NPDC 2018 prepared accounts as a template.

3 Matters raised in the Audit Plan

In our Audit Plan of 9 May 2019, we identified the following matters as the main audit risks and issues:

Audit risk/issue Outcome

Terminal Redevelopment Project

PRIP is currently upgrading the We tested the appropriate accounting for a Company terminal which is a significant sample of transactions with a specific focus on the project and will be included as work-in- split between capital and operating expenditure. progress (WIP) at year-end. We reviewed the Company’s assessment of In accordance with the requirements of indicators of impairment and confirmed no the accounting standards, PRIP will need impairment was necessary. to demonstrate that the carrying value of its assets is not materially different We identified some misclassifications between from the fair value. operating and capital expenditure but these were not material and we concluded that the work in progress related to the terminal development project is fairly stated. We recommend that the Company improve its review processes, to ensure that expenditure is appropriately coded in the general ledger. We also recommend that the Company prepare a reconciliation of WIP by project. Refer to section 4.1 for more detail.

Loan from the District council

The Intragroup Asset Transfer Deed (the We reviewed the work done by the prior year Deed) between the District Council and audit team regarding the work-in-progress and the Company, signed in January 2018, inspected invoices and contracts in order to stipulated that only the Company fixed determine if the recognition criteria were met. assets noted in the fixed asset register We reviewed the work done by the previous in the agreement would be transferred. Appointed Auditor in relation to the impairment It was later noted that the work-in- of work-in-progress. progress balance ($1.5 million) related to the terminal redevelopment was not We discussed the nature of the expenditure with included in the Deed. It was the consultant project manager and we reviewed subsequently agreed with the Company relevant documents such as the business case, to transfer the WIP balance with a council minutes of decisions.

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Audit risk/issue Outcome

corresponding increase in the loan to We determined that the prior year work-in- Council. progress was correctly capitalised. We understand We noted in the prior year that there that the management of the District Council have was no formal agreement for this and agreed to convert this loan in to equity once a based on our latest discussion with the Council resolution on the matter is passed. This is management of the Company, this expected to be in the 2019/20 year. amount is under dispute and may be written off by the District Council. As a consequence, the work-in-progress recognised in the prior year may be impaired or may not meet the criteria for recognition as property, plant and equipment in terms of PBE IPSAS 17 Property, plant and equipment. Management will need to prepare a formal impairment assessment. Management override

There is an inherent risk in every Our audit response to this risk included: organisation of fraud resulting from  testing the appropriateness of selected management override of internal journal entries; controls. Management are in a unique position to perpetrate fraud because of  reviewing accounting estimates for their ability to manipulate accounting indications of bias; and records and prepare fraudulent financial  evaluating any unusual or one-off statements by overriding controls that transactions, including those with related otherwise appear to be operating parties. effectively. Auditing standards require us to treat this as a risk on every audit. We did not place any reliance on the system of internal control within the journal entry process due to the limited levels of segregation within the Company. The Company changed accounting systems during the year. There were a number of journals related to the transfer of information from the General Ledger maintained by the Council to the Xero system. We confirmed that the transfer of information was recorded appropriately. We did not identify any evidence of management override from the testing performed.

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4 Other matters

During the course of our audit we identified the following matters which we wish to bring to your attention.

4.1 Property, Plant and Equipment year-end processes

Recommendation

Formalise processes around property, plant and equipment and ensure year-end procedures include:

 A reconciliation of WIP per project.

 A fair value assessment.

 An impairment assessment.

 A schedule of capital commitments at year end, detailing the contractual obligation less any payments made.

Obtain formal technical accounting advice when appropriate, to ensure that adequate support for the above assessments and schedules are available prior to the commencement of the audit.

Background

The accounting standard PBE IPSAS 17, Property, Plant and Equipment, requires that valuations are conducted with sufficient regularity to ensure that the carrying amount does not differ materially from fair value.

The impairment accounting standard requires the Company assess at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the Company should estimate the recoverable service amount of the asset.

If the recoverable service amount is less than the carrying value of the asset then the asset is impaired and an impairment is recognised in the financial statements.

As this could have a significant impact on the financial statements it is important that this assessment be performed early to allow issues to be resolved in a timely manner.

The following were not prepared at the start of the audit and were only provided subsequent to our request for these to be performed:

 A reconciliation of work in progress per project, including the additions and capitalisations. This is required for the note disclosure.

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 A fair value movement assessment to determine if there is a significant difference between the book value and the fair value of assets. This assessment triggered the need for a full revaluation of the Company’s land as the carrying value differed materially from the fair value.

 An impairment assessment.

 A schedule of capital commitments at year end, as required by PBE IPSAS 17.

As these weren’t prepared prior to the commencement of the audit this caused delays to the finalisation of the audit opinion.

Management comment

Reconciliation of WIP is now updated monthly and having the full years’ accounting data in Xero will help with this process. Formal technical accounting advice will be sought as appropriate.

4.2 Share capital on issue

Recommendation

Ensure that the Companies Register is updated to reflect the correct shares on issue.

Background

The Intragroup Asset transfer Deed for New Plymouth Company says that PRIP will satisfy the transfer price by issuing 13,000,000 shares to NPDC. However on review of the Companies Register only 100 shares are on issue. It is important that the Companies Register is kept up to date with all shares issued.

Management comment

This has now been updated with the Companies Office.

4.3 Deferred taxation

Recommendation

Calculate accurately the exception adjustment included in the deferred tax calculation.

We also recommend that the Company obtain taxation advice when necessary to ensure the relevant support is available prior to the audit commencing.

Background

The deferred tax calculation for the company includes a large exception adjustment to reduce the accounting value of assets. The deferred tax calculation prepared by the

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Company for 2019 used the exception adjustment from last year of $9,138,000. However, due to depreciation and additions, it was not the correct figure for 2019.

We estimated the correct figure for the year to be $8,633,000. The company used this figure in its amended deferred tax calculation. However, we would expect the Company to be able to more accurately this figure going forward. It is unlikely that we will be able to accept another estimate for this adjustment in 2020.

The adjustment should be calculated based on the accounting book value of the initial cost difference and the subsequent additions of non-depreciable building assets.

Management comment

Following major changes due during FY20 in PRIP’s assets with the new terminal becoming operational and the old buildings being decommissioned, additional work will be required with regards deferred taxation calculations. PRIP will seek taxation advice on the matter and will cooperate with the auditor to ensure accurate figures are used rather than estimates.

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5 Public sector audit

The Company is accountable to their sole shareholder (the District Council), their local community and to the public for its use of public resources. Everyone who pays taxes or rates has a right to know that the money is being spent wisely and in the way the Company said it would be spent.

As such, public sector audits have a broader scope than private sector audits. As part of our audit, we have considered if the Company has fairly reflected the results of its activities in its financial statements and non-financial information.

We also consider if there is any indication of issues relevant to the audit with:

 compliance with its statutory obligations that are relevant to the annual report;

 the Company carrying out its activities effectively and efficiently;

 the Company incurring waste as a result of any act or failure to act by a public entity;

 any sign or appearance of a lack of probity as a result of any act or omission, either by the Company or by one or more of its members, office holders, or employees; and

 any sign or appearance of a lack of financial prudence as a result of any act or omission by a public entity or by one or more of its members, office holders, or employees.

We did not identify any waste or probity issues from the testing we performed.

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6 Useful publications

Based on our knowledge of the Company, we have included some publications that the Board and management may find useful.

Description Where to find it

Client updates

In March 2019, we hosted a series of client On our website under publications and updates. The theme was “Improving trust resources. and confidence in the public sector”. Link: Client updates These included speakers from both Audit New Zealand and external organisations.

Model financial statements

In July 2019, we issued updated model On our website under publications and financial statements for Crown entities. The resources. update primarily focuses on the early Link: Model Financial Statements adoption of PBE IFRS 9 Financial Instruments for a tier 1 or tier 2 entity. In July 2019, we issued updated model financial statements for a Tier 3 entity, using the public benefit entity (PBE) simple format reporting accrual (public sector) standard.

Our model financial statements reflect best practice we have seen. They are a resource to assist in improving financial reporting. This includes:  significant accounting policies are alongside the notes to which they relate;  simplifying accounting policy language;  enhancing estimates and judgement disclosures; and  including colour, contents pages and subheadings to assist the reader in navigating the financial statements.

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Description Where to find it

Tax matters

As the leading provider of audit services to On our website under publications and the public sector, we have an extensive resources. knowledge of sector tax issues. These Link: Tax Matters documents provide guidance and information on selected tax matters.

Client substantiation file

When you are fully prepared for an audit, it On our website under publications and helps to minimise the disruption for your resources. staff and make sure that we can complete Link: Client Substantiation File the audit efficiently and effectively. We have put together a tool box called the Client Substantiation File to help you prepare the information you will need to provide to us so we can complete the audit work that needs to be done. This is essentially a tool box to help you collate documentation that the auditor will ask for.

Severance payments

Because severance payments are On the OAG’s website under 2019 discretionary and sometimes large, they are publications. likely to come under scrutiny. The Link: Severance payments Auditor-General has released updated good practice guidance on severance payments. The guide is intended to help public sector employers when considering making a severance payments to a departing employee. It encourages public organisations to take a principled and practical approach to these situations. The update to the 2012 good practice guidance reflects recent case law and changes in accounting standards.

Matters arising from the 2017/18 audits

The OAG has published a report on the On the OAG’s website under publications. results of the 2017/18 audits for the sector. Links: Local Government

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Description Where to find it

Good practice

The OAG’s website has been updated to On the OAG’s website under good practice. make it easier to find good practice Link: Good practice guidance. This includes resources on:  audit committees;  conflicts of interest;  discouraging fraud;  good governance;  service performance reporting;  procurement;  sensitive expenditure; and  severance payments.

Post-implementation reviews

The OAG have recently completed a review On the OAG’s website under publications. of Auckland Council’s post-implementation Link: Post-implementation review process review process. While many aspects of the report are specific to Auckland Council, it documents the process that Auckland Council uses, and includes a post-implementation review checklist.

Reporting fraud

The OAG have released data from 2012-2018 On the OAG’s website under data. on fraud in public entities. This includes how Link: Reporting Fraud the fraud was detected, the type of fraud and the methods and reasons for the fraud. The graphs show the high-level sector, and this can be broken down further into sub-sectors by opening the spreadsheets available.

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Appendix 1: Status of previous recommendations

Open recommendations

Recommendation First raised Status

Urgent

Impairment assessment of work in 2018 Open progress – the work in progress balance is Refer to section 3 and 4.1. and will continue to be a material balance and should be reviewed on a regular basis (six monthly) for impairment and signed off by the Board.

Loan arrangements 2018 Open All loan arrangements to be formalised and While there were no issues with the agreed by both parties, to enable effective loans that were raised during the management and governance of such 2018/19 year, we do note that the arrangements. issue around the $1.5M WIP loan is still to be formalised or converted to equity. Refer further to section 3.

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Recommendation First raised Status

Necessary

Incorrect coding of expenditure 2018 Open We recommend the Company put in place We noted a number of issues where controls around the coding of operational capital expenditure was coded as and capital expenditure to ensure it is repairs or vice versa. correctly coded the first time.

Approval of Sensitive Expenditure 2018 In progress All expenditure be approved in line with The Company has implemented policy. sensitive expenditure and delegation policies, effective from Jan 2019. Prior to the policy being implemented, we noted one instance of Travel expenditure not being approved on a one-up basis. Since implementation, all travel expenditure has been approved in line with the new policy delegations. The Sensitive expenditure policy does state that CE sensitive expenditure is to be approved by the Board, whereas the delegation policy allows the CE to approve his own travel up to $1,200 per single trip providing it is within $2,500 for the month. We recommend that approval is documented or retrospective approval given at Board meetings and this approval be recorded in the minutes.

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Recommendation First raised Status

Company policies 2018 In progress We recommend that the Company The following policies have been document all policies that are appropriate implemented by the Company from for the Company and develop a timeline for January 2019: implementation of identified policies.  Delegation of Authority Policy  Fraud or Corruption Policy  Credit Card Policy  Sensitive Expenditure Policy  Monetary Transaction and Cash Handling We noted that the delegation policy wording for the CE Opex within approved budget wording states 'Over $50,000 and up to $250,000', which implies that the CE is unable to approve expenditure below $50,000. We recommend that the wording be amended to match the intended meaning that the CE can approve up to $250,000.

Formal fraud risk assessment 2018 Open We recommend the Company undertake a No assessment took place this fraud assessment to assess: financial year.  transactions, activities, or locations that may be susceptible to fraud; and  controls/processes the Company has in place to mitigate those risks.

Beneficial

Legislative compliance 2018 In progress We recommend that the Company put in We noted that in general the place systems and processes to ensure Statement of Intent complies with future compliance of the Statement of legislation, but improvements can Intent still be made to performance measures to make these more meaningful.

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Implemented or closed recommendations

Recommendation First raised Status

Streamline the accounting processes – the 2018 The Company has changed integration of the Company’s accounting accounting function providers and function into that of the Council makes for systems. an overly complicated transactions with a poor audit trail. A more streamlined accounting process that is standalone would better support the reporting requirements of the Company.

Landing fees and passenger numbers 2018 Since the last audit, management now undertakes random checks on We recommend that the Company the number of passengers through consider introducing a process to verify the exit door. passenger numbers. The Company could review the load factors each month and In 2018/19, the total number of investigate any discrepancies to their own commercial flights was 9,182 and the expectations or sample test passenger total number checked was 31 numbers from planes and compare back to arrivals. There have been no the information received from the airlines. discrepancies found throughout these random checks. We recommend that management continue with this process.

Coding of expense claims 2018 No coding issues were identified with expense claim items from our We recommend that as part of the testing performed. review of expenditure that attention be given to ensuring items are coded to the correct ledger accounts.

Legislative compliance 2018 The six monthly report for the 6 Months ended 31 December 2018 We recommend that the Company put in was approved by the board on 12 place systems and processes to ensure February 2019. It was presented to future compliance with the Local the Council Performance Committee Government Act around the submission of meeting on 27 March 2019. This was the six monthly report to Council. the first meeting subsequent to the approval by the Board.

Conflict of Interest Declarations 2018 We noted that a register is We recommend that annual declarations maintained and we did not identify are completed by the Board and key issues in testing the completeness of employees. the register. We followed up interests not included and were satisfied with the Directors reasons for not including these interests.

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Appendix 2: Disclosures

Area Key messages

Our responsibilities in We carried out this audit on behalf of the Controller and conducting the audit Auditor-General. We are responsible for expressing an independent opinion on the financial statements and performance information and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001. The audit of the financial statements does not relieve management or the Board of their responsibilities. Our Audit Engagement Letter contains a detailed explanation of the respective responsibilities of the auditor and the Board.

Auditing standards We carried out our audit in accordance with the Auditor-General’s Auditing Standards. The audit cannot and should not be relied upon to detect all instances of misstatement, fraud, irregularity or inefficiency that are immaterial to your financial statements. The Board and management are responsible for implementing and maintaining your systems of controls for detecting these matters.

Auditor independence We are independent of the Company in accordance with the independence requirements of the Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners, issued by New Zealand Auditing and Assurance Standards Board. Other than the audit, we have no relationship with, or interests in, the Company.

Fees The audit fee for the year is $33,409, as detailed in our Audit Proposal Letter. No other fees have been charged in this period.

Other relationships We are not aware of any situations where a spouse or close relative of a staff member involved in the audit occupies a position with the Company that is significant to the audit. We are not aware of any situations where a staff member of Audit New Zealand has accepted a position of employment with the Company during or since the end of the financial year.

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PO Box 149 Palmerston North 4440 Phone: 04 496 3099

www.auditnz.govt.nz

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129 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019 OF NEW PLYMOUTH DISTRICT COUNCIL’S COUNCIL CONTROLLED ORGANISATIONS

PURPOSE

1. The purpose of this report is for the Committee to note the Condensed Interim Financial Statements (the statements) for the six months ended 31 December 2019 of the New Plymouth District Council’s (NPDC, the Council) Council Controlled Organisations (CCO).

2. CCOs of the Council include Venture Taranaki Trust (VTT), Papa Rererangi i Puketapu Ltd (PRIP, the Airport), New Plymouth PIF Guardians Ltd (NPG) and the two Forestry Joint Ventures – Duthie and McKay.

3. These statements are for the first six months of the financial year to 31 December 2019. The statements are not audited but comply with Public Benefit Entity International Accounting Standard 34 Interim Financial Reporting.

RECOMMENDATION That, having considered all matters raised in the report, the Condensed Interim Financial Statements from the following Council-Controlled Organisations be noted: a) New Plymouth PIF Guardians Ltd b) Papa Rererangi i Puketapu Ltd c) Venture Taranaki Trust d) Two Forestry Joint Ventures – Duthie and McKay

SIGNIFICANCE AND ENGAGEMENT

4. This report is provided for information purposes only, and has been assessed as being of some importance.

DISCUSSION

5. VTT, PRIP, NPG and the two Forestry JVs are CCOs pursuant to the Local Government Act 2002 (LGA 2002). The LGA 2002 requires that, within two months after the end of the first half of each financial year, each CCO must deliver to the shareholder a report on the organisation’s operations during that six month period. Attached are the statements for each of the CCOs to satisfy this legislative requirement.

130 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Summary of New Plymouth PIF Guardians (NPG) Condensed Interim Financial Statements

6. NPG is well below budget for the period to date due to not needing to undertake professional and consulting services as had been forecast. This may change by the end of the financial year.

Summary of the Papa Rererangi i Puketapu (PRIP) Condensed Interim Financial Statements

7. PRIP has reported profit after tax of $63k for the six month period.

8. PRIP provided cash loans to two of their leasee’s totalling $210k. This was approved by PRIP Director’s, yet to be approved by Council.

9. Interest rates for PRIP’s loans provided by Council have decreased from 1 October 2019 due to the loan being restructured.

10. Jetstar withdrew from regional flying from New Plymouth from 30 November 2019.

Summary of Venture Taranaki Trust (VTT) Condensed Interim Financial Statements

11. VTT has reported profit after tax of $769k for the six month period to date, due to the timing of grant revenue received. VTT are expected to breakeven by 30 June 2020.

12. VTT has recognised a liability of $235k for unpaid grants which are expected to be paid out over the next 12 months.

Summary of the Forestry joint venture’s Condensed Interim Financial Statements

13. The Forestry joint ventures are below budget for the period due to budget timing of expenditure. Actuals are expected to be closer to budget by the end of June 2020.

14. Only inspection and maintenance activities are required during the period. Harvesting is not anticipated until 2022 for McKay Forestry JV and 2024 for Duthie Forestry JV

NEXT STEPS

15. The Condensed Interim Financial Statements will be published on the Council website within one month of the CCOs meeting.

