WATERFRONT AUCKLAND an Auckland Council Controlled Organisation

WATERFRONT AUCKLAND An Auckland Council Controlled Organisation

Waterfront Auckland (Auckland Waterfront Development Agency Limited)

Statement of Intent

for the period from 1 July 2011 to 30 June 2014

Adopted by Waterfront Auckland on 22 June 2011

Contents

1. INTRODUCTION ...... 3 2. WHO WE ARE AND WHAT WE DO ...... 4 3. GUIDING PRINCIPLES AND RESPONSIBILITIES ...... 5 4. THE VISION FOR AUCKLAND’S WATERFRONT ...... 7 5. NATURE AND SCOPE OF ACTIVITIES ...... 8 6. GOALS AND BUSINESS OBJECTIVES ...... 10 7. STRATEGIC PROJECTS AND PERFORMANCE MEASURES ...... 11 8 CONTRIBUTION TO AUCKLAND COUNCIL OBJECTIVES ...... 19 9. RELATIONSHIPS WITH AUCKLAND COUNCIL, CCOS AND STAKEHOLDERS ...... 20 10 REPORTING TO AUCKLAND COUNCIL ...... 23 11 APPROACH TO GOVERNANCE ...... 24 12 DECISIONS WHICH REQUIRE SHAREHOLDER APPROVAL ...... 26 13 ACCOUNTING POLICIES ...... 26 14 FUNDING ASSUMPTIONS ...... 27 15 DISTRIBUTIONS TO AUCKLAND COUNCIL ...... 28 16 PROCEDURES FOR PURCHASING SHARES IN OTHER COMPANIES ...... 28 17 RATIO OF CONSOLIDATED SHAREHOLDER’S FUNDS TO TOTAL ASSETS ...... 28 18 ESTIMATE OF THE COMMERCIAL VALUE OF THE COMPANY ...... 29

ATTACHMENT 1: MAP – WATERFRONT AUCKLAND AREA OF OWNERSHIP AND INFLUENCE ...... 30 ATTACHMENT 2: SUMMARY OF ASSETS...... 31 ATTACHMENT 3: DIRECTORY ...... 34 ATTACHMENT 4: ACCOUNTING POLICIES ...... 35

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1. INTRODUCTION

1.1 This Statement of Intent (SOI) is presented by the Auckland Waterfront Development Agency Limited (known as Waterfront Auckland) in accordance with the requirements of Section 64(1) of the Local Government Act 2002. This document outlines:

(a) Our vision and goals and how we propose to measure our performance in achieving these goals. (b) The nature and scope of our activities, (c) Our relationships with Auckland Council1 and waterfront stakeholders, (d) The Board’s approach to governance, (e) Our financial responsibilities and policies. 1.2 This SOI covers our operations for a period of twelve months from 1 July 2011 to 30 June 2012 in detail and the following two years to 30 June 2014 in outline. 1.3 This SOI is a public and statutory expression of Waterfront Auckland’s accountability to its shareholder, Auckland Council. It is against this document that the Board will report to the Council and be held accountable. The SOI contains goals, business objectives and measures against which the performance of Waterfront Auckland can be measured in a transparent manner and against which it must report.

1 The Council operates under a new decision-making model. The Governing Body and Local Boards share the decision-making responsibilities of Auckland Council. The governing body focuses on region-wide strategic decisions. The local boards represent their local communities and make decisions on local issues, activities and facilities. Throughout the SOI, all references to the “Auckland Council” or the “Council” mean the Governing Body and local boards.

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2. WHO WE ARE AND WHAT WE DO

2.1 Waterfront Auckland is a wholly owned Auckland Council organisation. It has the legal status of a Council Controlled Organisation (CCO) under the Local Government Act 2002 and is a company under the Companies Act 1993. It was established with two primary roles: (a) To plan and influence the development of the city waterfront including preparing a Waterfront Master Plan which will provide input to and be consistent with Auckland Council’s Spatial Plan, acknowledging that the Waterfront Plan is not a regulatory document; (b) To plan, manage, operate, deliver and develop Waterfront Auckland owned assets and related public realm assets in an integrated and balanced way. 2.2 Waterfront Auckland operates within both a defined area of ownership and an area of influence as described below and indicated in the map in Attachment 1. The mandated area of influence stretches from the Harbour Bridge Park in the west to Teal Park in the east and as far inland as the original shoreline of 1840. Although much of this area is managed by Auckland Council, Waterfront Auckland has a shared interest in the standard and quality of development, nature and timing of investment in this special place. The geographic area of influence will be included in the Waterfront Plan. Auckland Council is currently preparing a City Centre Master Plan which will interface with Waterfront Auckland’s area of ownership and influence. It is intended to agree a Management Protocol to determine the roles and relationships of the parties in this area and ensure that the City Centre Master Plan and the Waterfront Plan integrate seamlessly. 2.3 The waterfront area of ownership is a smaller area that includes all land previously owned and leased by public agencies. Waterfront Auckland has direct control and management rights over this land and/or facilities. Our assets include2: (a) Significant leasehold land holdings; some with other party lessee interests and some combined lessee and lessor ownership, freehold land holdings, and a substantial commercial property portfolio associated with the land holdings. (b) Wharves including Halsey Street Wharf, Wynyard Wharf and a half share of Queens Wharf. (c) Marina assets such as Westhaven Marina, other marinas and berths. 2.4 In addition to the above, Waterfront Auckland holds coastal permits and can gather income from coastal licences. Ports of Auckland Ltd (POAL) holds the occupation consent for the waterfront waterspace, under section 384A of the Resource Management Act. The range of historic agreements around waterspace is complex and requires attention from Waterfront Auckland and affected parties. 2.5 Other major assets owned by Auckland Council or its organisations are of strong interest to the functions and goals of Waterfront Auckland – this includes the: (a) Ports of Auckland, (b) Downtown Ferry Terminal, (c) Britomart Transport Centre, (d) Downtown car park, (e) Viaduct Events Centre and the Voyager Museum, (f) Designated roads and public reserves, (g) Marine Rescue Centre, (h) The Landing (Orakei), (i) Orakei Wharf, Devonport Wharf, (j) Hobsonville marine development.

2 A more detailed summary of assets is included as Attachment 2

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3. GUIDING PRINCIPLES AND RESPONSIBILITIES

3.1 As a Council Controlled Organisation, Waterfront Auckland is subject to the provisions of Part 5 of the Local Government Act 2002. Section 59 of the Act requires all CCOs to: (a) Achieve the objectives of its shareholders, both commercial and non-commercial, as specified in the SOI. (b) Be a good employer3. As a good employer Waterfront Auckland is committed to maintaining high standards of health and safety in the workplace, and complying with the provisions of the Health and Safety in Employment Act 1992 and all other associated health and safety information. (c) Exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do. 3.2 Waterfront Auckland will adhere to clause 36 of the Seventh Schedule to the Local Government Act 2002 which provides:

(1) A local authority, and any other person having responsibility for the selection and management of employees of the local authority, must operate a personnel policy that complies with the principle of being a good employer. (2) For the purposes of this clause, a good employer means an employer who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment, including provisions requiring— (a) good and safe working conditions; and (b) an equal employment opportunities programme; and (c) the impartial selection of suitably qualified persons for appointment; and (d) recognition of— (i) the aims and aspirations of Māori; and (ii) the employment requirements of Māori; and (iii) the need for greater involvement of Māori in local government employment; and (e) opportunities for the enhancement of the abilities of individual employees; and (f) recognition of the aims and aspirations, and the cultural differences, of ethnic or minority groups; and (g) recognition of the employment requirements of women; and (h) recognition of the employment requirements of persons with disabilities. (3) In addition to the requirements specified in subclauses (1) and (2), a local authority,— (a) when making an appointment, must give preference to the person who is best suited to the position; and (b) must ensure that all employees maintain proper standards of integrity, conduct, and concern for the public interest.

