Chairman's Report
The Directors are pleased to report that after a particularly challenging year, Manaaki Whenua achieved noteworthy success in its science business and a satisfactory financial performance.
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Manaaki Whenua’s kaupapa is to deliver excellent science for a sustainable New Zealand and, at the same time, maintain a sound commercial performance. About 60% of our revenue is from the Foundation for Research, Science and Technology’s purchasing of our science. Recently the Foundation unveiled a new funding model framed around a set of long-term, national objectives. We welcome, firstly, the shift in emphasis from high contestability to increased collaboration, which we believe will yield better value; and secondly, the additional accountability on us to achieve longer term, nationally important outcomes.
To pilot the new model, the Foundation has selected ‘Natural Ecosystems’, the area of research that represents most of Manaaki Whenua’s business. We trust the Foundation to progress carefully in this area so as not to jeopardise the immense knowledge and experience that resides in Manaaki Whenua.
Our research continues to create wealth for New Zealand, even though this does not always benefit our own balance sheet. In an independent economic evaluation by the Foundation, our possum research had the highest benefit:cost ratio of five areas, including hi-tech examples.
The company’s financial result was pleasing with a 4.5% pre-investment return on shareholders’ funds, from gross revenues of $45.166 million. New Foundation funding for urban and business sustainability initiatives helped offset reduced funding for soil science, remote sensing and pest ecology. The cuts to soils research underscore the inherent problems of the present funding model, namely the uncertainty created by short-term contestable funding and the consequences for staff retention and sound investment decision-making.
This year our Chief Executive, Dr Andy Pearce, advised us of his intention to step down in July 2005. Andy has led Manaaki Whenua since inception and the Board attaches great importance to the appointment of his successor. To help clarify future directions for the new CEO and Manaaki Whenua, the Board and senior managers completed a 50-year visioning exercise. The Board, staff and external stakeholders have met regularly to scope various options for New Zealand’s future and how these scenarios might affect Manaaki Whenua. We look forward to sharing the results of this work next year.
A highlight of the year was the opening, by the Prime Minister Rt Hon Helen Clark, of Manaaki Whenua’s new building on the Tamaki Campus of the University of Auckland. The building is an excellent example of innovative commercial construction that embraces the principles of sustainable development. Although the cost exceeded our initial projections, it was close to that for a conventional building of similar nature and size. Manaaki Whenua is, perhaps, the only organisation that could take the risk of proving this was possible.
In December 2003, Ian Donald completed his term as Chairman. The company is indebted to his wise counsel and strong leadership of the Board. We welcomed Willie Te Aho and Jill White to the Board during the year, and Alastair Lawrence since balance date.
On behalf of my fellow Directors, I thank Andy Pearce and his staff for their excellent contribution this year.
Rob Fenwick
Chairman of Directors
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