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FINANCIAL AND RESOURCING IMPLICATIONS

16. This report is produced within existing resources and budgets.

IMPLICATIONS ASSESSMENT

APPENDICES

Appendix 1: New Plymouth PIF Guardians (NPG) Condensed Interim Financial Statements for the six months ended 31 December 2019 (ECM 8242909)

Appendix 2: Papa Rererangi i Puketapu (PRIP) Condensed Interim Financial Statements for the six months ended 31 December 2019 (ECM 8242945)

Appendix 3: Venture Taranaki Trust (VTT) Condensed Interim Financial Statements for the six months ended 31 December 2019 (ECM 8242900)

Appendix 4: McKay Forestry JV Condensed Interim Financial Statements for the six months ended 31 December 2019 (ECM 8242927)

Appendix 5: Duthie Forestry JV Condensed Interim Financial Statements for the six months ended 31 December 2019 (ECM 8242928)

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Report Details Prepared By: Laura Harris (Financial Accountant) Kathryn Scown (Principal Adviser – Regional Economic Development) Team: Business Services / Strategy Group Approved By: Joy Buckingham (Chief Financial Officer) Ward/Community: District Wide Date: 19 February 2020 File Reference: ECM 8242988 ------End of Report ------

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3.1

NEW PLYMOUTH PIF GUARDIANS LIMITED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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3.1

NEW PLYMOUTH PIF GUARDIANS LIMITED

CONTENTS

Page

3 Company Directory

4 Statutory Information

6 Interim Statement of Comprehensive Revenue and Expenses

6 Interim Statement of Changes in Equity

7 Interim Statement of Financial Position

8 Interim Statement of Cash Flows

9 Notes to the Condensed Interim Financial Statements

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3.1

NEW PLYMOUTH PIF GUARDIANS LIMITED

COMPANY DIRECTORY

Directors: Mark Butcher (Chairman) Kirsty Campbell Tracey Jones David Rae

Shareholder: New Plymouth District Council

Registration details: Company number 1102498

Registered office: New Plymouth District Council Civic Chambers Liardet Street New Plymouth

Auditors: Audit New Zealand on behalf of the Auditor-General

Bankers: Westpac Banking Corporation PO Box 91 New Plymouth

Solicitors: Simpson Grierson PO Box 2402 Wellington

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3.1

NEW PLYMOUTH PIF GUARDIANS LIMITED STATUTORY INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

NATURE OF INTEREST COMPANY

Mark Butcher (Chairman) Chairman New Plymouth PIF Guardians Limited Chairman Waikato Tainui Group Investment Committee Chief Executive New Zealand Local Government Funding Agency Limited Nomination Committee member Guardian of NZ Superannuation Fund

Kirsty Campbell Director New Plymouth PIF Guardians Limited Director Enviro-Mark Solutions Ltd trading as Toitu Envirocare Director The New Zealand Home Loan Company Limited Director and Chair of Salt Funds Management Limited Compliance Committees Salt Investment Funds Limited Director/Beneficial shareholding Clarity Advisory Limited Director/Beneficial shareholding Ptarmigan Consulting Limited Board Member Public Trust Investment Committee Member Findex Advice Services NZ Limited

Tracey Jones Director New Plymouth PIF Guardians Limited Chair Nikko Asset Management NZ Limited Director Cove Road Soapworks Limited Director Tutanekai Investments Limited Director RC Custodian Limited Director/Chair of Audit Committee Harmoney Corporation Limited Chair/Advisory Trustee Petal Foundation Trustee N’Godwi Trust

David Rae Director New Plymouth PIF Guardians Limited Director Astronomy New Zealand Limited Director Whanganui District Council Holdings Limited Director The New Zealand Refining Nominees Limited Director Gasnet Limited Director NZ International Commercial Pilot Academy Limited Trustee The New Zealand Refining Company Pension Fund Associate MYFiduciary Limited Investment Committee Member Te Puia Tapapa Limited Partnership Advisory Committee Member Public Infrastructure Partners Fund III

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NEW PLYMOUTH PIF GUARDIANS LIMITED STATUTORY INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Shareholding by directors The Directors do not hold any interest in the shares of New Plymouth PIF Guardians Limited (the Company, NPG).

Insurance arrangements The Directors have resolved to and have entered into a Directors and Officers Combined Indemnity insurance policy to a level they consider appropriate, given the size of the Company, to provide investment advisory services.

Dividend recommendation The Directors do not recommend the payment of a dividend in relation to the six months ended 31 December 2019.

Changes in accounting policy There were no changes in accounting policies during the six months ended 31 December 2019.

Shares issued The Company has 1,000 shares on issue as at 31 December 2019 (2018:1,000).

Statutory information The Shareholder has agreed that the requirements of section 211 (1) (a) and (e) to (h) of the Companies Act 1993 need not be reported against.

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NEW PLYMOUTH PIF GUARDIANS LIMITED INTERIM STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSES FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Budget Unaudited 2019 2019/20 2018 $ $ $ Note Revenue Non-exchange - Advisory management fees 2 104,689 132,000 109,960 Exchange - Interest revenue 119 500 315 Total revenue 104,808 132,500 110,275

Expenditure Directors fees 77,500 77,500 77,500 Directors expenses 3,194 7,500 7,385 NPDC services 2 16,500 16,500 25,000 Other expenses 7,614 31,000 390 Total expenses 104,808 132,500 110,275

Surplus/(deficit) before tax - - -

Income tax expense - - - Surplus/(deficit) after tax - - -

Other comprehensive revenue and expense - - - Total comprehensive revenue and expense - - -

Total comprehensive revenue and expense - - - attributable to: New Plymouth District Council – 100% - - -

The accompanying notes form part of these financial statements.

NEW PLYMOUTH PIF GUARDIANS LIMITED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Unaudited

2019 2018 $ $

Balance at 1 July - - Total comprehensive revenue and expense - - Balance at 31 December - -

The accompanying notes form part of these financial statements.

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NEW PLYMOUTH PIF GUARDIANS LIMITED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

Unaudited Audited 31 December 30 June

2019 2019 Note $ $ Current assets Cash and cash equivalents 54,598 34,391 Receivable from New Plymouth District Council 14,424 33,866

GST receivable 2,499 438 Tax receivable 1,890 1,856 Prepayments 1,327 5,307 Total current assets 74,738 75,858

Total assets 74,738 75,858

Current liabilities Creditors and other payables 6,924 11,267 Payable from New Plymouth District Council 27,814 24,591 Related party advance (New Plymouth District Council) 2 40,000 40,000 Total current liabilities 74,738 75,858

Total liabilities 74,738 75,858

Net assets - -

Equity Accumulated funds - - Share capital - -

Total equity - -

The accompanying notes form part of these financial statements.

Chairman………………………………………………..……………. Date: ……………….. Mark Butcher

Director…………………………………..……………………………. Date: ……………….. Tracey Jones

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NEW PLYMOUTH PIF GUARDIANS LIMITED INTERIM STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Unaudited

2019 2018 $ $

Cash flows from operating activities Receipts from New Plymouth District Council 124,131 136,050 Interest received 3,536 227 Payments to directors, suppliers and employees (105,400) (111,403) Goods and services tax (net) (2,061) (3,314) Net cash inflow from operating activities 20,206 21,560

Net increase in cash and cash equivalents 20,206 21,560

Cash and cash equivalents at 1 July 34,391 17,404 Cash and cash equivalents at 31 December 54,598 38,964

There were no investing or financing cash flows during the periods reported.

The accompanying notes form part of these financial statements.

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NEW PLYMOUTH PIF GUARDIANS LIMITED NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

1. STATEMENT OF ACCOUNTING POLICIES

REPORTING ENTITY

The Company is a wholly owned subsidiary of the New Plymouth District Council (the Council) and is a Council Controlled Organisation as defined in section 6 of the Local Government Act 2002. The Company is incorporated and domiciled in New Zealand.

Rather than making a financial return, the primary objective of the Company is to provide advisory services to the Council, in relation to the Council's Perpetual Investment Fund (PIF) and other equity investments, when requested. Accordingly, the Company is classified as a Public Benefit Entity (PBE) for the purposes of PBE standards.

These condensed interim financial statements are for the six months ended 31 December 2019 and have not been audited.

BASIS OF PREPARATION

Statement of compliance These condensed interim financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period.

These condensed interim financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and the Local Government Act 2002, which include the requirement to comply with generally accepted accounting practice in New Zealand.

These condensed interim financial statements have been prepared in accordance with PBE International Accounting Standard 34 (IAS34) - Interim Financial Reporting with reduced disclosure requirements (Tier 2). The Company qualifies for Tier 2 reporting on the basis that it is not publicly accountable and it is not considered large under the PBE accounting standards.

These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements. Consequently these condensed interim financial statements should be read in conjunction with the annual financial statements and related notes for the year ended 30 June 2019.

These condensed interim financial statements have been prepared on a historical cost basis, are presented in New Zealand dollars and all values are rounded to the nearest dollar. The functional currency of the Company is New Zealand dollars.

Application of new and revised accounting standards, interpretations and amendments There have been no new or revised accounting standards, interpretations and amendments effective during the period which have a material impact on the Company’s accounting policies or disclosures.

There have been no changes in accounting policies or methods of computation since 30 June 2019. The accounting policies set out in the Company’s financial statements for the year ended 30 June 2019 have been applied consistently to all periods presented in these condensed interim financial statements.

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NEW PLYMOUTH PIF GUARDIANS LIMITED NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

Critical accounting estimates and assumptions

In preparing these condensed interim financial statements, the Company has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the actual results.

Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. There have been no estimates and/or assumptions that have a significant risk of causing a material adjustment to the value of assets and liabilities within the next financial year. This is consistent with the Company’s Annual Report for the year ended 30 June 2019.

2. RELATED PARTIES

For the six months ended 31 December 2019, as the sole shareholder the Council is deemed to be a related party of the Company.

In the six months ended 31 December 2019, transactions between the two parties consisted of services provided by the Council to the Company of $16,500 (2018: $25,000) and advisory services provided to the Council by the Company of $104,689 (2018: $109,960).

During the 2015/16 financial year the Council advanced the Company $60,000 to be repaid at a future date. The cash flow funding does not incur interest on the principal. The Company repaid $20,000 of the loan during the 2017/18 financial year.

In the six months ended 31 December 2019, no debts between the parties were written off or forgiven and no transactions between the parties took place at nil or nominal value.

3. EQUITY

As at 31 December 2019 there were 1,000 authorised shares (30 June 2019: 1,000) valued at $1,000 (30 June 2019: $1,000). These shares are issued but not fully paid.

4. CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets and liabilities at 31 December 2019 (30 June 2019: nil).

5. EVENTS AFTER BALANCE SHEET DATE

There are no significant events after 31 December 2019 (30 June 2019: nil).

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Condensed Interim Financial Statements - 6 months to 31 December 2019 Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

Prepared by Tandem Group Limited

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Contents

3 Directory

4 Approval of Financial Report

5 Statutory Information

7 Interim Statement of Comprehensive Revenue and Expense

8 Interim Statement of Financial Position

9 Statement of Cash Flows

10 Notes to the Financial Statements - Revenue and Expense

13 Notes to the Financial Statements - Financial Position

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Directory Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

Company Number

6315607

Companies Act

The Company is registered under the Companies Act 1993.

Registered Office

New Plymouth District Council 84 Liardet Street NEW PLYMOUTH

Shareholders

New Plymouth District Council 13,000,000 Ordinary

Directors

Philip Cory-Wright (Chairman) Rachel Farrant Shelley Kopu Christopher Myers

Auditors

Audit New Zealand on behalf of the Auditor-General

Bankers

Westpac Bank NEW PLYMOUTH

Solicitors

Auld Brewer Mazengarb & McEwen NEW PLYMOUTH

Chartered Accountant

Brent Abbott Tandem Group NEW PLYMOUTH

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Approval of Financial Report Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

The Directors are pleased to authorise the approved financial report including the historical financial statements of Papa Rererangi i Puketapu Limited for 6 months ended 31 December 2019.

APPROVED

For and on behalf of the Board of Directors.

Philip Cory-Wright

Date ......

Rachel Farrant

13 February 2020 Date ......

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Statutory Information Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

Legal Name of Entity

Papa Rererangi i Puketapu Limited

Philip Cory Wright

Chairman Papa Rererangi i Puketapu Limited

Director South Port NZ Limited

Director New Zealand Local Government Funding Agency Limited

Director Matariki Forests Group

Director Powerco

Shelley Kopu

Director Papa Rererangi i Puketapu Limited

Trustee Te Kotahianga o Te Atiawa

Director Tui Ora Limited

Board Member St Marys College

Director Kopu & Associates Limited

Employee EY Law

Board Member Youthline

Rachel Farrant

Director Papa Rererangi i Puketapu Limited

Director & Shareholder via Trust BDO Wellington Limited

Director & Shareholder via Trust Fulton Hogan Limited

Director Fairway Resolutions Limited

Trustee Experience Wellington Trust

Director The Property Group Limited

Chris Myers

Director Papa Rererangi i Puketapu Limited

Partnership Manager Contact Energy

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Statutory Information group 3.2

Wayne Wootton

Chief Executive Papa Rererangi i Puketapu Limited

Richard Buttimore

Operations Manager Papa Rererangi i Puketapu Limited

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Interim Statement of Comprehensive Revenue and Expense Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019 UNAUDITED DEC BUDGET DEC UNAUDITED DEC NOTES 2019 2019 2018

Exchange Revenue Landing Charges Revenue 2,066,830 2,028,888 1,353,445 Parking Fees 601,214 578,000 534,843 Rental Revenue 257,994 291,406 253,622 Other Revenue 10,765 12,000 17,639 Finance Revenue 146 1,500 2,195 Total Exchange Revenue 2,936,948 2,911,794 2,161,744

Expenses Terminal Building Operations 188,519 165,600 183,118 Personnel Costs 355,386 335,450 311,605 General & Operational Expenditure 1 958,835 985,240 729,065 Total Expenses 1,502,740 1,486,290 1,223,787

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) 1,434,208 1,425,504 937,957

Non Operating Expenses Interest Costs to Related Parties 445,928 420,000 201,148 Depreciation & Amortisation Expense 2 693,526 750,000 670,254 Total Non Operating Expenses 1,139,453 1,170,000 871,402

Surplus before Taxation 294,755 255,504 66,555

Taxation and Adjustments Income Tax Expense 3 232,239 71,545 26,473 Total Taxation and Adjustments 232,239 71,545 26,473

Surplus (Deficit) after Taxation 62,516 183,959 40,082

Total Comprehensive Revenue and Expense 62,516 183,959 40,082

The accompanying notes form part of these financial statements.

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Interim Statement of Financial Position Papa Rererangi i Puketapu Limited As at 31 December 2019 UNAUDITED 31 AUDITED 30 JUNE NOTES DEC 2019 2019

Assets Current Assets Cash and Cash Equivalents 5 857,030 600,712 Trade and Other Receivables 6 460,567 465,427 GST Receivable 191,399 448,922 Income Tax Receivable - 22,342 Total Current Assets 1,508,996 1,537,403

Non-Current Assets Deferred Tax 7 60,504 60,504 Property, Plant & Equipment, Capital Works & Work in Progress 8 54,947,931 47,661,388 Total Non-Current Assets 55,008,436 47,721,892

Loan - Airspresso 9 150,000 - Loan - Collab Hospitality 10 60,000 - Total Assets 56,727,432 49,259,295

Liabilities Current Liabilities Trade and Other Payables 11 2,187,488 2,867,276 Employee Entitlements 54,597 34,791 Borrowings - Current 12 550,000 3,650,000 Provision for Tax 165,603 - Total Current Liabilities 2,957,689 6,552,067

Non-Current Liabilities Borrowings - Term 12 24,495,927 13,495,927 Total Non-Current Liabilities 24,495,927 13,495,927

Total Liabilities 27,453,615 20,047,994

Net Assets 29,273,817 29,211,301

Equity Share Capital NPDC Current Equity 1 27,138,485 27,138,485 Total Share Capital 27,138,485 27,138,485

Retained Earnings 65,938 3,422 Revaluation Reserve 2,069,394 2,069,394 Total Equity 29,273,817 29,211,301

The accompanying notes form part of these financial statements.

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Statement of Cash Flows Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019 UNAUDITED 2019 UNAUDITED 2018

Cash Flows from Operating Activities Cash was provided from: Receipts from Customers 2,918,060 2,212,000 Interest Received 146 1,000 Total 2,918,206 2,213,000

Cash was applied to: Payments to Suppliers and Employees 1,545,057 1,808,000 Interest Paid 400,940 157,000 Net GST (169,460) 202,000 Tax Payments 44,294 114,000 Total 1,820,831 2,281,000

Inflow / (Outflow) from Operating Activities 1,097,375 (68,000)

UNAUDITED 2019 UNAUDITED 2018

Cash Flow from Investing Activities Cash was applied to: Purchase of Property, Plant & Equipment 8,531,057 3,234,000 Total 8,531,057 3,234,000

Inflow / (Outflow) from Investing Activities 8,531,057 3,234,000

UNAUDITED 2019 UNAUDITED 2018

Cash Flows from Financing Activities Cash was provided from: Proceeds from New Plymouth District Council Loans 7,900,000 3,400,000 Total Cash was provided from: 7,900,000 3,400,000

Cash was applied to: Loans to Tenants 210,000 - Total 210,000 -

Inflow / (Outflow) from Financing Activities 7,690,000 3,400,000

UNAUDITED 2019 UNAUDITED 2018

Cash & Cash Equivalents Net Increase / (Decrease) in Cash & Cash Equivalents Held 256,318 98,000 Opening Cash & Cash Equivalents Brought Forward 600,712 251,000 Cash & Cash Equivalents 31 December 857,030 349,000

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Notes to the Financial Statements - Revenue and Expense Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

Reporting Entity

Papa Rererangi i Puketapu Limited (PRIP) was established on 3 July 2017. It is a public benefit entity (PBE) Company, incorporated and domiciled in New Zealand. PRIP is a reporting entity for the purposes of the Financial Reporting Act 2013 and its Financial Statements comply with that Act and the Companies Act 1993.

PRIP is a wholly owned subsidiary of the New Plymouth District Council (the Council) and is a Council Controlled Trading Organisation as defined in Section 6 of the Local Government Act 2002.

Statement of Accounting Policies

Statement of Compliance

These condensed interim financial statements have been prepared in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993 and the Local Government Act 2002, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP).

These condensed interim financial statements have been prepared in accordance with Public Benefit Entity International Accounting Standard 34 (PBE IAS34) - Interim Financial Reporting –Tier 2. The Company qualifies for Tier 2 reporting on the basis that it is not publically accountable and it is not considered large under the PBE accounting standards.

These condensed interim financial statements do not include all of the information and disclosures required in the annual financial statements. Consequently, these condensed interim financial statements should be read in conjunction with the annual financial statements and related notes for the year ended 30 June 2019.

These condensed interim financial statements of the Company are for the six months ended 31 December 2019. They have not been audited.

Basis of Preparation

These condensed interim financial statements are presented in New Zealand (NZ) dollars ($), which is also the Company’s functional currency. These condensed interim financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period. These condensed interim financial statements have been prepared exclusive of GST, except receivables and payables.

Application of new and revised accounting standards, interpretations and amendments

In 2019, the Company did not adopt any new or amended standards and does not plan to early adopt any of the standards not yet effective.

Changes in Accounting Policies

Critical Accounting estimates and assumptions

In preparing these interim financial statements, the Company has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the actual results. Estimates and assumptions are continually evaluated. Estimates are based on historical experience and other factors, including

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Notes to the Financial Statements - Revenue and Expense group 3.2 expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the value of assets and liabilities are the same as disclosed in the Company’s financial statements for the year ended 30 June 2019. Budget figures The budget figures are those approved by the Company’s Board of Directors in the Statement of Intent. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted in preparing these financial statements.

Revenue

Accounting Policy

Revenue is measured at the fair value of consideration received or receivable. Landing fees are fees charged to the users of the Airport's aeronautical facilities. Revenue from landing fees is recognised upon use of the runway. Lease receipts under an operating sub-lease are recognised as revenue on a straight-line basis over the lease term. Interest income is recognised using the effective interest method. Parking revenue is recognised when the parking ticket is paid. All revenue received by the Airport are derived from exchange transactions - goods or services exchanged for equal value.

UNAUDITED DEC UNAUDITED DEC 2019 2018

1. General & Operational Expenses Rescue Fire Service Operations 425,804 243,631 Lease Property Maintenance 37,186 41,542 Carpark & Access - 48,760 Directors Fees 85,891 84,724 Overhead Charges (New Plymouth District Council) 49,533 75,487 Audit Fees for Financial Statement Audit - Audit New Zealand 8,354 4,939 Bank Fees 389 999 Directors Expenses 14,771 4,834

Other Expenses Other Employee Costs 38,150 19,471 Bad Debts Written Off 215 - General Expenses 298,542 204,677 Total Other Expenses 336,907 224,148

Total General & Operational Expenses 958,835 729,065

Interest Costs Interest Costs to Related Parties 445,928 201,148 Total Interest Costs 445,928 201,148

Accounting Policy

All borrowing costs are recognised as an expense in the financial year in which they are incurred.