3.3 Beyond these statutory requirements, the Board of Waterfront Auckland will: (a) Be open and transparent with our stakeholders, consistent with commercial disciplines (b) Promote sustainability and resilience in both the thinking and the outcomes of all of our activities and projects

3 Good employer has the same meaning as in clause 36 of Schedule 7 of the Local Government Act 2002

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(c) Aspire to create a place of beauty and interest, that all Aucklanders love and “own” (d) Adopt a design-led and evidenced based approach to all significant waterfront development proposals (e) Respect the position of Iwi, both past and present (f) Acknowledge the critical role of the private sector, and support and incentivise the private sector’s contribution in achieving the vision and goals for the waterfront (g) Demonstrate a strong customer focus for our operational activities (h) Be a results and delivery oriented organisation – our plans are for action (i) Be bold in developing and demonstrating new projects, ideas and concepts of value to Auckland and New Zealand (j) Respect and reflect our waka and maritime heritage (k) Be financially prudent and commercially successful

3.4 These principles will be developed and incorporated into the Waterfront Auckland Charter.

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4. THE VISION FOR AUCKLAND’S WATERFRONT

4.1 Auckland’s city waterfront is where Auckland began. It is one of New Zealand’s primary international gateways for commerce and tourism, an area steeped in maritime history, and an embarkment point for the Hauraki Gulf Islands and many harbour communities. It is home to the largest marina in the Southern Hemisphere and has the highest concentration of marine industry businesses in New Zealand. It is Auckland’s fishing industry port.

4.2 Urban renewal over the past 20 years has already dramatically changed the waterfront with a new harbour (Viaduct Harbour) indoor events centre (Vector), rail station (Britomart), new offices, hotels, restaurants, cafes, shops and apartments and a major restoration of the Britomart heritage precinct. However, this jewel of Auckland still has much potential to be realised.

4.3 Aucklanders aspire to a city waterfront that is lively, bustling and safe for all people. It is an area rich in character and activities, whose redevelopment is bringing people back to the city’s harbour edge. It is an area of renewal where it will be important to retain an authentic working waterfront that has character and can attract new and highly productive businesses.

4.4 The vision4 for the waterfront is to provide:

(a) A world class destination that excites the senses and celebrates our sea loving South Pacific culture and maritime history

(b) An area which retains the working waterfront character and functions

(d) A place for all people, an area rich in character and activities that link people to the city and the sea.

4 This vision is largely derived from Auckland Waterfront Vision 2040 published by the former Auckland Regional Council and Auckland City Council. It will be reviewed as part of the development of the Waterfront Plan.

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5. NATURE AND SCOPE OF ACTIVITIES

5.1 Waterfront Auckland has two primary roles: firstly to plan, facilitate and advocate the highest quality urban development outcomes in its area of influence, and secondly to plan, manage, operate and develop land, water and other assets within its area of ownership.

5.2 Land ownership is mixed and includes significant land subject to leasehold interests (terminating leases), freehold ownership and ownership of both lessee and lessor interests. Asset ownership of waterspace, marina assets and wharf and sea wall assets is complex and involves separate trusts, companies and limited tenures. Under the terms of a continuing agreement with the previous Auckland City Council and Auckland Regional Council (via Auckland Regional Holdings) much of the development of the public realm as the area redevelops will be the responsibility of Waterfront Auckland.

5.3 Our Goals and Business Objectives are outlined in section 6.0 of this SOI and focus on optimising the development and management of the waterfront assets to generate long term sustainable commercial returns. These returns enable our shareholder to deliver further economic, social, environmental and cultural benefits for Auckland. Our focus is also to deliver public realm projects, and non-commercial projects, to achieve the agreed vision for the city waterfront, the city centre and for Auckland.

5.4 Our specific business activities include:

(a) Integrated spatial planning for the area of influence which unifies land use and transport planning, urban design and economic, social, cultural, environmental and heritage outcomes. Deliverables include the Waterfront Plan and related strategies and plans

(b) Delivering projects, now accelerated in nature, in time for RWC2011 in our area of ownership, some of which will transfer to the ownership and/or management of other entities

(c) Place management which creates a place with character, attracts and connects people, stimulates a local economy, and builds new neighbourhoods for residents and workers

(d) Concept and precinct planning with others to bring about urban and economic development

(e) Delivering projects in the public realm (transport, streetscape, public space, buildings) in our area of ownership

(f) Securing investment and facilitating development of Waterfront Auckland land and assets, waterspace and water based assets and providing project management for our investment projects

(g) Property and asset management of Waterfront Auckland land, buildings and waterspace

(h) Managing and developing the marina assets and wharves (including rental and asset management)

(i) Managing the remediation of contaminated land

(j) Delivering a heritage tram service

(k) Providing and managing car parking in accordance with the provisions of the (legacy) district plan.

5.5 To support these specific business activities we are engaged in:

(a) Land use and transport planning

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(b) Research, spatial analysis, planning and design, policy development relevant to Waterfront Auckland’s area of activity and interest

(d) Stakeholder communications and engagement, project and property marketing, sponsorship and events

(e) Place making, neighbourhood development and activation

(f) Project and development management

(g) Facilitating and leveraging investment by the private sector

(h) Portfolio and asset management

(i) Property management including maintenance, acquisition and divestment, license, lease and rental management

(j) Financial planning and funds management.

5.6 Waterfront Auckland acknowledges that the experience for the customer should be seamlessly integrated between the CCO and the Council ensuring a consistent approach to service delivery. Responsive and seamless customer service will be a priority for Waterfront Auckland.

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6. GOALS AND BUSINESS OBJECTIVES

6.1 To achieve this vision and promote sustainability and resilience in both the thinking and the outcomes of all our activities and projects we have set four goals for Auckland’s waterfront.

 A public waterfront: A place for all Aucklanders and visitors to Auckland, a destination that is recognised for its outstanding design and architecture, public spaces, facilities and events; a place where we can express our cultural heritage and history, and celebrate our great achievements as a city and nation

 A working waterfront: a place for marine industries and businesses, local and international port activities; an attractor of further high value business investment and activity, the location that supports authentic and gritty waterfront activities that must locate here

 A growing waterfront: The critical location of urban transformation and renewal in Auckland, where we must demonstrate international best practice and innovation; achieve a significant lift in Auckland’s and NZ’s productivity; the most liveable of New Zealand’s central city urban communities; a vibrant mix of residents, business and employees, visitors, and activities

 A connected waterfront: A place where people are highly connected locally and with the inner city, to the rest of Auckland and New Zealand; that is highly accessible and safe for pedestrians, cyclists, and passengers, with telecommunications that support connectivity.

6.2 These four goals are supported by three business objectives, which shape our operation:

(a) A successful business managed under strong commercial and financial disciplines

(b) A highly innovative, sustainable organisation with skilled staff supported by efficient and robust business systems

(c) Demonstrated excellence in operational areas with a major customer service provision (e.g. marina operations, rental and lease operations, car parking).

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7. STRATEGIC PROJECTS AND PERFORMANCE MEASURES

7.1 In the period of this SOI, Waterfront Auckland will achieve its goals and business objectives, through the delivery of a number of strategic initiatives and projects. These are outlined in Table 1 below. Table 2 provides the performances measures for our goals and business objectives.

Table 1: Strategic Initiatives and Projects (next 12 months)

Strategic Initiatives and Projects (next 12 Public Working Growing Connected months) Waterfront Waterfront Waterfront Waterfront

Strategy & policy - all Waterfront City Districts

Waterfront Plan    

Place making, neighbourhood development and     activation programme

Urban Design Framework update    

Sustainable Development Framework update    

Waterspace management strategy    

Progress strategic priorities identified in Auckland Council’s Letter of Expectations for Waterfront Auckland, including:

 Identifying appropriate marine history and heritage   structures for retention.  A long term strategy for Queen’s wharf.      Preparation of a discussion document on initiative and options for implementation of the Master Plan.    

