Download the Summary Group Financial Statements 2016:
Kāi Tahu tītī ā kai, tītī ā manawa
It is almost 20 years sign we signed Te Kēreme and over the years since, we have worked hard to build a solid economic foundation of which we can be proud. Our responsibility to whānau however, extends beyond the financial and as we move into our next phase, we are making the shift to ensure our Ngāi Tahu values are demonstrated in every aspect of our business. Manawa Kāi Tahu is a sustainability and values-based framework in development across Te Rūnanga Group that will refocus our accountability in the areas of cultural, social, environmental and economic performance. Our first report will be available at Hui-ā-Tau.
Our focus on accountability also led to the introduction of Whatumanawa, the organisational wellness survey carried out in 2015. The survey was conducted across the Group to look at our organisational behaviours and delivery of outcomes to whānau. The results indicated that there were a number of areas we could improve on including better communications from the executive and wider disemination of news and information. A number of activities were implemented in response and the feedback has been positive.
In keeping with our vision, we are committed to developing and implementing programmes that engage, honour, empower and enable our people and communities to be the best they can be – from pēpi to kaumātua – in pursuit of whānau rangatiratanga. To accelerate these aspirations, we have set up a new tribal economies team, Tokona te Ao, whose mission is to create opportunities for business and enterprise development, housing and home ownership and employment pathways.
Innovation and technology are the way of the future and we need to be leading the charge by creating opportunities in this sphere that target future opportunities for rangatahi. We have partnered with Te Tapuae o Rehua, NZQA and Callaghan Innovation to take ten Year 9 and ten rangatahi to Silicon Valley in San Francisco to attend a five-day science, technology, engineering and mathematics (STEM) boot camp. Our Mātauranga and Tribal Economies teams have also come together to develop a 10-week coding club programme for Year 7 – 9 students. Exposure to computer programming, whether it be the creation of digital games, books or other communication technologies is a positive way to move rangatahi from purely consumers to producers of technology.
This year we celebrate the 10-year anniversary of three important tribal initiatives: Aoraki Bound, Whai Rawa and the Ngāi Tahu Fund. All have undergone review at this important milestone to ensure they remain relevant and continue to enhance the personal, cultural and financial growth of whānau and communities.
We have initiated a climate change project to look at how issues such as rising sea levels and increasing temperatures are impacting on our rohe and aim to have this completed by the end of June 2017. We have also been working to improve our relationship with the Department of Conservation both at a Te Rūnanga and Papatipu Rūnanga level and have initiated discussions to develop a relationship engagement framework. One of the key purposes of this framework will be to agree a set of protocols centred around our joint responsibilities relating to the Treaty of Waitangi and our Ngāi Tahu Deed of Settlement with the Crown.
Once again we must congratulate Ngāi Tahu Holdings (NTH) on another stellar financial performance across the Group which this year resulted in a $44.2m distribution to Te Rūnanga. We have been strengthening our relationship with NTH as we work together to bring the values to the forefront of everything we do through Manawa Kāi Tahu. We are delighted with the progress NTH is making in this area as they work to weave the values across the various entities. It is important to note several prestigious awards bestowed on our commercial businesses this year with NTH winning the Outstanding Business Leadership Award at the Māori Business Leaders Awards, Ngāi Tahu Tourism’s Dart River Jet winning gold in the Product Innovation category at the Chinese Tourist Welcome Awards in Beijing and Ngāi Tahu Farming being shortlisted as finalists in the prestigious Ahuwhenua Trophy BNZ Māori Excellence in Farming Award – our congratulations to all our staff involved with our commercial entitites.
The past few months have been challenging for the organisation. We would like to acknowledge the commitment and professionalism of staff in staying focused on what matters – working towards fulfilment of our aspirations for positive whānau outcomes – thank you for staying strong on this kaupapa – tīhei mauri ora!
Tā Mark Solomon, KNZM
Arihia Bennett, MNZM
Chief Executive Officer
Date: 18 November 2016
Location: Te Whare o te Waipounamu, 15 Show Place
To be followed by afternoon tea.
|Net Operating Surplus after interest||50,859||83,452||76,245||104,041|
|Non Operating Adjustments||28,891||77,975||41,179||106,728|
|Profit attributable to Ngāi Tahu Holdings||79,750||161,427||117,424||210,769|
|Tribal Development and Distribution Expenditure||(28,719)||(29,317)||(35,321)||(41,784)|
|Tribal Arm Non-Operating Adjustments||(1)||(10)||(1,295)||(25)|
|Net Profit (Loss) Before Taxation and Crown Settlements||51,030||132,100||80,808||168,960|
|Add Net Crown Settlements||68,806||12,500||28,582||42|
|Add Other Income Tribal Arm||2,078||1,679||429||469|
|Less Taxation Te Rūnanga o Ngāi Tahu||(162)||(409)||(455)||(739)|
|Profit (Loss) after taxation for the Year||121,752||145,870||109,364||168,732|
|Equity holders of the parent||121,449||145,455||109,435||168,690|
|Profit after taxation for the year||121,752||145,870||109,364||168,732|
|Term Debt, Total Assests and Equity|
*Footnote: Graph costs include both direct project costs and allocation of direct operational expenditure
This year we distributed $400,000 to each of the Papatipu Rūnanga via the Te Pūtea Whakamahi grants, an increase of $40,000 on the previous year, and this figure is set to increase again in FY17.
