Crown Forestry Rental Trust Report to Appointors 2016

CROWN FORESTRY RENTAL TRUST

Report to Appointors 2016-2017 Chairperson’s Report to Appointors 2017

I am pleased to present the Annual Report of the Crown Forestry Rental Trust to the New Zealand Maori Council and the Federation of Maori Authorities (acting together as the Maori Appointor) and the Minister of Finance as the Crown Appointor. This report covers the financial statements and activities of the Trust for the period 1 April 2016 to 31 March 2017. Over the last 12 months, the Trust has worked hard to meet the expectations of Approved Clients and eligible claimants. Trustees have taken a robust but fair approach to funding by balancing the needs of Approved Clients against Trustees’ obligations and powers contained in the Trust Deed, and the Trust’s cash reserves. In line with their fiduciary duties, Trustees will continue to manage the Trust’s investment base so that there is a reasonable level of funding available to eligible claimants. To help it, the Trust uses a pricing model to forecast the level of funding that it will need to fund Approved Clients. This model shows that the Trust will have sufficient funds available to support all eligible claimants with Wai claims that involve, or could involve, Crown Forest Licensed Land, through to when the last Crown Forest Licensed Land is transferred. Work programme The Trust has had a busy and productive 2016-2017 year. There were two transfers of accumulated rentals to claimants totalling $6m. Funds held in Trust stood at $137.0m on balance date down from $137.5m in the previous year. $12m of funding assistance was provided to Approved Clients, and total Trust expenditure for the year was $14.2m. Both figures were down on the previous year, however, this was expected and consistent with a reduction in workload. 16 Approved Clients were engaged in, or completed, settlement negotiations, and a further 10 Approved Clients were involved in the Waitangi Tribunal process. Future challenges As I have signalled previously, the Trust continues to move towards its final phase of work. As the number of Treaty claims still to be completed decreases so does the Trust’s cash reserves and the ability for it to generate revenue. The figures laid out in this table clearly illustrate how the Trust’s financial position is changing as settlements are completed with the reference point being 2009 given the significant transfer of $290M of accumulated rentals from the Trust to CNI groups that occurred that year. The ability of the Trust to generate revenue from its capital base has continued to be constrained by falling interest rates. As outlined in the table below, revenue has fallen to $7.3m.

Type 2009 2017 % change

Funds Held in Trust $517.6M $137.0M 74% ↓

Retained Earnings $144.3M $80.0M 45% ↓

Total Capital $661.9M $217.1M 67% ↓

Income $49.7M $7.3M 85% ↓ Safeguarding Trust funds Trustees hold the accumulated rentals for Crown Forest Licensed Lands in trust for all beneficiaries, past and future. This means that funding contributions made to Approved Clients are rigorously monitored, with Approved Clients subject to stringent reporting requirements. Where Trust funding is at risk, Trustees will take appropriate action to safeguard those funds, including legal action.

High quality funding services The Trust’s future challenges mean that our organisational structure, management strategies and staff capability must continue to be of a high calibre and fit for purpose to ensure we are able to meet our commitment to Approved Clients and eligible claimants. Over the last year, Trustees have worked to achieve positive results on all fronts. All Trust operations and policies are reviewed to ensure they are fit for purpose, and that the right number of staff and mix of skills are available to carry out the work required in that year. As the Trust’s workload decreases, staff numbers will reduce. However, the Trust is fortunate to have a highly skilled and professional workforce with managers and staff who are committed to the broader Treaty sector outcome of resolving historical Treaty claims, and to the Trust’s core purpose to assist eligible claimants to prepare, present and negotiate their claims that involve or could involve Crown Forest Licensed Land. The Trust’s leaner structure means that management and staff have to work in different ways with a strong client focus and with a priority for delivering quality claimant services, efficient reporting to Trustees, and making timely payments of approved funding to Approved Clients. Summary In conclusion, the Trust is well run, fit for purpose, with robust systems, policies and processes and is well placed to complete its final tranche of work in an expedient and efficient manner. I wish to thank the management, staff and trustees for their dedication and hard work to help the Trust assist claimants with interests in Crown Forest Licensed Lands.

Rakihia Tau CHAIRPERSON Chief Executive’s Report to Appointors 2017

It has been another very important year for the Trust. The 2016-17 financial year saw two transfers totalling $6.0m in accumulated rentals to Confirmed Beneficiaries; $5.2m was transferred to Ngāti Hineuru for part of Esk Crown Forest Licensed Land, and $744,630 was transferred to Rāngitane o Manawatu for the Tangimoana Crown Forest Licensed Land.

Financial Performance

Table 1 below provides a summary of the Income and Expenditure Statement for the 2015-16 and 2016-17 financial years. Total Income for the year to 31 March 2017 of $7.3m was $2.4m (25.2%), lower than the previous year. Income has fallen mainly due to lower interest rates and a reducing Trust investment base as accumulated rentals are transferred to the confirmed beneficiaries.

Funding assistance to claimant groups of $12.0m has reduced by 8.0% from the previous year. Administration funding of $2.2m was $0.8m lower than the previous year. Total Trust expenditure for the year was $14.2m compared to $16.1m for the 2015-16 financial year. Overall, the Trust had a shortfall of $7.0m compared to a shortfall of $6.4m for the previous year.

Table 1: A summary of the Income and Expenditure Statement:

2017 2016

Income $7,259,245 $9,710,878 Expenditure: • Administration $2,207,236 $3,031,353 • Assistance to Claimants $12,003,554 $13,047,135 Total Expenditure $14,210,790 $16,078,488 Net Operating Deficit ($6,951,545) ($6,367,610)

Financial Position

Table 2 below provides a summary of the financial position of the Trust for the 2015-2016 and 2016- 17 financial years.

For the 2016-17 financial year, retained earnings decreased by $7.0m over the year to $79.8m. Total Assets also fell over the period by $7.6m reflecting the shortfalls and the net reduction in Funds Held in Trust as accumulated rentals were transferred. Similarly, Total Liabilities reduced by $0.7m as settlement legislation was enacted and Funds Held in Trust were disbursed.

Table 2: A summary of the Balance Sheet

2017 2016

Retained Earnings $79,756,485 $86,708,030

Total Assets $217,078,290 $224,699,499

Current Liabilities $16,627,600 $22,125,562

Non-Current Liabilities $120,694,205 $115,865,907

Total Liabilities $137,321,805 $137,991,469

Net Assets $79,756,485 $86,708,030

1 Claimant expectations

The Trust is aware that its policies and processes may be perceived by some claimants as unnecessarily bureaucratic. However, Trustees are clear that they have a duty to act in a manner that is prudent and within the scope of the Trust Deed. The Trust’s policies and procedures ensure this occurs, and that Trust funds are used appropriately.

All Trust funding contributions require Trustees’ approval, and the key component of a successful funding request is a well prepared business plan, with sound rationale. Financial, governance and management capability, Crown or Waitangi Tribunal engagement and comprehensive planning are also critical.

Once funding decisions are made by Trustees, the Trust expects both Approved Clients and Trust staff to negotiate a funding contract that is clear and reflects the funding approval. Once both parties execute the contract, the funding contract is managed in a similar vein to those of any organisation operating funding contracts. Rigorous reporting requirements apply to Approved Clients.

The Trust makes no apology for its high accountability and capability requirements. Trustees are clear that a strong claimant organisation will result in more effective results and durable settlement outcomes.

The team

I am proud of the work and commitment of Trust staff in assisting groups to progress the settlement of their historical Treaty claims. Their contributions are often lost in the celebratory noise, which inevitably follows the achievement of a significant milestone within negotiations or a Waitangi Tribunal inquiry.

It is difficult for staff to work for an organisation that is winding up. It requires a high level of resilience and commitment. Yet, year in, year out, Trust staff can be seen working long and hard hours, often under considerable pressure and in trying conditions, for claimant groups. The Trust is fortunate to have a highly experienced, skilled and dedicated team.

Looking forward

The Trust is a unique entity. It is not part of the public service, yet it serves the public interest; and it is not a Maori organisation even though its primary objective is to assist Maori to prepare, present and negotiate claims before the Waitangi Tribunal that involve or could involve Crown Forest Licensed Lands.