Westhaven Precinct Projects

Westhaven Marina Pier Z toilet block redevelopment  

Westhaven Pier replacement 

Wynyard Quarter Precinct Projects

Halsey Street precinct plan    

Jellicoe Precinct retail strategy  

Jellicoe Precinct business and events establishment   

Implementation Plan: Achieving economic potential  (action the findings of the PWC report)

Maritime heritage development (Vos and Sanford) 

Gateway Plaza and Kiosk    

Jellicoe Street  

Silo Park  

Six Pack Silo interim refurbishment  

Sites 12 & 13 interim activation  

Wynyard Quarter public art projects  

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Strategic Initiatives and Projects (next 12 Public Working Growing Connected months) Waterfront Waterfront Waterfront Waterfront

Halsey Street upgrade as public space  

North Wall, North Wharf and Wynyard Wharf Repairs 

Temporary car parking project for Jellicoe Precinct    

North Wharf Redevelopment – Site 14  

Aimec Building demolition  

Wynyard Crossing – interim bridge  

Heritage Tram project & realignment  

Te Wero Island and Western Viaduct  

Wynyard Central mixed use precinct redevelopment    including preparation of Precinct Plan 2

Redevelopment of Wynyard Marine Super Yacht    Precinct and facilities

ASB development (Sites 22 and 23) – Jellicoe Street   

Hotel development (Sites 15 and 25) – Halsey Street  

Central Wharves Precinct Projects

Queens Wharf RWC2011 related projects  

Activation of Queens Wharf and short term cruise     terminal strategy

Negotiations

Remediation of Wynyard Quarter  

Bulk Liquids relocation (preliminary negotiations)  

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Table 3: Performance Measures from the Long-Term Plan

How will we know if we are successful

What we do How we will measure Indicator of Target 1/07/11 to Target 1/07/12 Target 1/07/13 to success (performance performance 30/06/12 to 30/06/13 30/06/14 measure)

Manage Return on Investment New measure Maintain or Maintain or Maintain or Waterfront (ROI) on commercial improve baseline improve baseline improve baseline Auckland activities assets in a way that optimises financial returns

Manage, Percentage of annual New measure 100 100 100 maintain and Waterfront Auckland develop public works property and programme achieved other assets

Provide high Percentage of marina 76 80 80 80 quality berth owners satisfied customer with service provided service

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7. Strategic Projects and Performance Measures - continued

Table 4: Outcome focussed performance measures

How we will measure Performance targets Goals Achieved by (outputs) success (outcomes) Baseline 2011/2012 2012/2013 2013/2014 Public Waterfront Visitors . Provision of new public . Number of annual visitors 70, 000 per yr 1.2% increase 1.2% increase 1.2% increase spaces and infrastructure to the Waterfront (2009 survey base) including Queens Wharf and Design & architecture Wynyard Quarter RWC deliverables Events and . Hectares of public open 11 hectares space on waterfront Public spaces, events activation programme +5 hectares +0.7 hectares +0.8 hectares

. Maritime Heritage development . Distance of continuous 1 km (Viaduct Culture, heritage . Hotel development waterfront promenade Harbour) +1 km (Silo Park +0.5 km (Daldy +4 km Westhaven – Jellicoe St – St) (Finance Dependent) Eastern Viaduct)

Working Waterfront Marine industry . ASB / Auckland Theatre . Number of FTEs working 4,500FTEs 0 % increase 45 % increase 16 % increase Port Company development in Waterfront Area

Attract business . Marine industry development . Number of new 0 new 100 new businesses investment . Cruise strategy and businesses locating in 470 businesses 210 new businesses implementation plan waterfront area businesses

. Jellicoe precinct retail 21% increase strategy, business & events 0% increase 0% increase establishment . Floor space for marine 37.500 m sq [8,000 m sq] industry in Wynyard . Westhaven pier replacement Quarter . Waterspace management strategy

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How we will measure Performance targets Goals Achieved by (outputs) success (outcomes) Baseline 2011/2012 2012/2013 2013/2014 Connected Waterfront 2007 Locally . Wynyard Crossing . Percentage of workers PT – 20.5% 22% 25.5% 28% To city, Auckland and NZ . Light rail pilot and permanent and/or visitors within Walk – 5.5% 6.5% 7.5% 9.5% Te Wero Bridge Wynyard Quarter using Accessible & safe sustainable transport Cycle – 1.2% 1.5% 2.0% 2.5% Telecommunication . Waterfront walking and Total – 27.2% 30% 35% 40% cycling promenade

. Temporary car parking . Daily PM peak number of people accessing 0 60 40% increase 70% increase . Travel management plan Wynyard Quarter via . Place-making, Wynyard Crossing

neighbourhood development and activation programme . Frequency of daily bus 0 Bus every 10 0 % increase 0% increase mins between services into Wynyard 7am-7pm Quarter

. Broadband business case . Percentage of Wynyard 2% increase Quarter business area 75% 2% increase 2% increase serviced by Broadband

Growing Waterfront Urban renewal . Urban renewal projects . Percentage of 21.5% 15% increase 15% increase 15% increase Productivity . Implementation plan for Aucklanders who achieving economic potential recognise Wynyard Best practice innovation Quarter as a vibrant Liveable city . Wynyard Central mixed use waterfront destination precinct redevelopment Vibrant mix of uses . Affordable Housing / School research and feasibility . Percentage of 44% 5% increase 5% increase 5% increase . Increasing web profile and Aucklanders who visit the waterfront awareness Waterfront at least once a month

A successful business . Long term business plan . Return on Investment New measure Maintain or Maintain or Maintain or improve managed under strong (ROI ) on commercial improve baseline improve baseline baseline commercial and financial activities disciplines Manage Waterfront Auckland assets in a way that optimizes financial returns (Council LTP)

A highly innovative and . Sustainable Development . Percentage of new sustainable organization Framework Update buildings in Wynyard N/A 4 star 100% 4 star 100% 4 star 100% with skilled staff supported Quarter that are 5 star – 40% 5 star – 40% 5 star – 40%

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How we will measure Performance targets Goals Achieved by (outputs) success (outcomes) Baseline 2011/2012 2012/2013 2013/2014 by efficient and robust sustainable buildings business systems . Urban Design Framework (NZGBC or equivalent) Update 70 tenants (Mar . Percentage of WA tenants 2011) 7% 14% 20% that are members of the Establishment of Travel Management TMA 2011 Association

. Number of reported injuries to staff or . Best practice Health & Safety policies contractors 2 1 0 0 1. Serious harm incidents / lost time incidents 13 8 7 6 2. Medical treatment injuries 35 21 18 14 3. First aid injuries Demonstrated excellence . Comprehensive review of . Overall staff satisfaction in operational areas marina operations with leadership, 21% fully engaged 2% increase 5% increase 5% increase management etc (Council Employee engagement survey)

Manage, maintain and . Asset management plans . Percentage of annual develop property and . Property management Waterfront Auckland 95% 100% 100% 100% other assets public works programme 100% for RWC . Development programme achieved (Council LTP) and management

Provide high quality . Develop and manage marina . Percentage of marina customer service operations berth owners satisfied 76% 80% 80% 80% (Council LTP) with service provided

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7. Strategic Projects and Performance Measures - continued

7.3 Our strategic initiatives over the next three years, dependent on fit with Auckland Council’s strategy, planning initiatives and funding availability, will include additional projects such as: (a) A long term strategy for a cruise terminal (b) A strategy for the long term use of Queen’s Wharf (c) Wynyard Crossing permanent bridge (d) Wynyard Quarter remediation strategy continuation (e) Waitemata Waterfront walk and cycle way (f) Enhancing public access to the waterfront continuation (g) Recruiting high profile and fast growing businesses and institutions to the waterfront. (h) Light rail pilot integrated into the public transport network.