The activities of the Office are now aligned to our outcomes-based framework defined by four key Pou: Oranga (Wellbeing), Mātauranga (Knowledge), Ngāi Tahutanga (Culture and Identity) and Te Ao Tūroa (Environment). This enables more accurate determination of success measures in delivering to whānau, hapū and iwi.
Four support functions known as Heke (rafters) sit behind the four pou. They are: Ko Ngā Whakapāpātanga (tribal communications), Te Whakaariki (influence), Te Kaitiakitanga me te Tāhuhu (organisational development and governance) and Te Ao Pūtea (investment planning). These are the activities that work to grow and strengthen the structure that enables us to deliver the outcomes.
spent on Oranga FY2016
Outcome: Whānau are healthy and living in healthy environments
Building strong, vibrant and economically successful communities is at the heart of our tribal economies strategy. This means not only looking for ways to grow opportunities for Papatipu Rūnanga but also finding ways to work with whānau to build economies in the home and enabling home ownership. Tokona te Ao, the tribal economies team was established earlier this year to explore and create opportunities for business and enterprise development, housing and home ownership and employment pathways.
Business and Enterprise development through Puna Pakihi has been a huge success with 25 whānau enterprises launched this year. In the employment pathway space the team has been focused on technology with a view to enhancing a tech culture and capability among Ngāi Tahu whānui to stay abreast of where the world is headed. Tokona te Ao partnered with the Mātauranga team to provide a 10-week coding club programme for Years 7-9. A CODE club pilot was set up in Ōtautahi using students from Te Kura Kaupapa Māori o Te Whānau Tahi with another two sites to be set up in 2017. The programme is designed to provide experience and the opportunity to explore information technology through coding. Exposure to the development of computer programming is a great way of encouraging rangatahi to become IT producers rather than consumers.
We also partnered with Te Tapuae o Rehua, NZQA and Callaghan Innovation to take 10 rangatahi to Silicon Valley to attend a five-day science, technology, engineering and mathematics (STEM) boot camp.
Tokona te Pō, our research and development team, continues to support Ngāi Tahu whānui economic development aspirations. Two key focus areas are: indigenous species research and an evolving opportunities portfolio. The indigenous species research is an exciting model of research, development, and commercial products. Among our projects are: a research and development initiative based on revival of the traditional use of Taramea (speargrass) in the production of fragrance, led by Kāti Huirapa Rūnaka ki Pukerteraki and a potential initiative utilising the novel features of indigenous gentians as input into a breeding programme led by Hokonui Rūnanga. Additionally, funding has recently been received to conduct research into the commercial potential of an alga found in the Awarua Wetland led by Awarua Rūnanga. The high values of EPA (eicosapentaenoic acid, part of the long chain fatty acids that have high nutritional value) found in the alga mean that it may offer an alternative to the health supplement fish oil. We have also provided support to Hokonui for their water purification project.
Within the opportunities portfolio, a new initiative offering rūnanga and whānau regional development activities, has been kicked off. The initial model being developed will offer rūnanga and whānau assistance with entering the honey, food and tourism industries. This model is designed to improve the success rate of new ventures.
In April we launched a home ownership pilot programme, with three refurbished homes in Addington for whānau to move into as a stepping stone towards longer-term accommodation.
Whai Rawa, our iwi savings scheme is celebrating its 10th anniversary this year and has recently undergone a review to ensure that it continues to best serve the needs of whānau. In June Whai Rawa was granted a Managed Investment Scheme Licence by our regulator; the Financial Markets Authority.
As at 30 June there were 21,868 members (including 70 per cent of all registered tamariki aged 15 and under) and a total fund value of $52m. In the year to 31 March $3.53m was paid out in distributions and $481,262 in administration.
Total amount deposited by members and whānau since inception = $24.23m
Total amount withdrawn since inception for tertiary education, a first home or a more comfortable retirement = $4.97m
The annualised return for the four years ending 30 June 2016 = 7.19%
The annualised return paid to members (before PIE tax) for 12 months to 31 March 2016 = 5.24%
He Oranga Pounamu (HOP) was successfully wound up as at 30 June. A number of Crown entities have requested an ongoing relationship with Te Rūnanga and as a result a couple of contracts have been brought across to the Oranga team.
This year our kaumātua received grants totaling $1.3m.
spent on Ngāi Tahutanga FY2016
Outcome: Whānau are proud of and strengthened by being Ngāi Tahu
Cultural identity is what defines us as uniquely Ngāi Tahu. Our mission is to develop initiatives that grow and strengthen our culture and whānau pride in Ngāi Tahutanga.
