Annual Report 2019 TE MANAKO NUI Our Vision 1880
Looking to the past to forge the future
To be the organisation that returns Ngati Whakaue to its full and rightful land ownership position, including titles to our reserves and recognition of mana over the Rotorua township.
TE WHĀINGA Our Mission
To manage and enhance our land and assets into sustainable wealth and benefits for our owners, tribe and community.
NGĀ WHAKAPONO Our Values
• Kia pono – honesty & integrity • Kia tika – professionalism, expertise and acumen • Kia aroha – respect and empathy
1 Pukeroa Oruawhata Trust ~ Annual Report 2019 CONTENTS
Vision statements ...... 1. Contents ...... 2 Directory ...... 3 Minutes – AGM – 3rd November 2018 ...... 4 Chairman’s Report ...... 12 2019 Owner’s Grant Policy ...... 15 Operations Report ...... 18 Financial Report ...... 26 Governance Structure ...... 32 Ngati Whakaue Education Endowment Trust Board Chairman’s Report ...... 33 Maori Land Court Successions ...... 35 Consolidated Financial Statements ...... 36
ENTITIES:
CRL – Casino Rotorua Ltd LHRDL – Lake House Resort Developments Ltd LRTL – Lake Road Tavern Ltd LTL – Lake Tavern Ltd POCT – Pukeroa Oruawhata Charitable Trust POT – Pukeroa Oruawhata Trust POHL – Pukeroa Oruawhata Holdings Ltd PLHL – Pukeroa Lakefront Holdings Ltd PLLP – Pukeroa Lakeside Limited Partnership PPL – Pukeroa Properties Ltd PPL2 – Pukeroa Properties (No .2) Ltd POLIL – Pukeroa Oruawhata Lakefront Investments Ltd POTSL – Pukeroa Oruawhata Trustee Services Ltd (as Trustee of Pukeroa Oruawhata Charitable Trust) RCL – Rotorua Casino Ltd WASML – Wai Ariki Spa Management Ltd WAHSSLP – Wai Ariki Hot Springs and Spa Limited Partnership WHL – Waihunuhunukuri Holdings Ltd
Office: Pukeroa Oruawhata House 1/1176 Amohau Street, PO Box 12031 ROTORUA Phone (07) 348-8990 • Website: pukeroa .co .nz Accountants: Deloitte (Rotorua) Auditors: BDO Rotorua Limited Solicitors: Holland Beckett and Graeme Dennett Bankers: Bank of New Zealand and ANZ
Pukeroa Oruawhata Trust ~ Annual Report 2019 2 Trustees/Directors
Malcolm Short (Chairman) David Tapsell Rawiri Waru
Monty Morrison Tina Ngatai Tanira Kingi Non-Trustee Directors
Alec Wilson Jeanna Love Kiriwaitingi Rei (PLHL Director) Appointed 1/10/17 Appointed 1/10/17
Accountant General Manager Personal Assistant
Alexander Wilson Peter Faulkner Helen Crawford Property Team Property Manager Facilities Manager Property Administrator
Steve O’Sullivan Gary Herbert Lee Emery
3 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
CHAIRMAN: Malcolm Short
MINUTE TAKER: Helen Crawford
MIHI & KARAKIA: Monty Morrison
ATTENDANCE: 117
APOLOGIES: 44 RESOLVED: “That the apologies be received.” (Josie Scott/Miriama Searancke) Carried
MINUTES: Of the previous AGM held on 4th November 2017 were taken as read and confirmed. RESOLVED: “That the minutes of the meeting held 4th November 2017 be confirmed.” (Bryce Morrison/John Fenwick) Carried
Matters arising:
• Dean James stated that there is no reference to his request for financial support for the wharekai rebuild for Te Koutu marae in the minutes .
• Rawiri Bhana stated he requested an independent scrutineer be appointed for the 2018 election and this is not in the minutes .
CHAIRMAN’S REPORT:
Malcolm Short read his report .
Malcolm paid homage to the passing of trustees, Stuart Harris and Pihopa Kingi .
Malcolm advised that Alec Wilson was retiring from the Trust this year and read the article in the AGM booklet recognising and honouring Alec’s contribution for over 37 years to Ngāti Whakaue and Pukeroa Oruawhata Trust .
Key points:
• Total distributions to owners exceeded $1million in the last financial year.
• Residential housing stock now 25 .
• Over 177 properties administered by the Group .
• Balance sheet has exceeded $280m .
• IRD Binding Ruling – enables grants to be paid tax free and enhances the tax effectiveness of the funding to the Charitable Trust .
• 3 major projects completed, Haupapa House, Kmart and the “Care Village” at Ngongotaha .
• Wai Ariki Hot Springs & Spa is our major focus over the next few years . RESOLVED: “That the Chairman’s report be received.” (Malcolm Short/Peter Anaru) Carried
Pukeroa Oruawhata Trust ~ Annual Report 2019 4 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
Questions from the floor:
1. Lauren James asked what decision has Pukeroa made in relation to the lands coming back to Ngāti Whakaue as per her question last year? Lauren stated she would like a more appropriate response than ‘Pukeroa are waiting on the outcome of the arbitration process which is back before the WJT trustees .’ Malcolm advised that is the most appropriate response he can provide at this stage .
2 . Tony Wihapi stated the WJT issue is a mana whenua issue and asked what is the relationship between Te Puia, WJT and the land?
Alec Wilson responded that there are owners to the valley. The argument put forward is a hapū versus owner argument. There are 106 registered owners under Ngāti Hurungaterangi, 64 registered under Ngāti Taeotū and 37 under Ngāti Te Kahu o Ngāti Whakaue Hapū, in the original blocks. Alec recommended that each hapū have their own meetings and that they share evenly under the HTK Te Puia Trust the revenue from the ownership structure .
Peter Staite thanked Alec for his korero and stated this was the first time he had heard this expressed in this fashion .
OWNERS GRANT POLICY:
Malcolm referred the attendees to page 15 and 16 of the AGM booklet and stated the minimum grant payment will again be $125 .
The trustees recommended that $810,000 be set aside for distribution as an Owner’s Grant (in lieu of a Dividend) according to the 2018 distribution table provided .
RESOLVED: “That the 2018 Owners’ Grant in lieu of a dividend to the value of $810,000 be supported and approved” (Iris Thomas/Patsy Rouse) Carried
GENERAL MANAGER’S REPORT:
Peter Faulkner read his report .
Key points:
• Strong growth in the Balance Sheet as a result of the Kmart/Whare Aroha/Haupapa House projects .
• Income from these projects to be reflected in the 2019 & 2020 financial results.
• We are projecting an additional $2 .4m from additional rentals coming in in 2019/2020 .
• Almost 100% occupancy of our properties .
• Interest rates at historically low levels assist our bottom line .
• We adopt a low risk approach in managing our interest rate exposure .
• Industry wide pressures (Building/Construction/Planning/Design) add to the cost complexity and time taken to complete our projects .
• We are not immune to political and economic events occurring around the world .
5 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
Questions from the floor:
1 . Tony Wihapi was pleased that Pukeroa is aware of what is happening in the world economically and politically and asked ‘will Pukeroa look to protect ourselves?’ Peter Faulkner responded that we cannot be blind to external influences, so we are constantly looking at reviewing options to best manage the business and protect it from future risks .
RESOLVED: “That the General Manager’s report be received.” (Bryce Morrison/Maxine Rennie) Carried
COMPANY PRESENTATIONS:
A Director from each of the Pukeroa companies spoke of the work undertaken with photographs via powerpoint displaying the activity .
Monty Morrison – Residential
Monty advised that we currently have 20 completed residential dwellings which are being upgraded to meet the ‘healthy homes’ requirements of the Residential Tenancies Act . The houses are all fully tenanted with all tenants Ngāti Whakaue.
A further 5 are being completed and should be ready for occupation by the end of this financial year.
The rentals contain an element of subsidy with average rental received approximately 60% of the median rental rates for the general area which is currently $350 per week .
The “Care Village” at Ngongotaha, which was taken on and completed by the Group last year, has required some ongoing support but is now at 95% occupancy and doing well .
Bryce Morrison stated rentals are a double-edged sword and suggested the trustees look seriously at whether we remain a landlord long-term – as the Residential Tenancies Act does not favour the landlord .
Merehira Savage stated that she is pleased Pukeroa is assisting in the social arena and asked, ‘when will due diligence start for kaumatua housing?’ Monty replied that this was still on the agenda but had to be deferred due to other commitments this year .
Tony Pecotic stated the style of housing in Froude/Sala St is based on an old model and suggested the trustees look at modern housing models when planning future housing developments .
Tanira Kingi – Large Format Retail.
Tanira advised that investment in our property portfolio continues to be our primary driver of revenue with occupancy @ 96% across all our properties . The Central Mall has become and continues to be Rotorua’s preferred shopping area .
Kmart opened 16 March 2018 creating 105 jobs with 25% of those employed of Ngāti Whakaue affiliation.
The Trade Central site is progressively being tenanted . We are looking to refurbish the CTTU building (Construction Trade Training Unit) and are working with a prospective tenant for this property .
Pukeroa Oruawhata Trust ~ Annual Report 2019 6 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
Haupapa House is drawing interest from multiple parties whilst Holland Beckett Lawyers occupies the upper floor. Haupapa House is an ‘A’ grade office building.
In response to a question whether we owned the land only, Tanira clarified that we own both the land and buildings in our portfolio and these are leased to our tenants on commercial terms .
Merehira Savage asked if we could be the owners of the business operating the Spa . Tanira responded that David Tapsell will be speaking to the Spa and that we are working on the basis that we will own both the buildings and the business .
David Tapsell – Tourism.
David stated that moving into tourism was a decision to diversify our asset base, provide employment opportunities and increase our revenue .
The tourism numbers going forward are solid . The seasonal highs and lows of tourism are not as pronounced with steady growth in the traditional off-season visitor numbers.
David spoke of the proposed lakefront development as indicated on page 23 of the Annual Report which identifies this as a 3-stage process. The first stage is the Spa. Second stage - serviced apartments that will complement the Spa offering and will be marketed at the higher end of the market. The last stage being a 5 Star Hotel which is some years away . The lakefront area is a prime location – the Hotel will be the ‘jewel in the crown’ with the Spa and Serviced Apartments complementing and supporting the Hotel .
The return of the Te Puia business to Ngāti Whakaue will complement our tourism projects and make us a major player in the tourism sector .
The Lakehouse Hotel has been deconstructed . During the process of de-construction, it was discovered the building was in worse shape than thought as it was riddled with borer and rot .
Pirihira Fenwick stated that after dark there is little entertainment in Rotorua and she would like to see a Casino at the top of the Hotel to attract the high-end Asian market . David responded, that there is a moratorium on any new Casino licences . Casino aside, catering to Asian visitors means providing different services at different times of the day and night. With the Spa clientele we would need to open early and possibly stay open late to cater for this market outside of their scheduled days activities .
Josie Scott asked what were our plans now with the Lake House Hotel site? David responded that we haven’t gone any further as the Lakefront development is our focus . We will investigate future opportunities with Te Arawa Management Limited (TAML) who own the adjoining carpark, but we have no immediate plans .
Peter Staite acknowledged what Alec Wilson has done for Ngāti Whakaue, the Whakarewarewa Joint Trust (WJT) and the 3 Ngāti Whakaue hapū and wished him well in his retirement from the Trust.
Maru Tapsell asked ‘are we thinking of working collaboratively with other businesses and industries outside Rotorua’ with the Chairman responding that yes we are and we have been .
Merehira Savage suggested we approach TAML to buy back the carpark with the Chairman responding that 3 years ago an approach was made and it was declined, however, we will look to approaching them again at some stage .
Tony Pecotic suggested it would be good if Pukeroa purchased residential properties for Ngāti Whakaue owners as they became available .
7 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
Tina Ngatai – Pukeroa Oruawhata Charitable Trust.
Tina reported that the Charitable Trust has provided a record number of grants to owners both for health needs and grants in lieu of a dividend .
Tina spoke of our interest in buying the flats on Ranolf St for kaumatua housing but these were withdrawn from auction and remain with the owner . We are always on the look out for similar opportunities . We will not however, put our assets at risk if building or buying is not supported after feasibility/due diligence tests are completed .
Tina spoke of our other operational activities and drew attention to our new vision and mission statements – stating we want to be back in charge of our own destiny in our own city – as we were in 1880 .
Lorin Manahi asked what the photo on page 24 was about with Tina responding the Ngāti Whakaue Women’s Health League Ohinemutu Branch received a grant and the women came to the office with preserves they make as a thank you .
Dean James stated Tumahaurangi Marae were declined financial support whereas Ngāti Whakaue Tribal Lands and Ngāti Whakaue Assets Trust each gave $50k with Tina responding that the Trust does not fund capital work but that there may be other areas that we can assist . The Charities Commission undertake audits every so often and we need to ensure we are compliant .
Anthony Kahukiwa as President of the Waikite Rugby & Sports Club gave thanks for the financial support given over the years, stating that if they did not assist the Club would not survive .
Merehira Savage asked if the Trust could put together what skills are required for Spa workers with Tina responding that we are currently working with Toi Ohomai regarding the courses and skill level we need so can’t provide more information at this stage . Rawiri Bhana proposed that we look to provide free fees for more than the 1st year of study/training .
Tony Wihapi requested more detail in the grant distributions namely, how much per category as well as the number of recipients .
FINANCIAL REPORT:
Alex Wilson presented his report in summary using info graphics via powerpoint with references to detail in the booklet . Full audited accounts were included in the 2018 AGM Report .