7.4 Waterfront Auckland will work closely with other agencies on the scope and deliverability of major initiatives in the waterfront area of ownership and influence, including the: (a) Council’s Auckland Plan, Infrastructure Plan and Unitary Plan (b) Auckland Economic Strategy (c) City Centre Master Plan (d) Alternative harbour crossing project (e) CBD rail project (f) Ferry terminal upgrade and future expansion (g) Upgrades to Fanshawe Street, Beach Road, Quay Street, Stanley Street (h) Auckland central storm water replacement programme (i) Hobsonville marine industry development (j) Inner city bus corridor and stations (k) National convention centre (l) Auckland Events Strategy (m) Regional Facilities Sector Development Plan (n) Future port development (o) Ultra-fast Broadband

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8 CONTRIBUTION TO AUCKLAND COUNCIL OBJECTIVES

8.1 Prior to November 2010, the Auckland local authorities and Government developed and endorsed a number of regional strategies. These strategies addressed the growth of Auckland and included a goal of developing Auckland as a destination and a place to live and do business. These documents will be treated as legacy strategies by the Auckland Council and will be the basis from which other strategies (e.g. Auckland Spatial Plan and Infrastructure Plan) will be developed and endorsed. Waterfront Auckland will draw on these documents in the development of the Waterfront Plan and subsequent waterfront specific policies and will commit its efforts to implementing wider goals through waterfront development and renewal.

8.2 Auckland Council’s vision outlined in the Long-Term Plan (2010-2019) is to make Auckland the most exciting vibrant, metropolitan centre in Australasia, a region which:

(a) Attracts people and investment

(b) Has first class infrastructure and lifestyle

8.3 The Auckland Mayor has announced an ambition to ‘create the world’s most liveable city” – with a focus on:

(a) Cohesive, resilient communities

(b) An excellent transport system

(d) Quality urban, rural and natural environments.

8.4 To contribute to Auckland Council objectives, Waterfront Auckland will deliver on the goals, business objectives and programmes and projects outlined in this SOI which recognise the visions and ambitions outlined above.

8.5 Waterfront Auckland will contribute to Auckland as an eco-city as provided in its Sustainable Development Framework.

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9. RELATIONSHIPS WITH AUCKLAND COUNCIL, CCOS AND STAKEHOLDERS

9.1 As a place-based agency, Waterfront Auckland will integrate and collaborate with Auckland Council and its CCOs. Strong working relationships will need to be built and maintained, particularly around the quality, design and development of the public and private realm. Waterfront Auckland has a particular role with private investors and its intention is to secure continued private sector investment in the waterfront. The support from waterfront stakeholders is also vital to success and requires excellence in working with others.

9.2 Relationship with Auckland Council

(a) In order to produce the best outcomes for Auckland Waterfront Auckland needs effective working and operational relationships with Auckland Council. Waterfront Auckland and Auckland Council will maintain a pro-active communication and engagement policy at all times on all matters of common interest. The Council and Waterfront Auckland will adhere to the ‘no surprises’ policy at all times and inform each other well in advance of any issues of interest. Waterfront Auckland should operate within budget and inform Council if it takes on additional risks. (b) Waterfront Auckland will input into the Council’s Spatial Plan, Long-term Plan and Annual Plan recognising its mandate to implement a Waterfront Master Plan; (c) Waterfront Auckland and Auckland Council will reach an overarching agreement on managing functional relationships, including areas such as urban design review of publicly funded capital works, master planning, and major projects of regional significance. The Waterfront place-based development occurs within the wider area of the City Centre development. Auckland Council and Waterfront Auckland will work together to ensure strategic and operational alignment of plans for these areas. (d) Waterfront Auckland will meet Council’s timing and information requirements so Council can engage meaningfully with the public. (e) Waterfront Auckland will, in carrying out its activities and responsibilities maintain close relationships with Auckland Council including its Local Boards and the Independent Maori Statutory Board. (f) Waterfront Auckland agrees there needs to be alignment with Waterfront Auckland activation and ATEED, particularly in respect of Event Strategy and Visitor Strategy. (g) Waterfront Auckland will develop a Local Board Engagement Plan, which will provide an overarching framework to guide engagement between Waterfront Auckland and local boards. It will be aligned with Council guidance provided. While Waterfront Auckland is charged with taking a regional approach in undertaking its activities, it will take account of the respective strengths and needs of each local board area. To that end, Waterfront Auckland will take account of the priorities identified in each Local Board Plan, as well as the key objectives and activities in each Local Board Agreement. The Local Board Engagement Plan will identify projects and activities requiring consultation or input. (h) Waterfront Auckland agrees to Auckland Council’s brand policy and guidelines including participation in a Brand Navigation Group (BNG) to review the Auckland Council (and its CCOs’) brand strategy. The BNG will ensure all communications consistently reinforce the concept of one Auckland Council to make clear the vital importance of consistently communicating their role as an effective delivery arm of Auckland Council. (i) Waterfront Auckland will incorporate the Auckland Council “pohutukawa logo” in all communications, marketing and advertising as appropriate. (j) Waterfront Auckland agrees to inform and, where appropriate, consult with Council’s advisory panels - Pasifika, Ethnic, Youth, Business, Rural and Disability on any issues of particular interest to each advisory panel.

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9.3 Relationship with Auckland Council Controlled Organisations

(a) Auckland Transport (AT): Waterfront Auckland will have a direct interest in public and private land and the associated activities around the waterfront. It is acknowledged that some of these areas fall into jurisdictional responsibilities of AT, particularly areas designated as road reserves and any public transport infrastructure. On emerging public transport matters such as the Heritage Tramway, Waterfront Auckland will negotiate with AT on operational costs.

Waterfront Auckland will work closely with Auckland Transport to ensure quality outcomes land use and transport integration. We will also input expertise into strategic transport projects (e.g. CBD rail link, Light Rail Integration, Alternative Harbour Crossing, Fanshawe and Quay Street upgrades) in collaboration with the New Zealand Transport Authority, particularly because these projects fall into the Waterfront Auckland’s area of influence.

(b) Auckland Tourism, Events and Economic Development Limited (ATEED): Waterfront Auckland will have a direct interest in the types of events that are attracted by ATEED. As an immediate priority we will contribute to the successful completion of key projects in the lead up to the Rugby World Cup 2011. We will work closely with the Major Events Team to ensure that the events that are held in the waterfront area of influence are consistent with the waterfront brand. We will work with ATEED in regard to the Volvo ocean race. We will work with Business and Sector Development experts to attract local, regional and international investment and activity on the waterfront. We will work with Tourism to promote the waterfront as a destination.

(c) Regional Facilities Auckland Limited (RFA): Waterfront Auckland will work together with this CCO to achieve its objectives in respect of those facilities in the waterfront area of control and influence. In particular we will develop and maintain a partnership with RFA for managing the Viaduct Events Centre and Voyager Museum located on the waterfront in such a way that enhances Auckland's international competitiveness, consistent with the waterfront brand.

(d) Auckland Council Investments Limited (ACIL): Waterfront Auckland has a direct interest in the Ports of Auckland land which is 100 percent owned by ACI. The activities of the port and the port land are integrally linked with a number of our goals and business objectives and we will work closely with ACIL and the Port Company to deliver on our mutual goals.

(e) Auckland Council Property Limited (ACPL): Unlike other CCOs Waterfront Auckland is a major property owner and is charged with managing acquisitions and disposal of its land in the area of ownership. ACPL may have some involvement the management, acquisition and disposal of land in the waterfront area of influence and where necessary and relevant we will liaise with colleagues in this CCO.

(f) Watercare Services Limited: Waterfront Auckland will work with Watercare services on matters regarding water and waste water services, particularly in its area of ownership.

9.4 Relationship with Independent Māori Statutory Board (IMSB)

Waterfront Auckland will contribute to the Auckland Council’s responsibilities of acting consistently with the provisions of the Treaty of Waitangi.

The IMSB’s role is promoting cultural, economic, environmental and social issues of significance for mana whenua groups and mataawaka of Tamaki Makaurau; and ensuring that the Council acts in accordance with statutory provisions referring to the Treaty of Waitangi. It will be undertaking research and developing a schedule of issues of significance to focus its work. Waterfront Auckland expects the IMSB will advise it of these issues on a regular basis. Waterfront Auckland will take account of the IMSB’s schedule of issues of significance and any statutory Treaty provisions that are relevant to its activities and where appropriate engage with the IMSB on these matters.

