Annual Report 2019 TE MANAKO NUI Our Vision 1880 Looking to the past to forge the future To be the organisation that returns Ngati Whakaue to its full and rightful land ownership position, including titles to our reserves and recognition of mana over the Rotorua township. TE WHĀINGA Our Mission To manage and enhance our land and assets into sustainable wealth and benefits for our owners, tribe and community. NGĀ WHAKAPONO Our Values • Kia pono – honesty & integrity • Kia tika – professionalism, expertise and acumen • Kia aroha – respect and empathy 1 PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 CONTENTS Vision statements . 1. Contents . 2 Directory . 3 Minutes – AGM – 3rd November 2018 . 4 Chairman’s Report . .12 2019 Owner’s Grant Policy . .15 Operations Report . 18 Financial Report . .26 Governance Structure . 32 Ngati Whakaue Education Endowment Trust Board Chairman’s Report . 33 Maori Land Court Successions . 35 Consolidated Financial Statements . .36 ENTITIES: CRL – Casino Rotorua Ltd LHRDL – Lake House Resort Developments Ltd LRTL – Lake Road Tavern Ltd LTL – Lake Tavern Ltd POCT – Pukeroa Oruawhata Charitable Trust POT – Pukeroa Oruawhata Trust POHL – Pukeroa Oruawhata Holdings Ltd PLHL – Pukeroa Lakefront Holdings Ltd PLLP – Pukeroa Lakeside Limited Partnership PPL – Pukeroa Properties Ltd PPL2 – Pukeroa Properties (No .2) Ltd POLIL – Pukeroa Oruawhata Lakefront Investments Ltd POTSL – Pukeroa Oruawhata Trustee Services Ltd (as Trustee of Pukeroa Oruawhata Charitable Trust) RCL – Rotorua Casino Ltd WASML – Wai Ariki Spa Management Ltd WAHSSLP – Wai Ariki Hot Springs and Spa Limited Partnership WHL – Waihunuhunukuri Holdings Ltd Office: Pukeroa Oruawhata House 1/1176 Amohau Street, PO Box 12031 ROTORUA Phone (07) 348-8990 • Website: pukeroa .co .nz Accountants: Deloitte (Rotorua) Auditors: BDO Rotorua Limited Solicitors: Holland Beckett and Graeme Dennett Bankers: Bank of New Zealand and ANZ PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 2 Trustees/Directors Malcolm Short (Chairman) David Tapsell Rawiri Waru Monty Morrison Tina Ngatai Tanira Kingi Non-Trustee Directors Alec Wilson Jeanna Love Kiriwaitingi Rei (PLHL Director) Appointed 1/10/17 Appointed 1/10/17 Accountant General Manager Personal Assistant Alexander Wilson Peter Faulkner Helen Crawford Property Team Property Manager Facilities Manager Property Administrator Steve O’Sullivan Gary Herbert Lee Emery 3 PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM. CHAIRMAN: Malcolm Short MINUTE TAKER: Helen Crawford MIHI & KARAKIA: Monty Morrison ATTENDANCE: 117 APOLOGIES: 44 RESOLVED: “That the apologies be received.” (Josie Scott/Miriama Searancke) Carried MINUTES: Of the previous AGM held on 4th November 2017 were taken as read and confirmed. RESOLVED: “That the minutes of the meeting held 4th November 2017 be confirmed.” (Bryce Morrison/John Fenwick) Carried Matters arising: • Dean James stated that there is no reference to his request for financial support for the wharekai rebuild for Te Koutu marae in the minutes . • Rawiri Bhana stated he requested an independent scrutineer be appointed for the 2018 election and this is not in the minutes . CHAIRMAN’S REPORT: Malcolm Short read his report . Malcolm paid homage to the passing of trustees, Stuart Harris and Pihopa Kingi . Malcolm advised that Alec Wilson was retiring from the Trust this year and read the article in the AGM booklet recognising and honouring Alec’s contribution for over 37 years to Ngāti Whakaue and Pukeroa Oruawhata Trust . Key points: • Total distributions to owners exceeded $1million in the last financial year. • Residential housing stock now 25 . • Over 177 properties administered by the Group . • Balance sheet has exceeded $280m . • IRD Binding Ruling – enables grants to be paid tax free and enhances the tax effectiveness of the funding to the Charitable Trust . • 3 major projects completed, Haupapa House, Kmart and the “Care Village” at Ngongotaha . • Wai Ariki Hot Springs & Spa is our major focus over the next few years . RESOLVED: “That the Chairman’s report be received.” (Malcolm Short/Peter Anaru) Carried PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 4 PUKEROA ORUAWHATA TRUST MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM. Questions from the floor: 1. Lauren James asked what decision has Pukeroa made in relation to the lands coming back to Ngāti Whakaue as per her question last year? Lauren stated she would like a more appropriate response than ‘Pukeroa are waiting on the outcome of the arbitration process which is back before the WJT trustees .’ Malcolm advised that is the most appropriate response he can provide at this stage . 