Alex stated the overall financial results for the group show another strong year with growth in Revenue, Net Operating Profit, Total Assets, Owner Grants and benefits for all Ngāti Whakaue. The average growth on Equity on the original capital over the last 33 years is 16 .72% per annum with a debt to equity ratio of @ 41% . 61% of our debt is fixed at an average interest rate of 4.92%.
Questions from the floor:
1 . Bryce Morrison asked what is 1 share worth? Alex responded that to sell a share would require the requirements under Te Ture Whenua Maori Land Act to be met . A share is worth what a ‘willing buyer – willing seller’ is prepared to pay . There is no open market as the Trust is an Ahu Whenua Trust .
The book value is based on the 2018 Balance Sheet - each share has a net asset value of @ $160k .
2 . Kahira McRae asked about Rotorua Casino Limited with Alex responding that it is an inactive company retained mainly to preserve the name and that it may/may not have a future going forward .
Pukeroa Oruawhata Trust ~ Annual Report 2019 8 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
3 . Tarewa Rota enquired as to the bad/doubtful debts with Alex responding that this represents the amount some of the tenants have not paid for various reasons including bankruptcy, withdrawal from their tenancy etc . 4 . Tony Wihapi thanked the trustees for transparency regarding trustee/director remuneration and had it not been for the reports in each of the areas the directors spoke to he would have recommended a reduction however, he can see the work undertaken supports the remuneration . Tony Wihapi congratulated Alex on another well-presented report, booklet and overhead graphs – the best he has received yet . RESOLVED: “That the finance report for the year ended 31 March 2018 be received.” (John Fenwick/Tony Wihapi) Carried
APPOINTMENT OF AUDITOR: RESOLVED: “That BDO Rotorua be reappointed auditors for the next financial year.” (Tony Wihapi/Maureen Jehly) Carried
NGĀTI WHAKAUE EDUCATION ENDOWMENT TRUST REPORT:
Malcolm Short, Chairman of the NWEET requested the Ngāti Whakaue Education Endowment Report be taken as read .
ELECTION RESULTS: Owen Mitai-Wells (Deputy Returning Officer) gave an outline of his responsibility and the process Deloitte undertook for the 2018 election, having been appointed as part of a competitive tender basis by the Trust . Martin Kinder was the independent Returning Officer but he is unable to present the results today.
The 2018 Pukeroa Oruawhata Trust election was conducted by Postal Vote and votes counted according to shareholding (Poll Vote) . Voting closed 4pm 26th October 2018, with Postal Votes receivable up to 12 noon, 30th October 2018 .
Owen noted that the trustee due for rotation under Section 7(e) is Alec Wilson, who has decided to retire and not stand for re-election .
Owen provided the results via a powerpoint presentation .
Owen advised the outcome of the postal vote by shareholding and declared Rawiri Waru as the highest polling candidate .
Candidate: No of Shares: Rawiri Waru 149 .0354 Rawiri Bhana 47 .3395 Hemi Rolleston 41 .1659 Terry Tapsell 40 .3050 Application will be made to the Maori Land Court for his appointment in due course .
2,410 voting papers were issued with 459 returned . 30 were declared invalid as they were either unsigned, incomplete, illegible, unclear or in the case of whanau trusts, not signed by a trustee .
Tony Wihapi requested a percentage of shareholding be presented with next year’s results .
9 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST
MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM.
GENERAL BUSINESS:
Lani Kereopa thanked the trustees for the grants given to the Kereopa whanau during the year and suggested Pukeroa work with other trusts to improve our collective databases and share contact details .
Lani also stated her mother who works at the Polynesian Spa has said Pukeroa is the only Maori organisation that supported the Resource Consent application by the Polynesian Spa to continue to discharge paru water into the lake and asked why? Peter Faulkner responded that we have only supported the ‘take’ of geothermal water and that the Polynesian Spa’s discharge to the Lake was under a separate Resource Consent . Our support of the Geothermal take was on the explicit understanding that we objected to the discharging of bathed in water directly to the Lake .
Mihaere Kirby thanked the trustees for support for the NW Kapahaka to compete in the 2019 Te Matatini Nationals at Poneke .
Tony Wihapi also thanked the trustees for the ongoing support for Whakanuia. Without the financial support from Ngāti Whakaue’s 3 main entities our people would not be able to attend or participate in what is always an amazing occasion for NW .
Bryce Morrison spoke of the RSA getting back on track . There are @ 330 members with over 270 over the age of 65 . We need more Maori involved so the RSA sponsors can continue to support the community .
Alec responded to Tony Wihapi’s question – are you really retiring? Alec spoke of the time when his elders told him to get all our lands back in the township . The land was supposed to be leased but the Crown did not do that. Alec has only accomplished half what he set out to do – but has now handed the rākau on to his mokopuna Rawiri Waru . An impromptu haka was given in recognition of Alec .
Tony Wihapi sought clarification around the handing over of the rākau to Rawiri Waru. Did this include his mana to korero on the marae with Alec confirming ae.
Eileen Jones thanked Pukeroa for the grant for the koeke (65+) to compete in ‘Iron Maori’ being held in Napier .
Monty thanked all Ngāti Whakaue for helping to make the Royal Tour such a success. It would not have happened without the generosity of our people . One Foundation for all the infrastructure and hosting costs, Pukeroa Oruawhata for the Korowai gifted to HRH the Duchess of Sussex . NW Assets Trust for supporting and hosting the event and the NW Education Endowment Trust for the proposed coffee-table style Souvenir Book (of the Day) . The Royals have requested the stories around the making of the korowai, Casey & Karina Bird (kai), our elders (Bom Gillies), and in particular our tamariki who were part of the tour and powhiri .
The International guests and media were not told they would receive a powhiri or a meal . Looking after them this way has never been done before anywhere in the world . Rotorua is still receiving great media coverage as a result .
Meeting closed at 12 .28 pm with karakia from Monty Morrison .
Pukeroa Oruawhata Trust ~ Annual Report 2019 10 Robert Gillies 75TH Anniversary PilgrimageCassino Tour - Italy
11 Pukeroa Oruawhata Trust ~ Annual Report 2019 CHAIRMAN’S REPORT
Kia ora tatou Ngāti Whakaue,
It is my pleasure and privilege Where has our growth come from? to present my 34th annual report to Pukeroa Oruawhata Trust Settled Assets Developed Assets owners . $350,000,000 $300,000,000 I am pleased to report that our $250,000,000 financial position has improved once again with our Balance $200,000,000 Sheet now in excess of $300m $150,000,000 – of interest is that it took us 24 years to reach $100m, 10 years to $100,000,000 reach $200m and 3 years to reach $50,000,000 the $300m mark . $
Our focus over the years has 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 been to build an asset base that will serve the interests of our The building & construction sector has been rocked by several high- owners and Ngāti Whakaue for profile collapses and the withdrawal from the market by Fletcher generations to come . I believe Construction, all during a time when there has been unprecedented that we have established a solid demand . Due to prudent oversight of our projects we have not been foundation for the future . directly affected by the changing dynamics in the market. We have taken care to ensure that the industry problems do not become our Pukeroa’s contributions to problems . Rotorua were acknowledged at this year’s Westpac Business Within the context of what has been a changing operating Excellence Awards with the environment, I am pleased to report that this year has been another Group receiving the Outstanding successful one for Pukeroa . Our key milestones this year have been: Contribution to Rotorua Award . - Distributions have been maintained at close to $1m Our results reflect the hard - Our balance sheet has increased to $303m work of your trustees, our staff and our advisors and I take the - Our operating revenue has increased by 13% opportunity to acknowledge the - Our equity increased by $14m (+9%) efforts that have been put in on behalf of us as owners . - Insourcing of our property management function to build our internal capacity The last 12 months has been a mixed bag in terms of factors impacting on us – on one hand we have seen interest rates drop to the lowest levels since the 1960’s and on the other we have seen increasing uncertainty and caution creeping into business sentiment .
Pukeroa Oruawhata Trust ~ Annual Report 2019 12 GOVERNANCE - Audit & Risk Tanira Kingi – Chair Tina Ngatai I am pleased to advise that Monty Monty Morrison Morrison, who retired by rotation Jeanna Love and was available for re-election, was re-elected unopposed and - Property & Development Malcolm Short – Chair accordingly I congratulate him on his Tina Ngatai reappointment for another term of 5 Rawiri Waru years . - Communications, Strategy David Tapsell – Chair David Tapsell was appointed & Special Projects Tina Ngatai unanimously by trustees as Deputy Monty Morrison Chair following Alec Wilson’s retirement from the Trust last year . We are, and have been for some time, an organization of scale David’s experience as a commercial dealing with a wide range of complex issues and an effective lawyer and member of several sub-committee structure is a critical factor in ensuring that corporate boards is invaluable and we remain on track . We have also reviewed the governance we are fortunate to have access to fee structure to allow us to continue with the Non-Trustee someone with his skills . directorship program. This will be fully reflected in next years financial accounts with a reduction in our governance cost. In February this year we reviewed our sub-committee structure and I would like to take the opportunity to thank my fellow now operate with the following: Trustees, and our non-trustee directors Jeanna Love and Kiriwaitingi Rei, for the hours that they put in on behalf of the Pukeroa Oruawhata Group .
FINANCIAL With the leasing activity currently being undertaken, we expect to generate an additional $650,000 of revenue from our core assets Our Accountant, Alexander over the next 12 months . Wilson of Deloitte will speak to the financials in detail however the key The Trustees confirm that we have recommended the following: items from the current year are: - An increase in owners’ distributions from $810,000 to - Total Assets increasing to $850,000 (+5%) $303m (+8%) - An increase in the Charitable Trust funding from $300,000 to - Gross operating revenues $350,000 (+17%) increasing to $19 .5m (+13%) A resolution to confirm the recommended distribution will be put - Net operating profit down at shortly . $3 .9m (-14%)
- Profit before Tax $15.008m Returns to owners last 10 years The gross operating profit reduction Owners Grants Charitable Trust Grants reflects the major works undertaken $1,200,000 on the Countdown loading dock, replacement of the farmers air- $1,000,000 conditioning system and costs $800,000 associated with the refurbishment of the Rebel Briscoes stores . These $600,000 costs, particularly the Countdown $400,000 loading dock, are either non- $200,000 recurring or recurring every 10-15 years . $ - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
13 Pukeroa Oruawhata Trust ~ Annual Report 2019 PROPERTY AND TE KOMITI NUI O NGĀTI DEVELOPMENT WHAKAUE
The key property & development activities Settlement negotiations between TKNONW and the Crown will be covered in detail in our Operations have been paused for some time . The Crown have asked report . Like previous years, this year has seen TKNONW to re-mandate before it will re-enter negotiations a lot of activity particularly in the leasing with TKNONW . In September 2019 representatives area with several major lease renewals, new of TKNONW met with representatives of the Pukeroa building leasing and tenant changes . Oruawhata Trust, Ngāti Whakaue Tribal Lands and Ngāti Whakaue Assets Trust to discuss these matters . These Progress on Wai Ariki Hot Springs & Spa meetings were positive . We have agreed to jointly work has been slower than we had anticipated together to assist TKNONW progress the Ngāti Whakaue due to the challenges facing the construction negotiations . This will take some time to work through . We industry and the need to remediate the site . aim to come back to Ngāti Whakaue with a draft Settlement After decades in the hands of the Crown, we Plan which includes a mandate strategy early next year . have had to take responsibility for cleaning the site after years of Crown neglect . The site has MANAGEMENT now been fully remediated and the building platform constructed . Our team has grown this year as a result of establishing the Property Management function effective from 1 August. I These issues have also had cost implications extend a warm welcome to Steve O’Sullivan, Gary Herbert and we have value engineered the design and Lee Emery . Whilst it is early days, I am pleased to say to deliver a quality product within prudent that we are already starting to see the benefits of this decision. financial parameters. We remain confident with this project and are taking our time to get I am pleased to advise that Peter Faulkner has renewed his it right . contract as General Manager for a further two years . Peter has been an integral part of our team for the last 9 years and whilst Subject to funding we expect to be this year has presented him with some additional challenges commencing construction next year . personally, he continues to deliver the results for us .
THE WHAKAREWAREWA Peter is more than ably supported by Helen Crawford who LANDS ensures that what must be done gets done .
Six years on from the decision of the As already mentioned, my fellow trustees and directors independent arbitration panel on the land, continue to do the hard yards on behalf of the Trust . Given we are now about to start this process all over that all of them have “real jobs”, the efforts put in are even again . We do not know when this matter will more notable and I express my gratitude and appreciation for be finally resolved. their efforts. CONCLUSION TE PUIA BUSINESS Over the last 38 years that I have been involved with the As mentioned last year, the Te Puia business Trust I’ve seen the business grow from a small, barely is in the process of being given back to us profitable entity to one of real substance producing by the Crown with no strings attached . We significant benefits to our owners. This has not just will be 25% owners of the business with the happened, it has been the result of the vision and old- three hapū of Ngāti Whakaue owning 25% fashioned hard work of your trustees, management and and Wahiao Tuhourangi o Whakarewarewa advisors . owning 50% . The return of the business does not impact on any historical claims that may Once again, I thank all those who have contributed to our exist . success, your efforts are appreciated.
The Vesting bill has had its first reading in Ngā mihi nui, December 2018 and the Maori Affairs Select Committee have now reported back to Parliament that the Bill proceed to the second and final reading which we understand will Malcolm T Short ONZM happen this year .
Pukeroa Oruawhata Trust ~ Annual Report 2019 14 PUKEROA ORUAWHATA TRUST
OWNERS GRANT
Policy Background:
Prior to 2007, the Trust paid a dividend to owners based on their shareholding which meant many owners with small shareholding were paid a dividend that was less than the cost of making the payment .
