maori trustee annual report 2010

Maori Trustee

A n n u a l R e p o r t

2 0 1 0

1


2 0 1 0

Maori TrusteeM T

327446 Maori Trustee Txt.indd 1327446 Maori Trustee Txt.indd 1 20/08/10 1:29 PM20/08/10 1:29 PM

2

Minister of Māori Affairs

I have the honour to present the Annual Report for the Māori Trustee for the year ended

31 March 2010.

John E Paki

Māori Trustee

20 August 2010

Ki te Minita mō ngā Take Māori

He hōnore ki ahau te tuku atu i te pūrongo ā tau ō Te Kai-Tiaki Māori mō te tau i mutu i te

31 o Māehe 2010.

John E Paki

Kai-Tiaki Māori

20 Here turi kōkā 2010

Maori TrusteeM T


3

Message from the Māori Trustee 4

Overview 6

Māori Trustee and Group

Statement of responsibility 10

Audit report 11

Statement of service performance 13

Financial statements

Statement of comprehensive income 20

Statement of changes in equity 21

Statement of financial position 22

Statement of cashflows 23

Notes to the financial statements 24

Māori Trustee Common Fund and Special Investment Accounts

Statement of responsibility 47

Audit report 48

Financial statement 50

Notes to the financial statement 51


4

On 1 July 2009 the Māori Trustee organisation

was established as a stand-alone entity under the

Māori Trustee Amendment Act 2009, separate

from Te Puni Kōkiri, independent from government,

with the mandate to become a viable, sustainable

organisation.

This was a major turning point in the 90 year

history of the Māori Trustee, and I am pleased to

present this first annual report from the new Māori

Trustee organisation. I would also like to thank

the staff at Māori Trustee who worked to ensure

a smooth transition for our clients, and who have

maintained their commitment to providing services

to our clients during the year as well as taking up

the challenge of transforming our organisation for

the future.

Continuing commitment

Our core commitment to our clients remains the

same – to build and protect the assets for now and

for future generations. As trustee for our clients’

assets, we continued to provide solid returns

on the assets we are responsible for, collecting

$14.0 million in rental income from properties and

achieving an above-benchmark gross return of

7.91% on client funds.

In accordance with the new legislative

requirements relating to payment of distributable

income from Common Fund investment income

received, we paid $1.3 million to 82,256 accounts

held in the fund for the period 1 July 2009 to 31

March 2010.

Transforming for the future

As an independent organisation, we have

embarked on a new path, one which we are

determined will bring greater opportunities and

value to our clients of today, and the future.

Our strategic and business planning puts our

clients front and centre of our business. We

are committed to partnering with our clients,

understanding their aspirations for their land

and assets, and finding realistic opportunities to

add value to our clients’ assets. We have set

ourselves three overarching goals backed by

challenging, but achievable targets: Connecting to

our people, achieving high returns from our clients’

land and assisting clients set up and benefit from

sustainable commercial ventures.

During 2009/10 we laid the foundation to achieve

these goals, carrying out client research, pursuing

opportunities to deliver the scale that will lift returns

from land, and establishing a new Development Unit

to work alongside trustees and owners to identify

commercial opportunities.

We know that delivering on the goals we have

set ourselves will not be easy, and will take time.

However since we have become a stand-alone

organisation, we have already achieved a number

of important milestones such as working with

owners of 21 properties to offer a combined 155

hectares in one higher-value lease, launching a new

company - Te Rua o Te Moko Ltd - to manage a joint

venture dairy operation on behalf of 1,000 owners

of four properties, and being named as a finalist

in the Ahuwhenua Trophy BNZ Māori Excellence

in Farming Award 2009 for our management of

Hereheretau Station.

Outlook

As we move ahead on our new path, we will be

challenging ourselves to provide more focussed

and relevant services to our clients. This will

mean making changes in how we work, including

improving our processes and IT infrastructure, and

putting in place a client satisfaction monitor to guide

our business improvement and client relationships.

We will also continue to drive our strategies of

increasing client returns and looking for opportunities

to develop higher value operations from assets.

We expect that our investment strategy both for

the Māori Trustee’s General Purposes Fund and

the Common Fund, which holds all client funds, will

continue to deliver in line with expectations.

Emerging issues

During the year the Māori Trustee made a

submission on the Financial Service Providers

(Pre-Implementation Adjustment) Bill and our team

will continue to work with officials to ensure the


5

impact of the changes support the Māori Trustee’s

obligations and services to clients.

We will also be looking to review aspects of the

Māori Trustee Amendment Act 2009 legislation

which appear to be restrictive in relation to the

operational sustainability of Māori Trustee, following

implementation of the Common Fund requirements

during the year.

The Emissions Trading Scheme (ETS) is also a key

issue for the land managed by the Māori Trustee.

We are dedicating resource to understanding

the implications and options for the land and for

our clients, particularly as we are aware the ETS

will extend to other sectors, including fishing and

agriculture, over the next few years.

I am confident that we have mapped a strategic

pathway which will enable us to meet the challenges

ahead and deliver excellent value to both our

Government funders and our clients. I know that I

am supported in this by the enthusiasm of the whole

Māori Trustee team to embrace the new path we

are on and be an active part of transforming the

organisation so that we can deliver the services our

people deserve.

Tekau Plus

Tekau Plus is a Māori business export programme,

led by the Māori Trustee, Poutama Trust and

Federation of Māori Authorities, and funded through

Te Puni Kōkiri. The programme, which was started

in October 2007, has the overall aim to develop

Māori globally competitive icon businesses in

the agribusiness sector, focusing on developing

businesses that have the scale and scope to

develop niche products for the world markets.

The Māori Trustee, by rotation, became the chair

in October 2009, and has provided administration

services to the programme. The businesses are

mainly focused on advanced value-added products

in niche markets.

During the first two years of operation, there was

significant effort in place to develop the platform of

information and systematic approach and building

the clusters. An independent review completed by

PricewaterhouseCoopers in January 2010 found that

all money paid by Te Puni Kōkiri had been accurately

accounted for and that the accounting records are

consistent between Te Puni Kōkiri and Tekau Plus.

The Board of Tekau Plus subsequently requested a

Value for Money Review, which was conducted by

PricewaterhouseCoopers (who have recently done

some work summarising the financial position and

outputs of Tekau Plus) and two independent reviewers

– Deputy State Services Commissioner, Tony Hartevelt

and Māori businessman, Whaimutu Dewes. The

findings of the review were released on 28 June 2010.

John E Paki

Māori Trustee

30 July 2010


6

Snapshot of Māori Trustee Business as at 31 March 2010

Hectares under management: 105,000 (estimated)

Properties under management: 2,046

Ownership interests in properties: 194,086

Client accounts: 128,456

Client funds under management:

(Common Fund and Special Investment Accounts) $66.0 million

Corporate funds under management:

(General Purposes Funds) $70.0 million

Staff: 70

Offices located in: Whangarei, Hamilton, Gisborne, Rotorua,

Whanganui and Wellington

2009/10 Highlights

• Website launched at www.māoritrustee.co.nz

• Online searchable unclaimed monies database launched at www.māoritrustee.co.nz

• Common Fund total gross performance for the year was 7.91%

• General Purposes Fund total gross performance for the year was 8.91%

• Collected rental income on behalf of clients of $14.0 million and other income of $4.3 million from

activities such as forestry, kiwifruit, dairy and stock sales

• 92% of rental income invoiced was received

• Presented the largest aggregation of properties yet - 21 - into one lease offer yielding higher value for

all properties

• Launched Te Rua o Te Moko Ltd, with independent directors, to manage a dairy joint venture on behalf

of 1,000 owners in four properties

• Significant investment in training both to support our people in the transition, and move quickly to lift

our own expectation of what we will deliver for our clients.

• Hereheretau Station, managed by Māori Trustee, was one of three finalists in the Ahuwhenua Trophy

BNZ Māori Excellence in Farming Award 2009 – Beef and Sheep sector

• Research by Business and Economic Research Ltd (BERL) showed that based on the portfolio of land

Māori Trustee is responsible for, an initial economic output of $110 million per annum with downstream

effects bringing a total of $278 million. This included the direct creation of 772 full time jobs with

downstream effects contributing another 903 jobs. Māori Trustee’s overall contribution to GDP was

calculated at $119 million.


7

The Māori Trustee Amendment Act 2009

The Māori Trustee Amendment Act 2009 came into effect from 1 July 2009. The main changes were:

• The Māori Trustee was established as a standalone entity that acts independently, free from any

direction or instruction from the Crown.

• New obligations on the Māori Trustee to prepare an Annual Report and Statement of Service

Performance as a Schedule 4 organisation under the Public Finance Act 1989.

• The Māori Trustee succeeding to the existing undertaking of the Māori Trust Office with staff moving

across from Te Puni Kōkiri to be employed by the Māori Trustee, on terms no less favourable.

• Common Fund investment income remains in the Common Fund and distributable income is paid to

client accounts. $1.3 million distributable income was paid to 82,256 Common Fund accounts.

• The funding agreement between the Minister of Māori Affairs and the Māori Trustee was signed in

December 2009. The agreement recognises that the Māori Trustee has a unique role in caring for

Māori land and other assets on behalf of Māori.

Funds Management

Economic commentary

March 2009 was considered the turning point of the financial crisis. A slow return by investors quickly

became a flood, igniting global equity markets in anticipation of the global recovery. After global coordinated

efforts by Central Banks to protect and support their domestic economies, the focus shifted to the future

impact of those efforts. These efforts were in the form of Government guarantees, and easier monetary

policy. The aim of lower interest rates was to help sustain and promote business activity in difficult times, but

over stimulation can lead to inflation.

Since March 2009 and throughout the year interest rates have steadily increased, due to potential inflation

fears, and competition from Banks for local deposits.

Fund summary

Overall both the General Purposes Fund portfolio and the Common Fund portfolio exceeded the index

against which both portfolios are benchmarked.

The Composite A Grade index1 performed remarkably well given interest rates rose steadily throughout the

year with a return of 5.93%. As investors returned from the safety of cash they went in search of the higher

returns from corporate bonds and contributed to the positive return to the index.

The outstanding performances for the Common Fund and the General Purposes Fund compared to the

Composite A Grade index were due to:

• a few individual companies recovering well in the wake of the recession

• the short duration of the portfolios, and

• narrowing credit margins on corporate debt as a result of more demand than supply.