This year two such initiatives are celebrating 10 successful years – Aoraki Bound and the
Ngāi Tahu Fund.
Over the past 10 years there have been 22 Aoraki Bound courses completed and close to 250 alumni whose lives have been culturally enriched by their journey.
Since its inception the Ngāi Tahu Fund has invested more than $8.5m into supporting over 850 projects to strengthen cultural excellence through sustainability, innovation and tenacity. This year 63 projects received a total of $637,912. Just over $2.5m was also allocated to the Marae Development Fund. This fund was established to fund projects to breathe life into our Papatipu Marae. Since 2012 $7.6m has been allocated to a range of new marae, rebuilds, repairs and maintenance. The Mahinga Kai Enhancement Fund was established to protect, enhance, utilise and maintain mahinga kai areas, resources and species and the rights of Ngāi Tahu to access. This year three projects received a total of $228,580. Additionally, five taurahere groups received funding through the Taurahere Fund to support their activities.
Manawa Tītī is a series of wānanga focused on tribal leadership development and succession planning. We were delighted to have 13 graduates successfully complete our first series.
We have developed a range of rangatahi initiatives to support the growth of Ngāi Tahutanga and capability including: Kura Reo Rakatahi, Manawa Hou, the aspiring leaders’ forum and recently the Rakatahi Forum at Iwi Chairs.
Our tribal register continues to grow with 55,192 members enrolled on the whakapapa database as at 30 June. In the last six months of the year the Whakapapa Unit received 1266 registrations – a 36% increase on the previous three years which has necessitated a need for additional resource to manage. Significant progress has been made to reduce the number of whānau we don’t have a current address for.
It’s been another busy year for the Ngāi Tahu Archives Team with an additional 2000 images being archived over the year. A new digital archives management system has now been installed, and the scope and design of the cultural mapping website has been approved in preparation for the release of the Ngāi Tahu Atlas.
A highlight of the year was the celebration of the third biennial Ngāi Tahu Reo Awards held at Hui-ā-Iwi in Ōtepoti in November. The awards are an opportunity to honour whānau making a commitment to keeping our language alive and visible. KMK fund and deliver a suite of te reo initiatives designed to grow both the number of te reo speakers and the number of whānau speaking te reo in the home. As well as our calendar of events, this year 39 whānau received Kā Manukura o Te Reo funding totaling $75,475, 17 received Whānau Reo funding totaling $23,375 and 12 cluster groups received Kāika Reo funding totaling $35,710. 5 Papatipu Rūnaka received Papakāika Reo funding totaling $62,318.50.
was spent on Te Ao Tūroa FY2016
Outcome: Whānau are nourished by the natural environment (culturally and physically)
Weaving the Ngāi Tahu values into RMA planning documents, resource consent proposals and conservation management strategies has been a key focus for the environmental team. This is part of our commitment to strengthening our regional influence through providing support for Papatipu Rūnanga. Among our mahi in this area we supported Ngāti Waewae to work in close partnership with the Department of Conservation to “co-draft” the Paparoa National Park Plan. We also assisted Papatipu Rūnanga in the Christchurch rohe to identify and seek inclusion of approximately 96 significant Ngāi Tahu places and sites in the cultural heritage chapter of the Christchurch Replacement District Plan. At an iwi level we have been working with Manaaki Whenua (Landcare Research) to develop a Customary Use and Management Framework for native taonga.
In total we distributed $477,000 to a range of Ngāi Tahu regional environmental entities to support resource management mahi.
This year four new 4 new mātaitai customary fishing reserves – Te Ahi Tarakihi Mātaitai and the Tūhawaiki Mātaitai near Tīmaru, the Waikouaiti Mātaitai near Karitāne and the Ōtākou Mātaitai in Otago Harbour – were successfully established bringing the total number to 29 in our rohe. And, 12 new nohoanga sites were activated for whānau to occupy for mahinga kai gathering.
We were delighted to receive confirmation of $1.5m funding from Fonterra for Te Waihora, Waituna and Wainono for biodiversity, ecological, and mahinga kai restoration.
spent on Mātauranga FY2016
Outcome: Whānau are empowered to succeed through the acquisition of knowledge
Empowerment is at the heart of all we do – creating opportunities to access knowledge and provide the tools to make choices and enable self-determination no matter where whānau are at on their life journey.
We are growing our mātauranga expertise and have committed to channeling resource into our vision for our regions and support for our Papatipu Rūnanga with the establishment of regionally based kaitoko mātauranga positions. This is an opportunity to go beyond our traditional engagement with the Ministry of Education and other education stakeholders and to pursue our own initiatives. To date we have successfully recruited six kaitoko.
We have also established the Rūnanga Education Fund as part of our mātauranga strategy. The purpose of the fund is two-fold: to provide targeted financial assistance for Papatipu Rūnanga to develop their own targeted educational resources for use in their communities. Secondly, to support innovative projects and concepts of benefit to Ngāi Tahu learners and whānau. Seven projects have been supported to date.