To address this situation, it was first resolved at the 2007 AGM that the Trust would change to an owner grant in lieu of a dividend, with a minimum grant amount established . The generosity of the owners with larger shareholding is acknowledged as we are now paying a minimum grant of $125 .
2019 OWNERS GRANT POLICY
It is recommended that an Owners Grant in lieu of a dividend be payable (referred to as the 2019 Owners Grant) to registered owners .
1. An owner is identified as an individual or a Whanau Trust registered on the Pukeroa Oruawhata Trust Share Register and has been allocated a Share Register Identification number.
2 . Payments will only be made by direct credit to owners whose address, and bank account is held .
3 . Payments have been calculated according to shareholding bands as shown .
4 . This year’s grant in lieu of a dividend is tax free .
5. Any Owners who update their contact and financial details after the payment date and up until the next AGM will be entitled to the payment they would have received had their address and bank account details been known at distribution date .
6 . Any owners who succeed to shares after the payment date will be entitled to the current payment up until the next AGM on the deceased’s shareholding (or succeeded proportion) where it has not been paid to the deceased shareholder. Where the Trust is notified of a shareholder’s death the Trustees may at their discretion release up to 3 years unpaid grants to the successors .
7 . The Trustees reserve the right to make only one payment to a shareholder whose name may appear more than once on the share register where it is evident that those multiple names refer to one person .
8 . Entitlement to the payment will expire at the next Annual General Meeting date .
9 . Payments to overseas owners will be the $NZ amount less any bank charges .
10 . The Trustees reserve the right to amend this policy or draft new policy to cover any circumstance not covered or anticipated by this policy .
11. The Trustees decision in these matters is final.
RESOLVED: “that an owners’ grant in lieu of a dividend to the value of $850,000 be supported and approved”
Moved: Seconded:
15 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST
Indicative grant structure for owners in lieu of dividend. Payment is made on the basis of addresses and bank accounts being held. Minimum Grant $125
Share Range Grant to be paid
0 to 0.01999 $125
0.02 to 0.02999 $125
0.03 to 0.04999 $125
0.05 to 0.07999 $125
0.08 to 0.09999 $125
0.1 to 0.14999 $128
0.15 to 0.19999 $170
0.2 to 0.29999 $256
0.3 to 0.39999 $341
0.4 to 0.49999 $426
0.5 to 0.59999 $511
0.6 to 0.69999 $597
0.7 to 0.79999 $682
0.8 to 0.89999 $767
0.9 to 0.99999 $852
1 to 1.49999 $1,278
1.5 to 1.99999 $1,704
2 to 2.49999 $2,131
2.5 to 2.99999 $2,557
3 to 3.49999 $2,983
3.5 to 3.99999 $3,409
4 to 4.49999 $3,835
4.5 to 4.99999 $4,261
5 to 5.49999 $4,687
5.5 to 5.99999 $5,113
6 to 6.49999 $5,539
6.5 to 6.99999 $5,966
7 to 7.49999 $6,392
7.5 to 7.99999 $6,818
8 to 8.49999 $7,244
8.5 to 8.99999 $7,670
9 to 9.49999 $8,096
9.5 to 9.99999 $8,522
10 to 11.99999 $10,227
12 to 13.99999 $11,931
Pukeroa Oruawhata Trust ~ Annual Report 2019 16 4% 13% 206 33 $19 .479m H $0 .962m
ANTS INAN IA % TOTA 1 004 514 % 17 8 ESU TS O A E $303 .259m $9 .446m
43 1884 % O % 14 9 N E A I $172 .905m $3 .937m OPERATIONS REPORT
Kia ora tātou, OPERATING ENVIRONMENT
The last 12 months has been one of consolidation after the As mentioned by the Chairman, the completion of three major projects in the previous year . Construction Industry has been going through a major shake up with several high-profile crashes Our financial results, which will be covered by Alex and the withdrawal of major industry players Wilson in more detail soon, show a decrease in our net from the market . There has been much debate profit this year. This is mainly a result of repairs and about the cause of this market turmoil, however maintenance completed last year being ‘expensed’ and low margins and unsustainable business we expect that the 2020 results will show a significantly practices in the industry are the key drivers . improved result . % % Through prudent management we have been Our focus this year has been predominantly on leasing insulated from the worst of the issues, however, 4 13 activities, both for our new builds and re-leasing several it has created an environment where we existing tenancies as their tenants move on . have had to take extra care to ensure that the problems in the Industry do not become ours . 206 33 Our projections show that gross revenue for the group The indirect impact has been continued pressure $19 .479m will exceed $20 million by 2020 . H $0 .962m on costs and availability of tradespeople . The local economy has continued to show signs of strength across the board, supported by a growing population and historically low unemployment rates . INAN IA % The demand for well-presented tenancies ANTS continues to be strong, particularly in the TOTA 1 004 514 % 17 commercial / light industrial sector where we ESU TS O simply do not have enough “stock” available 8 to meet demand . The lack of ability to meet E demand for industrial property is a real A constraint on Rotorua’s growth prospects . $303 .259m $9 .446m After years of strong growth, there are signs that the number of visitor arrivals into New Zealand is starting to slow, however, the numbers remain well above historical levels . The outlook for tourism continues to be positive for New Zealand in general, and Rotorua in particular . The slowing of the rate of growth in visitor 43 1884 % numbers creates opportunities to increase focus % on providing value rather than relying on O 14 volume . 9 N E A I $172 .905m $3 .937m
Pukeroa Oruawhata Trust ~ Annual Report 2019 18 OPERATIONS REPORT
Globally we have seen an increasing % CASH RATE number and level of “uncertainties”, 10 with the financial markets reacting with 9 caution . We have seen Central Banks, 8 including our own, look to use interest 7 Forecasts rates and monetary policy to maintain 6 economic growth . 5 4 RBNZ Interest rates are now at the lowest 3 August MPS levels since the 1960’s and the market 2
expectations are that there may be further 1 BNZ softening of interest rates to come . The 0 forecast for further reductions in interest 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 rates is a sign of further uncertainties Source: RBNZ, BNZ Quarterly predicted in the domestic and global economies . DEBT PROFILE 2018-2020
For us, the lower rates mean that our cost 80% of borrowing is reducing and is expected 70% to continue to reduce as our existing fixed 60% rate commitments mature . 50% 40% Our debt profile has 55% fixed (down 30% from 61% fixed last year) and is scheduled 20% to reduce to 30% fixed by June 2020. This 10% means we will see some of our high cost 0% fixed debt roll off and we should be well 2018 2019 2020 placed to replace this with long term rates Floating Fixed that are at historically low levels .
Our current average cost of borrowing is OPERATING REVENUE 4 72%. which we expect will continue to soften over the coming year and provide $25,000,000 direct benefit to our bottom line. $20,000,000
The projections for our gross revenue are $15,000,000 positive with additional lease revenue expected to be realized over the next 6 $10,000,000 months . $5,000,000
$ - 2011 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020 (P)
19 Pukeroa Oruawhata Trust ~ Annual Report 2019 OPERATIONS REPORT
INSOURCING Pukeroa Property Management Limited now provides our property management services In August this year we completed the insourcing with Steve O’Sullivan (Property Manager), Gary of our property management function which had Herbert (Facilities Manager), and Lee Emery previously been provided by Hulton Patchell (Property Administrator) joining the team . Support Services Limited . The decision to in-source the property management function was in no way a reflection of any concerns with the previous provider but a reflection of the age and stage of the Group. Insourcing will deliver significant cost savings and increase our operating efficiencies going forward.
Peter Faulkner General Manager
Gary Herbert, Lee Emery and Steve O’Sullivan
RESIDENTIAL Across the portfolio of rental properties, the rental levels are currently at 60% of the median rent rates Our housing stock remains at 25, with 23 of for the area in which the houses are located . As we these now completed and 2 more expected to incur additional maintenance costs, we will need to be completed by the end of this year . We had progressively increase the rents charged, but we will expected that all 25 would be completed by this maintain them at levels lower than the median rent time, however the consenting process on the last 2 rates . dwellings has dragged on until mid-2019 . All our houses are tenanted by Ngati Whakaue . We have also completed an audit of our houses to ensure that they meet or exceed the requirements The Care Village (formally Whare Aroha) was of the Residential Tenancies Act in terms of being completed in 2017 when the development struck warm, dry homes . All houses now have modern difficulties. The Village has now been trading for heating systems and have ceiling and underfloor two years and we are pleased to advise that it is insulation . enjoying strong demand and delivering on the care outcomes it was targeting . Over the last 3 years we have invested $3 25m. in increasing and upgrading our housing stock for our We acknowledge the contributions of the whanau . Governance team of Simon Collett, Alexander Wilson, Rosemary Viscovich, Sonia Hawkins As an investment, housing does not provide us with (who retired this year due to work commitments), the level of cash return that we target however we and Peter Spurdle for all the work that has been believe that what is important is the social benefit. undertaken to ensure the Care Village continues to deliver the quality of care for their residents, many of whom are our kaumatua and kuia .
Rawiri Waru Trustee / Director
Pukeroa Oruawhata Trust ~ Annual Report 2019 20 OPERATIONS REPORT
LARGE FORMAT RETAIL We have also had two of our major tenants on Rotorua Central Mall express their intent to Our Property team has been kept busy this year recommit to the site for extended periods on the with the number of tenancy changes across the expiry of their current leases . Rotorua Central Mall, Trade Central and Ti Street and their focus is ensuring that we drive as much value out of our asset as possible . PUKEROA GROUP OCCUPANCY LEVELS
The new leasing’s this year have included: 100% • Refurbishment and leasing of 37 Te Ngae Road to Speedy Signs 95% • Refurbishment and leasing of 35 Te Ngae Road to Housing First, Rotorua . 90% • Leasing of 12 Ti Street to Pipeline Industries • Absorption of Warehouse Stationery into The Warehouse premise 85% • Leasing of the ex-Warehouse Stationery to Torpedo 7 80% • Relocation of Number 1 Shoes to Trade Central WHL PLLP PPNo2 POHL POT POT • Leasing of 1183 Amohau Street to the Commercial Residential Electoral Commission
The combination of new leasings and recommitments mean that we have stability in our income going forward .
Our occupancy levels are currently 96% for both POHL and PPNo2, and 100% for the Trust .
Our debtor position is generally very tidy, with only one tenant (Te Taumata o Ngati Whakaue) causing us concern . We have worked closely with Te Taumata and will continue to do so whilst practicable .
Overall, our core commercial property business is in good stead . We are currently working on the following transactions which we expect to have closed out by Tina Ngatai the end of the year: Trustee / Director
• Haupapa House – Eastern • Haupapa House – Western • Ex-CTTU – (older building beside Kmart) • 1489 Hinemoa Street
21 Pukeroa Oruawhata Trust ~ Annual Report 2019 OPERATIONS REPORT
TOURISM In light of the issues impacting on the construction industry and the early signs As already mentioned, after years of strong growth in of a slowing in the rate of growth in visitor numbers there has been a softening in the number visitor numbers, we have been taking the of international visitors over the last 12 months with the opportunity to undertake thorough due back-packer market particularly affected. Whilst there is diligence . We engaged an independent review a slowing of the rate of growth it is important to note that of our business plan earlier this year this the overall visitor numbers are still significantly higher review was strongly supportive of the Spa than they were 2-3 years ago and the outlook for tourism concept . remains positive . After receiving the initial pricing for the Spa, Tourism is and will remain a significant driver of our we have worked through a value engineering local economy and our involvement in this sector is a key process with our preferred construction firm. focus for us going forward . In an increasingly competitive We are now at a point where we are looking market, it remains critical that we build on the key features to complete the procurement process which, of our culture and the geothermal resource to differentiate subject to funding, will see a commencement us from other destinations . on site next year .
The Wai Ariki Hot Springs & Spa development will Monty Morrison incorporate both our culture and the geothermal resource Trustee / Director into a purpose-built ‘health & wellness’ orientated facility .
Pukeroa Oruawhata Trust ~ Annual Report 2019 22 OPERATIONS REPORT
CHARITABLE TRUST GRANTS $1,000,000 Our Charitable Trust’s focus is on the provision of benefit to Ngati Whakaue through health grants $900,000 and supporting Ngati Whakaue entities . $800,000 Over the last 12 months the Charitable Trust has supported over 350 applicants paying out $313,936, $700,000 made up of the following; $600,000
279 Health Grants $116,462 $500,000
26 Cultural Grants $15,140 $400,000
$300,000 40 Discretionary Grants $131,689
$200,000 4 Marae Grant (*) $50,645 2011 2010 2012 2013 2014 2015 2016 2017 2018 2019
Last year we increased the health grant to a We also support a number of Whakaue orientated maximum of $500 in any one year and we are community activities with those grants over $1000 seeing a steady increase in the number of grant scheduled below . approved and paid out . Our Tangi grants were also increased to $500 to support our whanau in Application forms are accessible from our website meeting the costs of farewelling their loved ones . (www.pukeroa.co.nz), from our office or emailing grants@pukeroa .co .nz .