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9.5 Relationship with Key Stakeholders

Waterfront Auckland will be proactive, responsive and transparent in its relationship with all stakeholders and to take into account the interests of Auckland Council as well as Waterfront Auckland, in its dealings with external parties. We will develop and maintain relationships with key stakeholders, in particular: i. The Auckland public ii. Iwi iii. Central Government iv. CBD and waterfront business/user associations v. Ports of Auckland Limited vi. Land owners and residents vii. Private sector investors viii. Industry sectors – e.g. marine, fishing, cruise sectors, tourism ix. Development, utilities and infrastructure sector and the finance community

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10 REPORTING TO AUCKLAND COUNCIL

10.1 Statement of Intent

Waterfront Auckland will provide Auckland Council with a draft and final SOI for each financial year, prepared and finalised in accordance with the requirements of Schedule 8 of the Local Government Act 2002.

10.2 Annual Report

Within three months from the end of June each year, Waterfront Auckland will provide to Auckland Council an Annual Report which will comply with Section 68 of the Local Government Act 2002.

10.3 Half Year Report

Within eight weeks from the end of December each year, Waterfront Auckland will provide to Auckland Council an unaudited Half Year Report which will include a: Statement of financial performance; Statement of financial position; Statement of cash flows and a report on the programme of action and performance targets set out in the SOI.

10.4 Quarterly Report

Within eight weeks of the September and March quarters and also at the end of the June quarter of each financial year, Waterfront Auckland will provide to Auckland Council an unaudited Quarterly Report which will include a: Statement of financial performance; Statement of financial position; Statement of cash flows and a report on the programme of action and performance targets set out in the SOI.

10.5 Additional information

Waterfront Auckland will provide additional information to the Auckland Council as required, or as requested by Auckland Council, to ensure that Auckland Council is informed in a timely manner of significant events which related to Waterfront Auckland and which may affect Auckland Council.

In addition to the legislative requirements above, the Council requires all CCOs to report their performance quarterly to the Council. First and third quarter reports will be required no later than one month after the end of each quarter. Fourth quarter, unaudited reports will be required no later than one month after the end of the quarter, or directly following the next Board meeting (whichever is later).

10.6 10 Year Plan

Waterfront Auckland will prepare a Ten Year Plan which will also incorporate its asset management practices.

10.7 Confidentiality

Relevant information which is confidential under the terms of the Local Government Official Information and Meetings Act will be shared with Auckland Council as permitted by other agreements. When sharing such information Waterfront Auckland will clearly state the nature of the information and the reason for confidentiality.

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11 APPROACH TO GOVERNANCE

11.1 The Waterfront Auckland Board is committed to the highest standards of governance and business behaviour. The Board of Directors will continue to monitor developments in corporate and public sector governance to ensure that Waterfront Auckland implements the highest standards of governance at all times.

11.2 In undertaking its activities, Waterfront Auckland will exhibit and ensure:

(a) Sound business practice in its commercial undertakings

(b) Sustainable business practice

(d) An open and transparent approach to decision-making, while respecting the need for commercially sensitive information to be protected

(e) An active partnership approach with Auckland Council and key Auckland Council Group CCOs and Stakeholders

(f) An active partnership approach with Iwi.

(g) Waterfront Auckland will act consistently with the principles of the Treaty of Waitangi

11.3 The Board is accountable to Auckland Council to ensure that Waterfront Auckland:

(a) Performs its functions

(b) Acts in accordance with relevant legislation

(d) Gives effect to Auckland Council’s LTP, vision for the waterfront, accountability policy and all relevant polices and plans.

(e) Waterfront Auckland must adhere to Council’s Board Appointment and Remuneration Policy in relation to subsidiaries and inform and consult with Council about any Board and Trust appointments.

(f) Waterfront Auckland will integrate the Waterfront Plan with the Auckland Plan.

11.4 The Board will:

(a) Obtain full and timely information necessary to discharge its obligations fully and effectively

(b) Actively review and direct the overall strategy of Waterfront Auckland

(d) Discuss Waterfront Auckland’s SOI with Auckland Council

(e) Establish Waterfront Auckland as an effective, results oriented organisation with core competencies and appropriate systems necessary to carry out its functions

(f) Manage and monitor the performance of the Waterfront Auckland Chief Executive

(g) Establish remuneration policies and practices, set and review remuneration for the Chief

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Executive and other senior executives

(h) Provide leadership with key stakeholders.

11.5 The Waterfront Auckland Board meetings are open to the public except where the business being discussed or transacted is commercially sensitive.

11.6 Pursuant to section 96 of the Local Government (Auckland Council) Act 2009, Waterfront Auckland will hold meetings that are open to the public at the following times:

(a) In the last week of June each year for the purpose of considering comments from the Auckland Council on the statement of intent for the following financial year,

(b) Towards the end of August in each year for the purpose of considering the organisations performance under its statement of intent in the previous financial year.

11.7 The time and location of all Waterfront Auckland Board meetings will be publically notified in the New Zealand Herald and on the Waterfront Auckland website.

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12 DECISIONS WHICH REQUIRE SHAREHOLDER APPROVAL

12.1 Strategic assets in terms of the Local Government Act 2002, owned by Waterfront Auckland, comprise freehold interests in waterfront land. We will manage these in accordance with the provisions of this SOI.

12.2 We will follow the appropriate Auckland Council policies for any proposed acquisition or disposal of strategic assets.

12.3 Waterfront Auckland’s decisions must be made with effect to the Auckland Council’s LTP, including the Strategic Plan documents as directed by Auckland Council.

12.4 Criteria guiding types of decisions requiring shareholder approval:  Decisions potentially having a moderate adverse effect on a large number of residents and ratepayers;  Decisions potentially having a large adverse effect on a small number of residents and ratepayers;  Decisions which have a history of generating wide public interest;  Decisions which affect Waterfront Auckland’s ability to deliver on the current and future social, economic and cultural well-being of the region;  Decisions which will affect Waterfront Auckland’s ability to meet any statutory responsibility;  Decisions which will impact on any intended service levels for a CCO activity (except if the impact is minor or has been agreed by the Council through the SOI process);  Decisions which will commit the Council to future provision of funding which has not already been agreed.

13 ACCOUNTING POLICIES

13.1 Waterfront Auckland will comply with the accounting and disclosure practices set out in all the relevant Financial Reporting Standards (FRS) issued by the New Zealand Institute of Chartered Accountants as periodically updated and as required by the Financial Reporting Act 1993.

The draft accounting policies form Attachment 4.

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14 FUNDING ASSUMPTIONS

14.1 The funding assumptions that support the activities and financial performance Waterfront Auckland are as follows:

(a) Waterfront Auckland is a tax paying entity

(b) Operational funding for public space activities will be from Auckland Council. Other operational funding, being the funding of the day to day operating expenses of Waterfront Auckland, will be sourced from internal cashflow revenue from property rental, berthage hire, marina operating fees, parking fees and other revenue and user charges or through debt.

(d) Public space capital works will be funded from equity investment by Auckland Council. Capital works for commercial (private) development will be funded from internal cashflow revenue or by borrowing.

(e) Funding for capital works on the marinas will be internally funded from user charges to the extent possible, and any shortfall will be funded by borrowing

(f) For 2011/2012 the Auckland Council is able to transfer development contributions required under Auckland City Council's development contributions policy to growth related capital expenditure by Waterfront Auckland.

(g) From 1 July 2012 the Auckland Council is able to require development contributions to fund its contribution to the total cost of growth related capital expenditure by Waterfront Auckland.

14.2 In accordance with the Funding Letter dated 26 November 2010, or any subsequent funding letters, which recognise the provisions of the related legacy Framework Agreement, and the General Security Deed between Auckland Council and Waterfront Auckland, Auckland Council will fund Waterfront Auckland to carry out certain Public Amenity and Infrastructure Works in Wynyard Quarter to an amount of $211 million plus escalations, subject to the conditions in the agreement, including the annual planning and LTP process.

14.3 Waterfront Auckland will work closely with Auckland Council to ensure that funding arrangements are both equitable and tax efficient between the parties.

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15 DISTRIBUTIONS TO AUCKLAND COUNCIL

15.1 Waterfront Auckland intends to distribute to Auckland Council funds surplus to its requirements. Such requirements will be consistent with Waterfront Auckland’s vision, guiding responsibilities and goals. Before any distribution is made, Waterfront Auckland will work with Council to determine the most efficient manner of making that distribution.