The Pēpi Pack initiative has been gathering momentum with 101 pēpi receiving packs over the past year. The pēpi project is not only a mechanism for the promotion of safe sleeping but also a way of connecting our pēpi to their whakapapa. Our challenge moving forward is to keep up with the demand which to date has far exceeded expectations.
Te Tapuae o Rehua continues to strive towards creating the framework for Māori success in tertiary education. Their focus is on a collaborative approach to bring together the strengths of Ngāi Tahu, its tertiary partners and others to achieve positive and lasting social change for Māori. He Toki and Whenua Kura continue to enjoy success under the guidance of Te Tapuae.
Five years on, He Toki has 500 graduates with approximately 40 percent working in industry related employment as at 90 days post course completion. The apprenticeship training trust, He Toki ki te Mahi is now in its second year with 29 apprentices within the trust and over 100 nationwide.
91 tauira have enrolled in Whenua Kura since the initiative began two years ago. Whenua Kura offer a range of courses in dairy, sheep and beef, horticulture and recently added apiculture to their kete. Nine graduates are employed on the Ngāi Tahu farms and 27 Ngāi Tahu Whenua Kura graduates are currently in industry related employment.
Building our relationships with the universities has been a recent priority and is producing positive outcomes with co-investment in scholarships and increased support for Ngāi Tahu students.
Our focus on iwi capability continues to pay off with exceptional talent coming forward for our various initiatives eg: Manawa Nui, which is our associate director programme and the Matakahi cadetship programme which aims to place tertiary students studying commerce-related degrees into our various commercial entities. This year we have awarded seven Matakahi scholarships as part of our growth strategy. We have developed a pilot programme with Ngāi Tahu Tourism to accelerate career paths for Ngāi Tahu students into the tourism sector.
We are actively promoting the extension of our traditional after school tuition to include the provision of more targeted support to those in need of extra help in the classroom and in their out of school study. This is to enable a more responsive needs-based approach.
One of the things we strive for, is going about our business in line with our values. Greater alignment of our activities to these values has been a key focus this year as we move towards a reporting framework that shifts the emphasis from purely economic performance to include environmental, social and cultural accountability to Ngāi Tahu whānui.
Manawa Kāi Tahu is a new initiative being implemented across both Ngāi Tahu Holdings (NTH) and the Office to help us identify, measure and where necessary, change the way we operate. For NTH it’s not just about what we achieve, but how we do it. While we have made significant progress, we have a way to go. Manawa Kāi Tahu, amongst a range of other initiatives across the Te Rūnanga Group, is a positive step towards ensuring our efforts keep improving in this area. The first Manawa Kāi Tahu report will be released at Hui-ā-Iwi and will provide a benchmark for the future.
Our financial performance has once again exceeded our forecast expectations with a Net Operating Surplus of $104.0m (FY15 $75.7m). This exceptional result reflects strong results across almost all our businesses including very strong residential sales at Wigram Skies and Prestons and the ongoing strength of kōura sales in China.
Shareholder equity was $1.2b (FY15 $1.1b). Our annual distribution to Te Rūnanga for FY16 was $44.2m. In total nearly $400m has been distributed since Settlement.
The sale of an additional 80 residential sections over budget and the consistently strong performance of the investment portfolio has resulted in an EBIT of $70m for Ngāi Tahu Property (NTP). As previously flagged, the need to explore potential new markets beyond Te Waipounamu has seen NTP expand their interests into the North Island, establishing an Auckland office and confirming their first residential development project at Hobsonville Point in partnership with NZ Superannuation and New Ground Capital.
The upturn in the tourism sector has resulted in a record year for
Ngāi Tahu Tourism, a particularly pleasing result and testament to their growth strategy and commitment to delivering premium product experiences to their customers. Agrodome continues to be a standout performer being hugely popular with Chinese visitors.
High prices and increased demand for kōura in Asia has netted
Ngāi Tahu Seafood (NTS) another great result ending the year with an EBIT of $24.6m (FY15 $20.9m).
Not surprisingly it was a tough year for Ngāi Tahu Farming in their first year of operation as a stand-alone entity. There were a number of ongoing challenges in the dairy sector with the result being a significant downturn in milk payout prices. Strong beef and log prices helped to offset the lower dairy prices. Ngāi Tahu Forest Estates was transferred to Ngāi Tahu Farming on 1 January.
During the year we made two significant investments, purchasing 50 percent shareholdings in both mānuka honey producer Watson & Son and transport company Hilton Haulage. Both of these businesses are whānau owned and operated, take a long-term intergenerational approach and fit well with our values and vision.
Once again we sold down a portion of our Ryman shares. In keeping with the investment strategy our intention is to keep our investment in Ryman at around 10 percent of our overall portfolio. While the Ryman business continues to perform well, share prices have flattened with values now more realistic.