Discretionary grants of over $1,000 is as follows:
Woodward Law – National Maori Health Hui $1,500 Rongomaipapa Kokiri 100 yr celebration $10,000 Billy Macfarlane – Offender programme $5,000 Whakaue ki Maketu * – Part Insurance $10,750 Tunohopu Marae* – Insurance $13,442 Te Arawa Lakes Trust – Matariki Koeke Ball $2,500 Visions of a Helping Hand Night Shelter $5,000 Waikite Rugby & Sports Club $25,000 NW Wmn’s Hlth League AGM Ohinemutu Branch $3,000 NW Whakanuia – Assets Trust Dinner & Kapa Haka day $20,000 Lake Road Tavern Sports Bar – 8 Ball Club $4,191 Pakaru Tinana Kaumatua Group – Korowai Aroha Hlth $1,745 NW Kapa Haka – National Comp – Wgtn - (performers) $10,000 NW Kapa Haka – National Comp – Wgtn - (supporters) $7,000 Toa Oranga Tinana o Waiariki – 65+ Nat Maori Kaumatua Conf $1,004 Pouhine Ke te Whainga Charitable Trust - homeless $1,000 Robert Gillies – Cassino Pilgrimage Tour $5,000 Te Papaiouru Marae* – Geothermal repairs $13,225 Lakeside Charitable Trust – Lakeside Concert $20,000 Maori Youth Leadership Summit $1,000 Tunohopu Marae* – Geothermal repairs $13,228
23 Pukeroa Oruawhata Trust ~ Annual Report 2019 OPERATIONS REPORT
OTHER OPERATIONAL ACTIVITIES
The Trust continues to review its current activities and its strategic direction to ensure that we continue to meet the changing demands of the environment that we are operating within . The in-sourcing of our property management functions this year was a result of this strategic focus .
We are now a large operation with a broad range of activities, and it is critical that we are continually reviewing our strategic direction, our policies and our procedures to ensure that we meet the challenges of an increasingly complex business environment .
Tanira Kingi Trustee / Director
Pukeroa Oruawhata Trust ~ Annual Report 2019 24 25 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUaWHATA GROUP 2019 FINANCIAL REPORT
This Financial Report provides a summary of the Group’s Financial Performance and Position for the year ending 31 March 2019. Full audited financial statements are provided on pages 36-64.
BDO Rotorua Limited have audited the financial statements and have issued an unqualified audit opinion.
FINANCIAL PERFORMANCE
The overall financial results for the group show another strong year with growth in revenue and a new milestone, with the Groups Assets now exceeding $300 million .
THIS YEAR LAST YEAR CHANGE ($m) ($m) Operating Revenue 19 .480 17 .274 12 .8% Operating Expenses 9 .446 8 .048 17 .4% Interest 6 .096 4 .640 31 .4% Operating Profit 3.937 4.586 14 .1% Charitable Trust Grants .314 .322 2 .4% Other Gains/Losses 11 .785 25 .052 5 .3% Net Profit after Tax 15.008 28.876 48%
An operating profit of $3.937m was achieved from revenue of $19.48m. It is key to note that this is a close reflection of the cash profit for the group. After taking into account the revaluations of investment properties and interest swap revaluations the group has an overall profit of $15.008m
APPLICATION OF REVENUE
20
15 $9.446m $0.401m
10 $19.480m $11.785m
$6.096m $15.008m 5 $0.314m $3.937m 0 Operating Operating Interest Operating Charitable Other Gains/ Tax Net Profit Revenue Expenses Profit Trust Grants (losses) after Tax
Pukeroa Oruawhata Trust ~ Annual Report 2019 26 OPERATING REVENUE OPERATING EXPENSES
Rental Income has increased by $2 .039m since Operating Expenses have increased mainly due to last year (15%), due to the completion of Kmart a number of one off expenses. However the key development, a full year of rental from the Care movements in operating expenses are as follows: Village in Ngongotaha, new tenancies, scheduled rental reviews and new residential property being • Repairs & Maintenance – Increase of $1 072m. completed . • Insurance – Increase of $171k Operating Expense recoveries have also increased • Rates – Increase of $49k by $280,740 (10%) due to the increased costs to operate these properties . Interest has increased by $1 .456m with the main driver of this increase related to funds drawn down Other Revenue has decreased by $113,850 (33%) for the Wai Ariki Spa Development . It is also key to due to no distribution being received from WJT note that funds have been drawn down in POHL and last year recognising a one off compensation and advance through to PLHL . Structuring the debt payment from NZTA for the land taken through the facilities this way allows for tax advantages for the Arikikapakapa reserve . group .
Operating Revenue Operating Expenses
$19 .480m $15 .542m $12 .688m $17 .274m $12 .207m $11 .821m $16 .176m $15 .455m
2016 2017 2018 2019 2016 2017 2018 2019
Outgoing Recoveries Operating Expenses Interest, Dividends & Other Income Interest Foodcourt and Operating Expenses Rental Income
Composition of 2019 Operating Expenditure ($m)
Interest Foodcourt and other $6 .096m 39% $1 .598m 10%
Non Recoverable OPEX $0 .466m 3%
Trustees/Directors $0 .573m 4%
Secretarial and Accounting $0 .397m 2% Depreciation/Amortisation Other Expenses $0 .157m 1% $2 .432m 16% Repairs & Maintenance Rates & Insurance $1 .971m 13% $1 .853m 12%
27 Pukeroa Oruawhata Trust ~ Annual Report 2019 OPERATING PROFIT
The Net Operating Profit after Interest Costs has decreased from $4.586m to $3.937m ($.649m). This is more representative of the cash profit for the group and is what is available for repayment of debt, owners grants and charitable trust grants . OTHER GAINS/LOSSES NET PROFIT AFTER TAX
Other Gains/Losses comprise of “Changes in the Fair value Pukeroa Oruawhata Holdings Ltd is the only of derivative financial instruments” and “Changes in Fair entity in the group that has paid tax . Value of Investment Properties” After allowing for the Other Gains/Losses Changes in Fair value of Derivate Financial Instruments – and deducting of tax the Total Net Profit after This is a non cash accounting transaction which recognises tax for the year is $15 008m. . the change in value of interest rate swaps year to year . This year a loss of $580,902 has been recognised as result in falling interest rates .
Changes in the Fair value of Investment Properties – Details of the changes for each entity in the group are contained in note 8 of the financial statements. Details of the changes in each entity are noted as follows:
Changes in Fair Value of Investment Property Overview
Pukeroa Oruawhata Trust • 9% Increase in Value • Uplift in values reflects general increase in property values & • Completion of 13 Sala St, Upgrades to 5 Froude St and 37 Te Ngae Rd .
Pukeroa Oruawhata Pukeroa Properties No2 Pukeroa Lakefront Holdings Ltd Ltd Holdings Ltd
• A modest uplift of 2% • Uplift of 9 4%. • An uplift of 6% • Capital projects completed • This reflects the finishing • The increased value reflects including HVAC on BNZ and touches to Kmart and uplift the lakefront site as major Farmers in value of the site due to future development area by • Upgrades to Rebel and confirmation of tenancies. the valuer . Briscoe’s Buildings, Smith City and Final works on Haupapa House .
Pukeroa Properties Waihunuhunukuri Pukeroa Lakefront Limited Ltd Holdings Ltd Partnership
• An uplift of 6 9%. • A fair value decrease of $14k • A modest uplift of 4 7%. • This increase reflects the • This decrease is a result of • The increase reflects a general increase in property capitalized demolition costs complete development and values . of the Lakehouse Hotel . proven operating activity by the tenant .
Pukeroa Oruawhata Trust ~ Annual Report 2019 28 BALANCE SHEET REVIEW BANK COMPLIANCE
The BNZ and ANZ play an important role in the THIS LAST on-going success of the Group’s operations . The YEAR YEAR Change banking relationships contain certain performance ($m) ($m) covernants that the group must achieve . The performance against these covenants is measured Total Assets 303.259 280.757 8 .0% quarterly and with the Group’s perfomance as at 31 March 2019 summarised as follows: Total Liabilities 130.354 122.217 6 .7%
Total Equity 172.904 158.540 9 .0%
The Group’s total asset holding has increased by Bank $22 .503m during 2019 as a result of Investment Financial Required Actual Compliant Property value increases and the continued works Measure towards the Wai Ariki Spa development . Equity/ 40% 56 .9% Total Liabilities have increased by $8 .137m as we Assets continue to fund the Wai Ariki Spa Development Interest 1 .75 Times 3 .07 Times and complete some of the smaller projects noted Cover earlier in the report .
To mitigate the risk of interest rate exposure the group uses a number interest rate swaps and fixed interest rate products to provide certantity of its Bank interest costs . In locking in this certainty we don’t Financial Required Actual Compliant always get the benefit of interest rate reductions and Measure therefore the value of these swaps as recognised Equity/ on the balance sheet has increased from $1 .147m to 40% 58 .5% $1 .728m . Assets Interest 1 .5 Times 1 .54 Times In addition to interest rate exposure, the group Cover has also limited the risk exposure to just one bank . Below is a split of the group’s debt exposure by The loans with ANZ are held with PPNo2 & bank . PLHL and are secured by First Mortgage over Trade Central and Lakefront Properties along with an unlimited cross guarantee from POHL . The rest of the groups loans are held with BNZ ANZ secured by first mortgage over Rotorua Central $35 .3m Mall and a number of other Investment Properties 28 .8% in the remainder of the Group .
As interest on our borrowings represent our single largest cost (39% this year) the Group has an interest rate risk management strategy in place that uses a mix of fixed and floating interest rates. BNZ The current weighted average effective interest on $87 .4m our loans is 4 .72% 71 .2%
We continue to recognise a Deferred Tax Liability in accordance with Financial Reporting standards which has slightly increased to $3 .805m . All though this is on our balance sheet the reality is that this liability will never crystalise due to no intention sell the groups investment properties .
Overall the Equity position of the group is strong at 57% (56 .5% - 2018) .
29 Pukeroa Oruawhata Trust ~ Annual Report 2019 Pukeroa Oruawhata Group - 5 year Asset and Equity Growth with Gearing Composition
$303.3m $280.8m $227m $204.2m $183m $122 .2m $130 .4m $86 .8m $96 .7m $82m $158 .5m $172 .9m $101m $117 .4m $130 .3m
2015 2016 2017 2018 2019
Net Equity Total Liabilities Total Assets
TRUSTEES/DIRECTORS REMUNERATION
In February 2019, the Trustees reviewed the current In addition to this, the Trust has recognised the Trustee/Director remuneration levels and agreed need to appoint industry expertise for the Wai on a number of changes including reducing the Ariki Spa . In doing so, Tim Cossar, CEO of Te Puia PLHL and POHL Director Fees from $30,600 to has been appointed as an independent industry $18,000 per year . director .
The driver is partly due to many developments The overall effect of these changes will see group now reaching maturity and a desire from the Trust governance costs reduce to $518,000 per year . to have all trustees participate across the group whilst not increasing the governing costs .
POT POHL PLHL TOTAL Malcom Short (Chairman) $25,307 $66,343 $61,240 $152,890 Alec Wilson (*1) $13,082 $39,270 $39,750 $92,102 David Tapsell (*2) $17,330 $30,210 $31,097 $78,637 Monty Morrison (*3) $16,352 $1,500 $29,950 $47,402 Tanira Kingi (*4) $16,352 $29,950 $1,500 $47,402 Tina Ngatai (*5) $16,352 $1,304 $29,950 $47,206 Rawiri Waru (*6) $6,813 $29,950 $11,700 $48,063 Jeanna Love - $29,950 - $29,950 Kiriwaitingi Rei - - $29,950 $29,950 Total $111,588 $227,278 $233,937 $572,802
*1 – Ceased as Trustee on POT 3rd November 2018, Ceased as Director on POHL & PP2 in February 2019 . *2 – Appointed as Deputy Chairman from November 2018 *3 – Appointed to POHL from February 2019 *4 – Appointed to PLHL from February 2019 *5 – Appointed to POHL from February 2019 *6 – Appointed as Trustee to POT from 3rd November 2018 and PLHL from November 2018 .
Pukeroa Oruawhata Trust ~ Annual Report 2019 30 DISTRIBUTIONS AND SHARE REGISTER
Distributions to owners in 2019 are made by way Once again the Trustees have recommended of “Owners grants” and was at a rate equivalent to increasing the amount allocated for owners $812 per share with a minimum Grant of $125 . By distribution from $810,000 to $850,000 . adopting a minimum grant approach, the Trustees and larger shareholders have ensured that all Maori Land Online records the Trust share register identified shareholders receive a payment of some comprising of 997 .3874 shares by 6,838 owners . significance. The net equity backing of one share is $173,358 .
Share Registry Information
Address Provided and No Bank A/c 795 15% No Address and No Details Bank A/c 2,918 55% 4 0%
Address and Bank A/c Provided 1,639 31%
Locating owners is an ongoing issue and we continue to encourage owners to complete their successions and provide address, bank and IRD numbers with the Trust . The more information we have will enable the Trust to further develop its owner’s policies . The Trust still has a historical unclaimed dividend balance totalling $203,573 available for owners that complete their successions and register with the Trust .