Interest expenses are accrued on a time basis using the effective interest method. During the year PRIP's, interest rates ranged between 3.83% and 4.85%. (2018: 4.5% and 5.39%)

UNAUDITED DEC UNAUDITED DEC 2019 2018

2. Depreciation Buildings 358,558 368,173 Plant & Equipment 51,950 40,838 General Infrastructure 112,375 86,247

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Notes to the Financial Statements - Revenue and Expense group 3.2 UNAUDITED DEC UNAUDITED DEC 2019 2018

Runway Infrastructure 170,642 174,997 Total Depreciation 693,526 670,254

Refer to Property Plant & Equipment Note 8 for full detail of the fixed asset changes for the period.

UNAUDITED DEC UNAUDITED DEC 2019 2018

3. Income Tax Expense Net Profit 294,755 66,555 Tax at 28% 82,531 18,635

Plus/(less) tax effect of Permanent differences 89,117 7,838 Deferred taxation 60,504 - Tax expense 82,531 18,635 Tax expense 232,152 26,473

UNAUDITED DEC UNAUDITED DEC 2019 2018

Components of taxation expense Current taxation 171,735 26,473 Deferred taxation 60,504 - Total Components of taxation expense 232,239 26,473

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Notes to the Financial Statements - Financial Position Papa Rererangi i Puketapu Limited For the 6 months ended 31 December 2019

1. Share Capital

Share capital for the year of $27,138,485 comprises 13,000,000 fully paid ordinary shares and $14,138,485 relating to the financial lease of the land. Fully paid ordinary shares carry one vote per share and carry the right to dividends.

2. Related Parties

For the six months ending 31 December 2019 as the sole shareholder, the Council is deemed to be a related party of the Company. During the six months ended 31 December 2019 transactions between the parties consisted of charges to the company by the Council of $686,032 and charges to the Council by the Company of $8,900. Goods and services provided by the Council to the Company include project management, rates, vehicle lease, grounds maintenance, human resources, payroll, information services, accounting and expense reimbursements. In addition to the assets, the Council also leased the Airport land to PRIP under a lease agreement for 99 years at a nominal consideration of $1 per year and with no rights of renewal. In the six months ended 31 December 2019, no debts between the parties were written off or forgiven and no transactions between the parties took place at nil or nominal value.

Other Related Party Disclosures

Directors are considered to be related parties of PRIP as they have a considerable amount of control over the governance of the entity.

Rachel Farrant is a Director of PRIP, a Director of Fulton Hogan Limited and a Director and Shareholder of BDO Wellington Limited. During the year, Fulton Hogan Limited and BDO Wellington provided services to PRIP. All transactions were within a normal supplier or client/recipient relationship, and on terms and conditions no more or less favourable than those it is reasonable to expect the Company would have adopted in dealing with either party at arm's length in the same circumstances.

3. Contingent Assets and Contingent Liabilities

PRIP had no contingent assets or liabilities at 31 Dec 2019 (2018 - Nil)

4. Events After the Balance Sheet Date

On 25 September Jetstar announced it was planning to withdraw from regional flying throughout New Zealand from 30 November 2019. This will include the New Plymouth airport. The Directors consider that this has no impact on the 31 Dec 2019 financial statements. (2018 - Nil)

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

5. Cash and Cash Equivalents Cash at Bank 853,990 597,672 Carpark Machine Float 3,040 3,040 Total Cash and Cash Equivalents 857,030 600,712

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Notes to the Financial Statements - Financial Position group 3.2

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

6. Trade and Other Receivables Exchange Receivables Accounts Receivables 460,567 465,427 Total Debtors and Other Receivables 460,567 465,427

Accounting Policy

Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.

An allowance for doubtful debts is made for estimated irrecoverable amounts when there is objective evidence that the asset will be impaired. Any movement in the allowance is recognised in comprehensive income and expense, and measured as the difference between the asset's carrying and expected recoverable amount.

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

7. Deferred Taxation Balance comprises temporary differences attributable to: Property, plant and equipment 50,763 50,763 Employee provisions 9,741 9,741 Other provisions - - Total Deferred Taxation 60,504 60,504

Movements Opening Balance 60,504 27,633 Charged to Profit or Loss - 32,871 Charged to Equity - - Closing Balance 60,504 60,504

No change to deferred taxation has been made due to the material size of the fixed asset write off due once the new terminal is completed in March 2020.

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

8. Property, Plant and Equipment Land Balance 1 July 2019 16,207,879 14,138,485 Additions - - Disposals - - Revaluation - 2,069,394 Balance 31 December 2019 16,207,879 16,207,879

Land - Net Book Value 31 December 2019 16,207,879 16,207,879

Runway, Taxiway & Aprons Balance 1 July 2019 8,811,698 8,796,529 Additions - 15,169 Disposals - - Balance 31 December 2019 8,811,698 8,811,698

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Notes to the Financial Statements - Financial Position group 3.2 UNAUDITED DEC AUDITED 30 JUNE 2019 2019 Accumulated Depreciation Balance 1 July 2019 713,753 364,436 Depreciation 170,642 349,317 Accelerated Depreciation - - Balance 31 December 2019 884,395 713,753

Runway, Taxiway & Aprons - Net Book Value 31 December 2019 7,927,303 8,097,945

Buildings Balance 1 July 2019 3,170,559 2,772,281 Additions 1,000 398,278 Disposals - - Balance 31 December 2019 3,171,559 3,170,559

Accumulated Depreciation Balance 1 July 2019 1,355,000 656,836 Depreciation 358,558 94,030 Accelerated Depreciation - 604,134 Balance 31 December 2019 1,713,558 1,355,000

Buildings - Net Book Value 31 December 2019 1,458,001 1,815,559

General Infra-structure Balance 1 July 2019 3,701,142 3,559,926 Additions 19,597 141,216 Disposals - - Balance 31 December 2019 3,720,739 3,701,142

Accumulated Depreciation Balance 1 July 2019 333,527 161,772 Depreciation 112,376 171,755 Accelerated Depreciation - - Balance 31 December 2019 445,903 333,527

General Infra-structure - Net Book Value 31 December 2019 3,274,836 3,367,615

Furniture & Fittings Balance 1 July 2019 470,256 317,859 Additions 6,176 152,397 Disposals - - Balance 31 December 2019 476,432 470,256

Accumulated Depreciation Balance 1 July 2019 157,129 64,183 Depreciation 51,950 9,419 Accelerated Depreciation - 83,527 Balance 31 December 2019 209,079 157,129

Furniture & Fittings - Net Book Value 31 December 2019 267,353 313,127

Work in Progress Balance 1 July 2019 17,859,263 6,704,193 Additions 7,953,296 11,265,661 Items Capitalised - (110,591) Balance 31 December 2019 25,812,559 17,859,263

Work in Progress - Net Book Value 31 December 2019 25,812,559 17,859,263

Condensed Interim Financial Statements - 6 months to 31 December 2019 Papa Rererangi i Puketapu Limited Page 15 of 17

158 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Notes to the Financial Statements - Financial Position group 3.2 UNAUDITED DEC AUDITED 30 JUNE 2019 2019 Total Property, Plant & Equipment Balance 1 July 2019 50,220,801 36,289,273 Additions 7,980,069 11,972,725 Disposals & WIP Capitalised - (110,591) Revaluation - 2,069,394 Total Total Property, Plant & Equipment 58,200,870 50,220,801

Accumulated Depreciation Balance 1 July 2019 2,559,413 1,247,227 Depreciation 693,526 624,525 Accelerated Depreciation - 687,661 Total Accumulated Depreciation 3,252,939 2,559,413

Total Property, Plant & Equipment - Net Book Value 31 December 2019 54,947,931 47,661,388

Accounting Policy Accelerated depreciation reflects the decision of the Board in June 2018 to construct a new terminal. This has resulted in the economic life of the existing terminal being shortened to January 2020, the expected date that the new terminal will be operational.

The Company leases land which is owned by the Council. It is a renewable 99 year lease at a peppercorn rental of $1 per year. In accordance with para 28 of IPSAS 13, the Company recognised land as an asset in the Statement of financial position at fair value ($14,138,485) with a corresponding credit to equity. Effectively, the transaction is an in-substance equity contribution. The leasehold interest in the land was last valued as at 30 June 2019 by Telfer Young (New Plymouth) Limited in accordance with 2017 International Valuation Standards. While the land is owned by the Council, the Crown retains a 50 per cent beneficial interest in the land and any proceeds if it were to be sold in the future. The land cannot be disposed of without prior consent from the Crown.

9. Loan - Airspresso

The loan to Airspresso is for the Company's contribution as a landlord to the fit-out of the cafe. The loan is for a period of 9 years with an effective interest rate of 2.546% per annum. The loan is scheduled to be repaid in one lump sum on the first day of the final month of the 9 year term. At 31 December 2019 the loan balance was $150,000 (2018: NIL)

10. Loan - Collab Hospitality

The loan to Collab Hospitality is for the Company's contribution as a landlord to the fit-out of the retail operation in the new terminal building. The loan is for a period of 7 years with an effective interest rate of 3.265% per annum. The loan is scheduled to be repaid in monthly repayments. At 31 December 2019 the loan balance was $60,000 (2018: NIL)

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

11. Trade and Other Payables Trade Creditors 1,733,973 2,417,694 Contract Rententions 201,431 201,431 Accruals - 28,470 Credit Cards 6,674 2,867 Income in Advance - 20,515 Amounts Due to Related Parties 38,057 33,933 Interest Payable to NPDC 207,353 162,366 Total Trade and Other Payables 2,187,488 2,867,276

Accounting Policy

Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective

Condensed Interim Financial Statements - 6 months to 31 December 2019 Papa Rererangi i Puketapu Limited Page 16 of 17

159 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Notes to the Financial Statements - Financial Position group 3.2 interest rate method.

UNAUDITED DEC AUDITED 30 JUNE 2019 2019

12. Borrowings Secured Loans from New Plymouth District Council at Amortised Cost Classified as: Current (550,000) (3,650,000) Non-Current (24,495,927) (13,495,927) Total Secured Loans from New Plymouth District Council at Amortised Cost (25,045,927) (17,145,927)

Total Borrowings (25,045,927) (17,145,927)

Accounting Policy

Borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs (if any) associated with the borrowing and subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated taking into account any issue costs and any discount or premium on drawdown.

All borrowing costs are recognised in comprehensive income and expense in the period in which they are incurred.

At inception of the Company, the Council made available to it a non-current loan facility and current loan facility. An initial non-current loan was advanced to PRIP in order to cover the transfer price of the assets purchased from the Council (refer Note 14). Current loan advances have been made during the year for the terminal redevelopment project.

The interest rate on the non-current loan has been set at the Council's cost of funds plus 0.75 % per annum, currently 4.11% (2018: 4.33%) per annum. The interest rate on the current loan has been set at the Council's cost of funds plus 0.25 % per annum, currently 3.61% (2018: 4.67%). Finance costs for the six months to 31 December 2019 totalled $445,928) (2018: $201,148).

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160 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

3.3

Venture Taranaki Trust

Interim Report

For the six months ended 31 December 2019

Un-Audited

DRAFT

161 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

3.3 Venture Taranaki Trust Interim Report Contents For the six months ended 31 December 2019

Contents Page

Trust Directory 1

Trustees' Review 2

Interim Statement of Financial Position 3

Interim Statement of Comprehensive Revenue and Expenses 4

Interim Statement of Changes in Equity 5

Interim Statement of Cash Flows 6

Notes to the Financial Statements 7 - 18

162 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Trust Directory For the six months ended 31 December 2019

Nature of Business Facilitating regional development in Taranaki

Business Office 25 Dawson Street New Plymouth

Trustees Jamie Tuuta (Appointed Chairman 15.10.19) Robin Brockie (Chairman till Resignation 15.10.19) Joanna Breare (Appointed 15.10.19) Gillian Cagney (Appointed 15.10.19) David Downs Gavin Faull (Resigned 15.10.19) Kevin Murphy Hinerangi Raumati-Tu’ua Hemi Sundgren

Auditors Audit New Zealand Auckland On behalf of the Auditor General

Accountants Baker Tilly Staples Rodway Taranaki Limited New Plymouth

Bankers TSB Bank New Plymouth

Solicitors Govett Quilliam New Plymouth

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163 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3

Trustees' Review For the six months ended 31 December 2019

The Board of Trustees present their Interim Report including financial statements of the Trust for the six months ended 31 December 2019.

The business of the Trust is facilitating regional development in Taranaki. The nature of the Trust's business has not changed during the period under review.

For and on behalf of the Trustees

______Chairman

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164 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Interim Statement of Financial Position As at 31 December 2019

Notes 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Current Assets Cash and cash equivalents 986,856 1,045,179 397,168 Other financial assets - 500,000 - Trade and other receivables from 1,944,385 1,077,198 181,483 non-exchange transactions Other current assets 20,666 19,019 55,679 GST receivable - 139,680 Total Current Assets 2,951,906 2,641,396 774,011

Non-Current Assets Intangible assets 3 42,666 87,289 55,503 Property, plant & equipment 4 299,042 188,124 195,898 Total Non-Current Assets 341,708 275,413 251,401

Total Assets 3,293,614 2,916,809 1,025,412

Current Liabilities Trade and other payables under 699,159 995,858 569,498 exchange transactions Funds held on behalf of OGST/EIG 24,979 34,025 12,596 GST payable 151,165 121,892 - Employee entitlements 8 120,139 133,467 88,950 Revenue received in advance 1,176,839 1,149,490 1,725 Total Current Liabilities 2,172,281 2,434,732 672,769

Equity Trust equity 1,121,333 482,077 352,643

Total Liabilities and Equity 3,293,614 2,916,809 1,025,412

These financial statements were authorised for issue by the Trustees on 18 February 2020 by:

______Chairman ______Trustee

The financial statements for the six month periods have not been audited. The full year financial statements to 30 June 2019 have been audited. The accompanying notes form part of these financial statements.

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Venture Taranaki Trust | Interim Report 3.3 Interim Statement of Comprehensive Revenue and Expenses For the six months ended 31 December 2019

Notes 6 Months to 6 Months to 12 Months to 31 December 31 December 30 June 2019 2018 2019 $ $ $

Grant revenue 2 Non-exchange 3,385,860 2,881,012 5,529,240 Other revenue Exchange 13,707 22,200 71,604 Interest revenue Exchange 8,114 8,574 29,368 Gain on disposal of assets Exchange - - 1,633 Total Revenue 3,407,681 2,911,786 5,631,845

Audit fee 13,142 13,142 26,284 Amortisation 3 32,438 31,785 63,570 Depreciation 4 36,890 27,823 60,353 Marketing 185,996 150,615 371,485 Professional fees 165,533 116,909 921,705 Grants 533,083 556,318 1,413,634 Provincial Growth Fund contractor costs 130,334 595,000 - Rental and operating lease expenses 89,610 76,815 154,291 Personnel costs 1,082,589 938,161 2,031,303 Trustees fees 40,253 44,000 88,000 (Gain)/Loss on fixed assets 23,235 - - Other operating expenses 305,888 224,826 494,263 Total Expenses 2,638,991 2,775,394 5,624,887

Surplus before Taxation 768,690 136,392 6,958

Income tax expense 5 - - -

Surplus after Taxation 768,690 136,392 6,958

Other comprehensive revenue and expenses -

Total Comprehensive Revenue and Expenses 768,690 136,392 6,958

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Venture Taranaki Trust | Interim Report 3.3 Interim Statement of Changes in Equity For the six months ended 31 December 2019

Trust Total Equity Equity $ $ 6 Months to 31 December 2019

Balance as at 1 July 2019 352,643 352,643

Total comprehensive revenue and expenses for the period 768,690 768,690

Balance as at 31 December 2019 1,121,333 1,121,333

6 Months to 31 December 2018

Balance as at 1 July 2018 345,685 345,685

Total comprehensive revenue and expenses for the period 136,392 136,392

Balance as at 31 December 2018 482,077 482,077

12 Months to 30 June 2019

Balance as at 1 July 2018 345,685 345,685

Total comprehensive revenue and expenses for the year 6,958 6,958

Balance as at 30 June 2019 352,643 352,643

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Venture Taranaki Trust | Interim Report 3.3 Interim Statement of Cash Flows For the six months ended 31 December 2019

Notes 6 Months to 6 Months to 12 Months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Cash Flow from Operating Activities

Receipts from grants and other income 3,041,723 3,200,796 5,529,111 Interest revenue received - - 29,368 Payments to suppliers and employees (2,346,982) (2,076,999) (5,393,744) Goods and services tax (net) 12 77,814 144,712 (5,563) Net cash flow from operating activities 13 772,555 1,268,509 159,172

Cash Flow from Investing Activities

Receipts from sale of property, plant and equipment 753 - 9,128 Purchase of property, plant and equipment (164,022) (56,189) (103,991) Purchase of intangible assets (19,601) - - Net cash flow (used in) investing activities (182,870) (56,189) (94,863)

Cash Flow from Financing Activities

Deposit of other financial assets - (500,000) - Net cash flow (used in) financing activities - (500,000) -

Net increase in cash and cash equivalents 589,689 712,320 64,309 Cash and cash equivalents at beginning of the period 397,168 332,859 332,859 Cash and cash equivalents at end of period 986,856 1,045,179 397,168

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168 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements For the six months ended 31 December 2019

1. Statement of Accounting Policies

REPORTING ENTITY

Venture Taranaki Trust is a Charitable Trust incorporated in New Zealand under a Trust Deed dated 27 May 1998 and is domiciled in New Zealand. The Trust commenced operations on 1 July 1998.

The Trust is a wholly owned subsidiary of New Plymouth District Council and is a Council Controlled Organisation as defined in Part 1 Section 6 of the Local Government Act 2002.

The Trust is a Public Sector Public Benefit Entity (PBE) for financial reporting purposes.

The interim financial statements of the Trust are for the six month period ended 31 December 2019. These interim financial statements were authorised by the Board for issue on 18 February 2020.

BASIS OF PREPARATION

The interim financial statements have been prepared on the going concern basis, and the accounting policies have been applied consistently throughout the period.

Statement of compliance

The interim financial statements of the Trust have been prepared in accordance with the requirements of the Financial Reporting Act 2013 which include the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP).

The interim financial statements have been prepared in accordance with Tier 2 Public Sector PBE Financial Reporting Standards as issued by the New Zealand External Reporting Board (XRB). The financial statements comply with International Public Sector Accounting Standards Reduced Disclosure Regime (IPSAS RDR) and other applicable Financial Reporting Standards as appropriate to Public Sector PBE’s. All reduced reporting disclosures have been made; except for PBE IPSAS 2 Statement of Cash Flows, as the Trust have elected to report Cash Flows on a Tier 1 basis.

The Trust is eligible to report in accordance with Tier 2 Public Sector PBE Accounting Standards on the basis that it does not have public accountability and annual expenditure exceeds $2 million but does not exceed $30 million.

The Trust is deemed a public benefit entity for financial reporting purposes, as its primary objective is to provide services to the community and the Trust has been established with a view to supporting that primary objective rather than a financial return.

The accounting policies set out in the 2019 Annual Report have been applied consistently to all periods presented in these financial statements.

Presentation currency and rounding

These interim financial statements are presented in New Zealand dollars and all values are rounded to the nearest dollar.

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Venture Taranaki Trust | Interim Report 3.3

Notes to the Financial Statements (continued) For the six months ended 31 December 2019

1. Statement of Accounting Policies (continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Revenue The specific accounting policies for significant revenue items are explained below:

Government grants Grants received from the New Plymouth District Council are the primary source of funding to the Trust and are restricted for the purposes of the Trust meeting its objectives as specified in the Trust Deed. The Trust also receives other government assistance for specific purposes, and these grants usually contain restrictions on their use.

Council, government, and non-government grants are recognised as revenue when they become receivable unless there is an obligation to return the funds if conditions of the grant are not met. If there is such an obligation, the grants are initially recorded as grants received in advance and recognised as revenue when conditions of the grant are satisfied.

Interest income Interest income is recognised using the effective interest method.

Foreign currency transactions Foreign currency transactions are translated into NZ$ (the functional currency) using the spot exchange rate at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit.

b) Grant Expenditure Non-discretionary grants are those grants awarded if the grant meets the specified criteria. They are expensed when an application that meets the specified criteria for the grant has been received. The Trust’s non-discretionary grants have no conditions that need to be fulfilled to receive the grant.