The Trust is an independent funding organisation that largely responds to the priorities of Treaty sector agencies. The Trust does not decide the outcomes of settlement negotiations; that is a matter for claimants and the Crown to agree upon. The Trust understands all settlements differ in content but the Trust is confident there is scope and flexibility within its policies to provide funding to assist claimants to prepare, present and negotiate their claims.

Darrin Sykes Chief Executive

2 CROWN FORESTRY RENTAL TRUST FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

INDEX PAGE

Statement of Comprehensive Revenue and Expenses 2

Statement of Net Assets/Equity 2

Statement of Financial Position 3

Statement of Cash Flows 4

Notes to the Financial Statements 5-23

Map – Crown Forest Licensed Land 29

Auditor’s Report 30-31

Directory 32 CROWN FORESTRY RENTAL TRUST STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSES FOR THE YEAR ENDED 31 MARCH 2017

2017 2016 Note $ $

INCOME Interest Term Deposits 7,199,140 9,646,305 Interest Forestry Licenses Issues - 3,683 Other Income 2 60,105 60,890 Total Income 7,259,245 9,710,878

EXPENSES Operating Expenses Administration Expenses 3 2,207,236 3,031,353

Assistance to Claimants Disbursements to Claimants 4 6,553,490 8,153,458 Research Services for Claimants 4 3,334,930 2,390,588 Facilitation and Formation of 4 597,790 437,987 Claimant Groups CFRT Service Delivery Costs 4 1,517,344 2,065,102

Total Assistance to Claimants 17 12,003,554 13,047,135

Total Expenditure 14,210,790 16,078,488

DEFICIT FOR THE YEAR (6,951,545) (6,367,610)

Other Comprehensive Revenue and Expenses - -

TOTAL COMPREHENSIVE REVENUE AND (6,951,545) (6,367,610) EXPENSES FOR THE YEAR

STATEMENT OF NET ASSETS/EQUITY FOR THE YEAR ENDED 31 MARCH 2017

2017 2016 $ $ Accumulated Revenue and Expense At Beginning of 86,708,030 93,075,640 Year

Movements in the Year Deficit/Total Comprehensive Revenue and Expenses (6,951,545) (6,367,610) for the Year

Accumulated Revenue and Expenses At End of Year 79,756,485 86,708,030

TOTAL NET ASSETS 79,756,485 86,708,030

The attached notes form part of these financial statements. Page 2 CROWN FORESTRY RENTAL TRUST STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017

Note 2017 2016 $ $

NET ASSETS Accumulated Revenue and Expenses 79,756,485 86,708,030 TOTAL NET ASSETS 79,756,485 86,708,030

Total Net Assets Represented by:

CURRENT ASSETS Cash at Bank 7 1,477,012 3,888,091 Short Term Deposits 7 214,000,000 219,000,000 Other Receivables 24,022 9,060 Accrued Interest 1,577,256 1,796,562 217,078,290 224,693,713 NON CURRENT ASSETS Property, Plant and Equipment 8 - 5,786 - 5,786

TOTAL ASSETS 217,078,290 224,699,499

CURRENT LIABILITIES Trade Payables 71,696 88,769 GST Payable 6,750 10,506 Other Payables 197,156 355,732 Rental Proceeds Held in Trust 18 16,351,998 21,670,555 16,627,600 22,125,562

NON CURRENT LIABILITIES Rental Proceeds Held in Trust 18 120,694,205 115,865,907

TOTAL LIABILITIES 137,321,805 137,991,469

NET ASSETS 79,756,485 86,708,030

These financial statements were approved on the 22 June 2017. Signed for and on behalf of the Board of Trustees:

Rakihia Tau Hinerangi Raumati-Tu'ua Chairperson Chairperson Crown Forestry Rental Trust Finance & Risk Committee

The attached notes form part of these financial statements. Page 3 CROWN FORESTRY RENTAL TRUST STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2017

Note 2017 2016 $ $ CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Cash was provided from: Interest 7,478,551 10,402,316

Cash was applied to: Payment of Administration Expenses and Services and (14,395,615) (16,332,167) Disbursements to Claimants Net GST Movement (3,756) 5,106

NET CASH (OUTFLOWS) FROM OPERATING ACTIVITIES 5 (6,920,820) (5,924,745)

CASH FLOWS (USED IN) FINANCING ACTIVITIES Cash was provided from: Rental Proceeds Received 18 5,510,084 6,370,343

Cash was applied to: Rental Proceeds Disbursed 18 (6,000,343) (23,413,846)

NET CASH (OUTFLOWS) FROM FINANCING ACTIVITIES (490,259) (17,043,503)

NET (DECREASE) IN CASH HELD (7,411,079) (22,968,248) Cash and Cash Equivalents at Beginning of the Year 222,888,091 245,856,339 CASH AND CASH EQUIVALENTS AT END OF THE YEAR 215,477,012 222,888,091

Represented by: Cash at Bank 1,477,012 3,888,091 Short Term Deposits 214,000,000 219,000,000 215,477,012 222,888,091

The attached notes form part of these financial statements. Page 4 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1 STATEMENT OF ACCOUNTING POLICIES

Reporting Entity These financial statements are presented for the reporting entity Crown Forestry Rental Trust ("the Trust").

The Trust is domiciled in New Zealand and registered in New Zealand under the Charities Act 2005, and is a public benefit entity for the purposes of financial reporting in accordance with the Financial Reporting Act 2013. The financial statements have been prepared in accordance with the Trust's Deed (1990) and the Financial Reporting Act 2013.

Nature of Activities

The Crown Forestry Rental Trust was established on 30 April 1990 to receive rental proceeds from Crown forestry licenses.

The rental proceeds received by the Trust are disclosed as liabilities within the Statement of Financial Position. These receipts must be invested in either New Zealand Government-issued securities or in short term interest-bearing deposit accounts with registered banks.

The rental proceeds of the Trust are distributed when the beneficiaries are confirmed and the settlement is enacted under an Act of Parliament.

The interest earned from investments is accumulated by the Trust and applied against the administration expenses of the Trust and to assist any claimant in the preparation, presentation and negotiation of claims which involve, or could involve, Crown licensed forest land.

Statement of Compliance These financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice. They comply with Tier 1 Public Benefit Entity Standards ("PBE Standards").

These financial statements have been authorised for issue by Trustees on 22 June 2017.

Standards and Interpretations Issued But Not Yet Effective At the date of authorisation of these financial statements, the following new, revised and amended standards are in issue but not yet required to be adopted by the entity:

● PBE IFRS 9 - Financial Instruments

Basis of Preparation The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The measurement base is historical cost.

The accrual basis of accounting has been used. These financial statements are presented in New Zealand dollars, rounded to the nearest dollar.

Judgements and Estimates The preparation of financial statements in conformity with PBE Standards requires judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Significant Accounting Policies

(i) Revenue

Revenue comprises mainly received or receivable income derived from deposits with financial institutions. Other income is comprised of administration fees from the Forestry Emissions Unit Trust and insurance settlements.

Interest income on short term deposits is recognised under the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period (including all fees and points paid or received between the parties to the contract that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or, where appropriate, a shorter period to the net carrying amount of the financial instrument.

(ii) Claimant Expenditure

Payments made to Claimants are recognised when the Trust has an obligation to make payment, which is deemed to be once the eligibility of the claim has been assessed and final approval for payment is given.

Page 5 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1 STATEMENT OF ACCOUNTING POLICIES (cont.)

(iii) Income Tax

In 2004 the Trust was successful in its case before the Privy Council to have it deemed a Charitable Trust for tax purposes. As a result the Trust is not liable for income tax on its earnings.

(iv) Goods and Services Tax

These financial statements have been prepared inclusive of GST

The Trust has two main activities which lie outside the provisions of the Goods and Services Tax Act 1985, these being:

● The Crown Forestry Rental Trust Deed creates a supply of money to the Trust (Interest earned from the rental proceeds invested which are capital in nature), and this does not meet the definition of Goods and Services in Section 2 of the GST Tax Act 1985.

● The Trust then funds or reimburses Claimants their expenditure relating to the presentation and negotiation of claims before the Waitangi Tribunal (this activity is not deemed to be a taxable activity).

Funding received by claimants is by definition not subject to GST.