Alex Wilson Accountant
31 Pukeroa Oruawhata Trust ~ Annual Report 2019 Pukeroa Oruawhata Group - Governance Structure
PUKEROA ORUAWHATA TRUST Trustees: • Malcolm Short (Chairman) • David Tapsell • Monty Morrison • Tina Ngatai • Tanira Kingi • Rawiri Waru
PROPERTY & DEVELOPMENT FINANCE & EXPENDITURE SUBCOMMITTEE SUBCOMMITTEE • Malcolm Short • Tanira Kingi (Chair) • Tina Ngatai • Tina Ngatai • Rawiri Waru • Monty Morrison • Jeanna Love
RETAIL/ TOURISM CHARITABLE COMMERCIAL • Pukeroa Lakefront Holdings • Pukeroa Oruawhata Holdings • Pukeroa Oruawhata Trustee • Waihunuhunukuri Holdings Services • Pukeroa Oruawhata Trust • Pukeroa Lakefront LP • Pukeroa Oruawhata Charitable • Pukeroa Properties No2 • Lake Road Tavern Trust • Pukeroa Properties Ltd • Pukeroa Oruawhata Investments Trustees: Directors: • Wai Ariki Spa Management Ltd • Malcolm Short (Chairman) • Malcolm Short (Chairman) Directors: • David Tapsell • Alec Wilson • Malcolm Short (Chairman) • Monty Morrison • David Tapsell • David Tapsell • Tina Ngatai • Tanira Kingi • Monty Morrison • Tanira Kingi • Monty Morrison • Tanira Kingi • Rawiri Waru • Tina Ngatai • Tina Ngatai • Rawiri Waru • Rawiri Waru • Kiriwaitingi Rei (Non-Trustee Director) • Alec Wilson (Non-Trustee Director) • Jeanna Love (Non-Trustee Director) Operational Structure
OPERATIONS PROPERTY MANAGEMENT MANAGEMENT • Peter Faulkner (General Manager) • Steve O’Sullivan (Property • Alex Wilson (Accountant) Manager) • Helen Crawford (Administration/ • Gary Herbert (Facilities Manager) P .A) • Lee Emery (Property Accounts & Administration)
Pukeroa Oruawhata Trust ~ Annual Report 2019 32 2019 CHAIRMAN’S REPORT
The Minister of Education NZ Government Wellington
Tena koe Minister
OPERATIONS REPORT
It gives me great pleasure to present my 23rd annual report for the Ngati Whakaue Education Endowment Trust Board .
2018 will be remembered as the year we lost one of our fondest community leaders with the passing of Bea Yates. Aunty Bea, as she was affectionately known to all, was a person of rare qualities who gave so much to the community whether providing food to hungry school children, writing children’s books, singing her famous Tina Tuna concerts, supporting marae activities or sitting on Governance Boards . Aunty Bea served 12 years as a Trustee on the Endowment Board and her wisdom and energy will be missed . Rest in peace Aunty Bea .
We also farewelled an original Trustee Pita Anaru when he retired after 23 years on the Board in December 2018 . Pita has had an outstanding career in the Army, as a School Principal, Justice of the Peace and a key driver of the Boards policies and processes . Pita was fully immersed in Board affairs participating on the Property, Investment and Education subcommittees. Along with his late wife Bev, Pita has been integral to the annual Project Grants to Schools for Literacy and Numeracy and Tertiary Grants . Likewise Pita will be missed for his passion, commitment and drive to achieving the Endowment goals .
New Trustees Herby Ngawhika, Wynel Raureti-George and Colin Bennett have been welcomed onto the Board in recent months .
The Board has continued its stable financial position. Gross income increased by 16.6% from $2,596,272 in 2017 to $3,028,987 in 2018 reflecting the rent reviews occurring in the last year. Operational costs increased from $475,746 to $663,464 and this was directly attributable to legal costs ($194,783) incurred on the rating valuation case the Board has been battling the Rotorua Lakes Council over for a number of years . The Board won the Court of Appeal case brought by the Council and the matter has now gone back to the Land Valuation Tribunal . The Tribunal hearing has been held and a decision is expected in September 2019 . This is an important case for rating valuations for properties with alienation restrictions and the outcome will establish an important precedent and put this issue to bed for the foreseeable future .
Back to the finances the overall net Surplus before grants was $2,365,523 compared to $2,120,527 in 2017. $2,365,523
$2,365,523 Net Surplus Revenue Expenses before Grants $3,028,987 $663,464 $2,365,523
33 Pukeroa Oruawhata Trust ~ Annual Report 2019 The Board made grants totalling $1,318,034 ($1,370,011 in 2017) . We have 20 active grant policy areas with the largest supported areas being Tertiary grants to students, numeracy and literacy projects in schools and the Ngati Whakaue Education Taumata initiatives. Detailed grants payments are included in the financial accounts at pages 22 and 23 .
The total number of Tertiary students supported with grants this year is 169 compared to 157 in 2018 . A total of $321,576 has been allocated to these tertiary students in their second and higher years of study . Last year the Board set up a joint venture arrangement with Victoria University to jointly fund Ngati Whakaue students attending Vic Uni . Last year the sum of $25,000 each was applied to Ngati Whakaue students attending Vic Uni . That arrangement has worked very well and this year the matched funding allocation has been increased to $30,000 each for grants to 21 students . We congratulate Victoria University on their initiative to grow and support students from outlying areas .
Project grants in schools for numeracy and literacy continue to be the area of greatest demand and the Board has entered a Joint Venture with Rotorua Energy Trust to expand the funding to Rotorua Schools . A total 38 schools and organisations have approved projects this year for a total funding of $750,000 . We also congratulate the Energy Trust Trustees for coming on board with project grant funding and convey grateful appreciation to our Education Consultant Jackie Woodland who is doing an excellent job in monitoring the school projects and for accepting the increased workload .
GRANTS TO 31 DEC 2018
Other $316,272 Tertiary $360,239
Ngati Whakaue Taumata $200,000 Projects $493,500
The investment portfolio performance was flat during the calendar year to 31 December 2018 showing a small decline on value of a net 1% . However markets have been very strong since then and the portfolio is showing a return of 10 .47% for the last 12 months and 8 .49% since inception . At 31 December the Total equity of the Board was $64,279,990 comprising Cash and investments of $26,628,990 and land value of $37,651,000 .
The Board continues to prudently manage its 94 leases . All rents are up to date and we have had no defaults . 7 rent reviews were completed up to 30 June 2019 and 2 are still to be finalised. A further 46 leases are due for review in the next year .
Full audited financial statements are included in this report. The audit qualification remains due to the Board policy of not undertaking market valuation of the land due to the nature of the perpetually renewable leases .
Our Board and management act responsibly and effectively in a united manner to manage the Endowment business and I take this opportunity to congratulate the Board on the outcomes achieved and thank them all for their hard work contributing to the ongoing success of our important Taonga .
Nga mihi
Malcolm Tukino Short, ONZM
CHAIRMAN
Pukeroa Oruawhata Trust ~ Annual Report 2019 34 MAORI LAND COURT SUCCESSIONS
Q. How do I apply for succession?
A. You need to file an application for succession at the Maori Land Court. You will need to provide the following:
• Original death certificate or a certified copy
• Original will (or grant of administration) if there is one
• Fully completed application papers
• Application fee of $60 .00
• Details of the deceased’s whanau . That is parents, brothers, sisters and children .
Q. How much does it cost?
A. The application fee is $60 .00 . That is the only cost payable to the Maori Land Court . You may incur other costs obtaining copies of death certificates and if you have to consult a lawyer. You should discuss this with Court staff.
Q. What happens when I lodge my application?
A. The application is searched by Maori Land Court staff to obtain full details of the deceased’s land interests . You will receive a copy of that search and will be advised by letter when you have to go to Court . A Court hearing will be arranged at the Court venue closest to where the land is located or, if you prefer, closest to where you live . Following the Court sitting, you will receive a copy of the Court minutes . This is confirmation of what happened at the hearing.
You will receive a Vesting Order sometime after the hearing . This is the legal document that states who has succeeded to the land interests of the deceased and in what proportion . Please provide a copy of the Vesting Order to the Share Registry team at the address below who will contact you regarding the information required to update the Share Register record .
Deloitte,
Pukeroa Oruawhata House 2nd Floor, 1176 Amohau St PO Box 12003 Rotorua 3045
Phone +64 7 343 1050
Q. Do I have to get a lawyer?
A. In most cases, you can complete succession yourself . You should discuss whether or not you need a lawyer with Court staff.
35 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST and subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
Pukeroa Oruawhata Trust ~ Annual Report 2019 36 INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Pukeroa Oruawhata Trust (“the Trust”) and its subsidiaries (together, “the Group”), which comprise the consolidated statement of financial position as at 31 March 2019, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 March 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime (“NZ IFRS RDR”) issued by the New Zealand Accounting Standards Board .
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”) . Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report . We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other than in our capacity as auditor we have no relationship with, or interests in, the Trust or any of its subsidiaries .
Other Information
The Trustees are responsible for the other information . The other information obtained at the date of this auditor’s report is information contained in the annual report, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon .
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated .
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact . We have nothing to report in this regard .
37 Pukeroa Oruawhata Trust ~ Annual Report 2019 INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES
Trustees’ Responsibilities for the Consolidated Financial Statements
The Trustees are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS RDR, and for such internal control as the Trustees determine necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error .
In preparing the consolidated financial statements, the Trustees are responsible on behalf of the Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so .
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion . Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists . Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional scepticism throughout the audit . We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control . • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management . • Conclude on the appropriateness of the use of the going concern basis of accounting by the Trustees and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion . Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report . However, future events or conditions may cause the Group to cease to continue as a going concern . • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation .
Pukeroa Oruawhata Trust ~ Annual Report 2019 38 INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit . We remain solely responsible for our audit opinion . We communicate with the Trustees regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit .
Who we Report to
This report is made solely to the Trust’s shareholders, as a body . Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report and for no other purpose . To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust’s shareholders, as a body, for our audit work, for this report or for the opinions we have formed .
BDO Rotorua Limited Rotorua New Zealand 25 October 2019
39 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST MARCH 2019
NOTE GROUP 2019 ($) GROUP 2018 ($)
Operating Revenue 2 19,479,748 17,273,978
Operating Expenses 3 (9,446,100) (8,048,152)
Net Operating Profit for the Year 10,033,648 9,225,826
Finance Costs
Interest paid (6,096,217) (4,640,095)
Net Operating Profit after finance costs 3,937,431 4,585,732
Charitable Trust Grants Paid (313,936) (321,642)
Net Operating Profit before Other Gains / (Losses) 3,623,495 4,264,090
Other Gains/(Losses)
Impaired Development Expenses - (49,000)
Changes in Derivative Financial Instruments 21 (580,902) (300,414)
Changes in Fair Value of Investment Properties 8 12,365,517 25,401,572
Profit before income tax 15,408,110 29,316,248
Income Tax Expense 4 (400,517) (440,587)
Total comprehensive income for the year $15,007,593 $28,875,663 attributable to owners
The attached notes form part of these consolidated financial statements
Pukeroa Oruawhata Trust ~ Annual Report 2019 40 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2019
Ariki- kapakapa Retained Retained earnings Retained Original Capital Earnings tax free earnings Total Group Capital Reserve (Note 12) (Note 13) (Note 11) Equity
Balance at 1 April 2017 2,098,500 5,779,659 35,293 251,749 122,181,601 130,346,803
Net profit and total - - - 28,875,663 28,875,663 comprehensive income
Transfer from Retained - - 32,440 - (32,440) - Earnings Taxable
Distributions - - - - - (682,873) (682,873) (Owners Grants)
Balance at 31 March 2,098,500 5,779,659 67,733 251,749 150,341,951 158,539,592 2018
Balance at 1 April 2018 2,098,500 5,779,659 67,733 251,749 150,341,951 158,539,592
Net profit and total - 15,007,593 15,007,593 comprehensive income - - -
Transfer from Retained (4,721) 4,721 - Earnings Taxable - - -
Distributions - - (642,210) (642,209) (Owners Grants) - - -
Balance at 31 March 2,098,500 5,779,659 63,012 251,749 164,712,059 172,904,979 2019
The attached notes form part of these consolidated financial statements
41 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31ST MARCH 2019 Note Group 2019 ($) Group 2018 ($) Current Assets Cash & Cash equivalents 6 464,918 92,887 Trade Receivables 200,975 624,367 Loans Advanced 14 63,000 - Prepayments 20,517 20,066 Inventories 4,611 4,297 GST Refund 82,265 225,476 Taxation Refund Due 67,156 - 903,442 967,093 Non Current Assets Development Costs 7 11,621,013 4,102,262 Investment Properties 8 290,174,179 275,336,179 Loans Advanced 14 342,376 104,340 Property, Plant and Equipment 9 214,197 238,864 Intangible Assets 3,909 7,818 302,355,674 279,789,463 TOTAL ASSETS $ 303,259,116 $ 280,756,557 Current Liabilities Bank Overdraft 6 1,872 219,837 Trade and other payables 1,716,550 2,344,780 Rents in Advance 180,745 185,788 Bonds 3,000 3,855 Secured Bank Loans 10 4,834,296 4,009,284 Derivative Financial Instruments 21 1,728,329 1,147,427 Taxation Payable - 308,980 8,464,794 8,219,952 Non Current Liabilities Deferred Tax Liability 4 3,804,445 3,759,844 Secured Bank Loans 10 117,887,065 110,033,595 Unclaimed Dividends 197,834 203,573 121,889,344 113,997,012 Total Liabilities 130,354,138 122,216,964 Equity Capital 2,098,500 2,098,500 Capital Reserve 5,779,659 5,779,659 Arikikapakapa Retained Earnings 12 63,012 67,733 Retained Earnings Tax Free 13 251,749 251,749 Retained Earnings 11 164,712,059 150,341,951 Total Owners Equity 172,904,979 158,539,592 TOTAL LIABILITIES AND OWNERS EQUITY $ 303,259,116 $ 280,756,557
Authorised for Release on 25th October 2019……… .by:
...... Chairman ...... Trustee
The attached notes form part of these consolidated financial statements
Pukeroa Oruawhata Trust ~ Annual Report 2019 42 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH 2019 Note Group 2019 ($) Group 2018 ($)
Cash Flows from Operating Activities
Cash received from operations 19,567,531 16,649,650
Cash paid to suppliers and employees (9,212,637) (8,544,993)
Interest received 28,684 5,381
Dividends received - 121,212
Interest paid (6,143,023) (4,577,900)
Income tax (paid) / received (732,052) (163,514)
Dividends/Distributions paid (647,949) (684,720)
Charitable Trust Grants Paid (313,936) (321,642)
GST (paid) / received 143,211 105,619
Net Cash Provided by Operating Activities 2,689,830 2,589,094
Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment (7,052) (168,769)
Purchase of Investment Properties (10,771,266) (26,850,405)
Net Cash Used in Investing Activities (10,778,318) (27,019,174)
Cash Flows from Financing Activities:
Secured Bank Loan funding received 34,006,815 107,928,046
Secured Bank Loan funding repaid (25,328,333) (83,900,503)
Net Cash Used in Financing Activities 8,678,482 24,027,544
Net increase decrease in Cash & Cash Equivalents 589,994 (402,536)
Opening balance Cash & Cash Equivalents 6 (126,950) 275,588
Closing balance Cash & Cash Equivalents 6 463,045 (126,950)
The attached notes form part of these consolidated financial statements
43 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity These consolidated financial statements presented are those of Pukeroa Oruawhata Trust (the Trust or Parent) and its controlled entities (the Group) . The Trust is originally vested in New Zealand under section 438 of the Maori Affairs Act 1955, and continues under section 251 of Te Ture Whenua Maori Act 1993 as an Ahu Whenua Trust . The controlled companies and limited partnerships are registered under the Companies Act 1993 and Limited Partnerships Act 2008 and are reporting entities under the Financial Reporting Act 2013 . The Pukeroa Oruawhata Charitable Trust is a controlled entity, established under a Trust Deed dated 17 December 2013 .