Discretionary grants are those grants where the Trust has no obligation to award the grant on receipt of the grant application. For discretionary grants without conditions, the total committed funding is expensed when the grant is approved and the approval has been communicated to the applicant. Discretionary grants with conditions for the delivery of an event are expensed when the grant is approved and the approval has been communicated to the applicant. This is based on the fact that the event is likely to occur and the payment is probable.

c) Leases - Operating Leases An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset.

Lease payments under an operating lease are recognised as an expense on a straight line basis over the lease term.

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170 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

1. Statement of Accounting Policies (continued)

d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less.

e) Receivables Trade and other receivables are initially measured at fair value and subsequently at fair value less any provision for impairment. The amount of impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected which is determined on an analysis of the Trust's losses in previous periods and review of specific debtors.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are included in non-current assets.

After initial recognition, they are measured at amortised cost, using the effective interest method, less impairment. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit.

Loans to community organisations made at nil or below-market interest rates are initially recognised at the present value of their expected future cash flows, discounted at the current market rate of return for a similar financial instrument. The difference between the face value and present value of the expected future cash flows of the loan is recognised in the surplus or deficit as a grant expense. The loans are subsequently measured at amortised cost using the effective interest method.

f) Impairment of Financial Assets Financial assets are assessed for evidence of impairment at each balance date. Impairment losses are recognised in the surplus or deficit.

g) Intangibles Software acquisition Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Staff training costs are recognised as an expense when incurred.

Costs associated with maintaining computer software are recognised as an expense when incurred.

Costs associated with development and improvements of the Venture Taranaki and Energy Stream websites are recognised as an asset when incurred as the websites generate future economic benefits.

Amortisation Computer software licenses are amortised on a straight-line basis over their estimated useful life of two and a half years. Amortisation begins when the asset is available for use and ceases at the date when the asset is disposed of. The amortisation charge for each year is recognised in surplus or deficit.

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Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

1. Statement of Accounting Policies (continued)

h) Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Additions The cost of an item of property, plant, and equipment is recognised as an asset only when it is probable that service potential associated with the item will flow to the Trust and the cost of the item can be measured reliably. In most instances, an item of property, plant, and equipment is initially recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at its fair value when control over the asset is obtained.

Disposals Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount of the asset. Gains and losses on disposals are presented net in the surplus or deficit.

Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that service potential associated with the item will flow to the Trust and the cost of the item can be measured reliably. The costs of day-to-day servicing of property, plant, and equipment are recognised as an expense as they are incurred.

Depreciation Depreciation is provided on a straight line basis at rates calculated to allocate the assets cost less estimated residual value, over the estimated useful life of the asset. Major depreciation periods are: Leasehold alterations 10 years Fixtures and fittings 10 years Office equipment 3-4 years Motor vehicles 5 years Other fixed assets 4-10 years The residual value and useful life of an asset are reviewed, and adjusted if applicable, at each financial year end.

i) Impairment of Property, Plant, and Equipment and Intangible Assets Property, plant, and equipment and intangible assets are reviewed for indicators of impairment as at each balance date. When there is an indicator of impairment, the asset’s recoverable amount is estimated. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

j) Trade and Other Payables Trade and other payables are stated at cost. Trade and other payables are non-interesting bearing and are normally settled on 30 day terms, therefore the carrying value of trade and other payables approximates their fair value.

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172 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

1. Statement of Accounting Policies (continued)

k) Employee Entitlements Short-term employee entitlements Employee benefits that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to but not yet taken at balance date, and sick leave.

l) Provisions The Trust recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditures will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in “finance costs”.

m) Goods and Services Tax (GST) All items in the financial statements are presented exclusive of goods and service tax (GST), except for receivables and payables, which are presented on a GST inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the IRD is included as part of receivables or payables in the statement of financial position.

The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

n) Income Tax Income tax expense includes components relating to both current tax and deferred tax.

Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years. Current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted at balance date.

Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in the statement of financial position and the corresponding tax bases used in the computation of taxable profit.

Deferred tax is measured at the tax rates that are expected to apply when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at balance date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities.

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173 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

1. Statement of Accounting Policies (continued)

n) Income Tax (continued) Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or tax losses can be utilised.

Deferred tax is not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit.

Current and deferred tax is recognised against the surplus or deficit for the period, except to the extent that it relates to a business combination, or to transactions recognised in other comprehensive revenue and expense or directly in equity.

o) Critical Accounting Estimates and Assumptions In preparing these financial statements, estimates and assumptions have been made concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances.

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174 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

2. Grant Revenue

6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ New Plymouth District Council 1,747,203 1,742,833 3,341,566 New Zealand Trade and Enterprise 151,851 151,335 303,138 Ministry of Business, Innovation & Employment 1,098,793 680,570 1,218,853 Other 388,013 306,094 665,683 3,385,860 2,881,012 5,529,240

During the six months to 31 December 2019 the Trust has generated a surplus of $768,690, due to timing of grant revenue received. It is expected that this surplus and grant revenue will be spent in full over the 6 months to 20 June 2020.

3. Intangibles

6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 Software $ $ $ Cost Balance at beginning of period 355,584 355,584 355,584 Additions 19,601 - - Disposals - - - Balance at end of period 374,585 355,584 355,584

Accumulated Amortisation and Impairment Losses Balance at beginning of period 300,081 236,511 236,571 Amortisation 32,438 31,784 63,570 Disposals - - - Balance at end of period 332,519 268,295 300,081

Carrying Amounts As at beginning of period 55,503 119,073 119,073 As at end of period 42,666 87,289 55,503

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

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175 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

4. Property Plant and Equipment

Leasehold Fixtures Office Other Motor Total alterations & fittings equipment assets vehicles $ $ $ $ $ $ Cost Balance at 1 July 2018 134,658 88,223 191,146 38,714 138,033 590,774 Additions - 1,226 54,963 - - 56,189 Disposals - (2,989) (47,751) - - (50,740 Balance at 31 December 2018 134,658 86,460 198,358 38,714 138,033 596,223

Balance at 1 July 2018 134,658 88,223 191,146 38,714 138,033 590,774 Additions - 8,425 61,787 - 33,779 103,991 Disposals - (9,653) (47,751) - (24,992) (82,396) Balance at 30 June 2019 134,658 86,995 205,181 38,714 146,820 612,367

Balance at 1 July 2019 134,658 86,994 205,181 38,714 146,820 612,367 Additions 20,479 43,338 77,843 22,361 - 164,021 Disposals (134,658) (41,064) (80,379) (20,687) - (276,788) Balance at 31 December 2019 20,479 89,269 202,645 40,388 146,820 499,601

Accumulated depreciation Balance at 1 July 2018 108,270 61,157 171,174 33,477 56,940 431,018 Depreciation 2,721 2,151 8,189 959 13,803 27,823 Disposals - (2,990) (47,752) - - (50,742) Balance at 31 December 2018 110,991 60,318 131,610 34,436 70,745 408,100

Balance at 1 July 2018 108,270 61,157 171,174 33,477 56,940 431,018 Depreciation 5,233 4,511 20,835 1,435 28,339 60,353 Disposals - (9,654) (47,752) - (17,494) (74,900) Balance at 30 June 2019 113,503 56,014 144,257 34,912 67,785 416,471

Balance at 1 July 2019 113,503 56,014 144,257 34,912 67,786 416,471 Depreciation 2,235 3,421 15,809 743 14,682 36,890 Disposals (115,335) (37,898) (80,245) (19,324) - (252,802) Balance at 31 December 2019 403 21,537 79,821 16,331 82,468 200,561

Carrying amounts At 1 July 2018 26,388 27,067 19,972 5,238 81,093 159,758 At 31 December 2018 23,667 26,142 66,747 4,278 67,290 188,124 At 30 June 2019 & 1 July 2019 21,155 30,981 60,924 3,803 79,035 195,898 At 31 December 2019 20,076 67,732 122,824 24,057 64,353 299,042

There are no restrictions over the title of the Trust’s property, plant, and equipment; nor is any pledged as security for liabilities.

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176 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3

Notes to the Financial Statements (continued) For the six months ended 31 December 2019

5. Taxation 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Net surplus before tax 768,690 136,392 6,958 Tax at 33% 253,668 45,009 2,296 Plus/(less) tax effect of: Timing differences 168,634 54,018 (3,173) Non-deductible expenditure 437 536 984 Adjustment for uncommitted grants (368,767) (145,483) Unrecognised/(utilisation) of tax losses (53,972) (54,080) (107) Taxable expense - - -

The taxation charge is represented by: Current tax payable - - - Deferred tax ------

Unused tax losses of $163,551 (31 December 2018: $163,876; 30 June 2019: $163,550) are available to carry forward and offset against future taxable income. A deferred tax asset has not been recognised due to the uncertainty regarding the availability of future taxable profits.

6. Commitments

a) Capital Commitments There were no capital commitments as at balance date. (31 December 2018: Nil; 30 June 2019: Nil).

b) Operating Leases as Lessees Lease commitments under non-cancellable operating leases are: 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Not later than one year 203,572 87,228 26,787 Later than one year and not later than five years 580,529 4,168 2,717 Later than five years - - - 784,101 91,396 29,504

The total non-cancellable operating lease relates to the lease of part of an office building, a photocopier and three (3) Eroad vehicle tracking systems. The office building lease runs 25 November 2019 to 25 November 2023 with two (2) further rights of renewal for four (4) years, lease expiring 25 November 2031. The lease on the photocopier expires 30 August 2020. Eroad vehicle tracking systems have variable expiry dates of between 7 July 2020 and 15 May 2022.

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177 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

6. Commitments (continued)

c) Operating Leases as Lessors 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Not later than one year 24,016 29,557 7,389 Later than one year and not later than five years 70,047 - - Later than five years - - - 94,063 29,557 7,389

7. Related Party Transactions No provision has been required, nor any expense recognised, for impairment of receivables from related parties (31 December 2018: $ Nil; 30 June 2019: $ Nil).

All transactions were carried out on normal commercial terms.

a) Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/recipient relationship on terms and conditions no more or less favourable than those that are reasonable to expect that the Trust would have adopted in dealing with the party at arm’s length in the same circumstances. Further, transactions with Government agencies (for example, Government departments and Crown entities) are not disclosed as related party transactions when they are consistent with the normal operating arrangements and undertaken on the normal terms and conditions for such transactions.

b) Key Management Personnel Key management personnel include 0.55 FTE Trustees, 1 FTE Chief Executive and 6.21 FTE Senior Management. (31 December 2018: 0.57 FTE Trustees, 1 FTE Chief Executive and 5.4 FTE Senior Management; 30 June 2019: 0.57 FTE Trustees, 1 FTE Chief Executive and 6.68 FTE Senior Management). 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Trustees 40,253 44,000 88,000 Chief Executive and Senior Management 529,099 426,591 997,078 569,352 470,591 1,085,078

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178 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

8. Employee Entitlements 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Balance at beginning of period 88,950 119,233 119,233 Additional provision made 131,121 76,644 164,184 Amount utilised (98,932) (62,410) (194,467) Balance at end of period 120,139 133,467 88,950

Current Annual Leave 120,139 133,467 88,950 120,139 133,467 88,950

Employee entitlements relate to employee benefits such as accrued annual leave. The provision is affected by a number of estimates, including the timing of benefits taken. All employee entitlements are expected to be consumed during the following financial year.

9. Contingencies

Contingent Liabilities The Trust has no contingent liabilities at balance date (31 December 2018: Nil; 30 June 2019: Nil).

Contingent Assets The Trust has no contingent assets at balance date (31 December 2018: Nil; 30 June 2019: Nil).

10. Trade and Other Payables under Exchange Transactions As at 31 December 2019, the Trust has recognised a liability of $235,000 for unpaid grants. The expectation is that all of these grants will be paid out over the next 12 months (31 December 2018: $467,750; 30 June 2019: $57,750).

11. Events after Balance Date There has been no significant events post balance date (31 December 2018: Nil; 30 June 2019: Nil).

12. Cash Flow The net GST component of operating activities reflects the net GST paid and received from the Inland Revenue Department. The GST component has been presented on a net basis, as the gross amounts do not provide meaningful information for financial statement purposes.

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179 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

Venture Taranaki Trust | Interim Report 3.3 Notes to the Financial Statements (continued) For the six months ended 31 December 2019

13. Reconciliation of Net Surplus with Net Cash Flow from Operating Activities

6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 $ $ $ Net surplus after tax 768,690 136,392 6,958

Add/(Subtract) non-cash items: Depreciation 36,890 27,823 60,353 Amortisation 32,438 31,785 63,570 Net loss / (gain) on disposal 23,233 - (1,633) 861,343 196,000 129,248 Movements in working capital: (Increase) in receivables (1,727,888) (951,554) (92,497) Decrease / (Increase) in GST receivable 290,845 245,598 (15,974) Increase in payables 1,317,158 1,764,230 168,677 Increase / (Decrease) in employee benefits 31,189 14,235 (30,282) 772,555 1,268,509 159,172

14. Capital Management The Trust’s capital is its equity, which comprises Trust capital and retained surpluses. Equity is represented by net assets. The Trust Deed requires the Board of Trustees to manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently. The Trust’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 Trust’s equity is to ensure that the Trust effectively achieves its objectives and purpose, whilst remaining a going concern.

15. Categories of Financial Instruments The carrying amounts of financial instruments in each of the PBE IPSAS 30 categories are as follows: 6 months to 6 months to 12 months to 31 December 31 December 30 June 2019 2018 2019 Loans and receivables $ $ $

Cash and cash equivalents 986,856 1,045,179 397,168 Other financial assets - 500,000 - Trade and other receivables 1,944,385 1,077,198 181,483 2,931,241 2,622,377 578,651

Financial liabilities at amortised cost

Trade and other payables 699,159 995,858 569,498 699,159 995,858 569,498

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180 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

3.4

JOINT VENTURE FORESTRY

MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

181 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

3.4

MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE

CONTENTS

Page

3 Interim Statement of Service Performance

4 Interim Statement of Comprehensive Revenue and Expenses

5 Interim Statement of Financial Position

6 Interim Statement of Changes in Equity

7 Notes to the Condensed Interim Financial Statements

182 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

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MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE INTERIM STATEMENT OF SERVICE PERFORMANCE FOR THE PERIOD ENDED 31 DECEMBER 2019

PERFORMANCE TARGETS

1. Financial performance

FOR SIX MONTHS 31 SOI SOI SOI December Forecast Forecast Forecast

2019 2019/20 2020/21 2021/22 $000 $000 $000 $000

Net operating deficit (3) (4) (4) (4) Council funding support 6 4 4 4 Net equity 1,204 1,006 1,006 1,006

2. Silviculture and harvesting

The performance of the joint venture is measured by ensuring that the trees are managed in accordance with accepted silvicultural practice. The Agreement sets out the following regime:

(a) planting at 833 stems per hectare; (b) plantation thinned to waste to 360 stems per hectare at age 7 years; and (c) pruning of 360 stems per hectare to 6.5 metres at age 7 years.

Harvesting is not anticipated until 2022/23. Upgrading farm tracks for logging trucks will be required in advance. No silvicultural activities, other than inspection and maintenance are required during 2019/20.

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MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE INTERIM STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSES FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Budget Unaudited

2019 2019/20 2018 $ $ $ Expenditure Administration and general expenses 1,136 2,150 1,278 Operations and maintenance 2,105 1,750 1,582 Total expenses 3,241 3,900 2,860

Deficit before tax 3,241 3,900 2,860

Income tax expense - - - Deficit after tax 3,241 3,900 2,860

Deficit attributable to: New Plymouth District Council 3,241 3,900 2,860 McKay

Other comprehensive revenue and expense - - -

Total comprehensive revenue and expense 3,241 3,900 2,860

Total comprehensive revenue and expense

attributable to: New Plymouth District Council 3,241 3,900 2,860 McKay - - -

The accompanying notes form part of these financial statements.

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MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

Unaudited Audited 31 December 30 June 2019 2019 $ $

Non-current assets Forestry 1,204,555 1,204,555 Total non-current assets 1,204,555 1,204,555

Total assets 1,204,555 1,204,555

Current liabilities Creditors and other payables 182 2,508 Total current liabilities 182 2,508

Total liabilities 182 2,508

Net assets 1,204,373 1,202,047

Equity Joint venture ownership New Plymouth District Council 680,391 678,065 McKay 523,982 523,982

Total equity 1,204,373 1,202,047

The accompanying notes form part of these financial statements.

Chief Executive……………………………………………………….

Date…………………………………………………………………….

Mayor…………………………………………………………………..

Date…………………………………………………………………….

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MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Unaudited

2019 2018 $ $

Balance at 1 July 1,202,047 1,006,300

Total comprehensive revenue and expense (3,241) (2,860) Contribution from New Plymouth District Council 5,567 5,357

Balance at 31 December 1,204,373 1,008,797

The accompanying notes form part of these financial statements.

186 CCOs Committee Agenda (3 March 2020) - Decision - CCO Interim Financial Statements

3.4

MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

1. STATEMENT OF ACCOUNTING POLICIES

REPORTING ENTITY

McKay Joint Venture is a forestry joint venture (the joint venture). The ownership and operation of the forest (83.5ha) is undertaken as a joint venture between McKay (43.5%) and the New Plymouth district Council (56.5%). The land was previously 100% owned by McKay but has been sold to G & S Evans Limited. McKay has retained their interest in the forest. The operating costs are met by the New Plymouth District Council.

The joint venture is a Council Controlled Trading Organisation as defined in part 1, section 6, of the Local Government Act 2002. The joint venture is domiciled in New Zealand and is classified as a Profit Orientated Entity, whose primary objective is to grow and harvest trees.

These condensed interim financial statements of the joint venture are for the six months ended 31 December 2019 and have not been audited.

BASIS OF PREPARATION

Statement of compliance

These condensed interim financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period.

These condensed interim financial statements of the joint venture have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and the Local Government Act 2002, which included the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP).

These condensed interim financial statements of the joint venture have been prepared in accordance with PBE International Accounting Standard 34 (IAS34) - Interim Financial Reporting with reduced disclosure requirements (Tier 2). The joint venture qualifies for Tier 2 reporting on the basis that it is not publicly accountable and it is not considered large under the PBE accounting standards.

These condensed interim financial statements of the joint venture have been prepared in accordance with New Zealand International Reporting Standards (NZ IFRS), International Accounting Standard 34 (IAS34) - Interim Financial Reporting with reduced disclosure requirements (Tier 2). The joint venture qualifies for Tier 2 reporting on the basis that it is not publicly accountable and it is not a large for profit public sector entity.

These condensed interim financial statements are presented in New Zealand dollars and all values are rounded to the nearest dollar. The functional currency of the joint venture is New Zealand dollars.

Application of new and revised accounting standards, interpretations and amendments

There have been no new or revised accounting standards, interpretations and amendments effective during the period which have a material impact on the joint venture's accounting policies or disclosures.

There have been no changes in accounting policies or methods of computation since 30 June 2019. The accounting policies set out in the joint venture's financial statements for the year ended 30 June 2019 have been applied consistently to all periods presented in these condensed interim financial statements.

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3.4

MCKAY (1259 OKAU ROAD) FORESTRY JOINT VENTURE NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

Critical accounting estimates and assumptions

In preparing these interim financial statements, the joint venture has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the actual results.

Estimates and underlying assumptions are continually evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the value of assets and liabilities in these condensed interim financial statements are the same as disclosed in the joint venture's financial statements included in the joint venture's Annual Report for the year ended 30 June 2019.

2. RELATED PARTIES

As a joint venture partner, the New Plymouth District Council is deemed to be a related party of McKay Forestry Joint Venture.

Transactions between the two parties consist of: reimbursement of expenses, incurred by the New Plymouth District Council, on behalf of the McKay Forestry Joint Venture; and charges to McKay Forestry Joint Venture, for the provision of services. In the period ending 31 December 2019, the total value of transactions between the two parties was $5,567 (2018: $5,357).

3. CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets and liabilities at 31 December 2019 (30 June 2019: nil).

4. EVENTS AFTER BALANCE SHEET DATE

There are no significant events after 31 December 2019 (30 June 2019: nil).

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3.5

JOINT VENTURE FORESTRY

DUTHIE JOINT VENTURE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

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3.5

DUTHIE FORESTRY JOINT VENTURE

CONTENTS

Page

3 Interim Statement of Service Performance

4 Interim Statement of Comprehensive Revenue and Expenses

5 Interim Statement of Financial Position

6 Interim Statement of Changes in Equity

7 Notes to the Condensed Interim Financial Statements

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3.5

DUTHIE FORESTRY JOINT VENTURE INTERIM STATEMENT OF SERVICE PERFORMANCE FOR THE PERIOD ENDED 31 DECEMBER 2019

PERFORMANCE TARGETS

1. Financial performance

FOR SIX MONTHS 31 SOI SOI SOI December Forecast Forecast Forecast

2019 2019/20 2020/21 2021/22 $000 $000 $000 $000

Net operating (deficit)/surplus (2) (4) (4) (4) Council funding support 4 4 4 4 Net equity 415 350 350 350

2. Silviculture and harvesting

The performance of the joint venture is measured by ensuring that the trees are managed in accordance with accepted silvicultural practice. The Agreement sets out the following regime:

(a) plantation thinned to 300-500 stems per hectare; and (b) between 300-500 stems pruned in three stages to 6.0 metres.

Harvesting is not anticipated until 2024. No silviculture activities, other than inspection and maintenance are required during 2019/20.

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3.5

DUTHIE FORESTRY JOINT VENTURE INTERIM STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSES FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Budget Unaudited

2019 2019/20 2018 $ $ $

Expenditure Administration and general expenses 447 2,950 353 Operations and maintenance 1,625 550 1,582 Total expenses 2,072 3,500 1,935

Deficit before tax 2,072 3,500 1,935

Income tax expense - - - Deficit after tax 2,072 3,500 1,935

Deficit attributable to: New Plymouth District Council 2,072 3,500 1,935 JL & GC Duthie - - -

Other comprehensive revenue and expense - - -

Total comprehensive revenue and expense 2,072 3,500 1,935

Total comprehensive revenue and expense

attributable to: New Plymouth District Council 2,072 3,500 1,935 JL & GC Duthie - - -

The accompanying notes form part of these financial statements.

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3.5

DUTHIE FORESTRY JOINT VENTURE INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019

Unaudited Audited 31 December 30 June 2019 2019 $ $

Non-current assets Forestry 414,973 414,973 Total non-current assets 414,973 414,973

Total assets 414,973 414,973

Current liabilities Creditors and other payables 182 2,028 Total current liabilities 182 2,028

Total liabilities 182 2,028

Net assets 414,791 412,945

Equity Joint venture ownership New Plymouth District Council 227,306 225,460 JL & GC Duthie 187,485 187,485

Total equity 414,791 412,945

The accompanying notes form part of these financial statements.

Chief Executive……………………………………………………….

Date…………………………………………………………………….

Mayor…………………………………………………………………..

Date…………………………………………………………………….

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3.5

DUTHIE FORESTRY JOINT VENTURE INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Unaudited Unaudited

2019 2018 $ $

Balance at 1 July 412,945 349,864

Total comprehensive revenue and expense (2,072) (1,935) Contribution from New Plymouth District Council 3,918 4,017

Balance at 31 December 414,791 351,946

The accompanying notes form part of these financial statements.

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3.5

DUTHIE FORESTRY JOINT VENTURE NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

1. STATEMENT OF ACCOUNTING POLICIES

REPORTING ENTITY

Duthie Joint Venture is a forestry joint venture between J.L and G.C Duthie (45.18%) and the New Plymouth District Council (54.82%). The ownership and operation of the forest (22.7ha) is undertaken as a joint venture between the two joint venture partners. The land is 100% owned by J.L and G.C Duthie and the operating costs are met by the New Plymouth District Council.

These condensed interim financial statements of the joint venture are for the six months ended 31 December 2019 and have not been audited.

BASIS OF PREPARATION

Statement of compliance

These condensed interim financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the period.

The condensed interim financial statements do not include all the information and disclosures required in the annual financial statements. Consequently these condensed interim financial statements should be read in conjunction with the annual financial statements and related notes for the year ended 30 June 2019.

Application of new and revised accounting standards, interpretations and amendments

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3.5

DUTHIE FORESTRY JOINT VENTURE NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2019

Critical accounting estimates and assumptions

In preparing these interim financial statements, the joint venture has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the actual results.

2. RELATED PARTIES

As a joint venture partner, the New Plymouth District Council is deemed to be a related party of Duthie Forestry Limited Forestry Joint Venture.

Transactions between the two parties consist of: reimbursement of expenses, incurred by the New Plymouth District Council, on behalf of the Duthie Forestry Joint Venture; and charges to Duthie Forestry Joint Venture, for the provision of services. In the period ending 31 December 2019, the total value of transactions between the two parties for services provided by the New Plymouth District Council was $3,918 (2018: $4,017).

3. CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets and liabilities at 31 December 2019 (30 June 2019: nil).

4. EVENTS AFTER BALANCE SHEET DATE

There are no significant events after 31 December 2019 (30 June 2019: nil).

196 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

4 DRAFT STATEMENT OF INTENTS TO THE YEAR ENDED 30 JUNE 2021 FOR NEW PLYMOUTH DISTRICT COUNCIL’S FOUR COUNCIL CONTROLLED ORGANISATIONS

PURPOSE

1. The purpose of this report is for the CCOs Committee to note the Statement of Intents (SOI) for all of the four Council Controlled Organisations (CCO), Venture Taranaki Trust (VTT), Papa Rererangi i Puketapu Ltd (PRIP), New Plymouth PIF Guardians Ltd (NPG) and the two Forestry Joint Ventures – Duthie and McKay.

RECOMMENDATION That, having considered all matters raised in the report, the Draft Statements of Intents from the following Council-Controlled Organisations be noted: a) New Plymouth PIF Guardians Ltd b) Papa Rererangi i Puketapu Ltd c) Venture Taranaki Trust d) Two Forestry Joint Ventures – Duthie and McKay

SIGNIFICANCE AND ENGAGEMENT

2. This report is provided for information purposes only, and has been assessed as being of some importance.

DISCUSSION

3. VTT, PRIP, NPG and the Forestry Joint Ventures are CCOs who are required to deliver a draft SOI under the Local Government Act 2002 (LGA) to New Plymouth District Council (NPDC, the Council) on or before 1 March each year. All SOIs were received by 1 March.

4. The CCOs Committee has delegated authority to provide shareholder comments on draft SOIs under the Local Government Act 2002. In doing so, the Committee must consider relevant Statements of Expectations, policies, plans and strategies.

5. Statements of Expectations (SOEs) for the three main CCOs were prepared as per the Local Government Act 2002 and approved by Council on 28 January 2020. The draft SOIs were prepared based on these SOEs.

6. The CCOs Committee also has authority to note the final SOIs. These must be provided to Council by 30 June each year.

197 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

4 New Plymouth PIF Guardians (NPG) Draft Statement of Intent for the Year Ended 30 June 2021

7. NPG is a CCO who is responsible for managing NPDC’s Perpetual Investment Fund (the PIF) through a Board of Directors who appoint a full outsourced investment agent (Mercer).

8. NPG Draft SOI fully reflects the SOE. In particular:

a) Directors will work within their Governance Deed (GD), and Statement of Investments Policies and Objectives (SIPO), including the strategic asset allocation (SAA) and advise officers of any breaches in a timely fashion.

b) Forecast of the PIF fund over the next three years meet their target return and the risk profile of the investment will be made in line with the SIPO.

c) NPG will meet the reporting deadlines of Council.

Papa Rererangi i Puketapu (PRIP) Draft Statement of Intent for the Year Ended 30 June 2021

9. PRIP is a Council Controlled Trading Organisation who operates the New Plymouth Airport (the Airport) ensuring the ongoing safety and successful commercial operation through a Board of Directors, Chief Executive and staff.

10. The PRIP Draft Statement of Intent fully reflects the Statement of Expectation, in particular:

a) After the completion of the new Airport terminal, PRIP will undertake a post-project review of the terminal’s first 12 months of operations. A Benefits Realisation report will be presented to the CCO Committee prior to the end of June 2021.

b) PRIP will continue to operate the Airport in full compliance with regulations set by Civil Aviation Authority (CAA).

c) PRIP will work collaboratively with the Council and other stakeholders to benefit the wider community.

d) PRIP will work within the same statutory obligations of the Council and pursuant to agreements with third parties.

198 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

4 e) PRIP will continue to work with Puketapu Hapū for the remainder of the new terminal project and any other capital project that PRIP undertake in the future.

f) Capital projects undertaken over the next three years will have appropriate controls and be within programme and on budget.

g) Agreements that PRIP has in place with NPDC will be abided. The current service level agreement between PRIP and NPDC is currently being reviewed to reduce the level of services to an “ad hoc” basis.

Venture Taranaki Trust (VTT) Draft Statement of Intent for the Year Ended 30 June 2021

11. VTT is a CCO responsible for delivering NPDC’s active regional development initiatives.

12. The VTT Draft SOI was received on 20 February 2020. This is presented in text-only form – the final SOI will be in published form. The Draft SOI fully reflects the NPDC Statement of Expectations.

13. The Draft SOI suggests that additional operational funding is required to accelerate Tapuae Roa activity. The Tapuae Roa budget under the Long-Term Plan 2018-21 will be transferred to VTT in full from 1 July 2020 – as shown on page 10 of the Draft SOI. It is hoped that VTT will also secure additional Central Government support for Tapuae Roa and Taranaki 2050.

14. The following amendments to the final VTT SOI are suggested:

a) The requirement for quarterly reports as well as half-yearly reports under section 66 of the LGA 2002 (page 11 of the SOI).

b) The need for the high-level breakdown of investment across activity areas (to be provided in the final SOI, page 10) to be reported on quarterly (page 11). This should be similar to the budget summary provided in quarterly performance reports in years up to and including 2018/19.

c) Clarity that the Tapuae Roa Implementation budget was not fully provided to VTT in the 2018/19 and 2019/20 years (page 10).

d) Other minor amendments discussed by officers with VTT.

199 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

4 Forestry joint ventures Draft Statement of Intent for the Year Ended 30 June 2021

15. The two Forestry joint ventures Duthie and McKay have two Joint Venture Forestry Agreements with the two partners are for an agreed share in the forestry harvest returns.

16. Each joint venture is covered by a formal legal document that specifies the details of the Agreement. The key factor in each of the Agreements is the ratio of return at the completion of each of their harvesting. Each joint venture is in the growth phase of the lifecycle and is not forecast to commence harvesting until 2023 for McKay and 2024 for Duthie.

NEXT STEPS

17. The Board or Trustees of each CCO must consider any comments made on the Draft Statement of Intent by the shareholders on or before 1 May 2020.

18. Each of the CCOs are required to deliver their Final SOI to the shareholders by 30 June each year. The CCOs Committee is scheduled to note these at a meeting on 15 September.

FINANCIAL AND RESOURCING IMPLICATIONS

19. There are no financial and resourcing implications. The Draft SOIs have been prepared based on the funding approved in the Long-Term Plan 2018-2028 and Annual Plan 2019/20.

IMPLICATIONS ASSESSMENT

20. This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:  Council staff have delegated authority for any decisions made;  Council staff have identified and assessed all reasonably practicable options for addressing the matter and considered the views and preferences of any interested or affected persons (including Māori), in proportion to the significance of the matter;  Council staff have considered how the matter will promote the social, economic, environmental, and cultural well-being of communities in the present and the future.  Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

200 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

4  Any decisions made are consistent with the Council's plans and policies; and  No decisions have been made that would alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or would transfer the ownership or control of a strategic asset to or from the Council.

APPENDICES

Appendix 1: NPG Draft Statement of Intent 1 July 2020 to 30 June 2021 (ECM 8243539)

Appendix 2: PRIP Draft Statement of Intent 1 July 2020 to 30 June 2021 (ECM 8243412)

Appendix 3: VTT Draft Statement of Intent 1 July 2020 to 30 June 2021 (ECM 8247220)

Appendix 4: Forestry Draft Statement of Intent 1 July 2020 to 30 June 2021 (ECM 8243965)

------End of Report ------

201 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

Statement of Intent 2020/21

4.1 NEW PLYMOUTH PIF GUARDIANS LIMITED STATEMENT OF INTENT

FOR THE YEAR TO 30 JUNE 2021 1. PURPOSE The Local Government Act 2002 (LGA) section 64(1) requires all Council-Controlled Organisations (CCO) to annually prepare a Statement of Intent. The content of a Statement of Intent must adhere to the Local Government Act 2002 schedule 8. New Plymouth PIF Guardians Limited (the Company, NPG) is a CCO established pursuant to LGA. Control in the Company is vested in the New Plymouth District Council (the Council, NPDC). The Statement of Intent sets out the overall intentions and objectives of NPG for the period 1 July 2020 to 30 June 2021 and the two succeeding years.

2. OBJECTIVES The Company operates with the responsibility of: (a) Managing the Council’s Perpetual Investment Fund (the PIF, the Fund) in line with the Governance Deed (GD). In respect of the Council’s investments the Company’s objectives are: (b) To appoint and manage a Full Outsourced Investment Agent. (FOA). (c) To monitor and report the performance of the FOA. (d) To monitor and report the performance of the Fund against appropriate benchmarks. (e) To ensure the FOA invest the funds in line with the Statement of Investment Policies and Objectives (SIPO) and the Strategic Asset Allocation (SAA) included in the SIPO.

3. CONTRIBUTION TO NPDC AND THROUGH THEM TO OVERALL AIMS & OUTCOMES The Company’s activities help provide an investment return on the Council’s investment fund, which enables a release payment to be made to the Council on a quarterly basis. The release payment is based on international best practice “spending” rules and is payable on a sustainable basis, which over the long term allows the real capital of the PIF to be maintained for current and future generations at an agreed level with the shareholder. The formula for the release payment is outlined in the SIPO.

4. GOVERNANCE AND MANAGEMENT The GD sets out the relationship between the Council and the Company. The Company will continue to comply with the terms contained within the GD and advise Council of any breaches in a timely fashion. The Board of Directors is appointed by the shareholder to govern the Company in the interests of the shareholder and in accordance with the Company’s constitution and relevant law. The Board has adopted the principles set out in the GD. The present Board comprises four independent directors noting that the GD requires there to be a minimum of four directors. Administration for the Company is carried out by NPDC in line with a Service Level Agreement. To ensure strong communications and alignment between the Council and the Company, an advisor will attend, as an observer, all Board meetings. This is currently the Chief Financial Officer. Given that the PIF is an investment of ratepayers funds, the risk profile of investments will reflect this and the targeted rate of return will be made in line with the SIPO, including the strategic asset allocation.

ECM 7961753

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Statement of Intent 2020/21

5. PERFORMANCE TARGETS 4.1 The performance of NPG will be assessed against the terms in the GD, the Statement of Intent, and industry benchmarks as detailed in the SIPO. Below are the key performance measures.

5.1 Benchmarks for NPG financial performance (a) NPG is operated on a full cost recovery basis and is therefore budgeted to operate at a nil net cost. The sum below reflects its expected management costs, which are charged to NPDC.

(b) Forecast NPG Statement of Financial Performance FY2021F FY2022F FY2023F $000’s $000’s $000’s Revenue 291 284 288 Costs 291 284 288 Net Profit after tax (NPAT) - - - NPAT to average shareholders’ funds Nil Nil Nil

(c) NPG budget FY2021F FY2022F FY2023F $000’s $000’s $000’s Revenue Advisory management fees 290 283 287 Interest revenue 1 1 1 Total revenue 291 284 288 Expenditure Directors fees 180 170 170 Directors expenses 15 16 17 NPDC services* 34 34 35 Audit fees 12 13 14 Consulting and other expenses 50 51 52 Total expenditure 291 284 288 Surplus/(deficit) - - -

*FY2021 NPDC services comprise the following: governance $4,000 and accounting $30,000.

5.2 Benchmarks for PIF performance

(a) Fund balance target FY2021F FY2022F FY2023F Est $M Est $M Est $M Opening balance of fund 307.1 317.6 328.4

Return after tax, fees and costs 19.6 20.3 21.0

Release payment target forecast -9.1 -9.5 -9.9

Closing balance of fund 317.6 328.4 339.5

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Statement of Intent 2020/21

(b) Performance targets 4.1 i) Total portfolio return A prime focus for the Council is to ensure that returns from the PIF are at a level that meets its objectives for the fund. The total return on the portfolio (net of all costs) measured on a rolling five-year basis is currently a target of 3.3 per cent plus NZ inflation (as measured by the Consumers Price Index). Modelling prepared by Meville Jessup Weaver for the Company in 2019 indicates an expected long run return of inflation plus 4.6 per cent net of costs on the fund. ii) Market comparison The portfolio has two distinct categories of assets:  Listed Securities (Equities / fixed income / cash) The return on this proportion of the portfolio is targeted to be 0.50% per annum above the weighted average benchmark. NPG will measure and report on these securities quarterly, annually and on a rolling five year basis.  Unlisted Securities (Private Equity / Alternative Assets) These assets are illiquid, are largely not traded on markets and are valued infrequently. Therefore performance cannot be compared to benchmark returns on a short term basis. NPG will report on the performance of these securities annually.

(c) Maintain PIF within Strategic Asset Allocations ranges Strategic asset Asset class allocation Allowable range % % Global equities

 developed markets 40 25 - 55

 emerging markets 5 0 - 10 Private equity* 17.5 10 - 25 Alternative assets 17.5 10 - 25 Total growth assets 80 60 - 95 Fixed income 15 5 - 25 Cash 5 0 - 20 Total income assets 20 5 - 40

* This is a medium term target that may not be achieved by June 2021.

6. RATIO OF SHAREHOLDER FUNDS TO TOTAL ASSETS As the Company’s shareholder funds are nil, so is the ratio of shareholder funds to total assets.

7. ACCOUNTING POLICIES The measurement and reporting of earnings are under the policies as contained in the 2018/19 Annual Report with updates as required to meet Public Benefit Entity International Financial Reporting Standards.

8. INFORMATION TO BE PROVIDED TO SHAREHOLDER The following information will be made available: (a) A draft Statement of Intent, including an annual budget, to be provided to council officers by 14 February 2020. Council officers will provide feedback on the draft SOI by 17 February 2020 with

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Statement of Intent 2020/21

the intention of providing an agreed draft to the CCO Committee meeting in March 2020. This 4.1 will require the draft to be finalised by 19 February 2020 at the latest. (b) A quarterly report on the performance of the PIF operations including a comparison against the Statement of Intent and the budget within two months after the end of that quarterly reporting period. The report should also detail any significant issues relating to the Perpetual Investment Fund. The report will provide the information outlined in the GD. (c) A half-yearly report provided to the CCO Committee within two months of the end of the first half of the financial year. The report will be prepared in accordance with the LGA, the reporting requirements prescribed from time to time by the Companies Act 1993 and generally accepted accounting practice in New Zealand. The half-yearly report will include the following: i) Statement of comprehensive revenue and expense; ii) Statement of financial position; iii) Statement of changes in equity; iv) Statement of cash flows; v) Notes to the financial statements as deemed necessary. (d) An annual report provided to the CCO Committee and made available to the public within 90 days of the year end. The report will be prepared in accordance with the LGA, the reporting requirements prescribed from time to time by the Companies Act 1993 and generally accepted accounting practice in New Zealand. The annual report will include the following: i) Statement of comprehensive revenue and expense; ii) Statement of financial position; iii) Statement of changes in equity; iv) Statement of cash flows; v) Report on activities; vi) Notes to the financial statements as deemed necessary.

9. ACTIVITIES FOR WHICH COMPENSATION IS SOUGHT

There are no current activities for which specific compensation is sought from the shareholder. NPG currently provides the investment management services defined in the GD, on a full cost reimbursement basis from the PIF as noted above.