1. Composite A Grade index is a combination of all NZ fixed rate corporate bonds rated A or better plus all NZ Government bonds for

the 12 months to 31 March 2010


8

The following table summarises the composition of the funds and the market value as at 31 March 2010.

Common Fund General Purposes

Fund

Fixed interest bonds 76% 76%

Short term deposits 18% 10%

Cash 6% 7%

Private equity - 7%

Market value $58.97m $70.03m

Fund performance

The following table summarises the gross and net performance for each fund compared to the benchmark for

the 12 months to 31 March 2010.

Fund Performance

Common Fund General Purposes

Fund

Market Index

Gross performance2 7.91% 8.91% 5.93%4

Net performance3 7.74% 8.77%

Financial Summary

The Māori Trustee Amendment Act 2009 resulted in significant changes to the financial performance and

financial position as compared to the prior financial year.

Māori Trustee Group Financial Performance

Total revenue was $90.5 million compared to $10.2 million in 2009, an increase of $80.3 million. The

significant changes in revenue were:

• $8.0 million Crown appropriation and $3.5 million Crown capital funding.

• Fee and commission income increased by $0.5 million to $2.2 million. This increase includes the

Common Fund management fee of $0.3 million which the Māori Trustee charges in accordance with

the Māori Trustee Amendment Act 2009.

• Interest income decreased by $2.5 million, from $7.6 million to $5.1 million, because from 1 July 2010

interest income from Common Fund investments remained in the Common Fund with the introduction

of the Māori Trustee Amendment Act 2009.

• $70.2 million associated with the reimbursement of expenses to the Crown and $1.4 million in respect

of section 460A loans were resolved as part of the legislative reform and are required to be treated as

revenue.

2. Gross performance is before fees and tax for the 12 months to 31 March 2010

3. Net performance is after fees and tax for the 12 months to 31 March 2010

4. Composite A Grade index is a combination of all NZ fixed rate corporate bonds rated A or better plus all NZ Government bonds for

the 12 months to 31 March 2010


9

Total expenditure was $11.4 million compared to $9.6 million in 2009, an increase of $1.8 million. The significant

changes in expenditure were:

• Employee benefits increased by $1.2 million because the Māori Trustee reviewed resourcing requirements

resulting in the creation of new positions.

• The Māori Trustee employed specialists in finance, IT, legal and tax to provide technical advice to support the

implementation of legislative changes and to deliver the outputs specified in the funding agreement between

the Māori Trustee and the Minister of Māori Affairs.

• A decrease in finance costs of $0.8 million because the requirement for the Māori Trustee to pay interest on

accounts held on deposit in the Common Fund ceased with the introduction of the Māori Trustee Amendment

Act 2009.

Māori Trustee Group Financial Position

Cash and cash equivalents increased by $10.0 million compared to the prior year. Non-current assets increased

by $8.0 million, with held to maturity investments increasing by $6.5 million. This increase in cash and other assets

was because of:

• The 2010 surplus, which included Crown capital funding received prior to the actual capital expenditure.

• Crown appropriation of $2.7 million received in advance for the 2011 year.

Total liabilities decreased by $64.2 million to $4.7 million. The significant changes in liabilities were:

• Amounts owing to Te Puni Kōkiri decreased by $68.2 million, with the resolution of the liability as part of

the legislative reform.

• Income in advance increased by $2.7 million because Crown appropriation was received in advance for

the 2011 year.

• Sundry creditors increased by $0.5 million and accruals for employee benefits increased by $0.5 million.

Equity increased to $79.2 million as a result of the net surplus of $79.1 million.

Common Fund and Special Investment Accounts

Client funds held in the Common Fund and Special Investment Accounts totalled $66.0 million, an increase

of $4.7 million from 2009.

With the introduction of the Māori Trustee Amendment Act 2009 on 1 July 2009, Common Fund investment income

remained in the Common Fund and it was then paid to all account holders on a pro-rata basis. This distributable

income of $1.3 million was paid to 82,256 Common Fund account holders for the nine months to 31 March 2010.


10

In terms of the Crown Entities Act 2004, the Māori Trustee is responsible for the preparation of financial

statements, the statement of service performance and for the judgements made in them.

The Māori Trustee is responsible for the establishment and maintenance of a system of internal controls

designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

In the Māori Trustee’s opinion these financial statements and the statement of service performance for the

year ended 31 March 2010, set out on pages 13 to 46, fairly reflect the financial position and operations of

the Māori Trustee.

John E Paki

Māori Trustee

30 July 2010


11

To the readers of the Māori Trustee and Group’s financial statements and statement of service

performance for the year ended 31 March 2010

The Auditor-General is the auditor of the Māori Trustee (the Trustee) and group. The Auditor-General has

appointed me, Phil Kennerley, using the staff and resources of Audit New Zealand, to carry out the audit on

her behalf. The audit covers the financial statements and statement of service performance included in the

annual report of the Trustee and group for the year ended 31 March 2010.

Unqualified opinion

In our opinion:

• The financial statements of the Trustee and group on pages 20 to 46:

• comply with generally accepted accounting practice in New Zealand; and

• fairly reflect:

• the Trustee and group’s financial position as at 31 March 2010; and

• the results of operations and cash flows for the year ended on that date.

• The statement of service performance of the Trustee on pages 13 to 19:

• complies with generally accepted accounting practice in New Zealand; and

• fairly reflects for each class of outputs:

• its standards of delivery performance achieved as compared with the forecast standards outlined in

the funding agreement between the Minister of Māori Affairs and the Trustee (the funding

agreement); and

• its actual revenue earned and output expenses incurred, as compared with the forecast revenues

and output expenses outlined in the funding agreement.

The audit was completed on 20 August 2010, and our opinion is expressed as at that date.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Trustee and the

Auditor, and explain our independence.

Basis of opinion

We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the

New Zealand Auditing Standards.

We planned and performed the audit to obtain all the information and explanations we considered necessary

in order to obtain reasonable assurance that the financial statements and statement of service performance

did not have material misstatements, whether caused by fraud or error.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s

overall understanding of the financial statements and statement of service performance. If we had found

material misstatements that were not corrected, we would have referred to them in our opinion.

The audit involved performing procedures to test the information presented in the financial statements and

statement of service performance. We assessed the results of those procedures in forming our opinion.


12

Audit procedures generally include:

• determining whether significant financial and management controls are working and can be relied on to

produce complete and accurate data;

• verifying samples of transactions and account balances;

• performing analyses to identify anomalies in the reported data;

• reviewing significant estimates and judgements made by the Trustee;

• confirming year-end balances;

• determining whether accounting policies are appropriate and consistently applied; and

• determining whether all financial statement and statement of service performance disclosures are

adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements

and statement of service performance.

We evaluated the overall adequacy of the presentation of information in the financial statements and

statement of service performance. We obtained all the information and explanations we required to support

our opinion above.

Responsibilities of the Trustee and the Auditor

The Trustee is responsible for preparing the financial statements and statement of service performance in

accordance with generally accepted accounting practice in New Zealand. The financial statements must

fairly reflect the financial position of the Trustee and group as at 31 March 2010 and the results of operations

and cash flows for the year ended on that date. The statement of service performance must fairly reflect, for

each class of outputs, the Trustee’s standards of delivery performance achieved and revenue earned and

expenses incurred, as compared with the forecast standards, revenue and expenses outlined in the funding

agreement. The Trustee’s responsibilities arise from the Public Finance Act 1989 and the Māori Trustee Act

1953.

We are responsible for expressing an independent opinion on the financial statements and statement of

service performance and reporting that opinion to you. This responsibility arises from section 15 of the Public

Audit Act 2001 and the Public Finance Act 1989.

Independence

When carrying out the audit we followed the independence requirements of the Auditor-General, which

incorporate the independence requirements of the New Zealand Institute of Chartered Accountants.

Other than the audit, we have no relationship with or interests in the Trustee or any of its subsidiaries.

Phil Kennerley

Audit New Zealand

On behalf of the Auditor-General

Wellington, New Zealand


MattersRelatingtotheElectronicPresentationoftheAuditedFinancialStatements

ThisauditreportrelatestothefinancialstatementsofMāoriTrusteeandGroupfortheyearended31March2010includedonMāoriTrustee’swebsite.MāoriTrusteeisresponsibleforthemaintenanceandintegrityofMāoriTrustee’swebsite.WehavenotbeenengagedtoreportontheintegrityofMāoriTrustee’swebsite.Weacceptnoresponsibilityforanychangesthatmayhaveoccurredtothefinancialstatementssincetheywereinitiallypresentedonthewebsite.

Theauditreportrefersonlytothefinancialstatementsnamedabove.Itdoesnotprovideanopiniononanyotherinformationwhichmayhavebeenhyperlinkedtoorfromthefinancialstatements.Ifreadersofthisreportareconcernedwiththeinherentrisksarisingfromelectronicdatacommunication,theyshouldrefertothepublishedhardcopyoftheauditedfinancialstatementsandrelatedauditreportdated20August2010toconfirmtheinformationincludedintheauditedfinancialstatementspresentedonthiswebsite.

LegislationinNewZealandgoverningthepreparationanddisseminationoffinancialinformationmaydifferfromlegislationinotherjurisdictions.

13

The Māori Trustee Amendment Act 2009 established the Māori Trustee as a standalone entity from 1 July

2009. The Māori Trustee was listed in Schedule 4 of the Public Finance Act 1989, requiring the preparation

of the annual report and statement of service performance in compliance with requirements of the Crown

Entities Act 2004.

In a letter dated 5 August 2009, the Minister of Finance, as empowered by section 45N(2) of the Crown

Entities Act, granted the Māori Trustee the following exemptions from the provisions of the Crown Entities Act

2004:

• An exemption from providing “an assessment against the intentions, measures and standards set out

in a statement of intent prepared at the beginning of the financial year”. This exemption recognises

that the Māori Trustee is not required, under Schedule 4 of the Public Finance Act, to prepare a

statement of intent. However, the annual report must provide the information that is necessary to

enable an informed assessment to be made of the operations and performance for the financial year.

• An exemption from preparing a statement of service performance “in respect of any class of outputs

that is not funded (in whole or in part) by the Crown”. This exemption addresses outputs not directly

funded in whole or part by the Crown.

In addition, in his letter the Minister of Finance has ‘determined’ that the definition of ‘financial year’ set out in

section 136(1) of the Crown Entities Act 2004 will be 12 months ending 31 March for the Māori Trustee not

the usual 12 months ending 30 June for crown entities.