The Group comprises of Pukeroa Oruawhata Trust, Pukeroa Oruawhata Trustees Services Limited, Pukeroa Oruawhata Holdings Limited, Pukeroa Properties Limited, Pukeroa Properties (No .2) Limited, Pukeroa Lakefront Holdings Limited, Waihunuhunukuri Holdings Limited, Lake Road Tavern Limited, Pukeroa Lakefront Limited Partnership, Pukeroa Oruawhata Charitable Trust, Pukeroa Lakefront Limited, Wai Ariki Spa Management Limited, and Wai Ariki Hot Springs and Spa Limited Partnership . Dormant entities include, Lake House Resort Developments Ltd, Rotorua Casino Limited, Casino Rotorua Limited, and Lake Tavern Limited .
The principal activity of the Group is property development, property leasing, bar operations and charitable activities as outlined in the Pukeroa Oruawhata Charitable Trust Deed .
These consolidated financial statements of the Group are presented in New Zealand dollars for the year ended 31 March 2019 and have been rounded to the nearest dollar . For the purposes of complying with generally accepted accounting practice in New Zealand (“NZ GAAP”), the Group is a for-profit entity.
These consolidated financial statements are authorised for issue by the Trustees on 15 October 2019.
Statement of Compliance The Consolidated Financial Statements for the Group have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (“NZ GAAP”) . They comply with New Zealand Equivalents to International Financial Reporting Standards – Reduced Disclosure Regime (“NZIFRS RDR”) .
The Group qualifies for the reduced disclosure regime as it is large but not publicly accountable. All reduced disclosure regime concessions available to the Group have been adopted .
Specific Accounting Policies The significant accounting policies adopted by the Group are set out below and except for the changes noted below have been consistently applied to all periods presented in these consolidated financial statements.
Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for investment properties and financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below . Historical cost is generally based on the fair value of the consideration given in exchange for goods and services .
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique . In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date .
Pukeroa Oruawhata Trust ~ Annual Report 2019 44 Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Trust and entities controlled by the Trust . Control is achieved when the Trust: • has power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns. The Trust reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above . Consolidation of a subsidiary begins when the Trust obtains control over the subsidiary and ceases when the Trust loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Trust gains control until the date when the Trust ceases to control the subsidiary . When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Trust’s accounting policies . All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation .
Cash and cash equivalents Cash and cash equivalents include cash on hand and call deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. For the purposes of the consolidated statement of cash flows, overdrafts are included in cash and cash equivalents. Overdrafts are classified as current liabilities in the consolidated statement of financial position.
Revenue Recognition Sale of Goods Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates . Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably . If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised .
Rental Income Rental income from investment properties is recognised in the consolidated statement of comprehensive income on a straight line basis over the term of the lease . Contingent rentals are recognised as income in the reporting period in which they are earned .
Finance income and expenses Finance income comprises interest income on funds invested and dividend income . Interest income is recognised using the effective interest method when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably . Dividend income is recognised on the date that the right to receive payment is established. (Provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably) .
45 Pukeroa Oruawhata Trust ~ Annual Report 2019 Investment Properties Investment properties, principally comprising direct property investments, are held for long term capital appreciation and to earn rentals . Investment properties are initially measured at cost, plus related costs of acquisition . Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably .
Properties that are being constructed or developed for future use are classified as investment properties. All costs directly associated with the purchase and construction of a property, and all subsequent capital expenditures for the development qualifying as acquisition costs, are capitalised .
Subsequent to initial recognition, investment properties are measured at fair value . Gains and losses arising from changes in the fair value of investment properties are included in the consolidated statement of comprehensive income in the period in which they arise .
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.
Capitalised Lease Incentives Lease incentives which are offered to tenants as an inducement to enter into non-cancellable operating lease are capitalised and included within investment properties and are subsequently amortised over the term of the lease as a reduction of rental income .
Project Development Costs Development costs are expenses incurred in project investigation . Upon commencement of the project, these expenses will be capitalised to the cost of the project . Alternatively, if the project does not proceed or is impaired, these expenses will be written off.
Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale . Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation . All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Property, Plant and Equipment Property, Plant and Equipment (PPE) is recorded at cost less accumulated depreciation and impairment losses .
Depreciation Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight‑line method, on the following bases: Office Equipment 11.4% to 67% Diminishing Value Plant & Equipment 8% to 50% Diminishing Value
Intangibles Intangibles are stated at cost less accumulated depreciation .
Inventories Inventories are valued at the lower of cost and net realisable value . Cost has been assigned to inventory items on hand at balance date using the first-in first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs necessary to make the sale .
Pukeroa Oruawhata Trust ~ Annual Report 2019 46 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax . Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible . The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period .
Deferred Tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. For deferred tax liabilities or assets arising on investment properties measured at fair value, it is assumed that the carrying amounts of investment properties will be recovered through sale . As a result, the Group has not recognised any deferred taxes on changes in fair value of the investment properties as the Group is not subject to any income taxes on the fair value changes of the investment properties on disposal .
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, carrying forward of unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered .
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period .
Goods and services Tax Revenue, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST) except:
• where the amount of GST incurred is not recovered from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or • for receivables and payables which are recognised inclusive of GST (the net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables) .
Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease .
Trade Payables Trade payables are classified as other non-derivative financial instruments and are stated at amortised cost.
Secured Bank Loans Secured bank loans are classified as other non-derivative financial instruments and are stated at amortised cost
Financial Instruments Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the contract .
Financial assets The Group classifies its financial assets into measurement categories, depending on the purpose for which the asset was acquired. At the reporting date, the group’s financial assets consist of cash and cash equivalents and trade receivables and other receivables, which are classified as financial assets measured at amortised cost .
47 Pukeroa Oruawhata Trust ~ Annual Report 2019 Amortised cost These assets incorporate financial assets where the objective is to hold the assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment . Impairment provisions for trade receivables and contract assets are recognised based on the simplified approach within NZ IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses . During this process the probability of non-payment is assessed . This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the asset . Impairment provisions for receivables from related parties are recognised based on a forward looking expected credit loss model . The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised . For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised . For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised .
Financial liabilities The Group classifies its financial liabilities depending on the purpose for which the liability was acquired. The Groups’s accounting policy for financial liabilities is as follows: Trade payables Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method
Original Capital The original capital of the Parent was established using the Government Valuation of the Parent’s land and buildings as at the date of vesting .
Unclaimed Dividends and Distributions The Te Ture Whenua Act 1993 states that Unclaimed Dividends are dividends held by the Trust for at least 10 years without payment to the shareholder entitled . The Parent maintains a register that lists to whom dividends are payable and the amount of unclaimed dividends held for each shareholder . Where unclaimed dividends are held by the Parent this list is required to be submitted to the Maori Land Court . As claims in respect of unclaimed dividends are received the amount of the claim is payable by the Parent . Unclaimed dividends are classified as a current liability in the Group’s consolidated statement of financial position. As claims for Unclaimed Dividends are received and payments made to shareholders the movement results in a reduction of the Unclaimed Dividend balance in the Statement of Financial Position . Distributions by way of Owners Grants are recorded through the Group’s consolidated Statement of Movements in Equity . An Owners grant in lieu of a dividend was approved at the AGM on 3rd November 2018 . This grant is payable to the Owners registered at that date who have supplied their bank account numbers and addresses . The grant is available to Owners, subject to the terms of the grants policy, up to the next AGM .
Pukeroa Oruawhata Trust ~ Annual Report 2019 48 Critical Judgments, Estimates and Assumptions The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses . Estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances, the results of which form the basis of making judgements about varying values of assets and liabilities that are not readily apparent from other sources . Actual results may differ from these judgements, estimates and assumptions. The estimates and assumptions that are critical to the determination of the amounts reports in the financial statements relate to the following: a) Current and Deferred Tax The critical estimates and assumptions underlying the measurement of current and deferred tax are set out in Note 4
b) Fair Value of Investment Properties The valuation of investment property is dependent on a range of estimates, depending on the valuation methodology used . The critical estimates and assumptions underlying the measurement of investment property are set out in Note 8
c) Fair Value of interest rate derivatives The valuation of these instruments is influenced by several factors, including the time of day pricing decisions made, assessment of assumptions and the methodology adopted . A key assumption is the volatility of intra-day interest rates (Refer to note 20 for further details)
Changes to accounting policies New standards, interpretations and amendments introduced during the year
In the current period the following new financial reporting standards were adopted:
• NZ IFRS 9 Financial Instruments (NZ IFRS 9)
NZ IFRS 9, which has replaced the sections of NZ IAS 39 Financial Instruments: Recognition and Measurement (NZ IAS 39) relating to the classification and measurement of financial assets and financial liabilities, has been adopted by the Group from 1 April 2017 .
As a result of the adoption of NZ IFRS 9, Group’s financial assets have been reclassified - under NZ IAS 39 they were classified as loans and receivables and under NZ IFRS 9 they are classified as financial assets carried at amortised cost. The manner in which the financial assets are accounted for has, however, not changed – under both NZ IAS 39 and NZ IFRS 9 they were initially recognised at fair value plus transaction costs and thereafter carried at amortised cost less impairment . The manner in which impairment is measured has also changed – under NZ IAS 39 an incurred loss model was used, whereas under NZ IFRS 9 an expected loss model is used (that model is explained in accounting policy on financial instruments).
The adoption of NZ IFRS 9 has not resulted in any changes in the recognition or measurement of the Group’s financial instruments. As a result, the comparative financial statements have not been restated.
Other than the above there have been no other changes in accounting policies .
49 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 2. OPERATING REVENUE The following is an analysis of the Group’s revenue for the year .
Group 2019 ($) Group 2018 ($)
Bar Sales 137,372 129,721
Food Court & Operating Expenses Income 1,626,166 1,505,684
Rentals Received 16,127,146 14,088,266
Interest & Dividends Received 28,684 126,593
Outgoings Recovery 1,494,828 1,334,570
Other Income 65,552 89,144
19,479,748 17,273,978
NOTE 3. OPERATING EXPENSES
Operating expenses for the Group of $9,446,100 (Last Year $8,048,152) include:
Note Group 2019 ($) Group 2018 ($)
Trade Receivables Impairment 56,827 36,777
Lease Fees 98,208 98,798
Depreciation 9 35,628 32,755
Food Court & Operating Expenses 1,598,379 1,463,361
Legal Fees 367,695 77,908
Secretarial & Accounting 396,779 427,000
Audit Fees 25,000 25,000
Directors/Trustees/Committee Fees & 572,802 559,619 Expenses
Amortisation of capital lease incentives 8 121,131 111,600
Repairs & Maintenance 1,970,784 898,793
Pukeroa Oruawhata Trust ~ Annual Report 2019 50 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 4. INCOME TAXES Income recognised in profit or loss
The income tax expense for the year can be reconciled to the accounting profit as follows:
2019 ($) 2018 ($)
Current Tax Expense 445,118 396,858 Movement in Deferred Tax (44,601) 43,729 400,517 440,587
2019 ($) 2018 ($)
Profit before tax 15,408,110 29,316,248
Income tax expense calculated at 17 .5%/28% (2018:17 .5%/28%) 2,739,921 5,084,043
Adjusted for: Arikikapakapa Reserve - Exempt Income 826 (17,091) Capitalised interest - (63,305) Changes in Fair Value of Investment Properties (2,343,556) (4,549,131) Non-Deductible Consultancy Fees 683 5,885 Non-Deductible Entertainment 2,560 1,258 Non-Deductible Impairment Expense 83 21,306 Equity Participation Project - 4,383 Tax Depreciation loss on disposal - (47,284) Other Adjustments - 523
Current Tax Expense/(Benefit) 400,517 440,587
Income Tax Expense reported in Profit/(Loss) 400,517 440,587
The tax rate used for the 2019 and 2018 reconciliations above is a combination of the Maori Authority Tax Rate of 17 .5% payable by Maori Authority Entities and the Company Tax Rate of 28% as per individual entity requirements .