(v) Property, Plant and Equipment

Items of property, plant and equipment are initially recorded at cost. When an asset is acquired for no or nominal consideration (i.e. a non-exchange transaction) the asset will be recognised initially at fair value as their deemed cost at initial recognition. The fair value of the asset acquired through a non-exchange transaction is recognised as revenue. There are no property, plant and equipment acquired under a non-exchange transaction during the year.

Property, plant and equipment is subsequently measured at cost less accumulated depreciation and impairment.

Realised gains and losses arising from disposal of property, plant and equipment are recognised in the surplus or deficit in the period in which the transaction occurs.

The carrying amounts of property, plant and equipment are reviewed at least annually to determine if there is any indication of impairment. Where an asset’s recoverable amount is less than its carrying amount, it will be reported at its recoverable amount and an impairment loss will be recognised. Losses resulting from impairment are reported in surplus or deficit.

Depreciation is calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

Asset Category Expected Life Rate Method Computer equipment 3 years 33% Straight line Leasehold improvements 10 years 10% Straight line Furniture and fittings 4 years 25% Straight line Office equipment 4 years 25% Straight line Other equipment 4 years 25% Straight line

These last three categories have been aggregated and these appear as Combined Classes in Note 8 - Property, Plant and Equipment.

(vi) Intangibles

Intangible assets are initially recorded at cost. The cost of an internally generated intangible asset represents expenditure incurred in the development phase of the asset only. The development phase occurs after the following can be demonstrated: technical feasibility; ability to complete the asset; intention and ability to sell or use; and development expenditure can be reliably measured. Expenditure incurred on research of an internally generated intangible asset is expensed when it is incurred. Where the research phase cannot be distinguished from the development phase, the expenditure is expensed when it is incurred.

Intangible assets with finite lives are subsequently recorded at cost less any amortisation and impairment losses, and are amortised on a straight-line basis over their useful lives as follows:

Page 6 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1 STATEMENT OF ACCOUNTING POLICIES (cont.)

Asset Category Expected Life Rate Method

Software 3 years 33% Straight line

Realised gains and losses arising from disposal of intangible assets are recognised in surplus or deficit in the period in which the transaction occurs.

Intangible assets with finite lives are reviewed at least annually to determine if there is any indication of impairment. Where an intangible asset’s recoverable amount is less than its carrying amount, it will be reported at its recoverable amount and an impairment loss will be recognised. Losses resulting from impairment are reported in the surplus or deficit.

(vii) Leases

All leases held by the Trust are classified as operating leases where the lessor substantially retains all the risks and rewards of ownership. Operating lease payments are recognised in a systematic manner over the term of the lease. Leasehold improvements are capitalised and the cost is amortised over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter.

(viii) Rental Proceeds – Funds Held in Trust

The rental proceeds from licensed Crown Forest land are recorded when the receipt of the forestry rental is received by the Trust. The rental proceeds received are recorded directly to the liability for Rental Proceeds as these funds are only held in trust on behalf of future claimants. These proceeds are disclosed as Rental Proceeds within the Statement of Financial Position and accompanying note (Note 18).

Rentals in dispute are held by Land Information New Zealand (LINZ) and are accounted for as Contingent Assets (Refer to Note 13).

(ix) Employee Benefits

Employee entitlements to salaries and wages, annual leave, sick leave and other similar benefits are recognised in surplus or deficit when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid. The liability for any long term employee entitlements is reported as the present value of the estimated future cash outflows.

i. Short-term employee benefits

Short-term employee benefit liabilities are recognised when the Trust has a legal or constructive obligation to remunerate employees for services provided within 12 months of reporting date, and is measured on an undiscounted basis and expensed in the period in which employment services are provided.

ii. Defined contribution plans

Defined contribution plans, such as Kiwisaver are post-employment benefit plans under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

(x) Other Liabilities and Provisions

A provision is recognised if, as a result of a past event, the Trust has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Other liabilities and provisions are recorded at the best estimate of the expenditure required to settle the obligation. Liabilities and provisions to be settled beyond one month are recorded at their present value of those estimates.

(xi) Financial Instruments

All non derivative financial assets are classified as loans and receivables when the asset is held within the Trust's business model where the objective is to collect the contractual cash flows and those contractual cash flows consist solely of payments of principal and interest on specified dates. Loans are receivables are financial assets with fixed or determinable payments that are not quote in an active market. Loans and receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment.

Page 7 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1 STATEMENT OF ACCOUNTING POLICIES (cont.)

Cash and Cash Equivalents Cash and cash equivalents comprise of cash held in bank accounts and short term deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Accrued Interest Accrued interest comprises the interest earned but not yet received on short term deposits. Accrued interest is recorded separately to the underlying short term deposits in the Statement of Financial Position.

Receivables Receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method and are stated at their expected realisable value after providing for doubtful debts. Receivables with a duration of less than 12 months are recognised at their nominal value, unless the effect of discounting is material. Allowances for estimated irrecoverable amounts are recognised when there is objective evidence that the asset is impaired. Impairment losses are recognised in the Statement of Comprehensive Revenue and Expenses.

Payables Payables are recognised when the Trust becomes obliged to make future payments resulting from the purchase of goods and services.

(xii) Statement of Cash Flows

Operating activities include cash received from investment income and other income sources and cash payments to fund claimants and to manage the day-to-day running of the Trust. Investing activities are activities relating to the purchase and disposal of investments, property, plant and equipment, and intangible assets. Financing activities comprise the changes in Funds Held in Trust (Rental proceeds).

2 INCOME 2017 2016 $ $ Other Income Includes: Administration Fees from Forestry Emissions Unit Trust (refer to note 11) 60,000 60,000 Other Income 105 890 60,105 60,890

3 ADMINISTRATIVE EXPENDITURE

Incorporated within the Trust’s surplus or deficit are the following operating expenditures:

Administrative Expenditure: 2017 2016 $ $

Rent 145,796 228,875 Depreciation (refer to note 8) 5,786 71,731 Amortisation (refer to note 9) - 41,489 Trustee Fees (refer to note 10) 117,085 115,870 Audit Fees 46,863 42,953 Fees Paid to Auditors for Other Services 13,800 - Legal Costs (110) 230,108 Employee Remuneration and Benefits 1,212,241 1,243,489

The Trust’s Administration expenses for the year total $2,207,236 (2016: $3,031,353). The Auditor of the Trust is Deloitte Limited.

Page 8 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

4 CLAIMANT SERVICES DISCLOSURES

Assistance to Claimants: 2017 2016 $ $ Disbursements to Claimants: Waitangi Tribunal Hearings 1,632,522 1,509,411 Direct Negotiations with the Crown 4,920,968 6,644,047 Total Disbursements to Claimants 6,553,490 8,153,458

Research Services for Claimants: Research & Mapping Contracts 3,334,930 2,390,588

Facilitation and Formation of Claimant Groups: Region Level Facilitation Costs 597,790 437,987

CFRT Service Delivery Costs: Personnel Costs 852,000 1,111,791 Other Service Delivery Costs 665,344 953,311 1,517,344 2,065,102 Total Facilitation 6,967,408 6,958,779

13,520,898 15,112,237

Overall assistance to claimants for the current year was less than that of the prior year by $1,591,339. This decrease, which was forecast, is primarily driven by decreased claimant activity. The forecast for the next year (in the Trust’s business plan) is for expenditure to increase and the Trust currently has commitments totalling $9,426,548 (contracted but not spent) for claimant and research contracts as at 31 March 2017 (see Note 13).

5 RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES TO TOTAL DEFICIT

2017 2016 $ $ (DEFICIT) FOR THE YEAR (6,951,545) (6,367,610)

Adjustments for Non-Cash Items: Depreciation Expense 5,786 71,731 Amortisation Expense - 41,489 Non-Cash Adjustment to Funds Held in Trust - (94)

Impact of Changes in Working Capital Decrease in Accrued Interest 219,306 691,438 (Decrease) in Trade and Other Payables (175,649) (370,595) (Increase)/Decrease in Other Receivables (14,962) 3,790 (Decrease)/Increase in GST Payable (3,756) 5,106

Net Cash Outflows from Operating Activities (6,920,820) (5,924,745)

6 FINANCIAL INSTRUMENTS

(a) Foreign Exchange Risk The Trust has no exposure to foreign exchange risk.