In January we farewelled Tony Sewell from NTP. For more than 20 years Tony headed our property group and was instrumental in the exponential growth in property assets over his tenure. He played a significant role in the Treaty Settlement negotiations and the ‘Right of First Refusal’ process. David Kennedy is the newly appointed Chief Executive. David was previously an NTP board member for six years before stepping down to take up his new position. In April we also welcomed Joseph Thomas as the NTS Chief Executive. We are delighted to have both David and Joseph on board.
Across the Holdings Group we have a commitment to creating opportunities for growing iwi capability in all areas of our business. Manawa Nui, the associate director programme and the Matakahi tertiary Scholarships are among a suite of successful initiatives on offer. Additionally, each of the subsidiaries offers targeted industry scholarships and programmes.
We welcome the new health and safety legislation and see looking after our people as critical and a core part of our values. A group-wide strategy has been developed to ensure all of our activities have the required measures in place to guarantee the safety of their teams.
As we look to the future our priorities are threefold: To continue to embed an approach to business that reflects our values and Ngāi Tahu whānui expectations of us; make decisions around what we do with our rural land holdings (where we are ‘overweight’ per our investment policy framework); and, focus on realising the potential of our recent investments while retaining a sharp focus on our core businesses.
At the heart of our success are our team of passionate professionals who share a commitment to our long-term vision and values and work hard to maximise the potential of our businesses on behalf of Ngāi Tahu whānui – e kore rawa tēnei puna whakamihi e mimiti noa.
Net Operating Surplus up by $28.3m to
Total Net Profit of
Shareholder Equity up by $122m to
Distribution to Te Rūnanga o Ngāi Tahu
Operating Return on Equity (incl NTFSL) of
Total Return on Equity (incl NTFSL) 5 year average of
FY16 was marked by two significant acquistions, purchasing 50% shareholdings in both mānuka honey producer Watson and Son and transport company Hilton Haulage. We are always on the lookout for new opportunities to strengthen and diversify our portfolio and these two businesses were a perfect fit with our vision and values – whānau owned, a long-term vision and a strong values base.
An investment in mānuka honey had been on the radar for some time with our sights set on Waiararapa based Watson and Son as a producer and distributor of premium mānuka honey products. Watson and Son also owns ManukaMed, a related company focused on the medical applications of mānuka – a valuable resource with proven health properties. We view this partnership as an exciting investment with considerable development potential.
South Canterbury based transport company Hilton Haulage has been in the business of cartage for the past 25 years. Employing around 300 people they are a significant player in the local Te Waipounamu economy.
Ryman continues to perform well and the share price grew this year following a period of being relatively flat. This year we sold 9.2 million shares netting income of $74m. In line with our investment strategy the plan is to keep Ryman at around 10 percent of the total value of our portfolio.
Go Bus is proving a solid investment ending the year once again on budget. Opportunities for growth are promising with the recent successful tender for a South Auckland contract and several others on the horizon along with some targeted acquisitions.
Whilst a weak domestic dairy payout softened local performance for Waikato Milking Systems (WMS) export markets continue to be targeted in order to grow the business. A recent US acquisition is a key focus for WMS to capture a greater share of the international milking systems market. WMS was recently named winner of the Supreme 2016 Air New Zealand Cargo Export NZ Award and QBE Insurance Exporter of the Year Award ($10m to $25m category).
At the heart of our success are the positive relationships we enjoy with our investment partners. We don’t enter into these relationships lightly – our partners must share our values and our vision for long-term intergenerational investment. An excellent example of this is our great relationship with Tainui Holdings – our partners in both WMS and Go Bus.
As we move into the new financial year we are focused on realising the full potential of our new investments.
Our land bank continued to provide opportunities, allowing us to capitalise on the ongoing residential demand post earthquakes and this year resulting in a record performance and a net operating surplus of $63.28m for Ngāi Tahu Property.
The sections have kept selling at Wigram Skies and Prestons with 290 and 227 residential settlements respectively for the year – 105 ahead of projected sales. Te Whāriki is being developed one stage at a time with 37 sections sold for the year (25 less than projected).
With the flattening of the Christchurch market and the Prestons and Wigram Skies developments all but complete, we are looking to explore new opportunities. We have ventured into the Auckland market and committed to our first development at Hobsonville Point, in partnership with New Zealand Super Fund and New Ground Capital. Construction of the 208 home development is due to begin late 2016.
Construction is well advanced at the KEB site in central Christchurch with a March 2017 completion date for Stage One – two office buildings and a 600 capacity carpark are on target. At this stage we have 78% confirmed occupancy for both office buildings.
The strength of our Investment portfolio continues to prove its worth with 100% occupancy, a weighted average lease term of 9.86 years (industry average 8.32) and improving valuations. The portfolio is made up of 26 managed properties, 101 tenants and has a value of $311m – a $20.6m uplift in the value of the portfolio from last year.
The Christchurch Courts building was sold during the year to Science Alive for their new premises.
Te Haumi Whakamana is an investment opportunity specifically for Papatipu Rūnanga that enables those rūnanga who opt in to share in the returns of a portfolio of Crown-tenanted properties. The 10 rūnanga who have already invested in Te Haumi Whakamana have recieved their investment statements and their cash return payment for FY16. Their investment realised a total return of 16% (including revaluations) and a cash return of 7%.