10. SHARE ACQUISITION

While NPG manages the PIF on behalf of the Council all investments made are in the name of the Council. All investment decisions are made, with advice from NPG, by the FOA. Any subscription, purchase or acquisition by NPG of shares, in its own name, in a company or organisation will require Council approval.

11. COMMERCIAL VALUE OF SHAREHOLDER’S INVESTMENT

The Directors anticipate the nominal par value of the Council’s investment in the Company to be $1,000, being the net equity invested at historical cost. This estimate will be re-assessed in the same manner on an annual basis.

12. TIMELY RESPONSE Provide investment advice within one month to the shareholder on any significant developments that may have an impact on either the income stream to the Council or the value of the Council’s PIF.

13. “NO SURPRISES” POLICY

It is expected that NPG will maintain a “no surprises” policy and inform the Council well in advance of any material or significant events, transactions or other issues that would be considered contentious or attract wide public interest.

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Statement of Intent 2020/21

14. SENSITIVE EXPENDITURE 4.1

While noting that the Company operates in a different market to the Council, NPG is cognizant of the fact that it operates in a public environment and is aware of the Council’s sensitive expenditure policy.

15. RELATIONSHIP WITH NEW PLYMOUTH COMMUNITY The Council expects that NPG’s decisions are for the benefit of the district.

16. RELATIONSHIP WITH IWI, HAPŪ AND OTHER MAORI ORGANISATIONS

The Council expects that if any of NPG’s decisions impact local Iwi and Hapū these parties will need to be consulted.

17. OBLIGATIONS

NPG must act at all times in a manner consistent with the statutory obligations of NPDC and also those pursuant to agreements with third parties (including Iwi, Hapū, or other Maori organisations).

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4.2

Papa Rererangi i Puketapu Ltd New Plymouth Airport

Draft Statement of Intent for the period 1 July 2020 to 30 June 2023

New Plymouth Airport PO Box 9022 Bell Block New Plymouth 4351 Website: www.nplairport.co.nz

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4.2 1. INTRODUCTION

This Statement of Intent (SOI) is presented by Papa Rererangi i Puketapu Ltd (PRIP) in accordance with the requirements of Section 64(1) of the Local Government Act 2002. It represents the objectives, nature and scope of activities to be undertaken and performance targets by which PRIP will be measured. It covers the three years of operations from 1 July 2020 to 30 June 2023 and supersedes the previous SOI. This SOI will also have priority over any conflicts between PRIP’s constitution and the SOI unless a clause of the SOI breaches the Companies Act.

1.1 The Local Government Act

The Local Government Act 2002 requires Council Controlled Organisations to:

 Review their SOI prior to the commencement of each financial year  Have a financial year ending 30 June each year

Schedule 8 of the Local Government Act 2002 states that the purpose of an SOI is to:

 State publicly the activities and intentions of the Council Controlled Organisation for the year and objectives to which those activities will contribute  Provide an opportunity for the Council to influence the direction of the organisation  Provide a basis for accountability of the Directors to the Council for the performance of the organisation

1.2 Responsibilities

The Aerodrome certification, operation and use are governed by the New Zealand Civil Aviation Authority (CAA) and New Plymouth District Council (the Council) is currently the Aerodrome Operator Certificate (AOC) holder. Whilst the Council holds the AOC, PRIP will manage New Plymouth Airport operations on behalf of the Council, will be responsible for ongoing Airport capital development, will be responsible for the maintenance of the Airport assets and core infrastructure and will ensure full operational compliance with the CAA Rule Part 139. PRIP’s primary goal is to operate the Airport on a sustainable commercial basis, to optimise the use of its assets and generate a reasonable return on investment to ensure the ongoing safe and successful operation of the Airport.

1.3 Contact details

Chairman Philip Cory-Wright Chief Executive Wayne Wootton

Address: Papa Rererangi i Puketapu Ltd (New Plymouth Airport) PO Box 9022 Bell Block, New Plymouth 4351

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4.2 2. PAPA RERERANGI I PUKETAPU LTD (PRIP)

2.1 Establishment of PRIP

In July 2017 the Council established Papa Rererangi i Puketapu Ltd (PRIP) as a Council Controlled Trading Organisation (CCTO) to manage the full operations of New Plymouth Airport. The Council retains ownership of the Airport Company, holds the Aerodrome Operator Certificate and is the sole Shareholder.

2.2 The Organisation

PRIP is 100% owned by the Council and operates as a standalone Company governed by an independent skills-based Board of four Directors, including a Chairperson, and employs its own Chief Executive and staff. PRIP operates under an SOI agreed to by its Directors and the Council. In addition to the appointed Board of Directors, the Council can nominate an advisor who may attend PRIP Board meetings as an observer. This is currently the Council’s Chief Operating Officer who will ensure strong communications and alignment between the Council and PRIP. All Airport operations and assets are managed by the PRIP Chief Executive who has overall responsibility for implementing the Company’s strategic direction and reports to the Company’s Board of Directors. The organisation is classed as a semi-commercial investment within the Council’s Investment Policy. PRIP owns passenger terminals, aircraft hangars, airside infrastructure, car parking areas, roading and underground utilities. These facilities are sited on land occupied under a long-term lease from the Council, the length of this term determining that the land, for accounting purposes, sits with PRIP as a Company asset. The Airport provides services to allow the safe and efficient facilitation of travellers and freight and, ancillary to this, it leases terminal space and land at the Airport. PRIP’s prime objectives are to:

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In the management of the Airport operations, PRIP has the autonomy to set the following charges 4.2 at the Airport:

 all fees and associated charges in respect to vehicle parking  all landing and parking charges from regular passenger transport services  all landing and parking charges from general aviation aircraft  all revenue from tenant’s leases and rents, licences, concession based contracts and lessees outgoings

As Landlord, PRIP also has self-government with regards entering into any building or ground lease agreements on Airport land.

The Airport is viewed as an essential infrastructure asset for the District and the Taranaki Region and has a key role to play in the economic performance, growth and development of the area. PRIP will work collaboratively with the Council, the Venture Taranaki Trust, the Taranaki Chamber of Commerce and other key stakeholders, ensuring a combined approach to achieve the region’s desired strategic goals.

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4.2 3. GOVERNANCE

Governance sits with the Board of Directors of PRIP and the Board is responsible for the strategic and overall direction of the Company, laying down solid foundations for management and oversight. The Board employs a Chief Executive who monitors the organisation’s performance against pre- established Board criteria and has overall responsibility for implementing the Company’s strategic direction. The Board has four directors appointed by the Council and meets regularly with the Airport Management to review the Company’s performance and provides quarterly, half yearly and annual business performance reports to the Council. The PRIP Directors are:

 Philip Cory-Wright (Chair)  Shelley Kopu  Rachel Farrant  Christopher Myers

Also on the Board is an advisor from the Council, currently the Chief Operating Officer, who acts as an observer on behalf of the Council but has no voting rights.

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4.2 4. MANAGEMENT

Management of the Company is the responsibility of the Chief Executive who employs a small team comprising of an Operations Manager, Safety Manager, part-time Operations Officers and two administration / accounting assistants. The Chief Executive is accountable to the Directors for implementing the Company’s strategic direction, to ensure the ongoing safe and successful operation of the Airport in full compliance with CAA Rule Part 139 and to promote the Airport to the wider Taranaki community.

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4.2 5. RESPONSIBILITY TO THE COUNCIL

5.1 Statement of Intent

In accordance with the Local Government Act 2002, the Company will submit a Statement of Intent (SOI) for the coming financial year to the Council. The SOI sets out the Company’s overall objectives, intentions and financial and performance targets for the following three years. A draft SOI is to be submitted to the Council Officers by 1 March. The draft SOI will be considered at the CCOs Committee Meeting and, following feedback from the meeting, the final SOI is to be provided to the Council Officers by 30 June.

5.2 General information flows and reporting

The Board aims to ensure that the Council is informed of all major developments affecting the Company’s state of affairs, while at the same time recognising that commercial sensitivity may preclude certain information from being made public. Whilst noting that PRIP will operate in a different market to the Council, the Company is aware that New Plymouth Airport operates in a public environment and, as such, PRIP will exercise due care and attention in accordance with the Company’s policies and procedures and the Council’s sensitive expenditure policy. Within these constraints, information is communicated to the Council through the following:

 Quarterly reporting against the SOI’s performance measures and financial forecasts to be provided to the Council Officers for reporting to the CCO’s Committee within two months of the end of the quarter.

 Delivery of a half-year report to the Council Officers for reporting to the CCO’s Committee within two months of the end of the first six months of the financial year.

 Delivery of a Board-approved annual report with an unqualified Audit Opinion to the Council Officers for reporting to the CCO’s Committee within three months of the financial year end. This report to be made available to the public once adopted by the Council.

 Regular meetings between the PRIP Chief Executive and the Council’s Chief Operating Officer (COO) to ensure strong communications and alignment between the Council and PRIP.

 Other ad-hoc reports and briefings to inform well in advance of any material for significant events, transactions or other issues that would be considered contentious or attract wide public interest – operating a “no surprises policy”.

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5.3 Specific expectations 4.2

a) Airport Terminal Development

The Council approved the new terminal development on the basis of the information presented in the business case to the Council on 4 April 2017. The project was successfully completed during FY2020 and, following an operational utilisation period of 12 months, PRIP will undertake a post-project review which will include a “Benefits Realisation” report. It is expected that this report will be presented to Council Officers for reporting to the CCOs Committee prior to the end of June 2021.

b) Capital Projects

PRIP will continue to assess the need for future Airport infrastructure redevelopment based on the strategic direction of the company and the anticipated growth in Airport usage. Projects will be subject to robust business cases and PRIP will have in place appropriate controls to ensure that the projects are appropriately managed and delivered within programme and on budget. Major projects will be subject to:

 Feasibility studies  Full financials and cost benefits  Suitability reports from external consultants  Expert advice and specialist input  Consultation and input from Puketapu Hapu  Feedback from the airlines and Airport stakeholders

It is anticipated that with some redevelopment projects, PRIP will be unable to meet the scale of capital expenditure from operational cash flow. In these cases the project(s) will be subject to consultation with the Council in case assistance with funding is required. For the period of this SOI, capital projects under consideration are listed in Section 6.

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c) NPDC / PRIP agreements 4.2

There are various agreements that have been established between the Council and PRIP for the ongoing operation of the Airport namely:

 Service Level Agreement  Loan Facility Agreement  General Security Deed  Intergroup Asset Transfer  Deed of Lease of Airport Land

Changes during FY2019 to the Service Level Agreement resulted in accounting, budgetary and Audit control being taken on directly by PRIP. The Airport company has the responsibility for all financial controls and processes, Companies Office returns, IRD requests, procurement policy and practices, managing Audit issues, fraud and risk assessment and meeting reporting deadlines as per the Council’s timetable. Following the completion of the Terminal Redevelopment project during FY2020, the requirement for a dedicated communications officer from the Council was deemed not to be necessary and the Service Level Agreement was further revised. The Council now manage PRIP’s information technology side of the business with administration support for communications, public relations and human resources on an ‘as and when required’ basis. PRIP will continue to abide by the above agreements, including any variations, in good faith and will report any breaches to the Council officers on a timely basis.

d) New Zealand Civil Aviation Authority (CAA) requirements

As holder of the Aerodrome Operator Certificate (AOC), the Council is responsible for meeting all aviation operations and health and safety obligations under CAA Rule Part 139, including the ongoing management of an Airport Safety Management System (SMS). PRIP has signed an agreement with the Council to manage all of the Airport operations on a day-today basis. This agreement has been approved by the CAA. In accordance with the agreement, PRIP’s Chief Executive is designated on the AOC as the Aerodrome Chief Executive, having direct accountability to the CAA. Following a complete review of the Aerodrome Exposition1 during FY2020, PRIP Management were successful with their application to the CAA for a five year renewal of the AOC. The Airport’s AOC now has a new expiry date of 30 April 2024. PRIP will keep the Council officers and the CAA informed at all times of any changes in the status of these obligations or any other matters relating to CAA Rule Part 139.

1 The Airport Exposition consists of five manuals that govern how PRIP operates the Airport in accordance with the Civil Aviation Rule Part 139: Operations / Safety Management System / Rescue Fire / Aerodrome Emergency Plan / Wildlife Hazard Management

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e) Iwi, Hapu and other Maori organisations relationships 4.2

PRIP will continue to build upon the strong relationship with Puketapu Hapu that has developed over the past three years during the Airport Terminal Redevelopment project. This will be of particular importance with future projects such as the main runway extension proposal. PRIP is aware of future decisions that may impact on local Iwi and Hapu and will ensure an appropriate level of consultation at all times. PRIP is aware of the statutory obligations of the Council and will act at all times in a manner that is consistent with these and also those pursuant to agreements with third parties, including Iwi, Hapu, or other Maori organisations.

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4.2 6. CAPITAL EXPENDITURE PROPOSALS

Following the completion of the new Airport Terminal, PRIP’s focus will be on infrastructure redevelopment within the Airport precinct and airside improvements, including options for extending the existing main sealed runway. Depending on the scale of the projects, Board approval will be subject to feasibility studies and sound business cases being developed. Projects under consideration during the three year period of this Statement of Intent include:  Improvements to the Airport entrance  Extension, alterations and upgrades to car parking – several phases  Utilities upgrades (water, sewerage, power)  Roading improvements  Perimeter fence security upgrade  Construction of a new aircraft stand to the apron  Extending the main sealed runway

It is to be noted that airside projects such as the runway extension and new aircraft stand, together with upgrades to the perimeter fencing to improve security, will involve consultation with the commercial airlines. Costs may be recoverable through increased landing charges as they are deemed aeronautical assets. Further, the scale of the above projects may preclude full funding through Airport operational cash flow and in these instances the Council, as the 100% Shareholder, may be required to make a decision on a contribution to the works. One particular project of note is the main sealed runway extension as it is vital to consider the long- term sustainability of the Airport and safeguard the facility for the benefit of the Taranaki region. With the assistance of Provincial Growth Funding, a feasibility study was undertaken during FY2020 to analyse several runway extension options. The study involved Airport management, Puketapu Hapu, Air New Zealand and experts in various fields. The outcome, based on current growth predictions and aircraft fleet changes as advised by the commercial airlines, was that the optimum option would be to extend on the existing alignment at both ends of the runway. This option does have limitations from a cultural perspective, however, continued consultation with Puketapu Hapu will ensure that the best outcome is achieved whilst minimising the impact. Further work is necessary but the project has been included to commence during this SOI period. As part of the establishment of PRIP, an Intragroup Asset Transfer Deed was agreed and PRIP will control and manage the Airport assets on behalf of the Council. An asset management plan will be established and a rolling programme of maintenance and capital improvements will be developed.

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Forecasted capital expenditure 4.2

2020/21 2021/22 2022/23 $000 $000 $000

Aeronautical Perimeter fence security upgrade 200 (3) 200 (3) 200 (3)

Runway extension (construction FY22/23) 900 (5) 3500 (5) 2500 (5)

Apron extension - western side 1000 (4)

Non-aeronautical Car parking 300 (2) 500 (5)

Airport entrance 900 (4)

Roading improvements 100 (2) 400 (5) 150 (5)

Perimeter tracks 100 (3) 100 (3) 100 (3)

Community sponsorship 50 (5) 50 (5) 50 (5)

Utilities upgrades 350 (4) 250 (5) 200 (5)

Drainage 50 (4) 50 (4) 50 (4)

Total 2950 4550 4750

Figures in brackets represent the budget classification per project as per NPDC criteria.

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4.2 7. OPERATIONS

The Airport is an essential infrastructure transport hub for New Plymouth and the Taranaki region and provides facilities that are safe, efficient and welcoming to all users. It is essential that PRIP positions the Airport for future aviation growth by close collaboration with the airlines and key stakeholders to facilitate the expansion of tourism, trade and domestic air travel and to play a key role in the economic performance and development of the region. Prior to the establishment of PRIP, the Airport supported the Taranaki Air Ambulance Trust (TAAT) operations with an exemption from landing charges and PRIP will continue to honour this exemption subject to an annual review. Further, the Board of Directors have agreed to continue with an annual sponsorship arrangement with TAAT which will be reviewed in October 2023. If any capital works are required at the Airport to facilitate the air ambulance operation, PRIP will have the option available to generate revenue from the service to recoup the capital costs.

The operational performance of PRIP will be judged against the following measures:

7.1 Operational performance

 Maintain the Airport facilities to avoid any disruption of scheduled commercial flights other than for weather or airline related problems.

 Meet all the operating, maintenance, capital expenditure and interest costs from Airport revenue.

 Manage New Plymouth Airport in full compliance with the approved operating procedures of the Civil Aviation Authority Rule Part 139.

7.2 Passenger numbers

During FY2020 Jetstar Airways Pty ceased regional operations in New Zealand and passenger numbers have had to be reforecast. The figures below are based on a medium annual growth rate of 2.5% and using a predicted base for FY2020 of 435,000.

2020/21 2021/22 2022/23

Pax numbers 445,000 456,000 467,000

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4.2 8. FINANCIALS

8.1 Ratio of PRIP’s capital to total assets

For the next three years, the ratio of total capital to total tangible assets is expected to range from 0.47:1 to 0.50:1.

Total capital includes:

 Retained earnings  Capital account

Total tangible assets include:

 Current assets  Property, plant and equipment

8.2 Accounting policies

The accounting policies will be consistent with:

 The Financial Reporting Act 1993  New Zealand Generally Accepted Accounting Principles (NZGAAP)  Accounting Standards Review Board pronouncements

8.3 Financial performance

The following outlines PRIP’s anticipated financial performance for the three year period ending 30 June 2023 assuming forecasted passenger growth, current and known future aircraft type and size, and other proposed commercial activity within the Airport confines:

Financial performance

2020/21 2021/22 2022/23 $000 $000 $000

Revenue 6,630 7,260 7,490

Expenditure 3,140 3,280 3,430

EBITDA 3,490 3,980 4,060

Depreciation, interest and tax 3,000 3,100 3,200

Net profit 490 880 860

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8.4 Forecast statement of financial position 4.2

2020/21 2021/22 2022/23 $000 $000 $000 Assets

Current assets 1,600 1,700 1,800

Deferred tax asset - - -

Property. plant and equipment 60,735 63,785 67,035

Loan assets 200 190 180

Total assets 62,535 65,675 69,015

Liabilities

Current liabilities 2,200 2,300 2,400

Current borrowings 3,000 3,000 3,000

Non-current borrowings 29,500 31,660 34,040

Total liabilities 34,700 36,960 39,440

Total equity 27,835 28,715 29,575

8.5 Commercial value of the organisation

In keeping with the spirit of the Act, the value of the investment is the capital. This rationale is based on the fact that PRIP is a going concern and that the total assets are carried at fair value and assessed for impairment annually. This estimate will be re-assessed in the same manner on an annual basis.

2018/19 2017/18 Movement $000 $000 $000

Land 16,208 14,138 2,070

Infrastructure and buildings (landside) 5,183 5,513 - 330

Runway, taxiways and apron (airside) 8,098 8,433 - 335

Furniture and fittings 313 254 59

Total 29,802 28,338 1,464

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4.2

8.6 Profit distribution policy

With the focus to be more commercially sound, profitability from the Airport operations is expected to improve over the coming years. Provisions will be made for PRIP to pay a dividend to the Council based on surplus funds once revenue received from Airport operations has met operational requirements and serviced and repaid borrowings. It is assumed that free cash flows will be used as dividends once the gearing ratio reaches 30%. A capital review has been agreed once the Airport terminal redevelopment project has been completed which will further inform the profit distribution policy. It is expected that PRIP will target a shadow investment grade credit rating.

8.7 Procedures for share acquisitions

Any subscription, purchase or acquisition by PRIP of shares in a company or organisation will be consistent with the objectives of PRIP and will be made in consultation with the Council.

8.8 Information to be provided

PRIP will make the following available to the Council if there are any material changes:

 Information that would normally be available to assess the value of the Council’s investment.  Details of any new developments which would involve a significant movement away from the current activities of the business.  Information and details on any new developments which have not been covered in the Statement of Intent for the year.

8.9 Accounting designation

The Company is designated as a Public Benefit Entity for accounting purposes.