15.2 The level of surplus funds will be determined by reference to:

(a) Waterfront Auckland’s medium-term fixed asset expenditure programme; (b) Waterfront Auckland’s investment in new business opportunities; (c) The sustainable financial structure for the business; (d) Waterfront Auckland’s working capital requirement; and will exclude (e) Capital profits earned on disposals of assets where such profits are to be used to meet investing and operating requirements

15.3 Waterfront Auckland does not envisage making a distribution to Auckland Council in the period of this SOI.

16 PROCEDURES FOR PURCHASING SHARES IN OTHER COMPANIES

16.1 This will require the prior approval in writing of the Auckland Council.

17 RATIO OF CONSOLIDATED SHAREHOLDER’S FUNDS TO TOTAL ASSETS

17.1 The ratio of Consolidated Shareholder’s Funds to Total Assets as at 1 November 2010 is 80% as shown in the opening balance sheet prepared by Auckland Transition Agency.

Waterfront Auckland will ensure for the period of this SOI that the ratio of Consolidated Shareholder’s Funds to Total Assets will be not less than 60%.

Notes:  Consolidated Shareholder’s Funds means the sum of the amount of paid up share capital, retained earnings and equity reserves of Waterfront Auckland  Total Assets means the sum of the net book values of property, plant and equipment, investments, intangible assets and current assets as disclosed in Waterfront Auckland’s balance sheet.

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18 ESTIMATE OF THE COMMERCIAL VALUE OF THE COMPANY

18.1 The value of the Shareholder’s investment in Waterfront Auckland disclosed in the opening Balance Sheet prepared by Auckland Transition Agency at 1 November 2010, was $354 million.

18.2 The Directors’ assessment of the commercial value of the Shareholder’s investment in Waterfront Auckland as at 31 December 2010 will be determined on completion of financial reports for the period to that date and this is dependent on Auckland Council providing a final and correct opening balance sheet.

18.3 The Directors’ assessment of the commercial value of the Shareholder’s investment will be reassessed on an annual basis at 30 June each year. Appropriate independent valuations will be obtained as required.

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ATTACHMENT 1: MAP – WATERFRONT AUCKLAND AREA OF OWNERSHIP AND INFLUENCE

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ATTACHMENT 2: SUMMARY OF ASSETS

All assets (land, buildings, waterspace) previously owned by the public bodies of the Auckland Regional Council (or Auckland Regional Holdings) and Auckland City Council were transferred to Waterfront Auckland.

The draft map below shows those assets now owned by Waterfront Auckland.

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ATTACHMENT 2: SUMMARY OF ASSETS (continued)

The table below provides a summary of the assets owned by Waterfront Auckland. The Local Government (Tamaki Makaurau Reorganisation) Council-Controlled Vesting Order 2010 provides the full list of legal descriptions and titles.

Asset Includes

Land and  Harbour Bridge Park buildings  Wynyard Precinct Property (previously owned by Auckland Regional Holdings) – includes investment property in the Wynyard Quarter, freehold land, waterspace, wharves, assets under construction and existing buildings.  Wynyard Headland Public Space  Waitemata Plaza  Te Wero Island  Teal Park

Wharves  A half share in Queens Wharf  Hobson Wharf (excluding the Maritime Museum)  Halsey Street Extension Wharf (excluding the Viaduct Events Centre)  North Wharf, Wynyard Wharf

Marinas  Westhaven marina and coastal permit rights Waterspace  Super yacht berthage Berthage  Viaduct Harbour  Coastal licences

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ATTACHMENT 3: DIRECTORY

Address: Waterfront Auckland P O Box 90 343 Victoria Street West AUCKLAND 1142

Shareholder: Auckland Council (100%)

Place of business: Ground Floor Pier 21 Building 11 Westhaven Drive Freeman’s Bay AUCKLAND 1010 Board:

Chairman: Bob Harvey Deputy Chair: Adrienne Young-Cooper

Directors: Ngarimu Blair Christine Caughey Evan Davies Terry Kayes Kerry Stotter

Executive Team:

Chief Executive: John Dalzell Chief Finance Officer: Richard Kerr Project Director: Richard Hiles-Smith Planning & Design Manager: Rob Marler Property and Assets Manager: Richard Aitken Place Manager: Kaaren Goodall Communications and Stakeholder Manager: John Gundesen

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ATTACHMENT 4: ACCOUNTING POLICIES

Summary of Significant Accounting Policies for the period ended 30 June 2011

1. General information

Auckland Waterfront Development Agency Ltd (Waterfront Auckland) is a limited liability company, incorporated under the Companies Act 1993 and a wholly owned Council Controlled Organisation (CCO) of Auckland Council, as defined in section 6 of the Local Government Act 2002.

Waterfront Auckland is a new entity formed on 1 November 2010 through the amalgamation of the following entities and assets: Sea + City Projects Limited; Auckland Regional Holdings’ Wynyard precinct property; Auckland City Council’s waterfront and marina assets; and Auckland Regional Council’s part share in Queens Wharf.

The 100 percent shareholdings in Westhaven Marinas Limited and Downtown Marinas Limited currently owned by Auckland City Council have transferred to Waterfront Auckland.

Waterfront Auckland has interests/contractual rights to the following existing trusts: Westhaven Trust, Westhaven Existing Marina Trust and Westhaven Marina Extension Trust.

The objectives of Waterfront Auckland are to:

 deliver on the aspirations of the Auckland Council on the waterfront;  develop the waterfront as a coherent whole;  act in a commercial way in achieving the development objectives, in particular the Waterfront Auckland owns and manage property, encourage and facilitate development and investment, including acting as a landlord, capturing the value of its assets to stimulate investment and reinvesting back into the area; and  develop and maintain relationships with key stakeholders.

The financial statements are for the Waterfront Auckland and the Group.

Waterfront Auckland is a public-benefit entity as defined under New Zealand Equivalents to International Financial Reporting Standards (“NZ IFRS”).

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

Statement of compliance

The financial statements of Waterfront Auckland and Group have been prepared in accordance with the requirements of the Local Government Act 2002: Part 6, section 98 and Part 3 of Schedule 10, which includes the requirement to comply with New Zealand generally accepted accounting practice (“NZ GAAP").

These financial statements have been prepared in accordance with NZ GAAP. They comply with NZ IFRS, and other applicable Financial Reporting Standards, as appropriate for public benefit entities.

Measurement base

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The financial statements have been prepared on a historical cost basis, modified by the revaluation of land and buildings, certain infrastructural assets, investment property, and financial instruments (including derivative instruments).

Functional and presentation currency

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of the Waterfront Auckland is New Zealand dollars.

2.2 Changes in accounting policy and disclosures

Waterfront Auckland commenced operations on 1 November 2010 and this is the first reporting period. Accordingly there are no comparative figures and no accounting policy changes.

On creation of Waterfront Auckland, as at 1 November 2010, the assets and the liabilities of the dissolved above named entities were transferred to Waterfront Auckland. On the date of transfer, these assets and liabilities were recorded at their previous carrying values in the financial statements of the predecessor entities with adjustments made where necessary to ensure that the assets and liabilities were recorded using consistent accounting policies adopted by the Group.

(a) New and amended standards adopted by the Group

(to be set out at the time)

(b) Standards and interpretation issued and not yet adopted

(to be set out at the time)

2.3 Consolidation

Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of WATERFRONT AUCKLAND as at balance date and the results of all subsidiaries.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by- acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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Transactions and non-controlling interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded as equity. Gains or losses on disposals to non-controlling interest are also recorded in equity. Joint ventures

Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity that is subject to joint control. Joint ventures take many different forms and structures. For accounting purposes joint ventures are distinguished into three types of categories, those being jointly controlled operations, jointly controlled assets and jointly controlled entities. The following characteristics are common to all joint ventures:

(a) Two or more venturers are bound by a contractual arrangement; and (b) The contractual arrangement establishes joint control.

