COMMERCIAL STRENGTH FOR SOCIAL GOOD TRUST HOUSE LTD AND TRUST HOUSE FOUNDATION Annual Report 2 01 7 CRUISE MARTINBOROUGH – THE FARRIERS BAR & EATERY CARPARK PARTY 2016 2 CRUISEMARTINBOROUGH.CO.NZ 3 COMMERCIAL STRENGTH FOR SOCIAL GOOD As a community owned company it is vitally Social and affordable housing has been a major In the last year we reported the sale of Greytown important that we work hard to ensure we enhance focus throughout the year and we increased the Hotel, Empire Tavern, Flaxmere Bottlestore and the well-being of our communities. This is, after level of commitment that we deliver to asset Featherston Gateway. We also recently announced all, the primary objective of the organisation. To improvements by another $50k. We therefore the sale of our bottle stores in Feilding and advance this aim we believe that first and foremost invested over $1.2 million on this important asset Pahiatua. With the completion of these sales we we must, as an organisation, be commercially and will increase this again in the have all but completed the asset reshuffle that was strong to do social good. coming year. a necessity to build a sustainable future We have worked hard over the last few years Recently we reported a housing regeneration for the Group. to streamline our assets, both tangible and program that was approved by our Board. This The year ahead will be very positive for the intangible, to better align the organisation’s skills will enable 8 new properties to be built on existing Trust House Group; we forecast an increase in and resources. We have and will continue to land to meet market demands in our region. We operating profit and further increases to the relentlessly focus on our core business and exit envisage further projects in the coming years. grants and sponsorships that we deliver back to those parts of our business model that do not We have added two new pubs to our portfolio with our communities. This, I am sure you will agree, is meet our core criteria, or are dragging the chain the Post Office Hotel and Jackson Street Bar now further evidence that commercial strength can in in our advancement of commercial strength. This part of our family. These important acquisitions fact equate to social good. year’s Trust House Limited operational surplus will add some real value to the Group over time. I also take this opportunity to thank Jock Kershaw including discontinued operations of $3.09 million our Chairman and the Directors and elected and Trust House Group operating profit including In general, the on premise market returns have improved from previous years, but we must Trustees of the Trust House Group for their discontinued operations of $6.56 million are strong unwavering support as we implemented many results and testimony to the strategies that we continue to work hard to ensure that we are always one step ahead of the competition. difficult strategies. I appreciate their wise counsel have adopted. and their willingness to debate and challenge Returns back to our communities via grants, Copthorne Resort Solway Park has had a change management as we deliver our products to market. charitable donations and sponsorships were over in management and also had a good year, despite This demonstrates the superior governance model $3.8 million in the financial year. This is a fantastic the national trend of a reduction in conference that this organisation promotes and one that would result for our communities, but we want to do more business, but we did report an increase in our be the envy of many organisations. FLAXMERE LICENSING TRUST’S ANNUAL GRANT inbound tour market with Chinese visitors now Trust grants and will work hard to continually increase the value To all of our staff, I thank you for your hard work, OF AROUND $100,000 TO FIVE SCHOOLS HAS IN that we deliver. enjoying the Wairarapa experience. The Board advance education RECENT YEARS GONE ON THE PURCHASING OF has also approved a $2.5m refurbishment project commitment and support. Change management IPADS, CHROMEBOOKS AND OTHER DEVICES TO is never easy, but I am impressed by the level of HELP IMPROVE ACCESS FOR STUDENTS. for the property over the next 5 years. This is an in Flaxmere ALLAN POLLARD – CHIEF EXECUTIVE exciting project and one that will ensure that this understanding that staff have on the necessity of asset is adding value to our community for many our change to ensure that the long-term viability of more years. this important community asset is maintained for future generations. OUR CORE PURPOSE IS TO ENHANCE THE WELL-BEING OF OUR OUR VISION IS TO MAKE GROUP SURPLUS COMMUNITIES BY DISTRIBUTING PROFITS IN SUPPORT OF COMMUNITY PRE DONATIONS ORGANISATIONS AND EVENTS AND BY OPERATING SUCCESSFUL a POSITIVE DIFFERENCE BUSINESSES THAT BENEFIT FROM COMMUNITY OWNERSHIP in our COMMUNITIES $9·5 M COVER: TAMATI NEWBITT- IRONMĀORI DUATHLON 2016, IRONMĀORI.COM 4 DIRECTORS REPORT 5 Principal activities Relationship with shareholders Trust House Limited is a community enterprise that owns and operates There is an