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4.3 STATEMENT OF INTENT FOR THE YEAR TO 30 JUNE 2021 AND THE FOLLOWING TWO FINANCIAL YEARS Purpose About Venture Taranaki Trust Objectives Nature and scope of activities to be undertaken Strategic Framework Impact Strategy Performance measures Outcome and impact indicators Investment and priorities NPDC investment into Venture Taranaki Trust Relationship with New Plymouth District Council Approach to Governance Statement of Accounting Policies Forecast Financial Statements This document is Venture Taranaki Trust’s Statement of Intent for the purposes of the Local Government Act 2002.

CHAIR’S COMMENT Venture Taranaki Trust is the regional economic development agency for the Taranaki region. This Statement of Intent, provided by Venture Taranaki’s Board of Trustees to our initiator and owner New Plymouth District Council, proposes a number of strategic and tactical interventions for the Trust that will facilitate the economic growth of Taranaki’s communities, businesses and people for the 2020-2021 financial year and beyond. The Trust’s activities will support the overarching framework established by the Taranaki Regional Economic Development Strategy, Tapuae Roa: Make Way for Taranaki, with a focus on the four futures defined in the strategy’s Action Plan: Energy Futures, Māori Economy Futures, Food Futures, and Visitor Sector Futures. This work will be accompanied by the initiatives and outcomes identified through the development of the Taranaki 2050 Roadmap and its associated pathway action plans. The Taranaki 2050 Roadmap has been co-created with our community and sets a clear pathway as Taranaki transitions to a low emissions economy. The basis of this Statement of Intent is Venture Taranaki’s Impact Strategy, which was developed in collaboration with our owner, stakeholders, and customers. This piece of work articulates the impact we seek to have within Taranaki and our desired outcomes over the short, medium and long terms. The Impact Strategy is supported by a measurement framework that allows us to track the value we provide in our community and our progress towards achieving our goals. Venture Taranaki plays a critical role in helping Taranaki reach its economic potential. The ongoing support and confidence of our stakeholders Stratford District Council, South Taranaki District Council, Taranaki Electricity Trust and the TSB Community Trust must be acknowledged, as must the Trust’s ongoing partnership with the Ministry of Business, Innovation and Employment. Their co-investment in our work, coupled with the New Plymouth District Council’s cornerstone investment, are actively leveraged to secure central government contracts for service as the regional partner for both New Zealand Trade & Enterprise and Callaghan Innovation. This enables significant investment into research and development interventions with a focus on export markets and into building the capabilities of the people leading our region’s small and medium-sized enterprises. The regional development services that Venture Taranaki provides the people and enterprises of our region are repeatedly acknowledged as best in class. Our challenge remains ensuring we can continue to excel in all our endeavours to promote the Taranaki region as a 1

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preferred location to visit, live, work, invest, create, and do business while balancing the our abilities to deliver both core business operations and a growing number of strategic projects and interventions as determined by Tapuae Roa and Taranaki 2050. 4.3 Many of the projects identified, explored and progressed under each of these strategic plans have the potential to positively change the future of our region in a world transitioning to a low-emissions economy. Additional operational funding would enable us to capitalise on these initiatives and would also allow further investment in building strong and lasting relationships with Iwi and hapū around the Mounga. The Trust has been through a period of significant change over the past twelve months, as we welcomed a new Chief Executive, moved to new premises, and adopted a new organisational structure aligned to our Impact Strategy. We acknowledge the departure of Robin Brockie and Gavin Faull and welcome Joanna Breare and Gillian Cagney to the Board of Trustees. These changes have positioned Venture Taranaki strongly as the region’s driver of the sustainable growth of our people, families, whanau, businesses and communities, both now and in the future, and this Statement of Intent sets out how we will do that.

Jamie Tuuta Chair PURPOSE In accordance with the Local Government Act 2002, this annual Statement of Intent (SOI):  publicly states the activities and intentions of Venture Taranaki Trust for the year to 30 June 2021 and the following two financial years, and the objectives to which these activities contribute,  provides the opportunity for New Plymouth District Council, as shareholder, to influence the direction of Venture Taranaki Trust, and  provides the basis for Venture Taranaki Trust’s accountability to its shareholder. This SOI reflects the strategic direction of Taranaki’s regional economic development strategy – Tapuae Roa. Tapuae Roa is a multi-agency strategy and Venture Taranaki Trust plays an important role in its implementation and coordination. Venture Taranaki Trust also facilitated the development of the Taranaki 2050 Roadmap. The Roadmap is supported by pathway-focused action plans and is a core strategic influence as Taranaki moves to a low-emission future. The content of the Statement of Intent is specified in Schedule 8 of the Local Government Act 2002. This Statement of Intent is reviewed annually with New Plymouth District Council and spans a three–year horizon.

ABOUT VENTURE TARANAKI TRUST Venture Taranaki Trust is a Council Controlled Organisation owned by New Plymouth District Council and is responsible for regional development and promotion activities in New Plymouth and the wider region. The Trust is incorporated under the Charitable Trusts Act 1957 but does not meet the criteria for a registered charity under the Charities Act 2005. Trust Objectives Venture Taranaki Trust’s objectives are set out in its founding trust deed and are to:  Provide leadership and support for the development and implementation of local, regional and national strategies for the creation of a vibrant and prosperous New Plymouth District economy and Taranaki regional economy.  Facilitate, promote, encourage and support sustainable enterprise growth, investment and employment opportunities in New Plymouth District and the Taranaki region.  Support the district’s commercial enterprises, large and small, mature or start-up, to establish, flourish and prosper. In carrying out these objectives Venture Taranaki Trust will:  Be a good employer.

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 Recognise the need for Māori to achieve economic prosperity. The Trust recognises Māori enterprise as having considerable growth potential and will actively seek to engage with Māori where that assistance is sought. 4.3  Conduct its affairs in accordance with sound business practices.  Maximise the organisation’s value in its own right and for the benefit of the New Plymouth District community by: – Winning and fulfilling contracts for service with New Plymouth District Council, South Taranaki District Council, Stratford District Council and other partner organisations. – Reviewing the organisation’s range of development services to reflect the strategic direction of Taranaki and its changing landscape.  Be a good corporate citizen and act as a role model by: – Acting ethically. – Being culturally and environmentally conscious. – Complying with legislative requirements. – Seeking to ensure, so far as is reasonably practicable, the health and safety of workers and that other people are not put at risk by our work.  Conduct research and development, and benchmarking to improve its range of services and identify and adopt global best practice standards.

THE NATURE AND SCOPE OF ACTIVITIES TO BE UNDERTAKEN Venture Taranaki is incorporated under the Charitable Trust Act 1957. The Trust’s charitable purposes mean charitable purposes for the benefit of the present and future members of the community resident in the Taranaki region including: (a) to facilitate sustainable employment opportunities in the Taranaki region (b) to facilitate sustainable economic benefits for the Taranaki region (c) to facilitate or provide educational training courses, presentations and other learning experiences (d) to research, acquire and update information about the Taranaki region (e) to promote the Taranaki Area as a desirable region in which to establish a business, live, work and visit (f) to support projects beneficial to the Taranaki region provided such projects meet paragraphs (a) to (e). Venture Taranaki cannot do this alone. It requires the support and collaborative efforts of not only its stakeholders, but also enterprises and the community of Taranaki region. In some instances, other stakeholders will undertake the lead role in achieving this goal and Venture Taranaki Trust will play a supportive role; on other occasions the Trust will take the lead role. VENTURE TARANAKI TRUST’S STRATEGIC FRAMEWORK Venture Taranaki Trust is guided by the vision, outcomes and strategic priorities of New Plymouth District Council as its shareholder. Together with Tapuae Roa – Taranaki’s Regional Economic Development Strategy, these form an integral part of the strategic framework for the Trust. The Trust plays a key role in the implementation of Tapuae Roa and its associated Action Plan. This includes oversight and coordination of the Tapuae Roa programme and leading or facilitating specific actions as well as monitoring and reporting on progress under the Action Plan. Venture Taranaki Trust will continue to oversee the coordination and reporting of implementation and delivery of the Tapuae Roa programme on behalf of the Mayoral Forum. This includes the Māori Economy Future area, working with Taranaki Iwi, Hāpu and other Māori organisations. Soon after the adoption of Tapuae Roa, the Government instigated a policy change which lead to cessation of new permits for oil and gas exploration off-shore in New Zealand and onshore beyond Taranaki, and much more ambitious environmental goals including targets concerning the lowering of greenhouse gas emissions. The Taranaki 2050 Roadmap was subsequently initiated as a response and forward planning mechanism to address this development and put Taranaki at the forefront of global efforts to transition to a low-emissions world. It entailed a co-creation process involving a broader stakeholder and community base, reaching over 70,000 people and leading to the roadmap, which sets out 12 transition pathways. Action 3

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plans for each pathway towards a low emissions future for Taranaki are then developed. The roadmap was completed in August 2019 and the supporting action plans are due for completion by mid-2020. 4.3 Whilst there are differences in the underlying drivers between Tapuae Roa and the Taranaki 2050 Roadmap (including objectives and processes), there are also many synergies between their goals and actions. In the development of the Taranaki 2050 pathway action plans, actions from Tapuae Roa have been considered and, where relevant, included in the pathway action plan. During 2020/21, Tapuae Roa and Taranaki 2050 Roadmap actions will be cross-mapped in more detail with any remaining actions from Tapuae Roa then assessed for progression (or not) by the Tapaue Roa Steering Group. Actions from Tapuae Roa already underway continue through to completion or implementation, integration with Taranaki 2050, or to a next stage or phase decision point for the Tapuae Roa Steering Group.

New Plymouth District Council’s vision New Plymouth District Council’s long-term planning is centred around: Building a Lifestyle Capital / He Whakatūtū Haupū Rawa Hei Āhua Noho underpinned by the vision: PEOPLE/He Tangata: Putting people first Aroha ki te Tangata. PLACE/ Tiakina: Caring for our place Manaaki whenua, manaaki tangata, haere whakamua. PROSPERITY/ Āwhina: Supporting a prosperous community Awhi mai Awhi atu, tātou katoa. Tapuae Roa An overview of Tapuae Roa, including its four futures and foundations, is set out below. ONE PAGE TAPUAE ROA IMAGE Taranaki 2050 Roadmap ONE PAGE ROADMAP IMAGE VENTURE TARANAKI TRUST IMPACT STRATEGY AND PERFORMANCE FRAMEWORK In 2019, Venture Taranaki Trust developed an Impact Strategy in collaboration with NPDC, other local government and central government agencies, regional stakeholders and customers. The Strategy is an outcomes-based framework that articulates the intervention logic between activities delivered by the Trust and desired outcomes for Taranaki over the short, medium and longer-term. It is a valuable tool in guiding investment and resourcing decisions, prioritising activities, and communicating to stakeholders and the region the value of the activities Venture Taranaki Trust delivers. The Impact Strategy is supported by a measurement framework that sets out suite of activity measures and indicators which form the basis of Venture Taranaki Trust’s accountability and performance reporting. The Impact Strategy represents a new way of understanding Venture Taranaki Trust’s activities, impact and performance. It is intended to be a living document and will be revisited and refined over time. Tapuae Roa’s futures and foundations are represented across the Impact Strategy and there are clear and logical links between these and the activities that the Trust delivers. Key themes from the Taranaki 2050 Roadmap are also present in the Strategy and these may become more explicit as this programme of work moves forward into action and implementation. Tapuae Roa and the Impact Strategy Venture Taranaki’s Impact Strategy has been developed within the context of needing to embed the strategic direction, goals and actions articulated in Tapuae Roa to ensure activities and desired outcomes are aligned. The three pillars of Tapuae Roa have been integrated across the Impact Strategy:

 Attractive Lifestyle – reflected in the outcomes related to the natural environment and Taranaki being a great place for living and visiting  Talented People - reflected in outcomes related to increased business capability, innovation and the attraction, growth and 4

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retention of talent in Taranaki.  Modern, high value economy – reflected in outcomes related to a diverse economy, investment attraction, innovation, business 4.3 capability and talent. The Impact Strategy also aligns with the Futures and Foundations of the Tapuae Roa Action Plan which are a core focus of Venture Taranaki’s activities. The Four Futures of Energy, Food, Visitor Sector and Māori Economy articulate areas for focused activity. Success in these areas will lead to the following outcomes:  Taranaki seen as a great place for living and visiting  Diverse local economy  Enterprises, including Māori enterprise, start, grow, relocate and succeed in Taranaki  Public and private sector invest in Taranaki  Enterprises being connected to realise opportunities for the region The Four Foundations support the development of the Four Futures: Talent, Enterprise and Innovation; Vibrancy and Liveability; Accessibility and Connectivity; Investment. Success within the Four Foundations will lead to the following outcomes:  Taranaki seen as a great place to invest  Taranaki seen as a great place for living and visiting  Enterprises are connected to realise opportunities for the region  Innovation is integrated into enterprise  Taranaki having appropriate infrastructure for enterprise to flourish  Increased business capability and confidence.

Taranaki 2050 Roadmap and the Impact Strategy The emerging pathways outlined in the Taranaki 2050 Roadmap are also closely aligned with the Impact Strategy. For example, the energy, food and fibre, innovation and tourism pathways align with fostering sector diversification and growth; championing innovation and sustainability and destination readiness and promotion activities outlined in the Impact Strategy. The pathways of people and talent, infrastructure and transport, health and wellbeing and arts are aligned with the Impact Strategy outcomes of talent being attracted to, grown and retained in Taranaki, people choosing to live in Taranaki and Taranaki having appropriate infrastructure for enterprise to flourish. Opportunities for alignment between Taranaki 2050 work and the Impact Strategy will continue to be identified as action planning progresses. Measurement framework The Impact Strategy is supported by a measurement framework that seeks to measure progress against desired outcomes and impacts to ensure that Venture Taranaki’s activities are aligned to its strategic framework (which embeds Tapaue Roa) and delivering value in the region. Historically, economic development has been focused on performance measurement, which evaluates activities, or direct outputs, such as the number of workshops delivered, meetings held, or number of visitor nights. This approach has sometimes led to a focus on doing the wrong things and fails to tell the story of what the long-term change is. Impact measurement evaluates “outcomes,” which are the benefits or changes that are consequences of the program activities and their results. The Measurement Framework articulates three levels of measures and indicators:  Performance measures: measure activity to ensure agreed levels of service are delivered  Short-term outcomes: indicators to track progress against desired outcomes, activities are delivered with the intention of impacting these outcomes

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 Medium-term outcomes: indicators to measure outcomes that are anticipated if short-term outcomes are realised. Venture Taranaki will report against the measures and indicators set out in the Measurement Framework and will continue to also 4.3 specifically monitor and report on the implementation of Tapuae Roa.

[IMPACT STRATEGY VISUAL] VENTURE TARANAKI 2020/21 PERFORMANCE MEASURES The table below sets out the key service level measures for the activities that Venture Taranaki Trust will deliver over the coming year. These directly relate to the activities set out in the blue ring of the Impact Strategy on the previous page and will be reported on over the annual reporting cycle.

Activity Measure Target Data Source

Promoting investment in Identifying opportunities to Number of engagements* related to 5 Venture Taranaki attract investment into Taranaki attracting investment to Taranaki Taranaki

Facilitating opportunities for Number of engagements related to 5 Venture investment into Taranaki facilitating opportunities for Taranaki investment in Taranaki

Research and thought Undertaking environmental Number of regional monitoring 4 Venture leadership scans and regional economic updates released Taranaki monitoring

Championing innovation and Number of initiatives targeting or 4 Venture sustainability supporting innovation and Taranaki sustainability.

Fostering sector diversification Number of initiatives targeting sector 4 Venture and growth diversification and growth Taranaki

Enterprise support and Enterprise Connection and Number of referrals and connections 200 Venture enablement Signposting made by Venture Taranaki staff Taranaki

Enterprise Support Net Promoter Scores (NPS) on +50 (or Annual support experience greater client ) survey

Number of support engagements 4000 Venture Taranaki

Breadth of enterprise support activity 5 Venture undertaken (number of different Taranaki support initiatives)

Promoting Taranaki as a Oversee regional events Number of engagements related to 25 Venture great place to live, learn, strategy the regional events strategy Taranaki create and play Administer the Major Events Number of major events funded in 4 Venture accordance with the criteria of 6

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Fund NPDC’s major events fund Taranaki 4.3 Destination Promotion and Number of destination promotion 2 Venture Attraction and attraction initiatives Taranaki

Number of engagements with visitor 100 Venture industry operators (including local Taranaki operators, other RTOs, national and international tourism agencies)

Facilitate talent attraction and Number of talent initiatives 2 Venture retention Taranaki

* Engagement is defined as an interaction by staff with an external party and includes meetings, workshops, activity-focussed emails, phone and video-conferencing conversations.

OUTCOME AND IMPACT INDICATORS Venture Taranaki Trust’s performance measures also include a range of medium and long-term indicators that will be used to track progress towards the outcomes and impacts described in the outer green circle of the Impact Strategy. These are the desired outcomes and impacts that our stakeholders would like to see for the region and also incorporate or reflect relevant measures set out in the Tapuae Roa Action Plan. The indicators will be tracked and refined over time and will be used to develop baseline data and track trends. They are not service level performance measures. SHORT-TERM OUTCOMES

Indicator Data Source

Public and Private sector % that report increased investment after engagement with VT support Client survey invest in Taranaki Funding received as a result of a Venture Taranaki referral Client survey

Taranaki has Enterprises rank Taranaki infrastructure at least 7 out of 10 Business Survey appropriate infrastructure for enterprise to flourish

Regional economic Relevant data produced in the last 12 months (currently measured as Google intelligence supports engagement with the reports page of the Venture Taranaki website) Analytics decision-making

Diverse local economy Regional GDP Stats NZ

Regional Domestic Product is more evenly spread across industries Infometrics

Number of people employed in key target industries e.g. tourism; food Infometrics production, renewable energy etc

Increased enterprise % of enterprises that report Venture Taranaki support has led to increased Client survey

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capability + confidence capability 4.3 % reporting enterprise better positioned as result of interaction with VT Client survey

Increased enterprise % that report improved confidence after engagement with VT support Client survey capability and confidence % reporting increased connectivity as result of VT interaction Client survey

Net Promoter Score of supported enterprises Client survey

Number of people or enterprises who identify as Māori receiving support Client survey from Venture Taranaki

Innovation is integrated % that report increased innovation after engagement with VT support. Client survey into enterprise Innovation is defined as an enterprise developing new products/ services or trying new ways of doing things.

Taranaki has a diverse Number of events across Taranaki that Venture Taranaki has supported Venture and vibrant events Taranaki portfolio Number of annual major events in Taranaki Venture Taranaki

Diversified portfolio of events as defined in the Regional Events Strategy Venture Taranaki

Number of meetings, incentives, conferences and exhibitions held in Venture Taranaki annually Taranaki

Indicator Data Source

People choose to visit Annual visitor guest nights (Commercial accommodation) NOTE: current StatsNZ Taranaki data-set has been discontinued, new indicator/s to be developed Infoshare

Visitor spend in Taranaki MBIE

Talent is attracted to, Working age population % Census grown and retained in Taranaki Working age population # Census

Population # Census

Population growth rate % Census

People living in Taranaki who were not residing in region 5 years prior Census

Net growth in International migrants to the region Infometrics and Stats NZ

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MEDIUM-TERM OUTCOMES 4.3 The table below sets out indicators for each of the impacts articulated in the Impact Strategy.