For the Group’s jointly controlled operation/s, the Group recognises in its financial statements the assets it controls, the liabilities and expenses it incurs, and the share of income that it earns from the joint venture.

For the Group’s jointly controlled assets, the Group recognises in its financial statements; its share of the jointly controlled assets (classified according to the nature of the assets), any liabilities that it has incurred, its share of any liabilities incurred jointly with the other venturers in relation to the joint venture, any income from the sale or use of its share of the output of the joint venture (together with its share of any expenses incurred by the joint venture) and any expenses that it has incurred in respect of its interest in the joint venture.

For the Group’s jointly controlled entities, the Group recognises in its financial statements its contribution of cash or other resources to the jointly controlled entity as an investment in the jointly controlled entity and its share of the profits of the jointly controlled entity.

2.4 Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities are recognised in the statement of comprehensive income.

2.5 Property, plant and equipment

Property, plant and equipment consist of:

Operational assets -These include land, buildings, plant and equipment, office & computer equipment, leased assets, and motor vehicles.

Restricted assets - Restricted assets comprise land owned by the Group which provide a benefit or service to the community and cannot be disposed of because of legal or other restrictions.

Initial recognition Property, plant and equipment are initially shown at cost or at fair value in the case where an asset is acquired at no cost, or for a nominal cost. Cost includes any costs that are directly attributable to the acquisition of the items.

Subsequent measurement The classes of assets below are subsequently measured at fair value. The change in fair value is recorded as non-operating revenue or expense. The methods used to determine fair value are also disclosed below. All other classes of assets are measured at historical cost less accumulated depreciation and accumulated impairment.

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Land and buildings (operational and restricted), are revalued with sufficient regularity to ensure that their carrying amount does not differ materially from fair value and at least every three years. The Group account for revaluations of property, plant and equipment on a class of asset basis.

Class of asset measured at fair Method applied to determine fair value value

Land and buildings (operational) Market-based evidence/income Land and buildings except Depreciated replacement cost reserve land (restricted) approach Waterfront assets Market-based evidence/income

The assumptions used when applying the methods above include: definition of market value (estimated amount for which a property should exchange on the date of valuation between a willing buyer and willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion) - the valuation assumes the project is continuing. Construction contracts, property management, development management and professional consultancy contracts are all assumed to remain in place

Additions

The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to the Group and the cost of the item can be measured reliably. In most instances, an additional item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the statement of comprehensive income. When revalued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to retained earnings.

Depreciation

Land is not depreciated. Depreciation on assets measured at historical cost is provided on a straight-line basis at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives of major classes of assets have been estimated as follows:

Class of asset depreciated Estimated useful life (Years)

Buildings 10 - 100 Plant and equipment 5 - 50 Office and computer equipment 5 - 10 Motor vehicles 5 - 10 Reserve Structures/Restricted assets 3 - 87 Wharves, piers and associated assets 2 - 100

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end.

Capital works in progress

Capital works in progress are not depreciated. The total cost of a project is transferred to the relevant asset class on its completion and then depreciated.

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An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (refer to note xx).

Right to acquire asset

This asset is the right to acquire physical assets owned, managed and operated by a third party.

The asset is recorded in the financial statements as intangible assets as follows:

 The component relating to the residual value of the asset is recorded at cost. This will be subject to impairment testing, taking into account the third-party requirement to maintain the asset’s service potential and return the asset in identical condition.  The component relating to the service potential to be received over the concession period (up to the time the asset reverts to Waterfront Auckland) is recorded at cost, less amortisation and impairment losses. This component is amortised over its useful life (i.e. the concession period) and is subject to impairment testing.

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2.6 Investment property

Investment properties are properties held for long-term rental yields and is not occupied by the Group. They are not used in the production or supply of goods or services for administration purposes and are not held for sale in the ordinary course of business.

Properties leased to third parties are not classified as investment properties if lessees are using the properties for service delivery objectives integral to the operation of Group's business or primarily using Group's services, for example properties held for strategic purposes and properties held to provide a social service, including those which generate cash inflows where the rental revenue is incidental to the purpose of holding the properties.

Investment property is measured initially at cost, including directly attributed expenditure. After initial recognition, the Group measures all investment properties (including work in progress) at fair value by an independent valuer at each balance date. Where the property’s fair value cannot be reliably measured, the Group will measure the property at cost until its fair value can reliably be measured.

There is no depreciation on investment property. Gains or losses arising from a change in the fair value are recognised in the statement of comprehensive income.

2.6 Intangible asset

Intangible assets are initially recorded at cost. Where acquired in a business combination, the cost is their fair value at the date of acquisition. The cost of an internally generated intangible asset represents expenditure incurred in the development phase only. Subsequent to initial recognition, intangible assets with finite useful lives are recorded at cost, less any amortisation and impairment losses, and are reviewed annually for impairment losses. Assets with indefinite useful lives are not amortised but are tested, at least annually, for impairment, and are carried at cost, less accumulated impairment losses. Realised gains and losses arising from the disposal of intangible assets are recognised in the statement of comprehensive income in the period in which the disposal occurs. 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. Impairment losses resulting from impairment are reported in the statement of comprehensive income. Computer software Computer software licences are capitalised based on the costs incurred to acquire and bring to use software. Costs are amortised using the straight-line method over their estimated useful lives (three to five years). Costs associated with maintaining computer software programmes are recognised as an expense when incurred. Costs directly associated with the development of identifiable and unique software products are recognised when the following criteria are met:  It is technically feasible to complete the software product so that it will be available for use;  Management intends to complete the software product and use or sell it;  There is an ability to use or sell the software product;  It can be demonstrated how the software product will generate probable future economic benefits;  Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and  The expenditure attributable to the software product during its development can be reliably measured. Computer software development costs recognised as assets are amortised using the straight-line method over their estimated useful lives (not exceeding three years).

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Staff training costs are recognised as an expense when incurred. Resource Consents Costs incurred in obtaining resource consents are capitalised and classified as intangible assets to the extent it is probable such costs are expected to be recoverable. Costs are amortised on a straight line basis over the term granted by the resource consent which ranges from five to 30 years and are stated at cost less accumulated amortisation and impairment losses.

Water rights Water rights have an indefinite life. These assets are recorded at cost and tested annually to assess whether there has been an impairment of value. This is done by comparing the carrying amount of the asset with the recoverable amount. Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the excess of the purchase price, over the fair value of the net identifiable assets, on the acquisition of a subsidiary at the date of acquisition. Goodwill is recognised as an intangible asset and is carried at cost less accumulated impairment losses. Goodwill is tested for impairment at least annually. Any impairment is recognised as an expense. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

2.8 Impairment of non-financial assets

Intangible assets that have an indefinite useful life, or not yet available for use, are not subject to amortisation and are tested annually for impairment. Assets that have a finite useful life are reviewed for indicators of impairment at each balance date. When there is an indicator of impairment the asset’s recoverable amount is estimated. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.

The value in use for cash-generating assets and cash generating units is the present value of expected future cash flows. If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. For revalued assets the impairment loss is recognised against the revaluation reserve for that class of asset. Where that results in a debit balance in the revaluation reserve, the balance is recognised in the statement of comprehensive income. For assets not carried at a revalued amount, the total impairment loss is recognised in the statement of comprehensive income.

The reversal of an impairment loss on a revalued asset is credited to the revaluation reserve. However, to the extent that an impairment loss for that class of asset was previously recognised in statement of comprehensive income, a reversal of the impairment loss is also recognised in the statement of comprehensive income.

For assets not carried at a revalued amount (other than goodwill) the reversal of an impairment loss is recognised in the statement of comprehensive income.

2.9 Financial assets

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The Group classifies its financial assets in the following categories: a) financial assets at fair value through profit and loss b) loans and receivables

The classification depends on the nature and purpose for which the financial assets were acquired. The Group determines the classification of its financial assets at initial recognition.

Financial assets are initially measured at fair value plus transaction costs unless they are carried at fair value through profit and loss in which case the transaction costs are recognised in the statement of comprehensive income.