(b) Credit Risk Financial instruments, which are potentially subject to credit risk, consist primarily of short term deposits. The Trust may be subject to losses up to the value of $217,078,290 as at 31 March 2017 (31 March 2016: $224,693,713) in the event of non-performance by all counter-parties. The Trust does not expect losses to occur as these instruments are comprised of deposits held with registered banks. Consequently, no collateral is held by the Trust to support these financial instruments. No financial assets are either past due or impaired at 31 March 2017 (31 March 2016: Nil).

(c) Interest Rate Risk The Trust's primary interest rate risk is on short term deposits and can be measured as the differential between the rate received and the current market interest rate. As at 31 March 2017 the estimated gain is $nil (as at 31 March 2016 the estimated gain was $nil).

The Trust regularly monitors interest rates and manages financial assets when required to limit interest rate risk. Quotes for short term deposit interest rates are sought from at least two banking institutions and highest quotes receive deposits accordingly.

(d) Liquidity Risk Management Ultimate responsibility for liquidity risk management rests with the Board of Trustees, which has built an appropriate liquidity risk management framework for the management of the Trust's short, medium, and long term funding and liquidity management requirements. The Trust manages liquidity by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities, and allowing for expected settlement payments.

Page 9 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6 FINANCIAL INSTRUMENTS (cont.)

(e) Capital Risk Management The Trust manages its retained earnings to ensure that the Trust is able to continue as a going concern while maximising the return to the stakeholders. There are no externally imposed capital requirements and the overall strategy remains unchanged from 2014.

There have been no changes in the Trust’s exposure to risk or the policies and processes in managing and measuring risk.

7 FINANCIAL INSTRUMENTS SCHEDULE

The following table details the Trust’s financial instruments, (which excludes other receivables and current payables whose carrying value is approximately fair value), their estimated fair values excluding accrued interest and the exposure to interest rate risk as at 31 March 2017 are as follows:

The fair values of these financial instruments have been determined using market interest rates.

Carrying Carrying Amount Amount 2017 2016 $ $ Cash and Bank 1,477,012 3,888,091 Short Term Deposits 214,000,000 219,000,000

Total Portfolio 215,477,012 222,888,091

(A) CURRENT Average Interest Face Value Carrying Face Value Carrying Maturity Rate Amount Amount % 2017 2017 2016 2016 $ $ $ $ Short Term Deposits 3.42% 214,000,000 214,000,000 219,000,000 219,000,000

TOTAL CURRENT 214,000,000 214,000,000 219,000,000 219,000,000

Maturity Analysis of Short Term Deposits Highest Lowest Highest Lowest 2017 2017 2016 2016 Interest Rate Ranges 3.59% 2.30% 3.80% 3.16%

Categories of Financial Instruments 2017 2016 $ $ Financial Assets at Amortised Cost Accrued Interest 1,577,256 1,796,562 Other Receivables 24,022 9,060 Cash at Bank 1,477,012 3,888,091 Short Term Deposits 214,000,000 219,000,000

Financial Liabilities at Amortised Cost Trade Payables 71,696 88,769 Other Payables 197,156 355,732 Rental Proceeds 137,046,203 137,536,462

Sensitivity Analysis

The Trust’s financial instruments include trade payables, rental proceeds, cash at bank, short term deposits, other receivables, and accrued interest.

The analysis below has been determined using the average monthly yield of all income generating assets held by the Trust. The table shows the effect of a 2% up or down movement in market interest rates on that average monthly yield. There have been no changes to the calculation methodology from the prior year.

Surplus/Deficit Accumulated Surplus/Deficit Accumulated Revenue and Revenue and Expense Expense 2017 2017 2016 2016 $ $ $ $ Market Interest Rates Decrease by 2% (4,329,167) (4,329,167) (4,703,333) (4,703,333)

Market Interest Rates Increase by 2% 4,329,167 4,329,167 4,703,333 4,703,333

Page 10 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8 PROPERTY, PLANT AND EQUIPMENT

Computer Leasehold Combined 2017 Equipment Improvements Classes * Total $ $ $ $ Opening Cost 1 April 2016 525,894 184,929 194,301 905,124 Closing Cost 31 March 2017 525,894 184,929 194,301 905,124

Opening Accumulated Depreciation 1 April 2016 525,894 184,929 188,515 899,338 Depreciation - - 5,786 5,786 Closing Accumulated Depreciation 31 March 2017 525,894 184,929 194,301 905,124

Net Book Value - - - -

Computer Leasehold Combined 2016 Equipment Improvements Classes * Total $ $ $ $ Opening Cost 1 April 2015 525,894 184,929 194,301 905,124 Closing Cost 31 March 2016 525,894 184,929 194,301 905,124

Opening Accumulated Depreciation 1 April 2015 524,094 117,910 185,603 827,607 Depreciation 1,800 67,019 2,912 71,731 Closing Accumulated Depreciation 31 March 2016 525,894 184,929 188,515 899,338

Net Book Value - - 5,786 5,786

* The assets aggregated within the Combined Class relate to Furniture and Fittings, Office equipment and Other equipment held by the Trust.

9 INTANGIBLE ASSETS

Intangible Assets – Software 2017 2016 $ $ Opening Cost 1 April 1,050,482 1,050,482 Closing Cost 31 March 1,050,482 1,050,482

Opening Amortisation 1 April 1,050,482 1,008,993 Amortisation - 41,489 Closing Amortisation 31 March 1,050,482 1,050,482

Net Intangibles - -

10 TRUSTEE FEES AND KEY MANAGEMENT PERSONNEL

2017 2016 $ $ Trusteeship/Governance 117,085 115,870

The rates for Trustee fees are in accordance with the Government’s standard “Fees Framework for Members of Statutory and Other Bodies Appointed by the Crown”. From 1 July 2005 the fees are a daily rate of $595 for the Chairperson capped to an annual maximum of $29,750. Other Trustees have been set a daily rate of $540, capped to an annual maximum of $14,875.

The Trustees attend regular meetings during the year to deal with governance issues of the Trust, such as strategic and business planning issues, as well as considering proposals relating to the funding of claimant groups.

Fees received by Trustees 2017 2016 $ $ Ms Angela Foulkes (term completed 30 Sep 2016) 8,677 14,875 Mr Alexander (John) Wilson 14,875 14,875 Hon Sir Taihākurei Durie 14,875 14,875 Mr Rakihia Tau (Chair) 29,750 29,750 My Paul Majurey 14,875 14,875 Mrs Hinerangi Raumata-Tu'ua 14,875 14,875 Tau Henare (commenced as from 1 Oct 2016) 6,198 - Ms Riria Te Kanawa (Maori Appointed Alternate) 405 405 Mr Roger Beckett (Crown Appointed Alternate) (term completed 31 Dec 2016) 405 2,025 Mr Simon Karipa (Maori Appointed Alternate) 1,215 1,215 Mr John Paki (Maori Appointed Alternate) 4,050 2,835 Mr Mark Bogle (Crown Appointed Alternate) (commenced as from 1 Jan 2017) 1,215 - Anne Carter (Crown Appointed Alternate) (commenced as from 1 Jan 2017) 1,215 - Kim Ngarimu (Crown Appointed Alternate) (commenced as from 1 Jan 2017) 1,215 - Ms Fran Wilde (term completed 31 Dec 2016) - 1,215 Ms Roimata Kirikiri (Maori Appointed Alternate) 2,835 3,645 Mr Russ Ballard (term completed 31 Dec 2016) 405 405 117,085 115,870

Page 11 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10 TRUSTEE FEES AND KEY MANAGEMENT PERSONNEL (cont.)

Key Management Personnel Conflict of Interest The Trust maintains an active register which records potential conflicts of interest whereby both staff and Trustees are required to disclose any interests associated with their Iwi group or affiliations concerning claimant funding activities and for other contracts and services being provided.

Management 2017 2016 CFRT Executive Team Members at year end 3 3

CFRT Executive Remuneration 2017 2016 $ $ Short Term Employee Benefits 583,881 561,794 Post Employment Benefits 14,155 15,192 Other Long Term Employee Benefits - - Termination Benefits - - 598,036 576,986

Other Affiliations held by Executive Team A number of the Executive Team have affiliations to Iwi represented by claimant groups recognised by the Trust. Where the Executive are considering providing assistance to particular claimant groups to which they are affiliated, the Executive discloses these affiliations and have taken action they consider appropriate to deal with any potential conflict of interest that may arise during the year.