2 . Tony Wihapi stated the WJT issue is a mana whenua issue and asked what is the relationship between Te Puia, WJT and the land? Alec Wilson responded that there are owners to the valley. The argument put forward is a hapū versus owner argument. There are 106 registered owners under Ngāti Hurungaterangi, 64 registered under Ngāti Taeotū and 37 under Ngāti Te Kahu o Ngāti Whakaue Hapū, in the original blocks. Alec recommended that each hapū have their own meetings and that they share evenly under the HTK Te Puia Trust the revenue from the ownership structure . Peter Staite thanked Alec for his korero and stated this was the first time he had heard this expressed in this fashion . OWNERS GRANT POLICY: Malcolm referred the attendees to page 15 and 16 of the AGM booklet and stated the minimum grant payment will again be $125 . The trustees recommended that $810,000 be set aside for distribution as an Owner’s Grant (in lieu of a Dividend) according to the 2018 distribution table provided . RESOLVED: “That the 2018 Owners’ Grant in lieu of a dividend to the value of $810,000 be supported and approved” (Iris Thomas/Patsy Rouse) Carried GENERAL MANAGER’S REPORT: Peter Faulkner read his report . Key points: • Strong growth in the Balance Sheet as a result of the Kmart/Whare Aroha/Haupapa House projects . • Income from these projects to be reflected in the 2019 & 2020 financial results. • We are projecting an additional $2 .4m from additional rentals coming in in 2019/2020 . • Almost 100% occupancy of our properties . • Interest rates at historically low levels assist our bottom line . • We adopt a low risk approach in managing our interest rate exposure . • Industry wide pressures (Building/Construction/Planning/Design) add to the cost complexity and time taken to complete our projects . • We are not immune to political and economic events occurring around the world . 5 PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 PUKEROA ORUAWHATA TRUST MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM. Questions from the floor: 1 . Tony Wihapi was pleased that Pukeroa is aware of what is happening in the world economically and politically and asked ‘will Pukeroa look to protect ourselves?’ Peter Faulkner responded that we cannot be blind to external influences, so we are constantly looking at reviewing options to best manage the business and protect it from future risks . RESOLVED: “That the General Manager’s report be received.” (Bryce Morrison/Maxine Rennie) Carried COMPANY PRESENTATIONS: A Director from each of the Pukeroa companies spoke of the work undertaken with photographs via powerpoint displaying the activity . Monty Morrison – Residential Monty advised that we currently have 20 completed residential dwellings which are being upgraded to meet the ‘healthy homes’ requirements of the Residential Tenancies Act . The houses are all fully tenanted with all tenants Ngāti Whakaue. A further 5 are being completed and should be ready for occupation by the end of this financial year. The rentals contain an element of subsidy with average rental received approximately 60% of the median rental rates for the general area which is currently $350 per week . The “Care Village” at Ngongotaha, which was taken on and completed by the Group last year, has required some ongoing support but is now at 95% occupancy and doing well . Bryce Morrison stated rentals are a double-edged sword and suggested the trustees look seriously at whether we remain a landlord long-term – as the Residential Tenancies Act does not favour the landlord . Merehira Savage stated that she is pleased Pukeroa is assisting in the social arena and asked, ‘when will due diligence start for kaumatua housing?’ Monty replied that this was still on the agenda but had to be deferred due to other commitments this year . Tony Pecotic stated the style of housing in Froude/Sala St is based on an old model and suggested the trustees look at modern housing models when planning future housing developments . Tanira Kingi – Large Format Retail. Tanira advised that investment in our property portfolio continues to be our primary driver of revenue with occupancy @ 96% across all our properties . The Central Mall has become and continues to be Rotorua’s preferred shopping area . Kmart opened 16 March 2018 creating 105 jobs with 25% of those employed of Ngāti Whakaue affiliation. The Trade Central site is progressively being tenanted . We are looking to refurbish the CTTU building (Construction Trade Training Unit) and are working with a prospective tenant for this property . PUKEROA ORUAWHATA TRUST ~ Annual Report 2019 6 PUKEROA ORUAWHATA TRUST MINUTES OF THE ANNUAL GENERAL MEETING OF OWNERS HELD AT TAMATEKAPUA ON SATURDAY 3RD NOVEMBER 2018 AT 10.00AM. Haupapa House is drawing interest from multiple parties whilst Holland Beckett Lawyers occupies the upper floor. Haupapa House is an ‘A’ grade office building. In response to a question whether we owned the land only, Tanira clarified that we own both the land and buildings in our portfolio and these are leased to our tenants on commercial terms . Merehira Savage asked if we could be the owners of the business operating the Spa . Tanira responded that David Tapsell will be speaking to the Spa and that we are working on the basis that we will own both the buildings and the business .