This statement of service performance reports against the outputs stated in the funding agreement between

the Minister of Māori Affairs (on behalf of the Crown) and the Māori Trustee for the 12 months ended 30 June

2010. These performance measures are also relevant for the 12 months ended 31 March 2010.

As this is a transition year, output costings are not available for individual outputs. The total cost of outputs

for the year ended 31 March 2010 is summarised below.

2010 Actual Budget $000 $000

Māori Trustee funding ex TPK creditor 3,426 2,689Crown appropriation 7,987 7,987Crown capital funding 3,520 - Interest income 86 - Total output funding 15,019 10,676

Expenditure funded ex TPK creditor (April–June 2009) 3,426 2,689Expenditure funded by Crown appropriation (July 2009–March 2010) 7,157 8,179Total output expenditure 10,583 10,868

The outputs funded from Crown appropriation are:

1. Management of the Common Fund

2. Management of client interests

3. Land management

4. Supporting sustainable development of assets

5. Capability and capacity of the organisation

6. Statutory and Funding Agreement requirements.


14

1. Management of Common Fund

Management of Common Fund including:

• monitor investment strategy

• administration and management of Common

Fund transactions and records

• payment and distribution of monies to client

accounts

• manage Common Fund in accordance with

statutory and regulatory requirements, and

in accordance with investment strategy and

parameters

• investment strategy monitoring endorsed by

advisory board

• Common Fund transactions are made in

accordance with Māori Trustee Act and

Trustee Act

• all distributions to client accounts are made in

accordance with legislation and regulations

Achieved Monthly investment management

meetings reviewed the funds

management performance and

investment strategy. The returns on

Common Fund investments were

above comparable market indices.

Administration of Common Fund

transactions and records continues,

including payment and distribution of

monies to client accounts.

Developed specifications for the

Common Fund utilising legal and tax

advice, enabling the Māori Trustee to

calculate the distributable income in

compliance with the Māori Trustee Act.

Undertake quarterly reviews of the Common Fund

in accordance with section 26(4) of the Māori

Trustee Act

Achieved Quarterly reviews of Common Fund

performance completed.

2. Management of Client Interests

Manage ownership interests in land administered

by the Māori Trustee

• add up to 4,000 ownership records Achieved 4,020 ownership records added

194,086 total ownership interests at 31

March 2010

Manage client records for accounts held by clients

with respect to one or more properties or funds

• update up to 12,000 client account records Achieved 12,443 client account updates

129,115 total client records at 31

March 2010

• provide information as requested by the Māori

Land Court (estimated 1,200)

Achieved 1,350 searches provided to the Māori

Land Court

• 95% of all information requests undertaken for

Māori Land Court completed by due date

Achieved 100% of information requests

completed by due date

• make 20,000 payments out to clients

throughout the year

Achieved 23,493 payments

• pay distributable income to client accounts

by 31 March in accordance with section 26 of

Māori Trustee Act

Achieved Distributable income of $1.3 million

paid to 82,256 client accounts on

31 March and in accordance with

legislation


15

• 95% of distributable income is paid on time

and is in accordance with section 26 and

Regulation 10 under the Māori Trustee Act

Achieved 100% of distributable income paid on

time and in accordance with legislation

• provide reports to clients by 30 June in

accordance with Regulation 10

• 95% of reports to clients on distributable

income to be on time and accurate

- The reports to clients are to be

provided by 30 June and this will be

completed in 2010/11

Initiatives to locate beneficial owners and obtain

information needed from owners

• publish Unclaimed Money list annually Achieved A web-based searchable unclaimed

money list launched in January 2010

• develop a strategy to identify, locate and

obtain information from beneficial owners to

enable the payment of currently unclaimed

monies, including:

• strategy to identify, locate and obtain

information from beneficial owners

developed by 30 June 2010

• the development of targets and milestones;

• initiatives aimed at increasing awareness

and clients’ provision of information to the

Māori Trustee

Achieved Developed a strategy to identify, locate

and obtain information from beneficial

owners and to increase awareness of

owners.

Completed a 90 day work programme,

including targets and milestones to 30

June 2010.

• measuring progress - This performance measure will be


• monitor initiatives and activities to determine

effectiveness

- This performance measure will be


3. Land Management

Provide governance and management of at least

2,060 properties to protect the beneficial owners’

interests, including through:

Partially

achieved

2,046 properties managed at 31 March

2010

• manage the land seeking utilisation of the land

and payment of rates

• maintaining the accounts

• record management

Achieved 169 rent reviews

89 lease renewals

619 rent inspections

• collection and payment of monies, including

taxes

Achieved Monies are collected and paid as

required. Rental arrears and tax

penalties are monitored – these are

indicators of the timely collection and

payment of monies.


16

• 90% of income is collected on time Achieved 92% of income was collected on time

• manage tax interest, filing tax returns on

time and accurately for 95% of applicable

properties

Achieved 99% of tax returns were filed on time

• meeting legal and compliance requirements Achieved The requirements for legal compliance

are varied and many. During the year

no significant legal issues or risks

arose for the Māori Trustee.

Manage the Māori Trustee’s accountability

through:

• holding at least 500 meetings with owners and

representatives

Achieved 568 meetings with owners and

trustees

• appearing before the Māori Land Court on

applications relating to the Māori Trustee (at

least 200)

Achieved 215 appearances before the Māori

Land Court

• providing reports for inspection where required

• providing special purpose update reports to

owners or representatives on arrangements

for their properties (for at least 200 properties)

• provide properties with reports in accordance

with trust orders

• all accountability reports meet fiduciary

requirements

Achieved 164 special purpose reports to owners

and representatives. Special purpose

reports are in lieu of meetings. The

number of meetings was more than

projected by 68, resulting in the

number of special purpose reports

being less than projected.

• seek client feedback to measure perceptions

and satisfaction by 30 June

Achieved In June 2009 client and market

perceptions and expectations studies

were undertaken through focus groups

and targeted surveys. This work has

informed the development of more

comprehensive and detailed research

and is currently being developed into a

client satisfaction survey.


17

4. Supporting sustainable development of assets

• Planning

• Increase productivity of land

Review land utilisation strategy

• develop and test planning process for 50 land

blocks

• support and encourage active owner

participation through the provision of

information and facilitating opportunities for

development

• plans include sustainability factors

Achieved The following have been undertaken:

• developing processes for engaging

with landowners and identifying

development opportunities

• developing scorecards and criteria

for assessment of the opportunities

• completing pilots with several

blocks and incorporating the

learnings into the processes being

developed

• analysis of the Māori Trustee

portfolio to identify opportunities

• preliminary research, for example

developing a horticulture strategy

and testing options.

• bring 600 ha into higher productive use Achieved Examples of land brought into higher

productive use include:

• Te Rua o Te Moko dairy farm

project (190 ha)

• land that was previously overrun

with gorse has been converted

to effective grazing with water

reticulation (250 ha)

• two blocks with a comprehensive

farm management plan including

water reticulation, fences and

races, effluent system and housing

(40 ha)

• Rotorua block (70 ha) where a new

leasee worked with the trustees

to remove gorse and upgrade the

land.


18

5. Capability and capacity of the organisation

Develop and enhance systems and processes

to provide effective and efficient core services to

clients

• seek client feedback to measure perceptions

and satisfaction by 30 June

Achieved In June 2009 client and market

perceptions and expectations studies

were undertaken through focus groups

and targeted surveys. This work has

informed the development of more

comprehensive and detailed research

and is currently being developed into a

client satisfaction survey.

• systems development include reporting

requirements

In progress An IT Manager was recruited to

progress this output. Systems

development will be completed in

2010/11.

Build the capacity and capability of the

organisation, including through:

• developing and implementing a training

strategy

• training strategy to focus on the Māori

Trustee’s core services implemented by 31

March 2010

Achieved The training programme for core skills

development was undertaken with the

emphasis on:

• the financial management capability

• communication with clients,

including conducting positive

relationships

• training on legal subjects for

regional and head office staff.

• developing an organisational performance

framework

• organisational performance framework

developed by 30 June 2010 covering:

• cost of services provided

• value for money

• client feedback

Partially

achieved

This performance measure will be

completed in 2010/11.

Review fees and commissions charging

framework by March 2010

Partially

achieved

Work was started on developing the

costings, income data and average

times to complete activities.

Develop the information, systems and processes

needed to progress towards an outcomes

framework for reporting and accountability

purposes

• information, systems and processes needed

to move to an outcomes framework in

development by 30 June 2010

Partially

achieved

During the year a high level Information

System Strategic Plan was developed

and process mapping was completed

as the initial steps to the new system

requirements. This performance

measure will be completed in 2010/11.


19

6. Statutory and Funding Agreement requirements

Meet requirements under the Public Finance Act,

Crown Entities Act, Public Audit Act, Trustee Act,

Māori Trustee Act, the funding agreement, Official

Information Act and others as required

• meet statutory timeframes for annual reporting

and other statutory obligations

Achieved All statutory obligations have been

met.

Meet quarterly reporting requirements under the

funding agreement

Achieved Quarterly reports on the funding

agreement were completed for the

September, December and March

quarters.


20

The accompanying notes form part of these financial statements.