11 RELATED PARTY TRANSACTIONS

2017 2016 Provision Trustee Affiliations Role $ $ for Hon Sir Hon Sir Taihākurei Durie Taihākurei Durie 497,655 95,549 Funding payment is a Trustee Daphne Luke Project manager /secretary of NZMC Daphne Luke is Te Hono ki Raukawa Trust Project Manager for Te Hono

Rudy Taylor executive of NZMC Rudy Taylor is 217,204 248,628 Funding payment Hokianga o Nga Hapu Whanau the Chair of Hokianga O Nga Hapu Whanau

Karen Waterreus Secretary of NZMC Karen Waterreus - 1,200 Funding payment Ngati Kahungungu ki Wairarapa performed services through Glenda Hughes and Associates

Pita Tipene executive of FOMA Pita Tipene is the 215,860 175,037 Funding payment Te Haumi Chair of Te Haumi

All trustees Trustees of 60,000 60,000 Secretariat Forestry Emission Unit Trust Forestry Services Emission Unit Trust

Maori appointed trustees Contracted Traci Houpapa Consulting Group Ltd Provider to - 13,350 Advisory services Claimant Groups

FOMA Maori Appointor 7,733 24,344 Maori Appointor Costs

A number of Trustees have affiliations to Iwi represented by claimant groups recognised by the Trust. Where Trustees are considering providing assistance to particular claimant groups to which they are affiliated, the Trustees have declared and minuted these affiliations and have taken action they consider appropriate to deal with any potential conflict of interest that may arise during the year.

The Te Hono ki Raukawa Trust received funding of $497,655 for the year to 31 March 2017 (2016: $95,549). During this time Daphne Luke was the Project Manager for Te Hono ki Raukawa Trust and is also the NZMC Project Manager and Acting

Secretary and Hon Sir Taihākurei Durie was a Trustee with Te Hono ki Raukawa Trust. Due to the conflict of interest Sir Taihākurei did not participate in any funding decisions.

Hokianga o Nga Hapu Whanau received funding of $217,204 for the year to 31 March 2017 (2016: $248,628). During part of this time Rudy Taylor was an Executive Member of NZMC.

Page 12 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11 RELATED PARTY TRANSACTIONS (cont.)

Te Haumi received funding of $215,860 for the year to 31 March 2017 (2016: $175,037). During this time Pita Tipene was an Executive Member of FOMA.

The Trust provided no funding to Ngati Hineuru for services provided by Traci Houpapa Consulting Group Ltd for the year ended 31 March 2017 (2016: $13,350). Traci Houpapa Consulting Limited is owned by Traci Houpapa who is also the Chair of FOMA. A potential conflict may arise due to the role of the FOMA Chair in appointing Trustees.

The Trust provided no funding to Ngati Kahungungu ki Wairarapa for services provided by Karen Waterreus in association with Glenda Hughes and Associates for the year to 31 March 2017 (2016: $1,200). Karen Waterreus is no longer the Interim Secretary of the NZ Maori Council.

The Trust administered the Forestry Emission Unit Trust during the year and received an Administration Fee of $60,000 for its services (2016: $60,000). The Forestry Emission Unit Trust trustees are also trustees of the Trust.

The funding for FOMA was for Maori appointor meetings, following a High Court order.

As noted in Note 10 the Trust maintains an active register which records potential conflicts of interest and Trustees are required to disclose such potential interests at Board meetings in order to reduce risks surrounding their association with their Iwi group or affiliations concerning claimant funding activities and for other contracts and services being provided.

The Trust paid no money to Woodward Law during the year which has Ms Donna Hall as Principal lawyer (2016: $8,550). The association is due to Ms Hall being the wife of Trustee Sir Taihakurei Durie.

Other significant Related Party interests of key advisors to the Board include the following:

2017 2016 Provision Investment Advisor Role $ $ for

James Ogden Principal 12,851 10,091 Investment Ogden Consulting Limited Advice

12 CONTINGENT LIABILITIES

There were no contingent liabilities as at 31 March 2017 (2016: $0).

13 CONTINGENT ASSETS

As at 31 March 2017 there are no disputed licence fees held by LINZ (2016: $0).

LINZ manages the collection of licence fees on behalf of the Trust. Every three years the licence fees are reviewed and the licensees are able to dispute the Crown’s assessments. As a consequence LINZ holds the disputed portion of the licence fees until the dispute is resolved.

When disputes are resolved LINZ forwards to the Trust the balance of the licence fees and any interest earned on the balances.

14 COMMITMENTS

(i) Assistance to Claimants The Trust has commitments totalling $6,023,869 as at 31 March 2017 (2016: $9,426,548) relating to assistance to claimants which has been approved by Trustees at balance date. The release of these amounts is subject to the claimant groups meeting the various terms and conditions established for their respective funding and the completion of research contracts in progress.

(ii) Capital Commitments The Trust has no capital commitments at 31 March 2017 (2016: $nil).

(iii) Lease Commitments Future operating lease rentals for premises and motor vehicles are not recognised in the financial statements. The minimum lease rental commitments at balance date are as follows:

2017 2016 $ $ Less than One Year 134,015 134,015 Two to Five Years 245,695 379,710 Greater than Five Years - - Total 379,710 513,725

Page 13 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

15 DEEDS OF SETTLEMENT

Te Kawerau ā Maki and Ngāti Whātua o Kaipara The Te Kawerau ā Maki Settlement Act 2015 provides that ownership of the remaining part of Woodhill Crown Forest Licensed land (Kopironui property) is to be determined by the Maori Land Court. The application to determine ownership was lodged with the Maori Land Court in March 2017 and is being processed by the Court. The ownership of the Kopironui property may be vested in the relevant trustees of either, or both:

a) Te Kawerau Iwi Settlement Trust; b) Nga Maunga Whakahii o Kaipara Development Trust.

The impact of the settlement legislation and subsequent vesting order of the Maori Land Court will be to distribute to the relevant Trustees the remaining portion of Funds held in Trust for Woodhill Crown Forest Licensed land (Kopironui property). As at 31 March 2017 the Funds Held in Trust for the Woodhill Crown Forest were approximately $81,000.

Ngāti Hineuru On 2 April 2015, the Crown and Ngāti Hineuru signed a Deed of Settlement. The Hineuru Claims Settlement Bill was introduced on 5 June 2015 and the legislation is expected to come into force in September 2017. Settlement date for the transfer of Crown Forest Licensed Land and payment of accumulated rentals in 20 working days after the legislation comes into force.

The impact of settlement will be to distribute to Te Kōpere o te iwi Hineuru Trust the remaining Funds Held in Trust for Esk Crown Forest Licensed land. As at 31 March 2017, the Funds Held in Trust for Esk Crown Forest Licensed land were approximately $5.2 million.

Tauranga Moana Iwi Collective On 21 January 2015, the Crown and Tauranga Moana Iwi Collective signed a Deed of Settlement. The Tauranga Moana iwi Collective Redress and Nga Hapu o Ngati Ranginui Claims Settlement Bill was introduced on 3 November 2015, and legislation is expected to come into force in late 2017. Settlement date for the transfer of Crown Forestry Licensed Land and payment of accumulated rentals is 20 working days after the legislation comes into force.

The impact of the settlement will be to distribute to the Tauranga Moana Iwi Collective Limited Partnership 39% of the Funds Held in Trust for Athenree Crown Forest Licensed land. As at 31 March 2017, the Total Funds Held in Trust for Athenree Crown Forest Licensed land were approximately $3 million.

Rangitāne o Manawatū On 14 November 2015, the Crown and Rangitāne o Manawatū signed a Deed of Settlement. The Rangitāne o Manawatū Claims Settlement Bill was introduced on 7 December 2015 and the legislation is expected to come into force in late 2017. Settlement date for the transfer of Crown Forest Licensed Land and payment of accumulated rentals is 40 working days after the legislation comes into force.

The impact of the settlement will be to distribute to Rangitāne o Manawatū Settlement Trust 100% of the Funds Held in Trust for Tangimoana Crown Forest Licensed land. As at 31 March 2017, the Total Funs Held in Trust for Tangimoana Crown Forest Licensed land were approximately $700,000.

