Community Plan 2009-2019

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Section 7: Council-Controlled Organisations

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The Local Government Act 2002 requires the Council to include in the Community Plan information on Council-controlled organisations, i.e. those organisations over which the Council has a 50 per cent or more shareholding or level of governance control.

This includes information on:

The Council is a shareholder or has an ownership interest in the following Council-controlled organisations:

• New Plymouth Airport Joint Venture
• Four forestry joint ventures
• Taranaki Investment Management Limited
• Venture Taranaki Trust
• Yarrow Stadium Trust
• Tasman Farms Limited (and its subsidiary Van Diemen's Land Company)

New Plymouth Airport Joint Venture

Responsibility

Peter Handcock (Manager Property Assets)

Nature and scope of activity

The New Plymouth Airport is a 50:50 joint venture between the Crown and the Council and is therefore deemed to be a Council-controlled organisation. The Council holds the aerodrome operator's certificate and operates the airport on behalf of the joint venture.

The operation covers the provision, maintenance and operation of the land and facilities, including the runways and the terminal building, but excludes the control tower and navigational aids which are provided, maintained and operated by the Airways Corporation of New Zealand (ACNZ). Land not required for aircraft operations and the terminal is leased for hangars, aviation-related businesses and grazing.

The continued involvement of central government in the New Plymouth Airport is currently under review. Whereas the previous government had a policy of quitting its joint venture agreements, the current coalition has yet to clearly define their policy but the Ministry of Transport (as Crown agent) has recently indicated a desire for a more active role in monitoring the management of the airport. The joint venture ownership has minimal effect on the airport operation.

The provision of airport infrastructure is essential to enhance the growth and economic development of the district and the Taranaki region and is an important aspect of residents' quality of life. While legally required to be operated as a business, the charges are set to cover the operating costs with only sufficient surplus as to cover periodic extraordinary maintenance. No rates funding is currently required although a recent refurbishment of the runway and aprons has resulted in the need to raise loan financing of $3.4m. At the time of writing the actual financial impact was yet to be discussed with the Crown partner, so the financial plan reflects that impact at this stage based on best estimates.

Key annual objectives and performance indicators

1. To provide airport facilities to serve the needs of the Taranaki region:

• To maintain facilities to avoid any diversion or cancellation of scheduled flights other than for weather or airline problems.
• To meet all operating and maintenance costs from revenue.
• Continue to prepare a Business Plan for the airport's future development needs.

2. To operate the New Plymouth Airport in full compliance with the approved operating procedures so as to achieve a clean audit report from the Civil Aviation Authority of New Zealand.
3. Determine new landing charges.

Significant policies and obligations on ownership and control of Council-controlled organisations

The joint venture was deemed to be a Council-controlled organisation rather than created as such. It is essentially seen as a self-funding operation providing an essential service to the district and wider region. No formal board structure.

Financial Plan

	Budget 2008/09 ($)	Projected* 2009/10 ($)	Projected* 2010/11 ($)	Projected* 2011/12 ($)
Operating expenditure	1,494,700	1,643,000	1,673,000	1,702,000
Operating revenue	1,430,000	1,420,000	1,480,000	1,503,000
Capital expenditure	(64,700)	(223,000)	(193,000)	(172,000)

Note. Aircraft movements and passenger numbers are driven by external factors and airport costs and revenue follow. An Airport Master Plan was adopted by the Council and forms the basis for completing a long-term business plan. The current financial plan therefore reflects the current operation and anticipated developments but may well require subsequent modification.

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Forestry Joint Ventures

Responsibility

Steve Taylor (General Manager Support Services)

Nature and scope of activity

The Council has four joint venture forestry developments that have varying levels of Council ownership (55 to 60 per cent) and are therefore deemed to be Council-controlled organisations. The woodlots will complement the harvest regime of the Council's own forestry investment activities.

Forest plantations have been established under the following agreements:

Tarata Ngatimaru Pukehou Joint Venture (60 per cent) 6.8 hectares

Oakura Farms Limited Joint Venture (60 per cent) 37.7 hectares

McKay Family Joint Venture (56.5 per cent) 83.5 hectares

Duthie Joint Venture (54.82 per cent) 22.7 hectares

A total of 150.7 hectares of forests are managed under joint venture agreements in which the landowner provides land and property related inputs, the Council provides management and tending programmes for the crop and both parties share the returns from the forest harvest on an agreed ratio of respective inputs (revenues will not flow until 2014 at earliest).

The Council's longer term objective for these investments is to review its involvement after each joint venture is harvested.

Key annual objectives and performance indicators

1. Complete all programmes outlined in the Forest Management Plans and Agreements.
2. Report annually in compliance with agreements.

Significant policies and obligations on ownership and control of Council-controlled organisations

Were originally set up to augment the harvest rotation for Council-owned forestry. The Council will currently retain the joint ventures to harvest then review their future position. No formal board structures.