All rūnanga have the option to invest up to $500k in Te Haumi Whakamana via an annual trading window which is open in August and September each year. We are also looking for other opportunities to increase our support to rūnanga within their rohe.
Core to our vision is supporting whānau looking to pursue property related careers through the Pūmanawa Scholarship for tertiary students. We also continue to support Manawa Nui, with Ben Bateman (Ngāi Tahu – Ngāti Waewae, Ngāti Māmoe) our current Associate Director on the Ngāi Tahu Property Board.
There has been a changing of the guard with the retirement of Tony Sewell after 21 years at the helm. Tony leaves behind a significant growth legacy – realising potential and growing equity from around $2m to in excess of $500m. He was also instrumental in engineering the Right of First Refusal process. We are thrilled to have David Kennedy step into the role as of January this year. David has a wealth of experience in the property sector and was previously on the Ngāi Tahu Property board for six years. General Manager, Development, Russell Pyne also left us earlier in the year after almost 20 years. Peter Rose was appointed to the role of COO and his focus is on business origination, markets and research and development.
During the year we welcomed David Kerr and Anthony Beverley to the board while Rick Braddock moved from the property board and joined the board of Ngāi Tahu Farming.
It was a great boost for the team to receive recognition at the 2016 Property Council of New Zealand Industry Awards in June, winning best in category for the Health and Medical Property Award for Te Whare Whakapapa and the Urban Land Developments Award for Wigram Skies. These awards are recognition of our hard work, high standards and innovative design.
The biggest challenge facing Ngāi Tahu Property is the need to secure new assets for development. In response to this there is a targeted approach and dedicated resource allocated to sourcing new opportunities. A regional market research project has been launched with Wānaka, Queenstown and Christchurch markets reviewed to date.
Residential sales in Christchurch for FY17 are expected to be well below this year. We have sold out of most of these land banks. Prestons has 50 settlements remaining, while Wigram has 98 constructed lots to settle (94 of these are contracted). We are expecting construction of the last neighbourhood at Prestons to be completed early 2017 with the majority of settlement to occur in FY17
We have reached agreement with the Riccarton Racecourse Trust and the government regarding the potential for a residential development on land surplus to racecourse requirements. This is an attractive location given its proximity to the racecourse.
We remain focused on exploring potential projects in the Auckland and Queenstown markets as well.
It has been an outstanding year for Ngāi Tahu Tourism as we celebrate our second consecutive record result, an operating year end EBIT of $11.4 million, and visitor numbers reaching close to one million across our businesses. Our investment across all aspects of capability including people, processes and experiences, is paying off and sees us well positioned to capitalise on industry growth.
Agrodome, Shotover Jet, Hukafalls Jet and Dart River were once again the standout performers while El Nino took its toll on Franz Josef Glacier Guides making for a large number of no fly days and a difficult year. NZ Snowshoe is proving to be a solid addition to the southern portfolio providing a fun snow alternative for non skiers which works well for Chinese visitors.
In May we celebrated the birth of Mighty Dash, the 1500th kiwi chick to hatch at Rainbow Springs, Kiwi Encounter – a significant milestone in kiwi conservation. The ongoing support and work of the Rainbow Springs team helps to ensure that our national icon doesn’t become extinct.
Then in June the official naming of Te Ao Mārama, the new Franz Josef visitor hub. This was led by Te Rūnanga o Makaawhio and it was great to have Tā Mark Solomon lend his support. The building is home to Franz Josef Glacier Guides, Glacier Hot Pools, the Department of Conservation, the Franz Josef i-SITE (which is now run by Ngāi Tahu Tourism) and also a cafe.
We were delighted by the recognition bestowed on Dart River at the Chinese Tourist Welcome Awards in April, winning a gold in the Product Innovation Category. Another highlight for us was making the Shotover Jet experience available for whānau at Hui-ā-Iwi in Dunedin as part of the 50th Anniversary celebrations for this iconic business.
The investment in our China strategy continues to pay off with China now making up 30% of visitors. Australia, the United States, Germany, the UK and France also continue to grow. We expect a continuation in the strength of the tourism market particularly from China, Australia and the USA. We have activity planned to maintain our position in these markets as well as programmes for future development including South East Asia, South America and India.
While the increase in visitor numbers is great for business, it brings with it a staffing challenge; at peak season our staff numbers swell to over 400. We are seeing growth in the shoulder season which may serve to iron out some of this seasonality, however our recruitment and retention strategies remain a key area of focus. This includes putting in place a programme to promote tourism as a desirable career option in the hope of employing more Ngāi Tahu staff.
In addition to supporting the Matakahi Scholarship we recently launched Te Pia Tāpoi Scholarship which provides the opportunity for Ngāi Tahu students who are studying towards a tourism qualification to come and do work experience with us and also to learn more about their iwi. We are excited about our first intern starting in October.