Impact Area Indicator Data Source

Enterprises, including Number of enterprises that begin trading following VT support Client survey Maori enterprise, start, grow, relocate and Number of enterprises who have increased their revenue in the year Venture succeed in Taranaki following Venture Taranaki interaction Taranaki

Number of enterprises who have increased their staff numbers one year Venture following Venture Taranaki interaction Taranaki

# of enterprise ‘births’ and ‘deaths’ – annual change Infometrics and Stats NZ

Number of Māori enterprises registered in Taranaki StatsNZ

An increase in the # people employed in highly skilled; skilled; semi-skilled and low-skilled jobs Infometrics number of meaningful, secure and well-paid % people employed in highly skilled; skilled; semi-skilled and low-skilled jobs Infometrics jobs Employment by occupation of target occupations Infometrics

NEET Rate (Not in employment training etc) Stats NZ

Employment rate; unemployment rate; participation rate Stats NZ

Median Incomes – households and personal Infometrics

Number and growth of employment of those identifying as Māori in Taranaki Infometrics

Skill levels of those identifying as Māori in Taranaki Infometrics

Taranaki seen as a great Covered by outcome indicators above place for living and visiting

People choose to live Covered by outcome indicators above and work in Taranaki

Increased tourism Covered by outcome indicators above spending

Increased regional Retail spend in Taranaki – $ and % growth Market View spending

Taranaki seen as a great Covered by outcome indicators above place to invest

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Confidence in Taranaki Confidence in Taranaki and its economy Annual and its economy enterprise 4.3 survey undertaken by Venture Taranaki

2020/21 INVESTMENT AND PRIORITIES Additional operational investment into Venture Taranaki Trust will allow acceleration of Tapuae Roa activity that VT is responsible for as we move from exploration and feasibility studies into ongoing implementation, and seek to translate action into outcomes. Another key priority area is building strong and lasting relationships with Iwi and Hapū around the region, and additional resource would allow further investment in this space. Protocol for engagement with Central Government As Taranaki moves forward on the transition to a low-emissions economy, it is important that the region has an agreed and coherent approach to its relationship and communications with Central Government. Venture Taranaki Trust will work with the Taranaki Mayoral Forum and New Plymouth District Council to develop an engagement protocol for Taranaki’s advocacy to the Government.

Investment across activity areas A high-level breakdown of investment across activity areas will be provided in the final SOI, following the annual business planning process. NPDC INVESTMENT INTO VENTURE TARANAKI The Trust requests the following investment from the New Plymouth District Council (per the draft Long-term Plan 2018-28)

Actual Actual Actual Budget Budget Budget

2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Event Fund $736,196 $749,452 $764,441 $781,258 $791,341 $808,716

Economic Development & $2,122,979 $2,161,214 $2,204,438 $2,252,936 $2,282,013 $2,332,116 Visitor Industry Tapuae Roa / ED $350,000 $357,000 $364,854 $376,215 $384,475 Implementation

Total funding requested $2,859,175 $3,260,666 $3,325,879 $3,399,048 $3,449,569 $3,525,307

VENTURE TARANAKI’S RELATIONSHIP WITH NEW PLYMOUTH DISTRICT COUNCIL Venture Taranaki Trust is committed to a positive and constructive relationship with New Plymouth District Council as its shareholder. The following mechanisms will continue to be used to ensure this relationship enables open and honest sharing of information and supports appropriate performance monitoring and accountability to the Council and the community:  A shared focus on the development of the district and region, guided by the vision of Tapuae Roa and the Taranaki 2050 Roadmap, 10

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 A shared focus on high quality service delivery guided by the performance measures set out in the SOI.  Continuing the ‘no surprises’ approach that Venture Taranaki Trust’s relationship with its shareholders is founded upon. 4.3  Six-monthly governance workshops between the Venture Taranaki Trust Board and New Plymouth District Councillors to discuss developments in the economy and Venture Taranaki’s progress on the projects and activities in this Statement of Intent and its business plans.  Quarterly workshops between Venture Taranaki Trust’s Chair, CEO, Senior Management Team and New Plymouth District Councillors to coincide with the quarterly updates to New Plymouth District Council. Quarterly updates will reflect the Impact Strategy and any other significant projects that Venture Taranaki Trust is responsible for and will include reporting on the delivery of Tapuae Roa and Taranaki 2050. The Impact Strategy will be reported on six-monthly.  Regular meetings between Venture Taranaki Trust and New Plymouth District Council CEOs.  The New Plymouth District Council CEO attending and participating as an advisor at Venture Taranaki Trust Board meetings.  Venture Taranaki acknowledging the Council as shareholder in branding and external communication, where appropriate. Venture Taranaki Trust will also provide information to its shareholder that meets the requirement of all relevant statutes, including, the Charitable Trusts Act 1957, the Local Government Act 2002 and the Financial Reporting Act 2013, to enable shareholders to make an informed assessment of the organisation’s performance, including:  An annual Statement of Intent in accordance with Section 64 of the Local Government Act 2002.  A half yearly report within two months of the end of the financial half year in accordance with Section 66 of the Local Government Act 2002.  An annual report within three months of the end of the financial year in accordance with Sections 67, 68 and 69 of the Local Government Act.

THE BOARD OF TRUSTEES’ APPROACH TO GOVERNANCE Governance of Venture Taranaki Trust is the responsibility of the Board of Trustees. Operations of the organisation are the responsibility of the Chief Executive who reports to the Chair of the Board of Trustees. The primary role of the Board of Trustees is to:  Approve the allocation of capital and resources to enable the organisation to achieve its objectives in a manner that best serves the economic development needs of New Plymouth District and the Taranaki region.  Effectively represent and promote the interests of New Plymouth District and the Taranaki community with a view to adding long- term value.  Direct and supervise the management of the organisation’s business affairs including: – Establishing goals and strategies – Establishing policies for strengthening the performance of the organisation – Monitoring performance of management – Deciding whatever steps are necessary to protect the organisation’s financial position – Ensuring that financial statements are true and fair, and conform to generally accepted accounting practices – Ensuring the organisation adheres to high standards of ethics and behaviour – Ensuring the organisation has appropriate risk management and regulatory compliance policies in place.  Satisfy itself that the organisation is achieving the organisation’s goals  Familiarise itself with issues of concern to the economic development of New Plymouth District and the broader regional community.  Evaluate economic, political, social and legal issues that may impact on the performance of the organisation and delivery of its objectives;

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 Assess the performance of the Board in accordance with the requirements of the Settlor (New Plymouth District Council). 4.3 POLICY FOR THE APPOINTMENT OF TRUSTEES Trustees are appointed by New Plymouth District Council in accordance with its Appointment and Remuneration of Directors of Council Organisations Policy. STATEMENT OF ACCOUNTING POLICIES REPORTING ENTITY Venture Taranaki Trust is a Charitable Trust incorporated in New Zealand under a Trust Deed dated 27 May 1998 and is domiciled in New Zealand. The Trust commenced operations on 1 July 1998. The Trust is a wholly owned subsidiary of New Plymouth District Council and is a Council Controlled Organisation as defined in Part 1 Section 6 of the Local Government Act 2002. The Trust is a Public Sector Public Benefit Entity (PBE) for financial reporting purposes. BASIS OF PREPARATION The financial statements have been prepared on the going concern basis, and the accounting policies have been applied consistently throughout the period. STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 2013 which include the requirement to comply with New Zealand Generally Accepted Accounting Practice (NZ GAAP). The financial statements have been prepared in accordance with Tier 2 Public Sector PBE Financial Reporting Standards as issued by the New Zealand External Reporting Board (XRB). The financial statements comply with International Public Sector Accounting Standards Reduced Disclosure Regime (IPSAS RDR) and other applicable Financial Reporting Standards as appropriate to Public Sector PBEs. The Trust is eligible to report in accordance with Tier 2 Public Sector PBE Accounting Standards on the basis that it does not have public accountability and annual expenditure exceeds $2 million but does not exceed $30 million. The Trust is deemed a public benefit entity for financial reporting purposes, as its primary objective is to provide services to the community and the Trust has been established with a view to supporting that primary objective rather than a financial return. PRESENTATION CURRENCY AND ROUNDING The financial statements are presented in New Zealand dollars and all values are rounded to the nearest dollar. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REVENUE Revenue is measured at fair value. The specific accounting policies for significant revenue items are explained below: Government grants Grants received from the New Plymouth District Council are the primary source of funding to the Trust and are restricted for the purposes of the Trust meeting its objectives as specified in the Trust’s trust deed. The Trust also receives other government assistance for specific purposes, and these grants usually contain restrictions on their use. Council, government, and nongovernment grants are recognised as revenue when they become receivable unless there is an obligation to return the funds if conditions of the grant are not met. If there is such an obligation, the grants are initially recorded as grants received in advance and recognised as revenue when conditions of the grant are satisfied. Interest income Interest income is recognised using the effective interest method. Foreign currency transactions 12

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Foreign currency transactions are translated into NZ$ (the functional currency) using the spot exchange rate at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates 4.3 of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit. B. GRANT EXPENDITURE Non-discretionary grants are those grants awarded if the grant meets the specified criteria. They are expensed when an application that meets the specified criteria for the grant has been received. The Trust’s non-discretionary grants have no conditions that need to be fulfilled to receive the grant. Discretionary grants are those grants where the Trust has no obligation to award the grant on receipt of the grant application. For discretionary grants without conditions, the total committed funding is expensed when the grant is approved and the approval has been communicated to the applicant. Discretionary grants with conditions for the delivery of an event are expensed when the grant is approved and the approval has been communicated to the applicant. This is based on the fact that the event is likely to occur and the payment is probable. C. LEASES – OPERATING LEASES An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight line basis over the lease term. D. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand and deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less. E. RECEIVABLES Trade and other receivables are initially measured at fair value and subsequently at fair value less any provision for impairment. The amount of impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected which is determined on an analysis of the Trust’s losses in previous periods and review of specific debtors. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are included in non-current assets. After initial recognition, they are measured at amortised cost, using the effective interest method, less impairment. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit. Loans to community organisations made at nil or below-market interest rates are initially recognised at the present value of their expected future cash flows, discounted at the current market rate of return for a similar financial instrument. The difference between the face value and present value of the expected future cash flows of the loan is recognised in the surplus or deficit as a grant expense. The loans are subsequently measured at amortised cost using the effective interest method. F. IMPAIRMENT OF FINANCIAL ASSETS Financial assets are assessed for evidence of impairment at each balance date. Impairment losses are recognised in the surplus or deficit. G. INTANGIBLES Software acquisition Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Staff training costs are recognised as an expense when incurred. Costs associated with maintaining computer software are recognised as an expense when incurred. Costs associated with development and improvements of Venture Taranaki’s websites are recognised as an asset when incurred as the websites generate future economic benefits. Amortisation Computer software licenses are amortised on a straight-line basis over their estimated useful life of two and a half years. Amortisation begins when the asset is available for use and ceases at the date when the asset is disposed of. The amortisation charge for each year is 13

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recognised in surplus or deficit. H. PROPERTY, PLANT AND EQUIPMENT 4.3 Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Additions The cost of an item of property, plant, and equipment is recognised as an asset only when it is probable that service potential associated with the item will flow to the Trust and the cost of the item can be measured reliably. In most instances, an item of property, plant, and equipment is initially recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at its fair value when control over the asset is obtained. Disposals Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount of the asset. Gains and losses on disposals are presented net in the surplus or deficit. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that service potential associated with the item will flow to the Trust and the cost of the item can be measured reliably. The costs of day-to-day servicing of property, plant, and equipment are recognised as an expense as they are incurred. Depreciation Depreciation is provided on a straight line basis at rates calculated to allocate the assets cost less estimated residual value, over the estimated useful life of the asset. Major depreciation periods are: Leasehold alterations 10 years Fixtures and fittings 10 years Office equipment 3-10 years Motor vehicles 3 years Other fixed assets 4-10 years The residual value and useful life of an asset are reviewed, and adjusted if applicable, at each financial year end. I. IMPAIRMENT OF PROPERTY, PLANT, AND EQUIPMENT AND INTANGIBLE ASSETS Property, plant, and equipment and intangible assets are reviewed for indicators of impairment as at each balance date. When there is an indicator of impairment, the asset’s recoverable amount is estimated. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. J. TRADE AND OTHER PAYABLES Trade and other payables are stated at cost. Trade and other payables are noninterest bearing and are normally settled on 30-day terms, therefore the carrying value of trade and other payables approximates their fair value. K. EMPLOYEE ENTITLEMENTS Short-term employee entitlements Employee benefits that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to but not yet taken at balance date, and sick leave. L. PROVISIONS The Trust recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditures will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the

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provision due to the passage of time is recognised in “finance costs”. M. GOODS AND SERVICES TAX (GST) 4.3 All items in the financial statements are presented exclusive of goods and service tax (GST), except for receivables and payables, which are presented on a GST inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the IRD is included as part of receivables or payables in the statement of financial position. The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST. N. INCOME TAX Income tax expense includes components relating to both current tax and deferred tax. Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years. Current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted at balance date. Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in the statement of financial position and the corresponding tax bases used in the computation of taxable profit. Deferred tax is measured at the tax rates that are expected to apply when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at balance date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or tax losses can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit. Current and deferred tax is recognised against the surplus or deficit for the period, except to the extent that it relates to a business combination, or to transactions recognised in other comprehensive revenue and expense or directly in equity. O. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS In preparing these financial statements, estimates and assumptions have been made concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances.

FORECAST FINANCIAL STATEMENTS Please note that recent amendments to the Local Government Act 2002 (Schedule 8, Part 4, section10(b)) require Venture Taranaki Trust to provide forecast financial statements for the year to which this Statement of Intent relates and the following two financial years. This information will be provided in the final Statement of Intent, following the annual business planning process.

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Duthie Joint Venture 4.4 McKay Joint Venture

DRAFT STATEMENT OF INTENT FOR THE TWO FORESTRY JOINT VENTURES DUTHIE AND MCKAY FOR THE YEAR ENDED 30 JUNE 2021

Under the Forestry Rights Registration Act 1983, the Council has two Joint Venture Forestry Agreements. These are:

McKay joint venture Established in 1995 Located at Ahititi Duthie joint venture Established in 1997 Located at Ararata (Hawera)

The joint ventures with the two partners are for an agreed share in the forestry harvest returns. The joint ventures were originally aimed at complementing the Council’s own ongoing forestry activities.

The two joint ventures listed above are council-controlled organisations (CCO) as defined in the Local Government Act 2002 (LGA 2002). The ownership and operation of the joint ventures is as follows:

Duthie joint venture New Plymouth District Council 54.82% J L & G C Duthie 45.18%

McKay joint venture New Plymouth District Council 56.50% R B McKay & Others 43.50%

Each joint venture is covered by a formal legal document that specifies the details of the Agreement. The key factor in each of the Agreements is the ratio of return to each party upon the harvesting of each forest. Harvest returns are expected at the midlife of each forest (15-18 years) for production thinning and at maturity of each forest (25-35 years) for clear felling. The ratio of returns is calculated by comparing all costs to both the land owner and the Council (as owner of the trees) throughout the life of each forest. These inputs determine the respective percentages of return from sales of forest produce.

As each agreement has been negotiated between the joint venture partners there are variations in each document. A “combined” draft Statement of Intent is considered appropriate as the variations are minor.

The Duthie and McKay joint ventures are currently in the growth phase of the lifecycle. Activity in these joint ventures include the ongoing management of trees in accordance with accepted silvicultural practice.

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4.4 OBJECTIVES The objectives of each joint venture are to tend and manage the forests in accordance with the best principles of Silviculture to produce high quality saw logs for harvesting and to provide the New Plymouth District Council and the industry within the district a secure supply of saw logs. This activity complements the Council’s own forestry investment activities.

CONTRIBUTION TO COMMUNITY PRIORITIES These joint ventures are examples of public-private partnerships that enhance the growth and economic development of the district resulting in employment growth and creation of business opportunities. In addition, forestry enhances the environment thereby improving the quality of life of the district’s residents.

GOVERNANCE Management and control of the two forestry joint ventures is vested in the Council. The Council governance is performed through the CCOs Committee and the Council. The Council’s Chief Executive is accountable to the Council for the operations of the two forestry joint ventures.

NATURE AND SCOPE OF ACTIVITIES TO BE UNDERTAKEN The joint ventures will establish and maintain (and eventually harvest) forests of approximately the following sizes, in the following areas:

McKay joint venture Ahititi 83.5 hectares Duthie joint venture Ararata (Hawera) 22.7 hectares

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RATIO OF CAPITAL TO TOTAL ASSETS 4.4 The ratio of joint ventures funds (capital) to total assets is expected to be 100 per cent for the next three years. The joint venture capital includes:

 Retained earnings  Reserve funds  Capital account

Total assets include the value of forestry.

ACCOUNTING POLICIES The policies will be consistent with:

 The Joint Venture Deeds of Agreement and partnership accounting principles.  The Financial Reporting Act 2013.  New Zealand Generally Accepted Accounting Practise (NZ GAAP).  New Zealand International Reporting Standards issued by the External Reporting Board.  External Reporting Board pronouncements.

PERFORMANCE TARGETS The joint ventures performance will be judged against the following measures:

Duthie joint venture

1. Financial performance 2020/21 2021/22 2022/23 $000 $000 $000

(a) Net operating deficit (7) (7) (7) (b) Council funding support 7 7 7 (c) Net equity* 413 413 413

* Net equity is based on forestry valuations at 30 June 2019. There is insufficient data to make reliable estimates for future years given fluctuating exchange and commodity prices.

2. Silviculture and harvesting

The performance of the joint venture is measured by ensuring that the trees are managed in accordance with accepted silvicultural practice. The Agreement sets out the following regime:

(a) plantation thinned to 300-500 stems per hectare; and (b) between 300-500 stems pruned in three stages to 6.0 metres.

Harvesting is not anticipated until 2024 and is dependent on tree growth and log prices which may either bring forward or delay the harvesting process. No

240 CCOs Committee Agenda (3 March 2020) - Decision -CCOs Draft Statements of Intent

silvicultural activities other than inspection and maintenance are required 4.4 during 2020/21.

McKay joint venture

1. Financial performance 2020/21 2021/22 2022/23 $000 $000 $000

(a) Net operating surplus/(deficit) (7) (7) 1,691 (b) Council funding support 7 7 9 (c) Net equity* 1,202 1,202 -

* Net equity is based on forestry valuations at 30 June 2019. There is insufficient data to make reliable estimates for future years given fluctuating exchange and commodity prices.

2. Silviculture and harvesting

The performance of the joint venture is measured by ensuring that the trees are managed in accordance with accepted silvicultural practice. The Agreement sets out the following regime:

(a) planting at 833 stems per hectare; (b) plantation thinned to waste to 360 stems per hectare at age 7 years; and (c) pruning of 360 stems per hectare to 6.5 metres at age 7 years.

Harvesting is not anticipated until 2022/23 and is dependent on tree growth and log prices which may either bring forward or delay the harvesting process. Upgrading farm tracks for logging trucks will be required in advance of harvesting. No silvicultural activities other than inspection and maintenance are required during 2020/21.

DIVIDEND POLICY Until the joint ventures reach a stage where timber is able to be sold no return will be made to the owners by way of a dividend.

INFORMATION TO BE PROVIDED The following information will be made available:

 A final Statement of Intent including an annual budget, for inclusion in the Council’s Annual Plan process.  A Statement of Intent prior to the commencement of each financial year.  A six-monthly report on operations, including a comparison against the Statement of Intent and the budget within two months of the end of the first half of the financial year.  An Annual Report for the year which will also be made available to the public within three months of the end of each financial year.

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PROCEDURES FOR SHARE ACQUISITIONS 4.4 Not applicable in this case.

ACTIVITIES FOR WHICH COMPENSATION IS SOUGHT There are no activities for which compensation is sought from the joint ventures. It is noted that under each Joint Venture Agreement the Council is responsible for funding the operational costs, including silviculture.

COMMERCIAL VALUE OF THE PARTNERS’ INVESTMENT The commercial value of the partners’ investment in the joint ventures is estimated as equal to each joint ventures partners’ capital. This is based on:

(a) the rationale that each joint venture is a going concern; and (b) the fact that total assets are carried at their current net value as determined by independent valuers on an annual basis.

This estimate will be reassessed in the same manner on an annual basis. There is insufficient reliable data to make reliable estimates for future years given fluctuating exchange and commodity prices.

As at 30 June, the joint venture partners’ capital values were (pre-tax):

2019 2018 McKay and Others joint venture $1,202,047 $1,006,300 Duthie joint venture $412,945 $349,864

CAPITAL EXPENDITURE FORECASTS There are no anticipated capital expenditure projects over the next three years.

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