Group Parent

Notes 2010 2010 2009 2010 2009

Actual Budget Actual Actual Actual

$000 $000 $000 $000 $000

Revenue

Investment income 1 5,128 4,453 7,635 7,027 12,033

Commission 1,049 1,092 1,036 1,049 1,036

Fees 1,184 1,008 689 1,202 729

Crown appropriation 2 7,987 7,987 - 7,987 -

Crown capital funding 2 3,520 - - 3,520 -

Share of associate’s net surplus 12 37 - 56 - -

Te Puni Kōkiri creditor written off 3 70,207 - - 70,207 -

Section 460A loan fees 4 1,354 - - 1,354 -

Agribusiness contract income 5 - - 730 - 730

Ahuwhenua sponsorship income 5 - - 42 - 42

Other income 4 214 7 4 7

Total revenue 90,470 14,754 10,195 92,350 14,577

Expenditure

Employee benefits 5,325 5,716 4,157 5,325 4,157

Depreciation 13 139 224 149 139 149

Amortisation 14 89 113 76 89 76

Finance costs 1 399 264 1,182 399 1,182

Impairment losses/(gains) 254 7 (11) 2,157 4,400

Grants paid 6 3 3 3 3 3

Agribusiness 5 - - 575 - 575

Ahuwhenua 5 - - 224 - 224

Other expenditure 7 5,169 5,020 3,293 5,146 3,284

Total expenditure 11,378 11,347 9,648 13,258 14,050

Net surplus 79,092 3,407 547 79,092 527

Other comprehensive income - - - - -

Total comprehensive income 79,092 3,407 547 79,092 527


21


Group Parent

Notes 2010 2009 2010 2009

Actual Actual Actual Actual

$000 $000 $000 $000

Equity at beginning of year

General Purposes Fund 153 (3,614) (166) (3,913)

Effect of Te Puni Kōkiri creditor balances written

back relating to periods prior to 1 April 2008,

taken directly to equity

3 - 3,583 - 3,583

Effect of reclassification of Agribusiness and

Ahuwhenua agency arrangements relating to

periods prior to 1 April 2008, taken directly to

equity

5 - (390) - (390)

Restated equity at beginning of year 153 (421) (166) (720)

Total comprehensive income as

previously reported- 547 - 527

Effect of reclassification of Agribusiness and

Ahuwhenua agency arrangements in 2009

financial year

5 - 27 - 27

Restated total comprehensive income

for 2009- 574 - 554

Transfers from statement of comprehensive

income

General Purposes Fund 74,656 - 74,656 -

Appropriation Account 4,436 - 4,436 -

Total comprehensive income 79,092 - 79,092 -

Equity at end of year

General Purposes Fund 74,809 153 74,490 (166)

Appropriation Account 4,436 - 4,436 -

Equity at end of year 79,245 153 78,926 (166)


22

Group Parent

Notes 2010 2009 2010 2009


$000 $000 $000 $000

Current assets

Cash and cash equivalents 8 20,264 10,299 20,169 10,177

Debtors and other receivables 9 715 1,493 714 1,489

Held to maturity investments 10 2,556 4,709 2,556 4,709

Total current assets 23,535 16,501 23,439 16,375

Non-current assets

Held to maturity investments 10 49,560 43,004 49,560 43,004

Loans and receivables 11 5,146 4,213 5,146 4,213

Investment in subsidiaries - - - -

Investment in associates 12 5,237 5,200 5,000 5,000

Property, plant and equipment 13 390 64 390 64

Intangible assets 14 79 78 79 78

Total non-current assets 60,412 52,559 60,175 52,359

Total assets 83,947 69,060 83,614 68,734

Current liabilities

Creditors and other payables 15 4,702 68,907 4,688 68,900

Total liabilities 4,702 68,907 4,688 68,900

Equity 79,245 153 78,926 (166)

Total liabilities and equity 83,947 69,060 83,614 68,734



23

Group Parent

Notes 2010 2009 2010 2009


$000 $000 $000 $000

Cash flows from operating activities

Interest income 5,691 6,832 5,682 6,832

Fees and commissions 1,887 1,817 1,905 1,817

Crown appropriation and capital funding 14,135 - 14,135 -

Net receipts from Agribusiness and

Ahuwhenua5 800 - 800 -

Other income 4 793 4 793

Employee benefits (3,599) - (3,599) -

Suppliers (2,749) (1,040) (2,731) (1,040)

Interest payments to clients (399) (1,182) (399) (1,182)

Goods and services tax received/(paid) 139 (54) 139 (54)

Grants (3) (3) (3) (3)

Net cash flows from operating activities 16 15,906 7,163 15,933 7,163

Cash flows from investing activities

Loans and receivables repayments 757 177 757 177

Disposal of intangible assets - 15 - 15

Disposal of property, plant and equipment - 36 - 36

Investment maturities and sales 4,235 6,219 4,235 6,219

Purchase of property, plant and equipment (439) (3) (439) (3)

Purchases of intangible assets (82) - (82) -

Loan advances (1,794) - (1,794) -

Investment purchases (8,618) (13,305) (8,618) (13,305)

Net cash flows from investing activities (5,941) (6,861) (5,941) (6,861)

Net increase in cash 9,965 302 9,992 302

Cash at beginning of year 10,299 9,997 10,177 9,875

Cash at end of year 8 20,264 10,299 20,169 10,177



24

Reporting entity

The Māori Trustee is a corporation sole defined under the Māori Trustee Act 1953 (the Act) and is domiciled

in New Zealand. The Māori Trustee is responsible for monitoring the affairs of a selection of Māori land

blocks and trusts to maintain, develop and enhance Māori assets.

These financial statements have been prepared in terms of Section 23 of the Act for the General Purposes

Fund and the Appropriation Account.

The General Purposes Fund represents funds held by the Māori Trustee in his own right.

The Appropriation Account was established on 1 July 2009 under the Māori Trustee Amendment Act 2009 to

account for revenue received from the Crown as defined by the Funding Agreement between the Minister of

Māori Affairs and the Māori Trustee for the period 1 July 2009 to 30 June 2011 (Funding Agreement).

The financial statements of the Māori Trustee and its subsidiary (the Group) for the year ended 31 March

2010 were approved for issue by the Māori Trustee on 30 July 2010.

The Māori Trust Office was dissolved upon commencement of the Māori Trustee Amendment Act 2009 on 1

July 2009, and the Māori Trustee’s role extended to cover the responsibilities of the former Māori Trust Office

as from that date. Whereas the costs of the Māori Trust Office were previously charged to the Māori Trustee

by Te Puni Kōkiri and accounted through the General Purposes Fund, as from 1 July 2009 such costs are

now met by the Māori Trustee from appropriations received from the Crown.

Although the Māori Trustee was established as a stand-alone entity, listed on Schedule 4 of the Public

Finance Act 1989 as from 1 July 2009, the roles and responsibilities of the Māori Trustee have remained

substantially the same for the full year to 31 March 2010. The first annual report of the Māori Trustee as a

stand-alone entity has therefore been prepared for the full year ended 31 March 2010, with comparative

figures provided from the financial statements of the Māori Trustee for the year ended 31 March 2009.

Basis of preparation

Statement of compliance

The financial statements have been prepared in accordance with New Zealand Generally Accepted

Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial

Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for

public benefit entities.

Budget figures

The budget figures were approved by the Māori Trustee. The budget figures were prepared in accordance

with NZ IFRS and are consistent with the accounting policies adopted by the Māori Trustee for the

preparation of the financial statements.

Measurement base

The financial statements have been prepared on a historical cost basis modified by the revaluation of held to

maturity investments.

The methods used to measure fair value are detailed in the specific accounting policies.

Functional and presentation currency

The financial statements are presented in New Zealand dollars, which is the Māori Trustee’s functional

currency. All values are rounded to the nearest thousand dollars ($000).


25

Standards, amendments and interpretations

There are no standards, amendments and interpretations issued that are not yet effective and have not been

early adopted that have a significant impact on these financial statements if adopted.

Basis of consolidation

Investments in subsidiaries

The consolidated financial statements comprise the financial statements of the Māori Trustee and its wholly

owned subsidiary, Te Māori Lodges Limited (TML). Subsidiaries are those entities over which the Māori

Trustee has the power to govern the financial and operating policies as to obtain benefits from their activities.

The principal activity of TML is that of a holding company which holds shares in Quantum Limited.

The financial statements of the subsidiary are prepared for the same reporting period and using consistent

accounting policies as the Māori Trustee.

In preparing the consolidated financial statements, all inter entity balances and transactions resulting from

inter-group transactions have been eliminated.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase

method involves allocating the cost of the business combination to the fair value of the assets acquired and

the liabilities and contingent liabilities assumed at the date of the acquisition.

Investments in subsidiaries are subject to annual review for impairment.

Investments in associates

Associates are entities over which the Māori Trustee has significant influence that are neither subsidiaries

nor joint ventures. Significant influence is where the Māori Trustee has over twenty percent of the voting

rights. The Māori Trustee treats the investments in Putake Limited and Quantum Limited as investments in

associates.

Investments in associates are accounted for using the equity method of accounting in the consolidated

financial statements. Under the equity method, investments in associates are carried at cost plus post

acquisition changes in the Māori Trustee’s share of the net assets in the associate, less provision for

impairment.

The financial statements of associates are prepared for the same reporting period as the Māori Trustee,

using consistent accounting policies.

The Māori Trustee is required, as an entity listed in Schedule 4 of the Public Finance Act 1989, to have

audited financial statements available within four months of the 31 March 2010 balance date in terms of

the Crown Entities Act 2004, section 156(2). The audit opinion was delayed due to the late confirmation of

material balances for an associate company.

Significant accounting policies

Revenue

Revenue is recognised and measured at the fair value of the consideration received or receivable to the

extent that it is probable that economic benefits will flow to the Māori Trustee and that the revenue can be

reliably measured.

Fees and commissions

The Māori Trustee can only deduct fees and/or commissions upon actual receipt of trust monies from

fees and commissions owing to the General Purposes Fund from the Common Fund. As such fees and

commissions are recognised on a cash basis.


26

Interest

Interest revenue is recognised using the effective interest method. The effective interest rate is the rate that

exactly discounts the estimated cash flows associated with the financial instrument over the expected life of

the instrument.

Revenue from the Crown

The Māori Trustee receives funding from the Crown, which is restricted in its use for the purpose of the Māori

Trustee achieving the outputs specified in the Funding Agreement.

Revenue from the Crown is recognised as revenue when earned and is reported in the financial period to

which it relates.

Dividends

Dividends are recognised when the Māori Trustee’s right to receive payment is established.

Leases

Leases that do not transfer substantially all the risks and rewards incidental to ownership of an asset to the

Māori Trustee are classified as operating leases. Operating lease payments are recognised as an expense

on a straight-line basis over the term of the lease in the statement of comprehensive income.

Financial instruments

The Māori Trustee is party to financial instruments as part of its normal operations. Financial instruments

include:

• financial assets - cash and cash equivalents, debtors and other receivables, held to maturity

investments and loans and receivables

• financial liabilities - creditors and other payables.

Purchases and sales of financial assets are recognised on the date when the Māori Trustee becomes party

to a financial contract. Financial assets are derecognised when the right to receive cash flows from the

financial assets have expired or been transferred.

Financial instruments are initially recognised at fair value plus transaction costs. Subsequent measurement

of financial instruments depends on the classification of the financial instrument.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash at bank and short term deposits with an original

maturity of three months or less that are readily convertible to known amounts of cash and which are subject

to an insignificant risk of changes in value.