Our digital strategy is integral to the delivery of our products and is driving solid results in terms of online direct bookings. As part of this strategy we recently developed a virtual reality version of our experiences. This technology lets people sample our experiences for themselves and is proving to be an invaluable sales tool.
The changes in the Health and Safety legislation have been a key focus of the year as we work to develop a group-wide framework. Health and safety has always been a priority across our experiences therefore the new legislation has been an easy transition for Ngāi Tahu Tourism.
We have an incredibly enthusiastic and talented team and this year the focus has been on putting a robust training and development programme in place to ensure they have the necessary skills to meet the challenges of the busy market; this includes a range of courses designed for all levels which have been well attended and received. The stand-outs are our Haumaru health and safety training and our leadership programme Rangatiratanga. This year we also had two of our staff attend Aoraki Bound both of whom came back more engaged and enriched by their experience, and two staff attend a cultural immersion programme at Guilin University in conjunction with Tai Poutini Polytechnic.
Meg Matthews replaced Geoff Lawrie as Associate Governor. Paul Bingham and Dave Hawkey also joined the board in October last year.
At Ngāi Tahu Tourism our purpose is to make the connection, with our customers, through our people, to our place and to Ngāi Tahu. Essentially this is about connecting our people, to each other and to Ngāi Tahu and connecting our customers by weaving the Ngāi Tahu values and culture throughout our experiences and our business activities. This purpose underpins everything we do and to this end we have developed a number of cultural initiatives including: a new learning development programme incorporating te reo, a series of language guide videos, and the gifting of pounamu taonga to all staff across the tourism group. The taonga were created from a single kōhatu as a symbolic way of connecting the team and will serve as a visible symbol of the importance of Ngāi Tahu culture, heritage and values in everything we do. We were supported by senior leaders from Ngāi Tahu including David Higgins, Francois Tumahai, Charisma Rangipunga and Justin Tipa. The feedback has been overwhelmingly positive and it is amazing to see all of our team wearing their toki with pride.
Tourism has now surpassed dairy as New Zealand’s biggest export earner so it’s a dynamic time to be in the industry. We are focused on ensuring we maintain good returns in these boom times to counterbalance the leaner years. We continue to invest in our experiences to ensure we are meeting the needs of our customers. Our immediate priorities are the planned redevelopment and repositioning of Rainbow Springs and Kiwi Encounter and the expansion of our offering at Glacier Hot Pools to include cultural interpretations and Māori theming and healing treatments.
In the southern region, we recently purchased iconic Queenstown business, Glacier Southern Lakes Helicopters. This is a superb addition to our portfolio with the potential to enhance the experiences we offer in the southern region. We are exploring tourism possibilities on the Ngāi Tahu High Country Stations at Whakatipu in partnership with Ngāi Tahu Farming.
We are pleased to report another positive performance for Ngāi Tahu Seafood with a year-end net operating surplus of $23.04m. The demand for premium quality live kōura in China continues to drive our strong result. We are focused on how best to maintain this favorable position and take this opportunity to thank our fishers, our team at Ngāi Tahu Seafood, service providers and customers for their continued support.
The strength of our relationships with our buyers in China is a significant factor in this ongoing success, as is the relationship with our fishers. We are conscious of the need to maintain these important relationships and will continue to work on how best to achieve this.
Health and Safety and Manawa Kāi Tahu are key priorities for us going forward. We are currently developing a framework and pathway to bring our values into action so that they become front of mind across our business in all that we do. We are committed to providing a safe and healthy workplace to ensure that our team members get home safely each day. We have embraced technology, an example being the implementation of EROADS, a system that accurately measures driver hours, and vehicle compliance and maintenance which assists us with keeping our drivers safe.
Tio enjoyed another great year with all 166,667 dozen caught and sold largely on the local market. We have seen an increasing demand for live in the shell tio which is being driven by the growing popularity of guests wishing to see oysters being opened as part of their dining experience and enjoy the fresh taste this option provides.
It’s been a great year for harvesting spat and as a result we expect to see an increase in supply of kūtai within the next 18 months. In September 2015 we purchased a mussel farm servicing operation based out of Tarakohe, Golden Bay. This acquisition provides Ngāi Tahu Seafood with greater security and access to a supply of spat. It also provides options in terms of kūtai farm maintenance and servicing.
The opening of our new state of the art fish processing facility in Bluff in April was a highlight of the year. The facility provides potential for growth and expansion of all species and formats such as live fish, crustaceans and shellfish and/or fresh chilled and frozen products and confirms our commitment to ongoing business and economic development in the southern region.
We have continued to work with our Ngāi Tahu fishers and the Murihiku Development pool to plan what the future may look like and how best we work together to achieve better outcomes. The industry continues to change as fishers become increasingly dependent on having to purchase Annual Catch Entitlement to sustain their business operation.
We remain committed to our fishing scholarships to help fund young
Ngāi Tahu fishers to gain their Inshore Launch Masters (ILM) tickets. This programme aims to build the capability of well-trained young people in the seafood industry and offer future fishers opportunities for development.