Purchases and sales of financial assets are recognised at trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. a) Financial assets at fair value through profit and loss

This category has two subcategories: financial assets held for trading, and those designated at fair value through profit and loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. They are classified as current assets if they are held for trading or expected to be realised within 12 months of the year-end date.

After initial recognition financial assets at fair value through profit and loss continue to be measured at fair value. Realised and unrealised gains and losses arising from the changes in the fair value of the financial assets at fair value through profit and loss category are included in the statement of comprehensive income in the period in which they arise. b) Loans and receivables

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

For advances, where the full amount is received back, the advance is carried at the amount of the advance. For interest bearing advances, interest income will be recorded in the Statement of Comprehensive Income on accruals basis.

2.10 Impairment of financial assets

Assets carried at amortised cost

The Group reviews at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:  Significant financial difficulty of the issuer or obligor;  A breach of contract, such as a default or delinquency in interest or principal payments;  The group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;  It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;  The disappearance of an active market for that financial asset because of financial difficulties; or

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 Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: i.) Adverse changes in the payment status of borrowers in the portfolio; and ii.) National or local economic conditions that correlate with defaults on the assets in the portfolio.

The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted using the financial asset’s original effective interest method. The asset’s carrying amount is reduced and the loss is recognised in the statement of comprehensive income in “other expenses”. If a loan or a held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.

2.11 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.12 Derivative financial instruments and hedging activities

The group uses derivative financial instruments to economically hedge exposure to interest-rate risk arising from financing activities. In accordance with its treasury policy, WDA does not hold or issue derivative financial instruments for trading purposes. Derivatives, such as interest-rate swaps, are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The resulting gain or loss is recognised immediately in the statement of comprehensive income within “other gains/(losses)” unless the derivative instrument has been designated as a hedging instrument and qualifies for hedge accounting, in which case, the method of recognising the resulting gain or loss is discussed below. The fair values of financial instruments traded in active markets are based on quoted market prices at the year- end date. The quoted market price used for financial assets held by the group is the current bid price. The quoted market price for financial liabilities is the current ask price. Derivatives that qualify for hedge accounting When a derivative is designated as a hedging instrument, the group documents a hedge relationship as either a cash flow hedge (hedge of a forecast transaction) or a fair value hedge (hedge of the fair value of a recognised asset or liability). Also documented are the nature of the risk being hedged, its risk-management objective, strategy for hedge transactions, identification of the hedging instrument and hedged item, and how the hedging instrument‘s effectiveness is to be assessed.

Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the “hedging reserve” within other comprehensive income. The gain or loss relating to the ineffective portion is recorded in the statement of comprehensive income within “other gains/(losses)”. When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets hedge accounting criteria, any cumulative gain or loss in equity at that time remains in equity and is recognised when the forecast transaction is recorded in the statement of comprehensive income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss reported in the “hedging reserve” transfers to “other gains/(losses)” within the statement of comprehensive income.

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Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of comprehensive income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Waterfront Auckland applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to the effective portion of the interest-rate swaps that hedge fixed-rate borrowings is recognised in the statement of comprehensive income within “finance costs”. The gain or loss relating to the ineffective portion is recognised in the statement of comprehensive income within ”other gains/(losses)”. Changes in the fair value of the hedged fixed-rate borrowings attributable to interest-rate risk are recognised in the statement of comprehensive income within “finance costs”. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is recorded in the statement of comprehensive income. When a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, or a forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, then the associated gains and losses that were recognised directly in equity will be included in the initial cost or carrying amount of the asset or liability.

2.13 Trade and other receivables

Trade receivables are amounts due from customers for goods and services. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for doubtful debts.

For information on impairment of trade and other receivables refer to note (xx). Furthermore, when a trade receivable for which the provision for impairment has been recognised becomes uncollectible in a subsequent period, it is written off against the provision for impairment of receivables. Subsequent recoveries of amounts previously written off are credited against “other expenses” in the statement of comprehensive income.

2.14 Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value, and bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

2.15 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

2.16 Borrowings

Borrowings are initially recognised at their fair value net of transaction costs incurred. After initial recognition, all borrowings are measured at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

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2.17 Borrowing costs

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

Facility fees

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

2.18 Current and deferred income tax

Income tax expense comprises both current tax and deferred tax, and is calculated using tax rates that have been enacted or substantively enacted by balance date. Income tax expense is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the tax is dealt with in equity.

Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years.

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

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities.

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

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

Deferred tax is recognised on taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

2.19 Good and Services Tax (GST)

All items in the financial statements are stated exclusive of GST, except for debtors and other receivables and creditors and other payables, which are presented on a GST inclusive basis. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the statement of financial position

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

Commitments and contingencies are disclosed exclusive of GST.

2.20 Employee benefits

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Short-term employee entitlements

Employee benefits that the Group expects to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to, but not yet taken at balance date, retirement gratuities, performance bonuses and long service entitlements expected to be settled within 12 months, and accumulating sick leave.

The Group recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Group anticipates it will be used by staff to cover those future absences.

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

Long-term employee entitlements

Entitlements that are payable beyond 12 months, such as long service leave and retirement gratuities, have been calculated on an actuarial basis. The calculations are based on:

 Likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement and contractual entitlement information; and  The present value of the estimated future cash flows. The discount rate is based on the weighted average of interest rates for government stock with terms to maturity similar to those of the relevant liabilities. The inflation factor is based on the expected long-term increase in remuneration for employees.

Superannuation schemes

Defined contribution schemes

Obligations for contributions to defined contribution superannuation schemes are recognised as an expense in the statement of comprehensive income as incurred. Defined benefit schemes

The Group belongs to the Defined Benefit Plan Contributors Scheme (the scheme), which is managed by the Board of Trustees of the National Provident Fund. The scheme is a multi-employer defined benefit scheme.

Insufficient information is available to use defined benefit accounting, as it is not possible to determine from the terms of the scheme, the extent to which the surplus/deficit will affect future contributions by individual employers, as there is no prescribed basis for allocation. The scheme is therefore accounted for as a defined contribution scheme.

2.21 Provisions

The Group recognises a provision for future expenditure of uncertain amount or timing when: the Group has a present obligation (legal or constructive) as a result of a past events; it is probable that expenditures will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an expense and is included in “finance costs”.

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2.22 Revenue recognition

Revenue is measured at the fair value of consideration received.

Sales of services Revenue from rendering of services is recognised by reference to the stage of completion of the transaction at balance date, based on the actual service provided as a percentage of the total services to be provided.

Sales of goods Sales of goods are recognised when a product is sold to the customer. Sales are usually in cash or by credit card. The recorded revenue is the gross amount of the sale, including credit card fees payable for the transaction. Such fees are included in other expenses.

Rental income / Berth hire Rental income is recognised on straight line basis over the lease term.

Long term Lease Revenue Long term lease revenue is recognized over the term of the lease.

Lease premiums and prepayments on new leases are amortised as income over the term of the lease. For tax purposes, any premium is recognised when received.

Other revenue  Where a physical asset is acquired for nil or nominal consideration the fair value of the asset received is recognised as other revenue. Assets vested in the Group are recognised as revenue when control over the asset is obtained.  Interest income is recognised using the effective interest method.  Dividends are recognised when the right to receive payment has been established.

2.23 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 (net of any incentives received from the lessor) are charge to the statement of comprehensive income on a straight-line basis over the period of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

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Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant period rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

Critical accounting estimates and assumptions

In preparing these financial statements Waterfront Auckland has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. The following are the critical estimates and judgements management has made in the process of applying the Group’s accounting policies and that have the most significant impact on the amounts recognised in the financial statements.

Useful lives of property, plant and equipment – as described in note 2.5, the Group reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period. The determination of the estimated useful lives has a significant impact on the timing of recognition of the depreciation expense.

Fair value of property, plant and equipment and investment property – as described in note 2.5, certain classes of assets are periodically revalued. Valuations are performed by independent registered valuers. The revaluation exercise requires an estimation of the amount for which these assets could be exchanged between willing parties in an arm’s length transaction. The determination of value has a significant impact on the total asset value reported for these assets and on the depreciation expense for property, plant and equipment.

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