Heretaunga Tamatea On 26 September 2015, the Crown and Heretaunga Tamatea signed a Deed of Settlement. Heretaunga Tamatea and its hapū is one of six large natural groupings negotiating the settlement of the historical Treaty claims of Ngāti Kahungunu. The Heretaunga Tamatea Claims Settlement Bill is expected to be introduced in May 2017 and to come into force in late 2017. Settlement date for the transfer of Crown Forest Licensed Land and payment of accumulated rentals is 40 working days after the legislation comes into force.

The impact of the settlement will be to distribute the Total Funds Held in Trust for the Kaweka and Gwavas Crown Forest Licensed lands to a licensed land entity, the Kaweka Gwavas Forestry Company Limited (KGFCL). The Heretaunga Tamatea Settlement Trust will own 66.66% of shares in KGFCL and the Mana Ahuriri Trust will own 33.34% of shares in KGFCL.

As at 31 March 2017, the Total Funds Held in Trust for Kaweka Crown Forest Licensed land were approximately $6 million and the Total Funds Held in Trust for Gwavas Crown Forest Licensed land were approximately $8 million.

Ahuriri Hapū On 19 June 2015, the Crown and Ahuriri Hapū initialled a Deed of Settlement. The Deed of Settlement is expected to be signed in mid-2017 and the Ahuriri Claims Settlement Bill is expected to be introduced in 2017 and to come into force before 31 March 2017. Settlement date for the transfer of Crown Forest Licensed Land and payment of accumulated rentals is expected to be the same as for Heretaunga Tamatea.

The impact of the settlement will be to distribute the Total Funds Held for the Kaweka and Gwavas Crown Forest Licensed lands to a licensed land entity, the Kaweka Gwavas Forestry Company (KGFCL). The Mana Ahuriri Trust wil own 33.34% of shares in KGFCL and the Heretaunga Tamatea Settlement Trust will own 66.66% of shares in KGFCL.

16 SUBSEQUENT EVENTS

There have been no events subsequent to balance date to note.

Page 14 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Tai Tokerau $ $ $ 399,580 Muriwhenua Negotiations Management Committee - - - 468,367 Ngati Kuri Trust Board - - 136,877 1,656,098 Te Aupouri Negotiations Co - - - 277,879 Te Runanga o Muriwhenua - direct disbursement - - - Te Runanga o Muriwhenua - disbursed for 1,413,957 administration by third parties - - - 1,812,161 Te Runanga o Te Rarawa - - - 1,362,795 Ngai Takoto - - - 1,725,925 Te Runanga a Iwi o Ngati Kahu - - - 3,143,490 Te Hui Topu O Te Iku O Te Ika (Te Hiku Forum) - - - 409,023 Nga Hapu o Whangarei Claims Committee - - - 26,048 Nga Hapu o Nga Puhi o Whangarei - - - 204,108 Ngati Kahu o Torongare Te Parawhau Hapu - - - 975,675 Hokianga Claims Alliance 175,905 216,529 106,370 332,835 Mahurangi & Gulf Islands - - - 249,414 Te Aho Claims Alliance - - - 161,200 Ngati Hine Health Trust Board - - - 163,901 Northland Design Group - - - 189,087 Ngatiwai Maori Trust Board (25,076) 161,452 - 50,000 Pu Hao Rangi (on behalf of a national claim) - - - 143,197 Puhipuhi Maruata Forestry Claim - - - 286,000 Tai Tokerau District Maori Council - - - 574,834 Te Taumata o Tangitu - - - 906,492 Te Waimate-Taiamai Alliance 167,781 128,716 159,565 98,830 Whangarei Core Collective Claimant Group - - - 956,705 Whangaroa Papa Hapu 173,814 165,580 150,206 30,000 Te Paparahi o Te Raki Inquiry - 30,000 - 681,781 Te Kotahitanga o Nga Hapu Ngapuhi 212,860 153,484 225,242 684,547 Te Mana Motuhake A Rohe o Whangarei 179,986 193,515 272,434 599,451 Te Runanga A iwi o Ngapuhi - - 599,451 787,839 Tuhoronuku Independent Mandated Authority (TIMA) (52,790) 650,629 190,000 183,350 Ngati Kahu Remedies Hearing - - - 20,954,569 Total Direct Assistance 832,480 1,699,905 1,840,145 Region Research Costs 384,742 321,138 220,537 Region Facilitation Costs 389,162 377,716 446,657 Total Te Tai Tokerau Claimant costs 1,606,384 2,398,759 2,507,339

Page 15 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Tamaki $ $ $ 950,260 Otamatea Maori Trust Board - - - 1,074,330 Te Uri o Hau o Te Wahapu o Kaipara - - - 857,210 TUOH Limited - - - 80,300 Awaroa Claims Management Committee - - - 36 Awaroa ki Manuka - - - 177,085 Kaipara Cooperative Claimant Forum - - - 1,525,146 Kawerau a Maki Trust - - 141,039 135,995 Manukau Whanau - - - 225,680 Ngati Tahinga/Ngati Mauku - - - 2,794,354 Ngati Whatua o Kaipara ki Te Tonga - - - 845,906 Te Runanga o Ngati Whatua - - - 10,257,939 Hauraki Collective 616,454 122,776 634,783 868,393 Ngati Manuhiri - - - 2,501,467 Ngai Tai Ki Tamaki - 266,808 42,036 2,226,285 Ngati Tamaoho 277,095 158,173 286,013 745,175 Ngati Te Ata - - - 252,012 Te Tao U - - - 5,000 Te Uri o Tautohe - - - 247,071 Te Waiariki Ngati Korora Hapu - - - 316,736 Ngaati Te Ata Incorporated - - - 280,635 Gregory-Mare Whanau - - - 72,130 Hakipene Hura Whanau - - - 2,328,357 Hauraki Maori Trust Board - - - 528,000 Marutuahu Confederation - - - 144,197 Ngati Hei - - - 101,058 Ngati Koi Claimant Committee - - - 20,900 Ngati Maru Iwi Authority - - - 12,048 Ngati Paoa - - - 2,863 Nga Uri o Horowhenua - - - 179,999 Ngati Whanaunga - - - 130,000 Taipari Whanau - - - 75,717 Te Kupenga o Ngati Hako - - - 152,500 Te Rakahurumai Claims Committee - - - 53,240 Te Rangatira o Tamatera - - - 272,877 Te Whanau o Hamiora Mangakahia - - - 319,626 Ngati Porou Mt Hikurangi Lands Claim Committee - - - 4,036 Tamaki Collective - - - 1,028,629 Te Akitai Waiohua 201,409 128,078 188,400 31,793,192 Total Direct Assistance 1,094,958 675,835 1,292,271 Region Research Costs 72,284 20,706 64,823 Region Facilitation Costs 3,970 2,614 8,636 Total Tamaki Claimant costs 1,171,212 699,155 1,365,730

Page 16 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Moana a Toi $ $ $ 37,210 Ngati Pukenga - - - 2,540,101 Ngati Pukenga/Ngati Hikairo - - - 545,659 Athenree Lands ki Tauranga Moana - - - 3,178,442 Pirirakau/Ngati Ranginui - - - 1,537,668 Te Kahui Raupatu o Tauranga Tangata - - - 2,895,908 Ngai Te Rangi Incorporated - - - 18,000 Ngati Hinerangi Trust - - - 28,300 Ngati Motai and Mahana - - - 36,500 Ngati Hangarau Trust - - - 10,817,788 Total Direct Assistance - - - Region Research Costs - - 0 Region Facilitation Costs - 252 524 Total Te Moana a Toi Claimant costs - 252 524