51 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
4.1 Deferred Tax
Opening Recognised Closing Opening Recognised Closing balance 1 in Profit Balance balance 1 in Profit Balance April 2017 or Loss 31 March April 2018 or Loss 31 March 2018 2019 Assets Holiday Pay accrual 4,507 (1,136) 3,371 3,371 (1,813) 1,558 Provision for doubtful 2,629 (1,222) 1,408 1,408 6,499 7,907 debts Waikuta Development 30,153 (14,357) 15,796 15,796 (5,240) 10,556 Costs Investment Properties (4,730,317) (395,989) (5,126,307) (5,126,307) (287,132) (5,413,439)
(4,693,027) (412,703) (5,105,732) (5,105,732) (287,686) (5,393,418)
Other Non-Balance Sheet Items Tax losses 889,456 456,431 1,345,888 1,345,888 243,084 1,588,973
Total Asset/(Liability) (3,803,573) 43,729 (3,759,844) (3,759,844) (44,601) (3,804,445)
NOTE 5. MAORI AUTHORITY CREDIT ACCOUNT (MACA) Group 2019 ($) Group 2018 ($)
Opening Balance 4,652,295 4,633,166 Tax paid 769,238 146,610 RWT on Investments 2,248 674 Credits attached to Distributions from Dividends Received - 21,212 Tax Refund Received (39,434) (3,821) Credits attached to Distributions from Dividends Paid - (145,546) 5,384,346 4,652,295
The closing balance is available to be attached to taxable distributions paid . Imputation Credit Account The imputation credits available to shareholders at balance date are $624 (Last Year $624) .
Pukeroa Oruawhata Trust ~ Annual Report 2019 52 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 6. CASH AND CASH EQUIVALENTS Group 2019 ($) Group 2018 ($)
Cash on Hand 1,000 500 BNZ - Current Account 299,686 - ANZ - Current Account 68,936 - ANZ - Call Account 73 73 BNZ - Investment Accounts 84,878 76,384 Deloitte Distribution Account 10,344 15,930 464,918 92,887
BNZ - Current Account - (35,238) ANZ - Current Account - (180,431) ANZ - Credit Card (1,872) (4,168) (1,872) (219,837)
*At 31 March 2018 Pukeroa Properties No .2 Limited had a secured overdraft facility of $300,000 at 9 .5% . Pukeroa Oruawhata Holdings Limited had a secured overdraft facility of $150,000 at 10 .45% . Refer to note 10 for security details . There are no overdraft facilities in place at 31 March 2019 .
NOTE 7. PROJECT DEVELOPMENT COSTS Project Development Costs comprise of the following Projects: 2019 ($) 2018 ($) Waihunuhunukuri Holdings Ltd Lake house development feasibility 91,294 91,294 Pukeroa Lakefront Holdings Ltd Lakefront development feasibility 370,501 370,501 Wai Ariki Lakefront Spa Development 10,184,403 3,338,771 Pukeroa Properties No.2 Ltd Waikuta development 42,253 40,893 Charter School Project 15,520 15,521 Hospice Building 5,572 5,572 CCTU Building 4,825 - Pukeroa Oruawhata Trust Residential & commercial development costs 906,645 239,711 11,621,013 4,102,262
53 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
NOTE 8. INVESTMENT PROPERTIES Movements in investment Properties are tabled below:
Group 2019 ($) Group 2018 ($)
Balance at the beginning of the year 275,336,179 225,124,177 Purchases/Subsequent capitalised expenditure 2,593,615 24,922,028 Amortisation of capital lease incentives (121,131) (111,600) Fair Value change to investment properties 12,365,517 25,401,572 Balance at the end of the year 290,174,179 275,336,179
Details of the Group’s investment properties are as follows:
2019 Amortisation Fair Value of Capital Fair value Fair Value 31 March Capital Lease gain/(loss) 31 March Valuer 2018 Movements Incentives 2019 2019
Pukeroa Oruawhata CGJ 29,303,177 961,031 (3,909) 2,622,881 32,883,180 Trust Pukeroa Oruawhata CGJ/ 154,855,001 1,084,418 (105,863) 2,991,445 158,825,000 Holdings Ltd JLL Pukeroa Properties CGJ 1,204,000 10,804 - 73,196 1,288,000 Ltd Pukeroa Properties CGJ/ 46,750,000 115,139 (11,359) 4,401,219 51,255,000 No 2 Ltd JLL Pukeroa Lakefront CGJ 30,824,000 348,088 - 1,860,912 33,033,000 Holdings Ltd Pukeroa Lakefront JLL 9,190,000 - - 430,000 9,620,000 Limited Partnership Waihunuhunukuri CGJ 3,210,000 74,135 - (14,135) 3,270,000 Holdings Ltd
275,336,178 2,593,615 (121,131) 12,365,517 290,174,179
Pukeroa Oruawhata Trust ~ Annual Report 2019 54 2018 Amortisation Fair Value of Capital Fair value Fair Value 31 March Capital Lease gain/(loss) 31 March Valuer 2017 Movements Incentives 2018 2018
Pukeroa Oruawhata CGJ 27,178,178 2,111,171 - 13,827 29,303,177 Trust Pukeroa Oruawhata CGJ/ 140,960,000 3,096,082 (109,413) 10,908,331 154,855,001 Holdings Ltd JLL Pukeroa Properties Ltd CGJ 661,000 639,322 - (96,322) 1,204,000 Pukeroa Properties CGJ/ 25,925,000 16,832,135 (2,187) 3,995,052 46,750,000 No 2 Ltd JLL Pukeroa Lakefront CGJ 19,367,000 477,154 - 10,979,846 30,824,000 Holdings Ltd Pukeroa Lakefront JLL 7,993,000 1,762,664 - (565,664) 9,190,000 Limited Partnership Waihunuhunukuri CGJ 3,040,000 3,500 - 166,500 3,210,000 Holdings Ltd 225,124,177 24,922,030 (111,600) 25,401,572 275,336,179
8.1. Independent Valuers
Valuer Abbreviation Cleghorn, Gillespie, Jensen Ltd CGJ Jones, Lang, Lasalle Limited JLL
8.2. Fair value measurement of the Group’s investment properties
The fair value of the Group’s investment property as at 31 March 2019 and 31 March 2018 has been arrived at on the basis of an independent valuation carried out on the respective dates by Jones, Lang, Lasalle Limited and Cleghorn, Gillespie, Jensen Ltd registered valuers. Both valuers have appropriate qualifications and experience in the valuation of properties in the relevant locations. Valuations were carried out for financial reporting purposes . The fair value was determined based on the following techniques and inputs:
Class of property Valuation techniques Inputs used
Investment Properties - Income capitalisation approach * - Net market rent (per sqm) - Direct Sales Comparison - Core capitalisation rate - Discounted Cash flow approach * - Discount rate - Terminal capitalisation rate - Rental growth rate (per annum) - Expense growth rate (per annum) - Vacancy factor
Income capitalisation approach
A Valuation technique that looks at the relationship between the income of a property and its expected returns . Capitalisations rates and yields are assessed by comparing the subject property to similar properties that have recently sold with adjustments for factors taking into consideration matters such as tenure, quality of construction, condition, size, and lease term, quality of tenant, security of income and the highest and best use scenario. The highest and best use scenario attempts to reflect what a prudent investor would pay for an asset given its expected ability to achieve a financial return commensurate with the risks involved in that asset .
55 Pukeroa Oruawhata Trust ~ Annual Report 2019 Unobservable inputs within the income capitalisation approach Gross market rent The annual amount for which a tenancy within a property is expected to achieve under a new arm’s length leasing transaction, including a fair share of property operating expenses . Core capitalisation rate The rate of return, determined through analysis of comparable, market-related sales transactions, which is applied to a property’s sustainable net income to derive value . Other income capitalisation rate The rate of return which is applied to other, typically short-term of uncontracted, sources of property income to derive value and which is assessed with consideration to the risks in achieving each income source . Discounted cash flow analysis
A valuation technique which requires explicit assumptions to be made regarding the prospective income and expenses of a property over an assumed holding period. The assessed cash flows are discounted to derive a net present value for the investment property .
Unobservable inputs within the discounted cash flow analysis approach Rental growth rate The annual growth rate applied to market rents over an assumed holding period . Discount rate The rate which is applied to a property’s future net cash flows to convert those cash flows into a present value determined through analysis of recent comparable sales, current level of the 10 year Government Bond Rate, dialogue with active institutional investors and property trust investors and property’s lease covenants and quality of improvements Terminal capitalisation The rate which is applied to the market net income at the end of an assumed rate holding period to derive and estimated future market value . Determined with regard to perceived market conditions at the end of the period, leasing profile and condition of the property at that time . Expenses growth rate The annual growth rate applied to property operating expenses over an assumed holding period . Vacancy rate Probability based assumptions regarding letting up and fit out incentives for all tenants upon expiry of their leases .
Direct sales comparison approach
A valuation technique that is an estimate of value based on a comparison of the asset to similar assets that have recently sold . Adjustments are made to allow for factors such as the date of sale, size of property, location, quality, condition, marketability, general condition plus access, contour and tenure .
8.3. Leasing arrangements
Investment property comprises a number of commercial and residential properties that are leased to third parties . Each of the leases contains an initial non-cancellable period . Subsequent renewals are negotiated with the lessee . Minimum lease payments receivable on leases of investment properties not recognised in the financial statements are as follows: Group 2019 $ Group 2018 $
Within one year $15,135,038 14,530,549 Later than one year but not later than 5 years $39,654,163 40,269,027 Later than 5 years $19,520,029 20,377,187 Total 74,309,230 75,176,763
Future minimum lease payments receivable exclude contingent rents . Contingent rents are receivable from various tenants and are subject to tenants exceeding a base turnover . Turnover that is over and above the base turnover stipulated in the lease agreements are then subject to further payments of between 3% - 8% of the tenant’s turnover .
Pukeroa Oruawhata Trust ~ Annual Report 2019 56 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 9. PROPERTY, PLANT & EQUIPMENT
Group Office Equipment Plant and equipment Total
(i) Cost As at 1 April 2017 66,747 153,298 220,045 Additions 12,598 132,072 144,670 As at 31 March 2018 79,344 285,370 364,715
As at 1 April 2018 79,344 285,370 364,715 Additions 10,960 - 10,960 As at 31 March 2019 90,304 285,370 375,675
(ii) Accumulated Depreciation As at 1 April 2017 (45,355) (64,021) (109,376) Depreciation (8,840) (7,631) (16,471) As at 31 March 2018 (54,195) (71,653) (125,847)
As at 1 April 2018 (54,195) (71,653) (125,847) Depreciation (11,082) (24,546) (35,628) As at 31 March 2019 (65,277) (96,199) (161,476)
(iii) Net book value At 31 March 2017 21,392 89,276 110,668 At 31 March 2018 25,148 213,717 238,864 At 31 March 2019 25,027 189,171 214,197
57 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 10. SECURED LOANS
Secured loans are provided by Bank of New Zealand and ANZ bank . At balance date the following facilities were drawn down . There were no unused facilities at balance date . Group 2019 ($) Group 2018 ($)
BNZ Facility drawn down - Current 4,084,296 3,259,284 ANZ Facility drawn down - Current 750,000 750,000 BNZ Facility drawn down 83,326,117 76,567,498 ANZ Facility drawn down 34,560,948 33,466,097 $122,721,361 $114,042,879
The current weighted average effective interest rate on the BNZ bank loans is 4.6% (2018:4.6%) per annum, and 4 4%. (2018:3 9%). per annum on the ANZ bank loans . The weighted average date to maturity on the BNZ loans are 3 5. years and 2 .25 years on the ANZ loans .
10.1 Security
BNZ Facilities The Bank of New Zealand (“BNZ”) holds security for loan facilities provided to Pukeroa Oruawhata Trust by first mortgage over properties at 7 Sala Street, Rotorua, properties at 3 Ti Street, Rotorua, 254 Fenton St, Rotorua and 2B Ranolf Street, Rotorua . There is also security by way of a guarantee from Pukeroa Oruawhata Holdings Limited for the amount of $15,450,000 plus interest and costs in terms of the Bank’s standard guarantee form .
The BNZ holds security for loan facilities provided to Pukeroa Oruawhata Holdings Limited by first mortgages bounded by Fenton, Amohau, Haupapa Streets and a debenture over the assets and undertakings of the Company . Pukeroa Oruawhata Holdings Limited also holds a company guarantee of $2,185,000 over Waihunuhunukuri Holdings Limited . There is an unlimited interlocking company guarantee between Pukeroa Oruawhata Holdings Limited and Pukeroa Properties Limited and Pukeroa Properties Limited No2 .
The BNZ holds security for loan facilities provided to Pukeroa Properties Limited by first mortgage over properties at, 9 Froude Street, 10 Meade Street, and 96 and 96A Taharangi Street Rotorua . There is also security by way of a perfected security interest in all present and after acquired property of Pukeroa Properties Limited and an unlimited interlocking company guarantee between Pukeroa Oruawhata Holdings Limited and Pukeroa Properties Limited .
The BNZ holds security for loan facilities provided to Waihunuhunukuri Holdings Limited by first mortgage over properties at Corner Lake Road and Houkotuku, and 41-45 Lake Road Rotorua . There is also security by way of a perfected security interest in all present and after acquired property of Waihunuhunukuri Holdings Limited and an interlocking company guarantee between Pukeroa Oruawhata Holdings Limited and Waihunuhunukuri Holdings Limited of $1,575,000 and $850,000 .
The BNZ holds security for loan facilities provided to Pukeroa Lakefront Limited Partnership by first mortgage over 34 Taui Street Rotorua . There is also security by way of a perfected security interest in all present and after acquired property of Pukeroa Lakefront Limited Partnership and an interlocking company guarantee between Pukeroa Oruawhata Holdings Limited and Pukeroa Lakefront Limited Partnership of $8,300,000 .
ANZ Facilities The ANZ Bank holds security for loan facilities provided to Pukeroa Properties Limited No2 by first mortgage over Trade Central, Rotorua and an unlimited cross guarantee between Pukeroa Oruawhata Holdings Ltd, Pukeroa Lakefront Holdings Ltd and Pukeroa Properties No2 Ltd .