Debtors and other receivables

Debtors are initially recognised at fair value and subsequently measured at amortised cost using the effective

interest rate method, less provision for impairment.

A provision for impairment of debtors is established when there is objective evidence that the Māori Trustee

will not be able to collect all amounts due according to the original terms of the receivable. Financial

difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective

evidence of impairment.

The amount of the provision for impairment is the difference between the asset’s carrying amount and

the present value of estimated future cash flows, discounted at the original effective interest rate. The


27

carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss

is recognised in the statement of comprehensive income. When the debtor is uncollectible, it is written off

against the provision account.

Held to maturity investments

Non-derivative financial assets with fixed or determinable payments are classified as held to maturity

investments when the Māori Trustee has the positive intention and ability to hold these investments to

maturity. Held to maturity investments include Government stock and commercial bonds. Investments

intended to be held for an undefined period are not included in this classification.

Held to maturity investments are initially recorded at fair value plus transaction costs and are subsequently

measured at amortised cost using the effective interest method less any impairment losses. The

amortisation is recorded in the statement of comprehensive income as interest income. Gains and losses

are recognised in the statement of comprehensive income when the investments are derecognised or

impaired.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted on an active market. Loans and receivables include advances to stations, properties and clients,

loans and mortgages, advances to Te Māori Lodges and conversion fund loans.

These assets are initially recorded at fair value plus transaction costs and are subsequently measured at

amortised cost using the effective interest method less provision for impairment.

A provision for impairment of loans and receivables is established when there is objective evidence that the

Māori Trustee will not be able to collect all amounts due according to the original terms of the receivable.

Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered

objective evidence of impairment.

The amount of the provision for impairment is the difference between the asset’s carrying amount and

the present value of estimated future cash flows, discounted at the original effective interest rate. The

carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss

is recognised in the statement of comprehensive income. When the asset is uncollectible, it is written off

against the provision account.

Investments in associates

The Māori Trustee’s share of post acquisition surplus or deficits are recognised in the statement of

comprehensive income, and the share of post acquisition movements in reserves are recognised in reserves.

The cumulative post acquisition movements are adjusted against the carrying amount of the investment.

Property, plant and equipment

Property, plant and equipment consists of EDP equipment, office equipment, furniture and fittings and motor

vehicles.

Property, plant and equipment are measured at historic cost, less accumulated depreciation and

impairments.

Depreciation is charged to the statement of comprehensive income on all property, plant and equipment,

other than work in progress. Depreciation is calculated on a straight line basis at rates estimated to allocate

the cost of an asset over the estimated useful life. The estimated useful lives and associated depreciation

rates of the asset classes are as follows:


28

EDP equipment 3 years 33%

Office equipment 5 years 20%

Furniture and fittings 5 years 20%

Motor vehicles 5 years 20%

Property, plant and equipment assets are derecognised when disposed or when no further future economic

benefits are expected from use of the assets. Gains and losses on disposal are determined by comparing

the proceeds with the carrying amount of the asset. Gains and losses on disposal are included in the

statement of comprehensive income.

Intangible assets

Intangible assets consist of acquired software and software modified for use by the Māori Trustee.

Intangible assets are measured at historic cost less accumulated amortisation and impairments. Costs that

are directly associated with the development of software for internal use are included in intangible assets.

Direct costs include software development and employee costs.

Amortisation is charged to the statement of comprehensive income on all intangible assets, other than work

in progress. Amortisation is calculated on a straight line basis at rates estimated to allocate the cost of an

asset over the estimated useful life. The useful lives of the intangible assets have been assessed to be finite.

The estimated useful lives and associated amortisation rates of the asset classes are as follows:

Acquired software 3 years 33%

Developed software 3 years 33%

Impairment of non financial assets

Property, plant and equipment and intangible assets are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment is

recognised in the statement of comprehensive income for the amount by which the carrying amount exceeds

the recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and

value in use.

Creditors and other payables

Creditors and other payables represent liabilities for goods and services provided to the Māori Trustee prior

to the end of the financial year.

Creditors and other payables are initially recognised at fair value and subsequently measured at amortised

cost using the effective interest method.

Employee entitlements

Employee entitlements include accrued salaries and wages, annual leave earned and retiring and long

service leave entitlements.

Employee entitlements expected to be settled within 12 months of balance date are measured at the

undiscounted current rates of pay and the accrued entitlements.

Employee entitlements that are payable beyond 12 months of balance date such as long service leave

are calculated on an actuarial basis, which takes into account years of service, years until entitlement, the

likelihood that staff will reach the point of entitlement and the net present value of the estimated cash flows.


29

Superannuation schemes

Obligations for contributions to Kiwisaver and the State Sector Retirement Savings Scheme are accounted

for as defined contribution superannuation schemes and are expensed in the statement of comprehensive

income as incurred.

Provisions

The Māori Trustee recognises a provision for future expenditure of uncertain amount or timing when there

is a present obligation as a result of a past event, it is probable the expenditure will be required to settle the

obligation and a reliable estimate can be made of the amount of the obligation.

Goods and Services Tax (GST)

All items in the financial statements are exclusive of GST, except for receivables and 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 receivable or payable to the Inland Revenue Department is included as part of

receivables or payables in the statement of financial position.

Income taxation

The Māori Trustee is defined as a public authority under the Income Tax Act 2004 and therefore is exempt

from income taxation.

Statement of cash flows

The makeup of cash and cash equivalents in the statement of cash flows is the same as cash and cash

equivalents in the statement of financial position.

Operating activities include cash received from all income sources by the Māori Trustee and cash payments

made for the supply of goods and services.

Investing activities include the acquisition and disposal of non-current assets and other investments not

included in cash equivalents.

Financing activities include activities that result in changes to the size and composition of equity.

Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are disclosed in the notes to the financial statements at the point

at which the contingency is evident. Contingent assets are disclosed if it is probable that the benefits will be

realised. Contingent liabilities are disclosed if the possibility that they will crystallise is not remote.

Commitments

Commitments are future expenses and liabilities to be incurred on contracts that had been entered into

before balance date.

Cancellable commitments that have penalty or exit costs explicit in the agreement are reported at the

minimum future payments including the value of the penalty or exit cost.

Commitments include:

• non-cancellable operating leases for property, which are measured as the future payments due under

the lease contract.

• other non-cancellable commitments for consulting contracts, which are measured as the future

payments due under the contract.


30

Significant judgements, accounting estimates and assumptions

The preparation of financial statements in conformity with NZ IFRS requires the Māori Trustee to make

judgements, estimates and assumptions concerning the future. The estimates and associated assumptions

are continually reviewed and are based on historical experience and other factors that are believed to be

reasonable under the circumstances. Actual results may differ from these estimates.

Estimation of asset useful lives

The useful lives of assets have been based on historical experience. In addition, the condition of the assets

are assessed annually and considered against the remaining useful lives. Adjustments to useful lives are

made when considered necessary.

Signifiant judgements

The Māori Trustee has exercised the following critical judgements in applying the accounting policies.

Impairment of financial and non financial assets

The Māori Trustee assesses the impairment of assets at each reporting date by evaluating conditions

specific to the Māori Trustee and to the particular asset that may lead to impairment. If an impairment trigger

exists the recoverable amount of the asset is determined. The Māori Trustee does not consider that the

triggers for impairment testing have been significant.

Changes in accounting policies

There have been no changes in accounting policies. All policies have been applied on a basis consistent with

other years.

1. Investment income

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Interest income from investments 4,778 7,308 6,681 11,718

Interest income from other sources 350 327 346 315

5,128 7,635 7,027 12,033

Finance costs 399 1,182 399 1,182

The Māori Trustee Amendment Act 2009 requires all income received from the investment of money in the

Common Fund to be paid into the Common Fund from 1 July 2009. Therefore, 2010 interest income and

finance costs only includes three months of interest income from the Common Fund and interest expense

paid to the Common Fund, compared to 12 months in 2009.


31

2. Crown appropriation and capital funding

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Crown appropriation 7,987 - 7,987 -

Crown capital funding 3,520 - 3,520 -

The Crown appropriation and Crown capital funding is paid to the Māori Trustee in accordance with the

funding agreement between the Minister of Māori Affairs and the Māori Trustee. The Crown capital funding

also includes $1,525,000 for property, plant and equipment, intangibles and cash as part of the transition of

the Māori Trust Office, as part of Te Puni Kōkiri, to a stand alone entity established on 1 July 2009.

3. Te Puni Kōkiri creditor written off

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Te Puni Kōkiri creditor written off 70,207 - 70,207 -

Section 41 of the Māori Trustee Act 1953 enabled the Crown to recoup the Māori Trust Office expenses from

the Māori Trustee General Purposes Fund. By Cabinet approval dated 14 April 2008, the Minister of Finance

and the Minister of Māori Affairs were jointly authorised to write off the Māori Trustee liability to the Crown

upon enactment of the Māori Trustee Amendment Act 2009, which repealed section 41. As at 1 July 2009,

the liability to the Crown was $70,207,000 and this amount was approved for write-off by the Minister of

Finance upon recommendation of the Minister of Māori Affairs on 17 November 2009.

As at 30 June 2009, the Te Puni Kōkiri creditor balance exceeded the balance advised by Te Puni Kōkiri by

$3,583,000. This amount related to write-offs and adjustments posted by Te Puni Kōkori in their accounts in

prior years but not posted in the Māori Trustee’s account, and has been recognised as an adjustment to the

opening equity balance of the General Purposes Fund.

4. Section 460A loan fees

During its administration of loans and advances made under section 460A of the Māori Affairs Act 1953, the

Māori Trustee deducted commission from proceeds paid to the Crown. Due to uncertainty regarding the

authority to make these deductions, a liability to the Crown was recognised.

As at 1 July 2009, upon commencement of Māori Trustee Amendment Act 2009, confirmation has been

received from Te Puni Kōkiri that the balance owing from the Māori Trustee in respect of section 460A loans

is nil. The accumulated balance of $1,354,000 has accordingly been recognised as revenue as at that date.

5. Agribusiness and Ahuwhenua

The Māori Trustee administers Agribusiness projects and Ahuwhenua Trophy as the umbrella organisation

in conjunction with other parties. The contract and sponsorship income received and expenses paid are

not treated as the Māori Trustee’s income and expenditure in the statement of comprehensive income.