Financial Plan

	Budget 2008/09 ($)	Projected 2009/10 ($)	Projected 2010/11 ($)	Projected 2011/12 ($)
Operating expenditure	25,100	26,000	27,000	28,000

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Taranaki Investment Management Limited

Responsibility

Steve Taylor (General Manager Support Services)

Nature and scope of activity

Taranaki Investment Management Limited (TIML) is a hundred per cent owned company with independent directors. The Council contracts TIML for the provision of an investment management role in respect of the Council's Perpetual Investment Fund, and an advisory role in respect of the Council's other investments in the Airport and various forestry ventures.

Key annual objectives and performance indicators

1. To meet its obligations in respect of the management of the Perpetual Investment Fund as set out in a contract with the Council.
2. To act for or assist the Council in its role as a diligent, constructive and enquiring shareholder/investor in respect of its other investments.
3. To protect and enhance the income streams from, and the value of, the investments.

Performance indicators

To meet the above objectives through the following means:

1. Provide a quarterly report to the shareholder providing the information outlined in the contract in respect of the Perpetual Investment Fund and the Council's other investments.
2. Provide timely advice to the shareholder on any significant developments that may have an impact on the investments in terms of either the income stream to the Council or the value of the Council's investments.
3. Review the Council's other investments where requested and advise on its position with regards to hold/growth/divestment strategies.

Significant policies and obligations on ownership and control of Council-controlled organisations

Originally set up in 2000 as a purely advisory company to the Council in its various equity-based investments. Now manages the Council's Perpetual Investment Fund while still retaining an advisory role on other investments. Formal board structure with normal appointments made by the Council.

Financial Plan

	Budget 2008/09 ($)	Projected 2009/10 ($)	Projected 2010/11 ($)	Projected 2011/12 ($)
Revenue	1,592,500	1,616,500	1,662,000	1,702,300
Net profit	0	0	0	0

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Venture Taranaki Trust

Responsibility

Kate Macnaught (Manager Corporate Strategy & Policy)

Nature and scope of activity

Venture Taranaki is a Council-controlled organisation whose governing board is appointed by New Plymouth District Council.

The purpose of Venture Taranaki, as set out in its statement of intent, is 'to drive and facilitate the creation of economic wealth for Taranaki and beyond'.

To achieve its purpose, Venture Taranaki undertakes a range of activities to improve the performance of the local economy. These activities include, but are not limited to:

1. Market and promote the region as a great place to live, work, learn and play.
2. Development of an enterprise culture in the region.
3. Provision of business support services to attract, retain and grow businesses.
4. Encourage, facilitate, recognise and celebrate business excellence.
5. Support development capital into the area.

New Plymouth District Council has three contracts for service with Venture Taranaki as outlined in the economic Council activity page.

These are:

1. Economic development services for New Plymouth District.
2. Tourism promotion services for the Taranaki region, purchased under a joint contract with South Taranaki District Council and Stratford District Council.
3. Major events funding.

Performance targets

Venture Taranaki has multiple performance targets set out in its statement of intent. A copy of the full statement of intent is available for inspection at New Plymouth District Council offices, libraries and service centres. These targets are summarised in the Economic Growth significant activity pages of this plan.

Significant policies and obligations on ownership and control of Council-controlled organisations

Venture Taranaki Trust (VTT). The Council controls VTT by appointing its trustees. This is to ensure the necessary independence, public credibility and specialised governance that the trust needs in order to be effective in delivering economic development programmes, while retaining accountability to the district's community.

Financial Plan

	Budget 2008/09 ($)	Projected 2009/10 ($)	Projected 2010/11 ($)	Projected 2011/12 ($)
Operating expenditure (NPDC funded)	2,691,000	2,640,000	2,729,000	2,805,000

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Yarrow Stadium Trust

Responsibility

Frank Versteeg (General Manager Strategy and Policy)

Nature and scope of activity

The Yarrow Stadium Trust is a charitable trust and a Council-controlled organisation under the Local Government Act 2002.

The trust was established in November 1999 to own and operate the then new Yarrow Stadium (the revamped former Rugby Park).

A review of event venues within New Plymouth District was undertaken in 2003 in conjunction with a wider review of economic development and tourism promotion agencies. As a result it was decided that operational functions related to the event venues, including Yarrow Stadium, would transfer to the Council.

The transfer to New Plymouth District Council of operational functions relating to the event venues has been completed. The Yarrow Stadium Trust has, however, been retained in amended form as a 'holding' trust until such time as all the assets of the trust are transferred to the Council.

Objectives

The trust operates with the intention of retaining the ownership of the remaining trust assets until such time as these are transferred to the Council.

The objective is to transfer the assets as soon as practicable, in compliance with all legal requirements, so that the trust can be disestablished.

Performance target

To complete the transfer of assets to the Council and disestablish the trust.

The current situation is that the transfer will require a change in legislation and this is unlikely to occur over the next three years. Consequently the possibility of a transfer has not been reflected in this plan.

It is noted however that the stadium is already managed and operated by the Council (under an agreement with the Trust) and that the associated costs are budgeted for in the 2009-2019 Community Plan.