Our new Chair, Craig Ellison and director Dr Richard Janes have settled in well to their directorships since their appointments in September 2016. In April, we farewelled Ben Bateman as our associate governor and welcomed his replacement, Warwick Tauwhare-George.
In April we also welcomed our new Chief Executive Joseph Thomas. Joseph comes to the role with sound industry knowledge and experience – at both at the management and governance level.
During the year, we undertook a project to develop and strengthen our brand in the marketplace with all product now exported under the TAHU brand. At its heart the TAHU brand is founded on manaakitanga – the concept of gifting and hospitality with our products being the gifts of Takaroa.
As we look to the future we remain focused on maintaining our current positive commercial position and continuing to strengthen our relationships with key stakeholders. We are focused on being the best we can with what we have available. This includes making sure that our supply chain processes – from the sea to the end market – deliver quality premium product for our customers. While kōura remains our priority we will also explore opportunities for development across our portfolio of species to provide diversification and to enhance our returns.
2016 was the first year that Ngāi Tahu Farming operated as a standalone business. An important part of the farming strategy was the development and introduction of a quadruple bottom line reporting format consistent with Ngāi Tahu values covering financial, social, natural environment, and culture and values measures.
Our first year came with its challenges with the downturn in the dairy sector and resulting low milk payouts. We did however, manage to end the year in the black with a net operating profit of $139,000 thanks to strong prices for beef and good log prices for the Ngāi Tahu Forest Estates.
The Ngāi Tahu Forest Estates portfolio was transferred from Ngāi Tahu Property to Ngāi Tahu Farming in January. The portfolio includes 49,300 hectares of land on the West Coast with forestry and mining activities.
Our farm developments are advancing well with Farms 7 and 8 at Te Whenua Hou and our 350ha pilot farm at Balmoral nearing completion. We currently have seven dairy farms and five beef finishing farms at Te Whenua Hou. When completed there will be 13 dairy and seven diary support farms, with beef finishing undertaken at Balmoral.
As well as focusing on our operational performance in farming and forestry, we have a number of projects underway to grow and diversify what we do. These include the potential for sheep milking, involvement in the mānuka honey industry with Watson & Son and tourism opportunities on our Whakatipu high country stations with Ngāi Tahu Tourism.
Our research partnership with Lincoln University is paying dividends as we work with the Department of Ecology to implement a biodiversity plan that provides planting schemes for all of our farms. We are now well on the way to achieving our goal of planting 1.5 million native plants across our Te Whenua Hou properties. Native species are being incorporated into shelter belts, in-paddock planting and around farm buildings and houses on each farm. This project provides a wonderful learning opportunity for Whenua Kura students, who have been involved in collecting some 16,000 native kānuka seeds from some of our remaining Te Whenua Hou stands. The planting supports the restoration of a healthy ecosystem at the same time broadening the students’ awareness of ecosystem importance.
We have progressed our sustainability matrix with the support of manawhenua with 80 measures across our quadruple bottom line that match what we want to measure with Ngāi Tahu values. This is a large and exciting project aimed at further improving our practices.
We were delighted to receive the Synlait Supplier of the Year Award for the environmental category. This award recognises excellence in environmental performance and is testament to the many initiatives we have underway to ensure our commitment to sustainability. Two of our farms were also named as finalists in the Ahuwhenua Trophy BNZ Māori Excellence in Farming Awards.
The Manawhenua Working Party guides and advises on the cultural, environmental and social aspects of our developments to ensure Ngāi Tahu values are meaningfully recognised and provided for through our projects. A key project has been the naming of nine of the farms at Te Whenua Hou.
We have been delighted by the positive, forward-thinking group of young parents who have joined Te Whenua Hou Community Committee to help us build a sense of togetherness on the farms. The committee is working hard to create an environment where Ngāi Tahu Farming employees and their families feel more socially connected to each other and to their wider communities. We are working with Whenua Kura and the Manawhenua Working Party on how we build the values and culture of Te Whenua Hou community.
Kia hoki ora atu – Everyone home safe, every day is both the name and intent of our health and safety programme. We are making good progress and over the past year have been focused on identifying and managing our high-risk hazards. We have identified eight of those across our portfolio. Understanding the risks associated with these activities, including critical control checks to proactively manage risk, is a priority for Ngāi Tahu Farming.
We continue to invest in and support the development of Whenua Kura and currently have nine graduates employed on our farms. The farms play an important role in the learning and career development of the students.
While dairy prices remain soft with a forecast pay-out of $4.75 for the FY17 year, prices for beef and logs remain positive. That said, we are concentrating on strong cost control across the entire business to help improve our operational performance. In response to the low dairy prices we have decided not to go ahead with the planned development of two new dairy farms and will instead expand our beef strategy. The next decision regarding dairy farm development will be made in June 2017 and will be based on forecast economics and strategic priorities.
A greater understanding of potential opportunities beyond the farm gate is an important focus as we look to refine and maximise our business activities.