However, in the 2009 and prior years financial statements this income and expenditure was recognised in

the statement of comprehensive income. Adjustments have been made to the General Purposes Fund

opening balance in the statement of changes in equity. In the statement of financial position Agribusiness

and Ahuwhenua balances are recognised in cash and cash equivalents and sundry creditors.


32

6. Grants paid

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Māori Education Trust QEII 3 3 3 3

The Māori Trustee is required by Section 3 of the Queen Elizabeth II Postgraduate Fellowship of New

Zealand Act 1963 to make an annual payment of $3,000.

7. Other expenditure

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Fees paid to auditors

Audit fees for parent 127 118 127 118

Audit fees for subsidiary 8 5 - -

Recovery for prior year audit overrun - 39 - 39

Directors’ fees 1 1 - -

Occupancy 538 500 538 500

Consultants and legal fees 2,777 1,654 2,766 1,652

Other operating costs 1,718 976 1,715 975

5,169 3,293 5,146 3,284

8. Cash and cash equivalents

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Cash at bank and on hand 3,237 113 3,236 111

Deposits at call 6,404 2,828 6,340 2,708

Short-term deposits 10,623 7,358 10,593 7,358

20,264 10,299 20,169 10,177

9. Debtors and other receivables

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Trade debtors 262 660 262 660

Interest receivable 102 833 101 829

Sundry receivables 351 - 351 -

715 1,493 714 1,489


33

The carrying value of debtors and other receivables approximates their fair value.

Trade receivables are non interest bearing and are generally on 30 - 60 day terms. An impairment loss is

recognised when there is objective evidence that an individual trade receivable is impaired. All overdue

debtors have been assessed for impairment and no provision has been deemed necessary.

10. Held to maturity investments

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Current portion

Government stock - 1,522 - 1,522

Commercial bonds 2,556 3,187 2,556 3,187

2,556 4,709 2,556 4,709

Non-current portion

Government stock 2,565 2,560 2,565 2,560

Commercial bonds 46,995 40,444 46,995 40,444

49,560 43,004 49,560 43,004

11. Loans and receivables

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Advances to stations, properties and clients - 15 - 15

Loans and mortgages 5,144 4,198 5,144 4,198

Conversion Fund loans 2 - 2 -

Advances to Te Māori Lodges Limited - - - -

5,146 4,213 5,146 4,213


34

Advances to stations, properties and clients

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Advances to stations, properties and clients 6 119 6 119

Provision for impairment (6) (104) (6) (104)

- 15 - 15

Provision for impairment

Impairment provision at beginning of year (104) (104) (104) (104)

(Increase)/decrease in provision 98 - 98 -

Impairment provision at end of year (6) (104) (6) (104)

Loans and mortgages

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Loans and mortgages 5,586 4,269 5,586 4,269

Provision for impairment (442) (71) (442) (71)

5,144 4,198 5,144 4,198


Impairment provision at beginning of year (71) (71) (71) (71)

(Increase)/decrease in provision (371) - (371) -

Impairment provision at end of year (442) (71) (442) (71)

Conversion Fund Loans

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Conversion Fund loans 3,320 3,336 3,320 3,336

Provision for impairment (3,318) (3,336) (3,318) (3,336)

2 - 2 -


Impairment provision at beginning of year (3,336) (3,347) (3,336) (3,347)

(Increase)/decrease in provision 18 11 18 11

Impairment provision at end of year (3,318) (3,336) (3,318) (3,336)


35

Advances to Te Māori Lodges Limited

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Advances to Te Māori Lodges Limited - - 57,540 55,637

Provision for impairment - - (57,540) (55,637)

- - - -


Impairment provision at beginning of year - - (55,637) (51,226)

(Increase)/decrease in provision - - (1,903) (4,411)

Impairment provision at end of year - - (57,540) (55,637)

12. Investment in associates

Quantum Limited Group

2010 2009

Actual Actual

$000 $000

Shares in Quantum Limited 12,680 12,680

Provision for impairment (12,680) (12,680)

- -


Impairment provision at beginning of year (12,680) (12,680)

(Increase)/decrease in provision - -

Impairment provision at end of year (12,680) (12,680)

The Māori Trustee’s 100% owned subsidiary Te Māori Lodges Limited holds shares in Quantum Limited.

The true value of Quantum Limited is in excess of the amount recognised however this amount has been

fully impaired as the underlying investment in Te Māori Lodges Limited has been incurring losses and has a

negative equity value of $33,090,000 (2009 $31,907,000).

Putake Limited Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Carrying value at beginning of year 5,200 5,144 5,000 5,000

Share of net surplus after tax 37 56 - -

Carrying value at end of year 5,237 5,200 5,000 5,000


36

Group

2010 2009

Actual Actual

$000 $000

Extracts from associate’s statement of financial performance

Revenue 449 563

Net surplus 73 113

Extract from associate’s statement of financial position

Current assets 2,817 4,668

Non-current assets 8,317 6,397

11,134 11,065

Current liabilities 661 665

Net assets 10,473 10,400

Share of associate’s net assets 5,237 5,200

Putake Limited is an investment vehicle for Māori business of which the Māori Trustee has a 50% share.

The equity accounted results for Putake Limited for the year ended 31 March 2010 are unaudited.

13. Property, plant and equipment

Group and Parent 2010

EDP Equipment

Office Equipment

Furniture and fittings

Motor vehicles

Total

$000 $000 $000 $000 $000

Cost at beginning of year 228 132 112 - 472

Additions 55 37 72 275 439

Cost at end of year 283 169 184 275 911

Accumulated depreciation at beginning

of year196 121 91 - 408

Depreciation 34 8 18 53 113

Accumulated depreciation at end of

year230 129 109 53 521

Net carrying value at end of year 53 40 75 222 390

Depreciation 34 8 18 53 113

Depreciation charged on assets held by

Te Puni Kōkiri4 2 2 18 26

Total depreciation expense 38 10 20 71 139


37


Work in progress

EDP Equipment

Office Equipment

Furniture and

fittings

Motor vehicles

Total

$000 $000 $000 $000 $000 $000

Cost at beginning of year 36 225 132 112 - 505

Additions - 3 - - - 3

Transfers to Te Puni Kōkiri (36) - - - - (36)

Cost at end of year - 228 132 112 - 472

Accumulated depreciation

at beginning of year- 144 102 83 - 329

Depreciation - 52 19 8 - 79

Accumulated depreciation

at end of year- 196 121 91 - 408

Net carrying value at end

of year- 32 11 21 - 64

Depreciation - 52 19 8 - 79

Depreciation charged on

assets held by Te Puni

Kōkiri

- - 2 3 65 70

Total depreciation expense - 52 21 11 65 149

There are no restrictions over the title of the Māori Trustee’s items of property, plant and equipment, nor are

any property, plant and equipment assets pledged as security for liabilities.


38

14. Intangible assets


Computer Software

Total

$000 $000

Cost at beginning of year 1,292 1,292

Additions 82 82

Cost at end of year 1,374 1,374

Accumulated amortisation at beginning of year 1,214 1,214

Amortisation 81 81

Accumulated amortisation at end of year 1,295 1,295

Net carrying value at end of year 79 79

Amortisation 81 81

Amortisation charged on assets held by Te Puni Kōkiri 8 8

Total amortisation expense 89 89


Work in Progress

Computer Software

Total

$000 $000 $000

Cost at beginning of year 15 1,292 1,307

Additions (15) - (15)

Cost at end of year - 1,292 1,292

Accumulated amortisation at beginning of year - 1,157 1,157

Amortisation - 57 57

Accumulated amortisation at end of year - 1,214 1,214

Net carrying value at end of year - 78 78

Amortisation - 57 57

Amortisation charged on assets held by Te Puni Kōkiri - 19 19

Total amortisation expense - 76 76

There are no restrictions over the title of the Māori Trustee’s intangible assets, nor are any intangible assets

pledged as security for liabilities.


39

15. Creditors and other payables

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Creditors and accruals 403 310 389 303

Income in advance 2,662 - 2,662 -

Sundry creditors 912 363 912 363

Employee benefits 487 - 487 -

Te Puni Kōkiri creditor - 66,781 - 66,781

S 460A loans liability - 1,354 - 1,354

GST payable 238 99 238 99

4,702 68,907 4,688 68,900

Creditors and other payables are non interest bearing and are normally settled on 30 day terms, therefore

the carrying value approximates their fair value.

Income in advance was the Crown appropriation for the April to June 2010 quarter that was received on 31

March 2010.

Sundry creditors represents the liability for funds held on behalf of Agribusiness and Ahuwhenua as at 31

March 2010.

Employee benefits were recognised in Te Puni Kōkiri statement of financial position at 31 March 2009

because the Māori Trust office employees were Te Puni Kōkiri employees.

Amounts owing to Te Puni Kōkiri for reimbursement of expenses to the Crown and the section 460A loans

were resolved with the Māori Trustee Amendment Act 2009 legislative reform on 1 July 2009.


40

16. Reconciliation of net operating surplus with net cash flows from operating activities

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Net surplus 79,092 547 79,092 527

Add/(deduct) non cash items

Amortisation of premiums/discount (20) (794) (20) (794)

Depreciation 113 79 113 79

Amortisation of intangible assets 81 57 81 57

Impairment losses/(gains) 254 (11) 254 (11)

Share of associate earnings (37) (56) - -

Add/(deduct) movements in working capital

(Increase)/decrease in debtors and other

receivables629 (119) 625 (119)

Increase/(decrease) in creditors and other payables (64,206) 7,460 (64,212) 7,424

Net cash flows from operating activities 15,906 7,163 15,933 7,163

17. Commitments

Leasing and operating commitments

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Less than 1 year 351 366 351 366

1 year to 2 years 326 353 326 353

2 years to 5 years 848 923 848 923

Greater than 5 years 934 1,206 934 1,206

2,459 2,848 2,459 2,848

18. Contingent Liabilities

Unclaimed Monies (1963 to 1993)

A contingent liability of $7,644,000 (2009 $7,644,000) relates to beneficiary monies paid out by the Māori

Trustee under statutory direction to the Māori Education Trust, the Māori Purposes Fund Board and the New

Zealand Māori Council. The Māori Trustee will be liable to make payment to beneficiaries who establish an

entitlement in the future.

Compensation Leases

The Māori Trustee administers leases where compensation is payable to the lessee on expiry or resumption

of a lease.

In some of these cases the Māori Trustee is required by the Māori Vested Land Administration Act 1954 to

advance to the owners the funds required to meet compensation payments upon resumption, as the level of

funds required to be set aside during the course of the lease is insufficient. The value of advances which the

Māori Trustee may be required to make upon resumption of a lease is not quantifiable at this time.