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Arawa $ $ $ 200,000 Ngati Awa Maori Trust Board - - - 3,032,438 Ngati Makino Claims Committee - - - 179,184 Ngati Pikiao Forest Claims Committee - - - 2,075,568 Te Runanga o Ngati Awa - - - 1,164,220 Te Runanga o Tuwharetoa ki Kawerau - - - 102,305 Haparangi A4 - - - 438,185 Horohoro Crown Forest Claims Committee - - - 3,634,989 Lake Taupo Forest Trust 679,198 826,211 - 2,129,580 Ngati Tuwharetoa Hapu Forum - - 190,687 3,209,092 Nga Kaihautu o Te Arawa Structure - - - 330,658 Ngati Rangitihi - - - 124,959 Ngati Tuara/Kearoa - - - 723,621 Ngati Tuwharetoa - - - 2,268,579 Ngati Whare Iwi Claims - - - 34,552 Rangiuru Sports Club Inc - - - 110,938 Rotomahana Parekarangi 6N2B & 6O2B Trusts - - - - Te Waka Pumau o Te Arawa (Non Aligned) - - - 118,500 Te Pumautanga o Te Arawa - - - 24,000 Te Papa-i-ouru Trustee Board - - - 6,023 Te Runanga o Ngati Tahu - - - 2,563,501 Te Runanganui o Te Ikawhenua - - - 200,000 Te Whakarewarewatanga o Te Ope Taua a Wahiao - - - 718,959 Whakarewarewa Forest Trust - - - 1,098,268 Waitaha Raupatu Trust - - - 50,000 Te Arawa Iwi of CNI - - - 5,593,336 CNI Forest Iwi Group - - - 828,251 Te Runanga o Ngati Manawa - - - 11,752,913 Volcanic Interior Plateau Project - - - 1,876,477 Te Maru O Ngati Rangiwewehi - - - 221,444 Nga Punawai o Te Toko Toru - - - 356,618 Te Kotahitanga O Whakaue - - -

Page 17 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Arawa (cont.) $ $ $ 24,438 Manutaki Trust - - - 88,450 Mataatua Marae Hearing Committee - - - 30,000 Maungapohatu Marae Committee - - - 48,000 Murumurunga Marae - - - 1,125,090 Nga Rauru o Nga Potiki - - - 2,554,034 Te Runanga o Ngati Manawa - - - 40,000 Rangitahi Marae - - - 247,000 Panekiri Tribal Trust Board - - - 56,824 Tauarau Marae Committee - - - 3,293,855 Te Kotahi a Tuhoe - - - 84,475 Te Rangatiratanga o Ngati Rangitihi - - - 33,000 Te Rewarewa Marae - - - 749,399 Tuhoe Waikaremoana Maori Trust Board - - - 264,805 Ngati Ruapani ki Waikaremoana - - - 351,173 Ngati Whare Iwi Claims - - - 44,000 Waimako Trust - - - 382,225 Panekiri Tribal Trust Board - - - 54,583,927 Total Direct Assistance 679,198 826,211 190,687 Region Research Costs 37,133 16,547 19,381 Region Facilitation Costs 0 595 2,794 Total Te Arawa Claimant costs 716,331 843,353 212,862

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Waikato $ $ $ 202,281 Tainui Maori Trust Board - - - 113,402 Wi Taka Whanau o Ngati Koheriki - - - 4,899 Ngati Koheriki - - - 936,217 Maniapoto Maori Trust Board & Treaty Claims Committee - - - 96,813 Maniapoto Maori Trust Board 76,813 - - 85,000 Maniapoto ki Waenganui Regional Claims Forum - - - 482,909 Maniapoto ki te Raki Regional Claims Forum - - - 286,917 Maniapoto ki te Tonga (Te Rohe Potae) - - - 186,604 Raukawa Kaumatua Kaunihera - - - 50,625 Te Maru o Rereahu Trust - - - 23,625 Te Nehenehenui Claims - - - 25,350 Te Whanui Kohinga - - - 1,774,301 Ngati Hinerangi Iwi Trust 740,037 695,073 339,191 300,000 Te Kawau Maro - 300,000 - 210,483 Ngati Te Wehi Cluster - - - 310,507 Whanganui Northern Cluster ki Te Rohe Potae - - - 77,663 Tuhua Hikurangi Claimants - - - 2,983,983 Raukawa Maori Trust Board - - - 168,768 Tainui Awhiro Trust - - - 985,591 Ngati Haua Iwi - - - 89,673 Maniapoto Central Region - - - 127,244 Te Runanganui o Ngati Hikairo - - - 9,522,855 Total Direct Assistance 816,850 995,073 339,191 Region Research Costs 82,754 135,854 292,957 Region Facilitation Costs 10,612 11,983 342,346 Total Waikato Claimant costs 910,216 1,142,910 974,494

Page 18 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Tai Rawhiti $ $ $ 359,796 Te Kura Takai Puni - - - 5,274,124 Te Runanga o Ngati Porou - - - 376,760 United Tribal Council - - - 234,142 Te Roopu Kaiwhakahaere o Ruawaipu Cluster - - - 275,718 Nga Ahi Kaa Cluster - - - 108,354 Te Uru Karaka Cluster - - - 364,654 Te Aitanga a Hauiti Iwi Cluster - - - 85,500 Te Whanau a Kai Trust - - - 87,018 Nga Uri o Te Kooti Rikirangi - - - 540,792 Ngai Tamanuhiri Whanui Charitable Trust - - - 67,144 Ngariki Kaiputahi Whanui Trust - - - 34,215 Te Runanga o Turanganui a Kiwa (Turanga Forum) - - - 2,435,147 Turanga Claimants (Turanga Manuwhiriwhiri) - - - 128,605 Rongawhakaata Charitable Trust - - - 537,847 Te Aitanga-a-Mahaki - - - 359,880 Te Pou-a-Haokai & Ngai Tamanuhiri - - - 170,000 Te Pou a Haokai Central Progression Team - - - 73,500 Te Whanau a Kai - - - 32,500 Wi Pere Whanau Trust - - - - East Coasts Districts Inq - - - 246,603 Mangatu Remedies Hearing - - - 11,792,299 Total Direct Assistance - - - Region Research Costs - - - Region Facilitation Costs - - - Total Te Tai Rawhiti Claimant costs - - -

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Takitimu $ $ $ 372,101 Nga Uri o Te Wharerata Forestry Claims Committee - - - 44,843 Ngai Tama Te Rangi Claim Committee - - - 42,500 Te Iwi o Rakaipaaka - - - 42,500 Te Whanau o Rongomaiwahine - - - 13,460 Wairoa Waikaremoana Maori Trust Board - - - 3,033,627 Wairoa Working Group 343,007 676,212 353,915 42,500 Whakaki Marae Committee - - - 8,940 Ngati Kahungunu ki Waikaremoana - - - 44,000 Rangiahua Marae - - - 50,000 Te Kahungunu Collective - - - 2,442,596 Maungaharuru Tangitu Society Inc. - - - 269,100 Nga Hapu o Te Ahuriri - - - 3,195,072 Ngati Pahauwera - - - 43,148 Te Whanganui a Orotu - - - 241,475 Ngati Hineuru/Ngati Hinerau - - - 819,498 Maungaharuru Tangitu/Ngati Hineuru - 59,073 450,629 1,092,003 Mohaka Waikare - - 3,301 1,908,598 Mana Ahuriri Incorporated 2,838 334,536 300,000 129,743 Nga Tukemata o Ruahine - - - 2,804,796 He Toa Takitini - 410,083 836,940

Page 19 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Takitimu (cont.) $ $ $ 459,400 Nga Hapu Karanga o Wairarapa - - - 787,706 Ngai Tumapuhia a Rangi Claims Committee - - - 1,840,072 Te Runanga o Rangitane o Wairarapa 277,253 197,768 664,746 173,500 Ngati Hinewaka - - - 4,250 Ngati Te Hore - - - 8,500 Owahanga Roopu - - - 441,529 Rangitane o Tamaki Nui a Rua - - - 88,355 Te Ropu Whenua Ngai Tumapuhiri - - - 606,480 Te Runanga o Rangitane o Wairarapa - - - 516,722 Rangitane Settlement Negotiations Trust - 434 5,000 2,317,803 Kahungunu ki Wairarapa - Tamaki Nui a Rua Trust 421,109 248,087 714,185 - Wairarapa Moana ki Pouakani Inc - - - 23,884,817 Total Direct Assistance 1,044,207 1,926,193 3,328,716 Region Research Costs 30,889 210,122 374,928 Region Facilitation Costs 1,089 11,991 7,427 Total Takitimu Claimant costs 1,076,185 2,148,306 3,711,071