Significant policies and obligations on ownership and control of Council-controlled organisations

To retain ownership of trust assets until such a time as these can be transferred to Council ownership.

Financial Plan

	Budget 2008/09 ($)	Projected 2009/10 ($)	Projected 2010/11 ($)	Projected 2011/12 ($)
Operating revenue	162,000	162,000	162,000	162,000
Operating expenditure (excluding depreciation)	62,000	62,000	62,000	62,000
Loan repayment	100,000	100,000	100,000	100,000

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Tasman Farms Limited

Tasman Farms Limited (TFL) is a public company 74.33 per cent owned by the Council. TFL has a 98.14 per cent shareholding in its subsidiary Van Diemen's Land Company (VDL). This summary information is drawn from its last annual report for 2007/08 and a first statement of intent is yet to be provided to TIML for 2009/2010 given the fact TFL was purchased in February 2009! The Council's ownership stake is part of the Perpetual Investment Fund. This summary will be updated if time permits  in light of the adopted statement as the information must firstly be released to the market by the company. This comment will also apply to VDL.

Principal activities

TFL and its subsidiaries operate predominantly in the breeding and grazing of livestock. It has a balance date of 31 May.

Highlights

Dairy farm operations

Number of Farms	2008	2007
Managed	1	1
Lower order sharefarmed	19	20
50:50 sharefarmed	3	2
Total	23	23

Facts at a glance

	2008 $000	2007 $000
Sales revenue	32,299	23,887
Earnings per share	3.11	0.3c
Net surplus/(deficit) after tax and minorities	2,086	218
Shareholders’ funds	149,399	60,125
Net debt and minority interests	103,382	62,125
Total assets	252,781	122,250

Livestock owned

Livestock owned by the dairy operations decreased during the year and the beef operations dairy beef finishing enterprise stock numbers declined due to the limited availability of bull calves with the high milk payout. The sheep operations continued to reduce in numbers.

	2008	2007	% Change
Dairy cattle including replacements	22,678	23,962	(6%)
Dairy beef bulls and beef cattle	12,284	13,113	(7%)
Sheep	1,562	4,896	(68%)

Shares

TFL is not listed on either the New Zealand or Australian stock exchange. It is however recorded on unlisted under the stock listing code 'tasman'. Unlisted is an internet-based securities trading and communications facility that provides a cost-efficient, easy way for small to medium sized companies to trade their shares and keep their shareholders informed.

Board operations and membership

The board comprises six directors: a non executive chairman and five non executive directors. The company's constitution sets out policies and procedures on the operation of the board, including the appointment and removal of directors.

The board normally meets six times a year including once a year for an extended strategic planning meeting.

Board committees

The board has one formally constituted committee detailed as follows.

Audit and Risk Committee

The committee reviews the group's financial statements and announcements, liaises with the external auditors, and monitors the accounting system and financial controls. The committee also has delegated authority to make Treasury decisions on behalf of the board provided they are consistent with approved Board Treasury Policy.

Role of the board

The Board of Directors of Tasman Farms Limited the ('Company') is elected by the shareholders to supervise the management of the Company and its subsidiary companies (the 'Group'). The board establishes the Group's objectives, annual budgets and the overall policy framework within which the business is conducted. The board monitors management's performance relative to these goals and plans, and has delegated the day-to-day mangement of the Group to the general manager.

The board has the obligation to protect and enhance the value of the assets of the Company. It achieves this through the approval of the appropriate corporate strategies, with particular regard to portfolio composition and return expectations, including the approval of transactions relating to acquistiions and divestments and capital expenditures above delegated authority limits, financial and dividend policy and the review of performacne against strategic objectives.

Committees established by the board review and analyse policies and strategies, usually developed by management, which are within their terms of reference. They examine proposals and, where appropriate, make recommendations to the full board. Committees do not take action or make decisions on behalf of the board unless specifically mandated by prior board authority to do so.

The board supports the concept of the separation of the role of chairman from that of general manager. The chairman's role is to manage the board effectively, to provide leadership to the board, and to interface with the general manager.

The composition and terms of reference of the board, the chairman, the committees and the general manager are reviewed annually by the board. The chairman annually assesses the effectiveness of the board and its committees.

The chairman of the board, with the assistance of the general manager, establishes the agenda for each board meeting. Each board member is able to suggest items for the agenda.

Change of control

In late 2007 New Plymouth District Council (NPDC), based in the Taranaki region of New Zealand, launched a takeover bid for TFL, the parent company of the VDL. In February 2008 this bid was finalised with NPDC purchasing some 74.33 per cent of TFL.

This change of control heralded some significant changes to both the governance and the management of TFL and the VDL

A number of members of the Board of TFL and VDL resigned and a number of new directors were appointed.

The directors of VDL determined that it was important for the management and administration of VDL to return to Smithton Tasmania and on 31 July 2008 the Timaru offices of TFL and VDL closed. A new management team is in place and will move into purpose built office facilities in Smithton in late September. There has been a positive response from the Tasmanian farming community to the return of management of VDL to Tasmania.

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