41

In other cases where the lease provides for compensation to be paid to the lessee, and there is insufficient

funds held on behalf of the owners, the Māori Trustee is not required by statute to provide these funds.

However the Māori Trustee is often called upon to provide the finance required. The value of advances is

not quantifiable at this time.

Other Contingent Liabilities

The Māori Trustee has received or is aware of potential claims totalling $200,000 (2009 $200,000). The

Māori Trustee denies liability and will defend the claim.

19. Financial instruments

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Financial assets

Cash and cash equivalents 20,264 10,299 20,169 10,177

Debtors and other receivables 715 1,493 714 1,489

Held to maturity investments 52,116 47,713 52,116 47,713

Loans and receivables 5,146 4,213 5,146 4,213

78,241 63,718 78,145 63,592

Financial liabilities

Creditors and other payables 4,702 68,907 4,688 68,900

Fair Value

The fair values of all investments, excluding company shares and held to maturity investments, is equivalent

to the carrying amount disclosed in the Māori Trustee’s statement of financial position.

The General Purposes Fund held to maturity investments had a current market value of $53.5 million as at

31 March 2010 (2009 $47.2 million).

The investment in company shares has no quoted market price and it is not practicable to estimate a market

value due to certain restrictions that may exist if divestment were to occur. All current estimates, taking into

account these possible restrictions, indicate a market value in excess of the current value as recorded in

these financial statements.

Financial instruments risk

The Māori Trustee’s activities expose it to a variety of financial instrument risks, including market risk,

credit risk and liquidity risk. The Māori Trustee has a series of policies to manage the risks associated with

financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow

any transactions that are speculative in nature to be entered into.

Market Risk

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because

of changes in exchange rates. The Māori Trustee has no foreign denominated financial instruments and,

accordingly, has no exposure to currency risk.


42

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in interest rates. The Māori Trustee is exposed to interest rate risk on those financial

instruments that have a floating interest rate.

The investments that have floating or variable interest rates or coupon payments are as follows:

Group Parent

2010 2009 2010 2009


Cash and cash equivalents sensitivity analysis

Weighted average effective interest rate (%) 2.47% 2.98% 2.47% 2.98%

1% increase/(decrease) in interest rates would

increase/(decrease) interest income and equity ($000) 96 28 96 28

Held to maturity investments sensitivity analysis

Weighted average effective interest rate (%) 3.32% 6.98% 3.32% 6.98%

1% increase/(decrease) in interest rates would

increase/(decrease) interest income and equity ($000) 70 48 70 48

Credit risk

Credit risk is the risk that a third party will default on its obligation to the Māori Trustee, causing a loss to be

incurred. Credit risk arises from the financial assets of the Māori Trustee which comprise cash and cash

equivalents, debtors and other receivables, loans and receivables and held to maturity investments.

The Māori Trustee’s maximum credit exposure from potential default is the carrying amount of these

instruments.

Debtors and other receivables

There are no significant concentrations of credit risk with respect to debtors.

Loans and receivables

The Māori Trustee has made advances to stations, properties and clients and issued mortgages under

Section 32 of the Māori Trustee Act 1953 and Section 248 of the Māori Affairs Act 1953.

Advances under Section 32 of the Māori Trustee Act 1953 may or may not be secured. Where a security is

taken, the security may be a first or second mortgage security over a freehold interest in land, a memorial of

charge over land or a debenture.

Advances under Section 248 of the Māori Affairs Act 1953 may or may not be secured. Where a security is

taken, the security is a memorial of charge over land.

The Conversion Fund was abolished by the Māori Affairs Amendment Act 1987 which effectively vested the

Conversion Fund assets in the Māori Trustee. Conversion Fund loans are “deemed advances” and are not

secured but the Māori Trustee owns shares in the land in which the Conversion Fund loans relate.

Security for other financial instruments is either unobtainable due to the nature of the instrument or is not

sought due to the instrument being invested in high credit quality organisations.

The Māori Trustee has made impairment provisions for advances and Conversion Fund loans.


43

Held to maturity investments

The financial instruments are spread amongst a number of financial institutions to minimise the risk of

default. The Māori Trustee and the Māori Trustee Investment Committee apply the following parameters

when investing money to minimise exposure to credit risk:

• 85% of fixed income securities are to have an ‘A’ grade rating or better

• For New Zealand Government stock, State Owned Enterprise and Local Authority stock and bank

items, no single security shall exceed 10% of the fixed income portfolio

• For corporate and capital notes, no single security shall exceed 5% of the fixed income portfolio.

Liquidity risk

Liquidity risk is the risk that the Māori Trustee will not have sufficient funds to meet commitments as they fall

due.

The Māori Trustee monitors forecast cash requirements daily. Surplus funds are invested for terms

appropriate for the expected cash requirements. A minimum buffer is maintained which provides access to

funds in excess of the forecast cash requirements.

The Māori Trustee applies the following parameters when investing money to minimise exposure to liquidity

risk:

• A target of 10% of the portfolio is to be invested in money market accounts with a maximum term of

364 days

• A target of 75% to be invested in fixed income securities

• A target of 15% to be invested in equity securities.

The table below analyses the Māori Trustee’s financial liabilities into maturity groupings based on the

remaining period from end of year to the contractual maturity date.

Group Parent

Less than 6

months6-12 months 1-5 years

Less than 6

months6-12 months 1-5 years

$000 $000 $000 $000 $000 $000

Creditors and other payables

31 March 2010 4,702 - - 4,688 - -

31 March 2009 68,907 - - 68,900 - -

20. Related parties

Crown

The Crown is a major source of revenue for the Māori Trustee. Appropriation revenue from the Crown

of $7,987,000 (2009 $nil) and Crown capital funding of $3,520,000 (2009 $nil) arises from a Funding

Agreement between the Māori Trustee and the Minister of Māori Affairs. The funding provided by the Crown

will enable the Māori Trustee to fulfil statutory and other common law obligations. The statement of service

performance reports against the outputs detailed in the Funding Agreement. Payment for these services is

managed by Te Puni Kōkori on behalf of the Crown.


44

Common Fund

Māori Trustee manages the Common Fund and this management relationship confers significant influence

on the funds. The Māori Trustee is entitled to charge the Common Fund a management fee under section

26A of the Māori Trustee Amendment Act 2009. A management fee of $322,000 was charged for the nine

months to 31 March 2010 (2009 $nil) and was included in sundry receivables at 31 March 2010.

Prior to the Māori Trustee Amendment Act 2009 coming into force, the Māori Trustee earned $799,000

Common Fund investment income for the three months to 30 June 2010 (2009 $3,285,000 for 12 months)

and paid $399,000 interest to the Common Fund for the three months to 30 June 2010 (2009 $1,182,000 for

the 12 months).

Statutory Role

The core function of the Māori Trustee under legislation is to hold land as trustee or administer land as agent

for Māori land owners. The Māori Trustee has a statutory entitlement under the Māori Trustee Act to charge

fees and commissions for managing trusts, agencies and properties, providing accounting and tax services

and taking instructions for special investments. For the year ended 31 March, the Māori Trustee earned

$1,871,000 fees and commissions (2009 $1,659,000).

The Māori Trustee also administers other entities under statute, for example the Māori Soldiers Trust,

including Hereheretau station.

The Māori Trustee is able to lend monies under the Māori Trustee Act. Loans made to Common Fund trusts,

agencies and properties and to staff are at market interest rates, unless the loan is advanced to replace a

Conversion Fund loan.

Te Māori Lodges Limited (TML)

Te Māori Lodges Limited (TML) is a wholly owned subsidiary of the Māori Trustee. TML is a holding

company which holds shares in Quantum Limited. During the year the Māori Trustee provided management

services to TML for $18,000 (2009 $40,500).

The Māori Trustee has an advance to TML at 31 March of $57,540,000 (2009 $55,637,000). The provision

for impairment against the advance at 31 March was $57,540,000 (2009 $55,637,000).

The Māori Trustee charged interest on the TML advance of $1,903,000 (2009 $ 4,411,000). The interest

income was capitalised.

Intercompany transactions and balances have been eliminated in the Group financial statements.

Putake Ltd

Māori Trustee has an investment in the associate Putake Ltd. The company invests in enterprises that

create greater Māori wealth, commercial understanding, transparency, corporate governance and choice.

John Paki, Māori Trustee, is a director of Putake Ltd. He received no remuneration or other benefits in 2010

(2009 $nil).


45

Ahuwhenua Trophy

The Māori Trustee’s role is administrator for the Ahuwhenua Trophy BNZ Māori Excellence in Farming Award

2010 - Dairy. This role involves invoicing and receiving sponsorship and paying the related expenditure.

Maui Tangohau, Deputy Māori Trustee, is the project director of the organising committee.

The Māori Trustee received $nil (2009 $20,000) fees for the services provided.

Tekau Plus

Tekau Plus is an agribusiness project. It is a collaboration between Māori Trustee, Poutama Trust and

Federation of Māori Authorities (FOMA) and is funded by way of a contract with Te Puni Kōkiri. John Paki,

Māori Trustee, was appointed chair of the Tekau Plus Board in October 2009. The Māori Trustee’s role is

as administrator. Management fees for services and board meeting fees of $32,000 were received (2009

$45,000).

The objective of Tekau Plus is for selected cluster businesses to foster Māori participation in global

agribusiness, with the aim of 10 clusters earning $10 million in foreign exchange in 10 years.

An independent review completed by PricewaterhouseCoopers in January 2010 found that all money paid by

Te Puni Kōkiri had been accurately accounted for and that the accounting records are consistent between Te

Puni Kōkiri and Tekau Plus.

The Board of Tekau Plus subsequently requested a Value for Money Review, which was conducted by

PricewaterhouseCoopers (who have recently done some work summarising the financial position and

outputs of Tekau Plus) and two independent reviewers – Deputy State Services Commissioner, Tony

Hartevelt and Māori businessman, Whaimutu Dewes. The findings of the review were released on 28 June

2010.

Key Management Personnel

The Māori Trustee maintains an interests register. There were no payments made or payments received

from entities that key management personnel have control or significant influence over, other than the

entities noted above.

Some key management personnel and family members are owners of land managed by the Māori Trustee in

the ordinary course of business and have account balances with the Common Fund. Distributable income

paid on account balances was calculated in compliance with legislation.