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Te Tai Hauauru $ $ $ 1,360,956 Nga Iwi o Taranaki/Ngati Maru 910,029 137,635 - 299,237 Ngati Haua Iwi - - - 79,871 Ngati Rakeipoho/Hikairo - - - 2,250,337 Ngati Rangi Trust 195,502 880,994 135,400 1,245,722 Southern Whanganui Cluster - - - 2,120,530 Te Runanga o Ngati Apa - - - 1,213,381 Whanganui Central Claims Charitable Trust - - - 904,926 Whanganui Northern Cluster - - - 851,855 Whanganui River Maori Trust Board - - - 2,517,836 Tanenuiarangi Manawatu Incorporated - 58,353 59,500 1,529,279 Muaupoko Tribal Authority (3,393) 158,637 727,676 421,287 Te Hono ki Raukawa Trust 213,210 95,549 - 695,765 Mokai Patea Claims Committee 162,062 154,596 116,716 40,000 Te Runanga o Mua Upoko - - - 642,332 Ngati Hinemanu me Ngati Paki Heritage Trust 98,714 137,344 116,819 393,174 Tumatanui Incorporated Society 110,383 120,791 107,000 472,405 Uenuku 208,090 214,315 50,000 430,698 Te Runanga o Raukawa - - - 213,227 Tu Te Manawaroa 141,200 72,027 - 50,000 Whanganui Land Settlement Negotiation Trust 50,000 - - 17,732,817 Total Direct Assistance 2,085,797 2,030,241 1,313,111 Region Research Costs 2,727,128 1,686,221 1,244,498 Region Facilitation Costs 192,957 32,836 112,714 Total Te Tai Hauauru Claimant costs 5,005,882 3,749,298 2,670,323

Page 20 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

17 TOTAL DISBURSEMENTS TO CLAIMANTS TO 31 MARCH 2017 (cont.)

Total Disbursements Since 1990 to 31/03/2017 Region & IWI 2017 2016 2015 Whanganui a Tara $ $ $ 5,587,343 Kurahaupo ki te Waipounamu Trust - - - 697,716 Ngati Apa ki Te Waipounamu Trust - - - 704,559 Ngati Koata no Rangitoto ki Te Tonga Trust - - - 631,313 Ngati Kuia Trust Claim Committee - - - 1,025,587 Ngati Rarua Trust - - - 685,799 Ngati Tama Manawhenua ki Te Tau Ihu Trust - - - 5,451,842 Tainui Taranaki ki te Tonga Ltd - - - 1,118,496 Te Atiawa Manawhenua ki Te Tau Ihu Trust - - - 1,600,898 Te Runanga a Ngati Toa Rangitira - - - 2,832,338 Te Runanga o Toa Rangatira Incorporated - - - 601,536 Te Runanga o Rangitane o Wairau - - - 52,500 Wakatu Incorporated - - - 52,452 Ngati Tamarangi - - - 1,149,337 Ngai Tahu Maori Trust Board - - - 22,191,716 Total Direct Assistance - - - Region Research Costs - - - Region Facilitation Costs - - 0 Total Whanganui a Tara Claimant costs - - -

203,273,980 Total Direct Assistance To Claimants 6,553,490 8,153,458 8,304,121 Total Region Research Costs 3,334,930 2,390,588 2,217,124 Total Region Facilitation Costs 597,790 437,987 921,098 Total Direct Services To Claimants 10,486,210 10,982,033 11,442,343

Other Service Delivery Costs 1,517,344 2,065,102 2,568,499

Total Assistance To Claimants 12,003,554 13,047,135 14,010,842

Page 21 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

18 FUNDS HELD IN TRUST TO 31 MARCH 2017

Forest Opening Current Year Current Year Current Year Total held No. Balance Received Adjustments Distributions in Trust $ $ $ $ $ Northland Aupouri * 1 - 21,093 21,093 Otangaroa 2 3,458,781 140,400 3,599,181 Waitangi 3 2,346,705 115,900 2,462,605 Glenbervie 4 10,859,424 496,850 11,356,274

Auckland Woodhill * 7 81,422 1,726 83,148 Riverhead * 8 - - Maramarua 11 14,564,255 576,100 15,140,355 Whangapoua 12 6,913,834 219,800 7,133,634 Kauaeranga 13 352,494 13,200 365,694 Waihou 14 2,273,155 107,000 2,380,155 Tairua 15 17,242,408 656,000 17,898,408 Athenree * 16 3,065,623 119,000 3,184,623 Whangamata 60 234,000 32400 266,400

Central North Island Pirongia 24 445,644 17,850 463,494 Tawarau 25 2,201,889 96,500 2,298,389 Mangaokewa 26 1,172,772 50,300 1,223,072 Pureora North 27 560,362 990 561,352

East Coast Mangatu 34 11,823,777 608,975 12,432,752 Patunamu 36 5,811,331 238,400 6,049,731

Hawkes Bay Esk * 38 5,255,713 (5,255,713) - Kaweka 39 6,256,910 263,450.00 6,520,360 Gwavas 40 8,159,587 346,900.00 8,506,487

Southern North Island Erua 41 69,288 3,600 72,888 Karioi 42 8,527,407 195,000 8,722,407 Te Wera 43 2,500,056 115,500 2,615,556 Lismore Hill 44 1,848,113 81,250 1,929,363 Lismore Sand 45 1,008,209 45,700 1,053,909 Santoft 46 1,431,256 53,000 1,484,256 Tangimoana 47 721,330 23,300 (744,630) - Waitarere 48 3,048,171 138,450 3,186,621 Manakau 49 454,857 17,450 472,307 Ngaumu 51 14,847,689 714,000 15,561,689

Total Forest Rental Proceeds 137,536,462 5,510,084 - (6,000,343) 137,046,203

* Forests or part of forests expected to be settled in the following financial year.

Page 22 CROWN FORESTRY RENTAL TRUST - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

18 FUNDS HELD IN TRUST TO 31 MARCH 2017 (cont.)

2017 2016 $ $ Current/Non Current Split of Rental Proceeds Held Current 16,351,998 21,670,555 Non Current 120,694,205 115,865,907 137,046,203 137,536,462

The rental proceeds relating to forests, or part forests, expected to be settled in the following financial year have been disclosed as current liabilities. No further liability maturity profile has been disclosed because the Trust is not contractually obliged to transfer any of the accumulated rentals until the relevant Deeds of Settlement have been signed and Bills enacted therefore it is difficult to estimate when amounts will become payable.

Page 23

Independent Auditor’s Report

To the Trustees of Crown Forestry Rental Trust

Opinion We have audited the financial statements of Crown Forestry Rental Trust (the ‘Trust’), which comprise the statement of financial position as at 31 March 2017, and the statement of comprehensive revenue and expense, statement of changes in net assets/equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements, on pages 2 to 23, present fairly, in all material respects, the financial position of the Trust as at 31 March 2017, and its financial performance and cash flows for the year then ended in accordance with Public Benefit Entity Standards.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (‘ISAs’) and 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 Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Trust 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 the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Other than in our capacity as auditor, we have no relationship with or interests in the Trust.

Trustees’ responsibilities for The Board of Trustees are responsible on behalf of the Trust for the preparation and fair the financial statements presentation of the financial statements in accordance with Public Benefit Entity Standards, and for such internal control as the Board of Trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Trustees are responsible for assessing the Trust’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 Board of Trustees either intends to liquidate the Trust or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for Our objectives are to obtain reasonable assurance about whether the financial statements the audit of the financial as a whole are free from material misstatement, whether due to fraud or error, and to statements 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 and 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 economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the External Reporting Board’s website at: https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page8.as px This description forms part of our auditor’s report. Restriction on use This report is made solely to the Board of Trustees, as a body, in accordance with Section 7.3 of the Trust Deed. Our audit has been undertaken so that we might state to the Board of Trustees those matters 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 Board of Trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Wellington, New Zealand 22 June 2017

This audit report relates to the financial statements of Crown Forestry Rental Trust (the ‘Trust’) for the year ended 31 March 2017 included on the Trust’s website. The Board of Trustees are responsible for the maintenance and integrity of the Trust’s website. We have not been engaged to report on the integrity of the Trust’s website. We accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and related audit report dated 22 June 2017 to confirm the information included in the audited financial statements presented on this website. CROWN FORESTRY RENTAL TRUST