agreement with the shareholders that: business units in the Wairarapa, Wellington, Kapiti, Tararua and Hawkes • Business plans will be presented in March each year for the financial Bay regions. Its shareholders are Masterton Community Trust and year beginning 1 April Flaxmere Licensing Trust. Management services were provided to Trust • Reports on key events and trading compared to business plan targets House Foundation. will be presented quarterly Trust House’s shareholding comprises: • Annual accounts will be presented in July • Masterton Licensing Trust – 94.26% • Consultation will be undertaken during the annual appointment • Flaxmere Licensing Trust – 3.97% of two Directors • Flaxmere Licensing (Charitable) Trust – 1.77% • Discussion will occur on all major transactions and, where necessary, shareholder approval received The Group owns and operates 11 business units including: There are strong and close links between the various Trusts • Licenced premises – hotels, restaurants, bars, cafes and bottle stores and Trust House Limited. • A Housing estate with 477 homes to rent • A hydro electricity scheme Auditors Whilst financial improvements were realised throughout the year, trading The Office of the Controller and Auditor-General has appointed continues to be difficult in traditional market segments. Cash flows and Audit New Zealand to conduct the audit of Trust House Limited and its profits (as detailed in the following table) were sound and the financial associated licensing and charitable trusts. Audit fees paid to Audit New Zealand Hastings Group position remains strong. for the year ended 31 March 2017 were $94,500 for Trust House Group. – riding for the Table 1: Cash flows generated* Audit and risk committee disabled YEAR $ The members of the committee are DB Henry (Chairman), L Griffiths, JW HASTINGS GROUP RIDING FOR THE Kershaw and DJ Baskerville. The Committee met six times during the year. JOCK KERSHAW – CHAIRMAN DISABLED ASSOCIATION INCORPORATED 2017 5.889 HAS BEEN PROVIDING THERAPEUTIC RIDING AND HORSEMANSHIP LESSONS IN 2016 5.759 HAWKE’S BAY SINCE 1972. 2015 3.482 Use of company information 2014 3.999 The Board received no notice during the year from Directors requesting 2013 3.778 to use Company information received in their capacity as Directors which would not have otherwise been available to them. * Group operating profit, plus discontinued operations, plus non-cash expenses. Share dealing Charitable distribution No Director acquired or disposed of any interest in shares in the Company The charitable distribution for the year was $3.5 million and followed the during the year. traditional procedures: local elected representatives call for, or initiate, donations or projects in their areas, and then make the initial decisions on Interest in transactions the extent of the grant. These recommendations are then approved, or not, No Director is interested in any transaction (as defined by Section 139 of by the Trust House Foundation. All the Regional Net Proceeds Committees the Companies Act 1993) or proposed transaction with the Company. have established priorities for their communities and there is a high degree of openness, accountability and consultation. Conclusion The various reports in this document record the distribution Grant and Sponsorship distribution in excess of $3.8 million for the year made to each community. to 31 March 2017 reinforces the importance of the organisation to our communities. Directors of the company and The year has been one of long term focus on our core business model and remuneration aligning our asset base to better utilise the resources and skills The Directors, and the remuneration paid to them for the year ended of the organisation. 31 March 2017 were: Directors are unanimous in their belief that it is imperative that the APPOINTED $ company remains financially strong so that it may offer real and tangible support to the communities in which we trade. J W Kershaw (Chairman) 2007 35,000 D B Henry 2005 25,000 (Chair, Audit Committee) D J Baskerville 2011 22,000 Trust House Limited senior managers L M Griffiths 2013 19,500 RICHARD SIMMONDS General Manager, Corporate Services M Antonio 2017 3,167 CRAIG THOMSON General Manager, Housing and Infrastructure K McAnulty 2017 3,167 CINDRA GRANT General Manager, Gaming and Compliance LESLEY WRIGHT B J Bourke Retired 2016 12,933 Executive Administrator ALLAN POLLARD Chief Executive R Southey Retired 2016 11,083 JERRY CRUMP General Manager, Operations & Marketing (insert right) Total 131,850 Financial performance Equity ratio 6 OPERATIONAL REVIEW Sales Table 4 7 YEAR % We continue to incorporate our strategic pillar framework model, as The cost of doing business continues to increase, with insurance, rates, Table 1 reported last year, in all that we do. The implementation of our turnaround wages and compliance costs all increasing faster than we can move retail YEAR $M 2017 70.4 strategies has enabled the creation of a strong foundation and has prices to facilitate the reduction in margins.