The ANZ Bank holds security for the interest only loan facility provided to Pukeroa Lakefront Holdings Limited by first mortgage over the properties held at Hinemaru, Whakaue and Houkotuku Street, Rotorua.
At balance date there are no known breaches for the bank covenants .
Pukeroa Oruawhata Trust ~ Annual Report 2019 58 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019 NOTE 11. RETAINED EARNINGS Retained earnings comprise of the following:
Retained Total retained Retained earnings earnings earnings investment (operating taxable - Property and property operating Revaluations revaluations)
Balance at 1 April 2017 10,625,473 111,556,130 122,181,601
Total comprehensive income for the year 3,474,090 25,401,574 28,875,663
Transfer from Retained Earnings Taxable (32,440) - (32,440)
Distributions (682,873) - (682,873)
Balance at 31 March 2018 13,384,250 136,957,704 150,341,951
Balance at 1 April 2018 13,384,250 136,957,704 150,341,951
Total comprehensive income for the year 2,642,077 12,365,517 15,007,593
Transfer from Retained Earnings Taxable 4,721 - 4,721
Distributions (642,210) - (642,210)
Balance at 31 March 2019 15,388,839 149,323,221 164,712,059
NOTE 12. ARIKIKAPAKAPA RETAINED EARNINGS (TAXABLE)
The Parent obtained the management rights for Arikikapakapa Reserve on 21 November 2014 . The Arikikapakapa Reserve is established under the Reserves Act 1977 with rental income to be held by the administering body (Pukeroa Oruawhata Trust) and applied for the purposes of the Act . Surplus funds are retained by the parent in a separate reserves account .
NOTE 13. RETAINED EARNINGS (TAX FREE)
The Parent and Pukeroa Oruawhata Holdings Limited elected to join the Maori Authority regime for tax purposes from 1 April 2004 . Pukeroa Lakefront Holdings Limited entered the regime from 1 April 2005 . Distributions to members from income retained prior to the 2004-2005 income year will be treated as non- taxable distributions in the hands of the members .
59 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
NOTE 14. LOANS Group 2019 ($) Group 2018 ($)
Current Portion
Rotorua Continuing Care Trust 63,000 -
Non- Current Portion
Waikite Rugby and Sports Club Incorporated 30,000 -
Rotorua Continuing Care Trust 312,375 104,340
Total Non- Current Portion 342,375 104,340
Total Loans 405,375 104,340
Waikite Rugby and Sports Club Incorporated During the year, Pukeroa Oruawhata Charitable Trust entered an agreement to loan $30,000 to Waikite Rugby and Sports Club Incorporated on the 13th September 2019 . The term is interest free for 3 years and repayable on the maturity of the term . An interest rate of 12% after maturity then applies . This loan is unsecured .
Rotorua Continuing Care Trust During the year, Pukeroa Lakefront Limited Partnership entered an agreement to loan the principal sum of $392,201 at an annual interest rate of 8% . The Loan arrangement commenced on the 21st September 2018 with interest and principal payments of $1,153 per week . From the 21st September 2019 Principal and interest payments increase to $2,307 per week until the expiry date of 24 September 2022 . Pukeroa Lakefront Limited Partnership holds a First Ranking General Security over the Trust’s present and after acquired property along with a first Ranking security over the registered lease on 32 Taui Street, Ngongotaha, Rotorua 3010.
NOTE 15. RELATED PARTIES
Balances and transactions including inter-group lease arrangements between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note . Details of the Group’s subsidiaries are disclosed in note 23 . The balances owing at year end between the entities are instead disclosed by way of current and non-current liabilities or non-current assets and are unsecured, interest free and non-repayable in the next 12 months . Details of transactions between the Group and other related parties are disclosed below .
During the year, Group entities entered into the following trading transactions with related parties that are not members of the Group:
• Third Party Transactions occurred between the Parent, subsidiaries Pukeroa Oruawhata Holdings Limited, Pukeroa Properties No .2 Limited and Shorts Transport Limited, a company in which the Chairman is a shareholder . The value of the services rendered during the year amounted to $26,569 (2018: $101,793) . At Balance date there are no amounts outstanding (2018: $Nil) • Pukeroa Oruawhata Holdings hold ground leases for buildings on land owned by the Ngati Whakaue Education Endowment Trust Board at 1239-1241 Amohau Street, 1175-1315 Amohau/Tutanekai Street and 1209 -1211 Amohau Street Malcolm Short, Alec Wilson and Monty Morrison are Trustees of the Ngati Whakaue Education Endowment Trust and Directors within the Group . The value of ground lease payments made was $73,226 (2018: $73,226) . At Balance date there are no amounts outstanding (2018: $Nil)
Pukeroa Oruawhata Trust ~ Annual Report 2019 60 • Rawiri Waru is a Trustee of the Pukeroa Oruawhata Charitable Trust and also a Trustee on Rotorua Lakeside Concert Charitable Trust . During the year Rotorua Lakeside Concert Charitable Trust received a $20,000 grant from Pukeroa Oruawhata Charitable Trust (2018: $20,000) . At Balance date there are no amounts outstanding (2018: $Nil) • Rawiri Waru is a Trustee of the Pukeroa Oruawhata Charitable and also a Trustee on Te Ara Ki Te Reo Ki Kuirau Charitable Trust . During the 2018 year Te Ara Ki Te Reo Ki Kuirau Charitable Trust received a $3,516 grant from Pukeroa Oruawhata Charitable Trust . At Balance date there are no amounts outstanding (2018: $Nil) • Alec Wilson was a Director of Pukeroa Properties No2 Ltd (Resigned 12 February 2019) and is also a trustee on Waikuta No2 Ahu Whenua Trust . The group has an arrangement with Waikuta No2 Ahu Whenua Trust to dispose and/or store building material on their land . Pukeroa Properties No2 Ltd has incurred direct costs to establish and maintain the disposal/storage area which amount to $4,287 this year (2018:$Nil) . At Balance date there are no amounts outstanding (2018: $Nil) No related party transactions have been forgiven or written off.
Key Management personal The Group has related party relationships with its key management personnel . Key management personnel include the Trust’s Board of Trustees . In total there were 10 key personnel during 2019 . Compensation totals include Directors, Trustees, committee fees, expenses and contract services for the general manager for the group .
Group 2019 ($) Group 2018 ($)
Key Personnel 758,952 729,918 FTE’s 10 11
NOTE 16. OPERATING LEASE COMMITMENTS
Operating leases relate to four ground leases of land held by Pukeroa Oruawhata Holdings limited . All operating lease contracts are with Ngati Whakaue Education Endowment Trust Board with lease terms of 21 years from 1 January 2000 and 1 July 2015 . The future aggregate minimum lease payments payable under non-cancellable operating leases are as follows:
Group 2019 ($) Group 2018 ($)
Within one year 73,226 73,226 Later than one year but not later than 5 years 100,554 159,851 Later than 5 years 170,812 184,741
NOTE 17. CAPITAL COMMITMENTS
The Group had the following capital commitments at balance date that are not recognised in the consolidated financial statements as they will be incurred in future reporting periods.
The group fulfilled the prior year capital commitments in the current financial year. There were no capital commitments to be noted at 31 March 2019 .
Group 2019 ($) Group 2018 ($)
Flooring Xtra Air Conditioning Unit - 16,050 Farmers Air Conditioning Unit - 125,757 Wai Ariki Lakefront Spa Development - 3,957,816
61 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
NOTE 18. CONTINGENT ASSETS AND LIABILITIES
(a) The Whakarewarewa Joint Trust, comprising of representatives from Pukeroa Oruawhata Trust, The three hapu of Ngāti Whakaue (Comprising of Ngāti Hurungaterangi, Ngāti Taeotu me Ngāti Te Kahu o Ngāti Whakaue), Tūhourangi and Ngāti Wahiao, holds the ownership and manages the leases in the land in the Whakarewarewa Valley and the Roto-a Tamaheke Reserve .
An arbitration panel, to determine the entitlement to the land and reserves concluded in 2013 ruling that interest in the land should be split 50/50 between Ngati Whakaue and Tūhourangi/Ngāti Wahiao. The three hapu of Ngāti Whakaue appealed the decision with the High Court and then with the Court of Appeal .
Further to that, a Court of Appeal judgement between the Three Hapu of Ngati Whakaue and Ngati Wahiao was issued on the 26th September 2017 . This judgement declared that all proceedings revert back to a period known as the “interim period” . During the “interim period” distributions made to the beneficiaries are now deemed to have been advances. On expiry of the interim period, any payments made during this period shall be deemed to be satisfied on account if the recipient is the final beneficiary, or may be due and owing to the Whakarewarewa Joint Trust on demand if the recipient is not the final beneficiary.
A contingent liability exists if the Pukeroa Oruawhata Trust is found not to be a final beneficiary. To date the Pukeroa Oruawhata Trust has received distributions/advances of $452,692 net of Maori Authority Credits from the Whakarewarewa Joint Trust which represents a 25% interest in the Whakarewarewa Joint Trust lands . These advances have been recorded through the Consolidated Statement of Comprehensive Income since 2016 .
A contingent asset exists for the Pukeroa Oruawhata Trust if it is found that their interest in regards to the land interests and entitlements as outlined in the Whakarewarewa and Roto-a-Tamaheke Vesting Act 2009 is more than 25%. The quantum of this is unable to be verified until the outcome of new arbitration has been completed .
(b) In 2017, Pukeroa Oruawhata Trust signed an agreement to vest the business of the Te Puia/New Zealand Maori Arts and Crafts Institute in Te Puia/NZMACI Limited Partnership . This agreement was entered into with Whakarewarewa Joint Trustees, Wahiao Tuhourangi o Whakarewarewa, HTK Te Puia Trust, Te Puia/NZMACI Limited Partnership, and the New Zealand Maori Arts and Crafts Institute .
On the 22nd February 2019, submissions on the Te Puia Vesting Bill closed, with the Maori Select Committee hearing submissions held at the Novotel, Rotorua on the 12th April 2019 . The select committee report was submitted to parliament on the 23 September 2019 .
A contingent asset exists for Pukeroa Oruawhata Trust in regards to a potential 25% interest in the business of the Te Puia/New Zealand Maori Arts and Crafts Institute
(c) The group has entered into an arrangement with Waikuta No2 Ahu Whenua Trust to receive and store fill on their land . A contingent liability exists for the ongoing monitoring costs and any potential remediation to the site if required by the local environment council. These costs are unable to be quantified.
Subject to the above there are no other known material contingent liabilities or assets .
NOTE 19. SUBSEQUENT EVENTS
Subsequent to balance date the bill vesting the business of the New Zealand Maori Arts and Crafts Institute (As disclosed in Note 19) is currently with Parliament awaiting the second reading .
There are no other known material events noted subsequent to balance date .
Pukeroa Oruawhata Trust ~ Annual Report 2019 62 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
NOTE 20. FINANCIAL INSTRUMENTS Group 2019 Fair value Fair value At through At through amortised profit or amortised profit or cost loss cost loss Financial Assets Financial Liabilities Total
Cash & cash equivalents 464,918 - - - 464,918 Trade & other receivables 200,975 - - - 200,975 Trade & other payables - - 1,716,550 - 1,716,550 Secured Bank Loans - - 122,721,361 - 122,721,361 Interest rate derivatives - - - 1,728,329 1,728,329 Group 2018 Fair value Fair value At through At through amortised profit or amortised profit or cost loss cost loss Financial Assets Financial Liabilities Total
Cash & cash equivalents 92,887 - - - 92,887 Trade & other receivables 624,367 - - - 624,367 Trade & other payables - - 2,344,780 - 2,344,780 Secured Bank Loans - - 114,042,878 - 114,042,878 Interest rate derivatives - - - 1,147,427 1,147,427
NOTE 21. INTEREST RATE DERIVATIVES
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts . Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt . The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the curves at the end of the reporting period and the credit risk inherent in the contract, and is disclosed below . The average interest rate is based on the outstanding balances at the end of the reporting period . The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is the local interbank rate of New Zealand. The Group will settle the difference between the fixed and floating interest rate on a net basis . Interest rate swap contracts exchanging fixed rate interest for floating rate interest movements are recognised at fair value in the consolidated statement of comprehensive income . Group 2019 ($) Group 2018 ($)
Balance at beginning of reporting period 1,147,427 847,014
Movements in fair value 580,902 300,414
Balance at end of the reporting period $1,728,329 $1,147,427
63 Pukeroa Oruawhata Trust ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2019
NOTE 22. COMPOSITION OF THE GROUP
Details of the Group’s Parent, Pukeroa Oruawhata Trust’s material subsidiaries at the end of the reporting period are as follows: Proportion of ownership interest and voting power held by the Group Name of subsidiary Principal activity 2019 2018
Pukeroa Oruawhata Holdings Property Development and Leasing 100% 100% Limited
Pukeroa Properties Limited Property Development and Leasing 100% 100%
Pukeroa Properties No .2 Limited Property Development and Leasing 100% 100%
Pukeroa Lakefront Holdings Property Development and Leasing 100% 100% Limited
Waihunuhunukuri Holdings Property Development and Leasing 100% 100% Limited
Lake Road Tavern Limited Bar Operations 100% 100%
Pukeroa Oruawhata Charitable Charitable entity 100% 100% Trust
Pukeroa Lakefront Limited Property Development and Leasing 100% 100% Partnership
Wai Ariki Spa Management Management Company 100% 100% Limited
All entities are incorporated and domiciled in New Zealand with a 31 March balance date .
Pukeroa Oruawhata Trust ~ Annual Report 2019 64