Group Parent

2010 2009 2010 2009


$000 $000 $000 $000

Key management personnel benefits

Salaries and other current employee benefits 958 1,185 958 1,185

Post employment benefits 25 32 25 32

983 1,217 983 1,217

Key management personnel include members of the senior management team established in 2010. This

team has fewer members than the 2009 operations committee, resulting in a reduction in key management

personnel benefits as compared to 2009.


46

21. Remuneration of employees

Parent

2010

Actual

$000

Total remuneration paid or payable

$100,000 - $109,999 2

$120,000 - $129,999 2

$130,000 - $139,999 1

$140,000 - $149,999 2

$250,000 - $259,999 1

8

During the year ended 31 March 2010 no employees received compensation in relation to cessation, totalling

$nil (2009 $nil).

22. Post reporting date events

The following events occurred after 31 March 2010:

• The Māori Trustee has entered into an agreement to subscribe for 10 million ordinary shares in Miraka

Ltd, subject to certain conditions being met. The company is building a wholemilk processing plant,

commencing operations in August 2011.

• The Māori Trustee entered into an agreement to purchase a building for $4,750,000.

There have been no other significant post reporting date events.


47

In terms of the Māori Trustee Act 1953, the Māori Trustee is responsible for the preparation of the Common

Fund and Special Investment Accounts financial statement and for the judgements made in it.

The Māori Trustee is responsible for the establishment and maintenance of a system of internal controls

designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

In the Māori Trustee’s opinion the financial statement as at 31 March 2010 set out on pages 50 to 52 fairly

reflects the financial position of The Common Fund and Special Investment Accounts.

John E Paki

Māori Trustee

30 July 2010


48

To the readers of The Māori Trustee’s Common Fund and Special Investment Accounts financial

statements as at 31 March 2010

The Auditor-General is the auditor of the Māori Trustee’s Common Fund and Special Investment Accounts.

The Auditor-General has appointed me, Phil Kennerley, using the staff and resources of Audit New Zealand,

to carry out the audit of the accounts of the Common Fund and Special Investment Accounts on her behalf

for the year ended 31 March 2010.

Unqualified Opinion

In our opinion, the financial statements of the Common Fund and Special Investment Accounts on pages 50

to 52:

• Comply with generally accepted accounting practice in New Zealand; and

• fairly reflect the financial position of the Common Fund and Special Investment Accounts as at 31 March

2010.

The audit was completed on 30 July 2010, and our opinion is expressed as at that date.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Māori Trustee

and the Auditor, and explain our independence.

Basis of Opinion

We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the

New Zealand Auditing Standards.

We planned and performed the audit to obtain all the information and explanations we considered necessary

in order to obtain reasonable assurance that the financial statements did not have material misstatements,

whether caused by fraud or error.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s

overall understanding of the financial statements. If we had found material misstatements that were not

corrected, we would have referred to them in our opinion.

The audit involved performing procedures to test the information presented in the financial statements. We

assessed the results of those procedures in forming our opinion.

Audit procedures generally include:

• determining whether significant financial and management controls are working and can be relied on to

produce complete and accurate data;

• verifying samples of transactions and account balances;

• performing analyses to identify anomalies in the reported data;

• reviewing significant estimates and judgements made by the Māori Trustee;

• confirming year-end balances;


49

• determining whether accounting policies are appropriate and consistently applied; and

• determining whether all financial statement disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements.

We evaluated the overall adequacy of the presentation of information in the financial statements. We

obtained all the information and explanations we required to support our opinion above.

Responsibilities of the Māori Trustee and the Auditor

The Māori Trustee is responsible for preparing the financial statements in accordance with generally

accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial

position of the Common Fund and Special Investment Accounts as at 31 March 2010. The Māori Trustee’s

responsibilities arise from the Māori Trustee Act 1953.

We are responsible for expressing an independent opinion on the financial statements and reporting that

opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001.

Independence

When carrying out the audit we followed the independence requirements of the Auditor-General, which

incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand.

Other than the audit, we have no relationship with or interests in the Common Fund and Special Investment

Accounts.

Phil Kennerley

Audit New Zealand

On behalf of the Auditor-General

Wellington, New Zealand


MattersRelatingtotheElectronicPresentationoftheAuditedFinancialStatements

ThisauditreportrelatestothefinancialstatementsoftheMāoriTrusteeCommonFundandSpecialInvestmentAccountsfortheyearended31March2010includedonMāoriTrustee’swebsite.MāoriTrusteeisresponsibleforthemaintenanceandintegrityofMāoriTrustee’swebsite.WehavenotbeenengagedtoreportontheintegrityofMāoriTrustee’swebsite.Weacceptnoresponsibilityforanychangesthatmayhaveoccurredtothefinancialstatementssincetheywereinitiallypresentedonthewebsite.

Theauditreportrefersonlytothefinancialstatementsnamedabove.Itdoesnotprovideanopiniononanyotherinformationwhichmayhavebeenhyperlinkedtoorfromthefinancialstatements.Ifreadersofthisreportareconcernedwiththeinherentrisksarisingfromelectronicdatacommunication,theyshouldrefertothepublishedhardcopyoftheauditedfinancialstatementsandrelatedauditreportdated30July2010toconfirmtheinformationincludedintheauditedfinancialstatementspresentedonthiswebsite.

LegislationinNewZealandgoverningthepreparationanddisseminationoffinancialinformationmaydifferfromlegislationinotherjurisdictions.

50

2010 2009

$000 $000

Special Investment Accounts

Investments under specific direction

Cash and cash equivalents 7,726 10,430

Government stocks - 100

Company debentures, stocks and bonds 181 187

Total investments under specific direction 7,907 10,717

Funded by

Specific deposits on behalf of Māori clients 7,907 10,717

Common Fund

Investments

Cash and cash equivalents 14,581 15,987

Government stocks 4,483 6,973

Company debentures, stocks and bonds 39,013 27,633

Total investments 58,077 50,593

Funded by

Proceeds from trust and agency activities 54,175 46,830

Capital gains from Common Fund investment 2,540 2,503

Stations 780 1,260

Accounts payable 582 -

Total funds 58,077 50,593

The accompanying notes form part of this financial statement.


51

Statement of Accounting Policies

Reporting entity

The Māori Trustee is a corporation sole defined under the Māori Trustee Act 1953 (“the Act”) and is domiciled

in New Zealand.

This financial statement is prepared in terms of Section 23 of the Act for the following separate funds:

• The Common Fund

• Special Investment Accounts.

The Common Fund represents monies received by the Māori Trustee under Sections 23 and 25 of the Act,

in trust for persons entitled to receive them. All Common Fund monies are guaranteed by the Crown under

Section 27 of the Act.

Special Investments are investments made in accordance with Section 24 of the Act.

The Māori Trustee administers the monies in Special Investment Accounts and the monies in the Common

Fund in accordance with the Act.

Section 26B (2) of the Māori Trustee Amendment Act 2009 requires the Māori Trustee’s annual report to

report on the total amount of distributable income, less management fees, paid on money held in trust in the

Common Fund.

The financial statement for The Common Fund and Special Investment Accounts is for the year ended 31

March 2010 and was approved for issue by the Māori Trustee on 30 July 2010.

Basis of preparation

Statement of compliance

In November 2004 the Accounting Standards Review Board (ASRB) approved the adoption of New Zealand

equivalents to International Financial Reporting Standards (NZ IFRS). At that time, the ASRB announced the

adoption of NZ IFRS would be mandatory for reporting entities with accounting periods beginning on or after

1 January 2007.

In September 2007 the ASRB announced that for certain small to medium size entities the mandatory

adoption of NZ IFRS had been delayed. These entities can continue to apply New Zealand Generally

Accepted Accounting Principles (NZ GAAP) as prescribed by New Zealand Financial Reporting Standards

and Statements of Standard Accounting Practice.

The Common Fund and Special Investment Accounts meet the criteria for deferral of NZ IFRS due to not

being publicly accountable and their size. The financial statement has been prepared in accordance with NZ

GAAP, consistent with previous periods.

Measurement base

The financial statement has been prepared on a historical cost basis, except for the revaluation of certain

items as detailed in the specific accounting policies.

Functional and presentation currency

The financial statement is presented in New Zealand dollars, which is the Māori Trustee’s functional

currency. All values are rounded to the nearest thousand dollars ($000).


52

Significant accounting policies

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash at bank and short term deposits with an original

maturity of three months or less that are readily convertible to known amounts of cash and which are subject

to an insignificant risk of changes in value.

Government stocks

Government stocks are stated at the lower of cost, adjusted for the amortisation of any premium or discount,

or net realisable value. The premium or discount is amortised over the life of the investment on a straight line

basis.

Company debentures, stocks and bonds

Company debentures, stocks and bonds are stated at the lower of cost, adjusted for the amortisation of

any premium or discount, or net realisable value. The premium or discount is amortised over the life of the

investment on a straight line basis.

Financial instruments

Financial instruments include cash and cash equivalents, Government stocks, and company debentures,

stocks and bonds. On initial recognition, financial assets are measured at cost. Financial assets are

derecognised when the right to receive cash flows from the financial assets have expired or been transferred.

The financial instruments are subject to credit risk, whereby a third party will default on its obligation to the

Māori Trustee, causing a loss to be incurred.

Income tax

The Common Fund has been issued a certificate of exemption from the Inland Revenue Department. Income

tax on special investments is deducted at source where the Māori client is not exempt from income tax.

Goods and Services Tax (GST)

The Common Fund and the Special Investment Accounts are not registered for GST.

Changes in accounting policies

There have been no changes in accounting policies. All accounting policies have been applied on a basis

consistent with other years.

1. Distributable income

Nine

months to

31 March

2010 2009

$000 $000

Income earned on Common Fund investments 1,576 -

Māori Trustee management fee (322) -

Distributable income 1,254 -

Tax credits (260) -

Net distributable income paid on Common Fund accounts 994 -

The Māori Trustee Amendment Act 2009 requires distributable income to be paid to Common Fund account

holders. Distributable income is the Common Fund investment income net of the Māori Trustee management

fee. Distributable income has been calculated for the nine months to 31 March 2010.


Maori Trustee


2 0 1 0

maori trustee annual report 2010

Documents

new mori trustee organisation

mori trustee common

mori trustee amendment

clients assets

john e pakimori trustee

clients land

pm2minister of mori

te tau