Chairman's review
 |
| Rob Fenwick. Image - Tim Bauer, for Living Earth |
“A watershed year marked by change ”
This was a watershed year for Manaaki Whenua marked by change in several significant areas—much of which required a high level of Board involvement. At year-end, the company had secured more than half its core FRST research revenue under new longer term contracts with the Foundation for Research, Science and Technology (FRST). Executive time required to achieve this was a contributing factor in our overall financial performance. Gross revenue at $48 million, while a record, was $2 million under budget. Unfortunately, $362,000 of revenue from Sirtrack could not be recognised before balance date due to delayed dispatch. Return on Average Equity was 3.4% against target of 6.7%.
Chief Executive changes
As advised last year, Andy Pearce stood down after leading the company for 13 years—the longest serving Chief Executive of all New Zealand’s CRIs. He has had a hugely positive influence on the culture and performance of Manaaki Whenua. The founding Chairman (John Kneebone), a past Director (Kevin Prime) and the Parliamentary Commissioner for the Environment (Morgan Williams) join us in this report to pay tribute to Andy’s achievements.
Appointing a new Chief Executive is one of the most important and time-consuming tasks for any Board. A 50-year visioning exercise was valuable for clarifying the future direction for Manaaki Whenua and hence, the critical success factors and leadership skills required to take us there. A special sub-committee —Julian Raine, Denise Church, and distinguished scientist and former Director, Michael Walker—managed the selection process. Warren Parker’s appointment is an excellent outcome after a global search. Manaaki Whenua goes forward with the Board’s total confidence in Warren’s ability to maintain the organisation’s science capability, and to expand the leadership and growth strategies.
Sustainable building design
 |
| Staff planting the atrium courtyard at our new Tamaki building. Image - Ross Beever . |
Perhaps the most graphic illustration of our commitment to sustainable development is our new building, which was opened last year on the University of Auckland’s Tamaki Campus. Our goal was to provide an exemplar to the commercial construction industry through innovative design incorporating sustainability principles, particularly energy and water conservation, and waste management. However, many aspects of construction and design were untried, and so the project represented considerable risk to Manaaki Whenua. In 2005, the Board deemed it appropriate to review the whole process, including design and project management, cost control, and monitoring the building’s performance against expectations. A special subcommittee of directors, Anne Urlwin and Alastair Lawrence, with input from external consultants and Audit New Zealand, carried out the review.
The 80-page Audit New Zealand review acknowledges our overall achievement. It also notes the overall cost is in line with a similar sized conventional building, and that the indicative performance of the building is favourable in terms of energy, water and waste. We hope the construction sector will also find value in learning from this review.
The shift to more devolved funding
A very significant issue during the year was negotiating new funding arrangements with the Foundation for Research Science and Technology (FRST). FRST decided to pilot the Outcome Based Investments (OBIs) approach to long-term funding with the Natural Ecosystems research portfolio. This meant about 60% of Manaaki Whenua’s core FRST research revenue income was at risk.
After an exhausting round of submissions and negotiations, Manaaki Whenua secured more gross revenue than before, with much of it committed for 8–12 years. The quality of our submissions and the high degree of end-user support for them, were key elements in this success.
The Board has always been strongly supportive of Andy Pearce’s appointment to the FRST Board in 1999 and his handling of inherent conflicts of interest. Andy was not able to participate in important negotiations around the OBI funding. This represented a potential risk, which was mitigated through the efforts of COO— Research (Ian Whitehouse), Research Manager (David Penman) and the Chairman. The teams of scientists and key managers who devoted months of work on submissions are to be warmly congratulated.
Notwithstanding the challenges, the OBI process was a positive learning experience for both parties. The Directors remain supportive of more devolved science funding, which is more constrained in New Zealand than in most western countries.
Good governance in a devolved RS&T sector
The success of devolution across research, science and technology organisations will ultimately depend on good governance processes around the OBIs. The Board appointed Dr Rod East to chair the governing bodies for the three OBIs that Manaaki Whenua leads. Rod is a highly regarded conservation scientist, with extensive experience in managing complex science programmes. He will report regularly to Manaaki Whenua’s Board of Directors.
Looking forward, we recognise there are risks—for example, an inability to meet cost increases over the 8–12 years, or the inability to reach agreement on shared outcomes. CRI Boards could also be at risk because, while they have effectively devolved much of their power, they are ultimately still responsible for the actions of OBI governing bodies.
Statement of Corporate Intent and Business Plan
 |
| Rob Fenwick (Chairman), Hon Marian Hobbs (Minister for the Environment), and Maggie Lawton (Operations Manager, Manaaki Whenua) at the Green Ribbon Awards. Image - MFE |
Each year, Manaaki Whenua produces a Statement of Corporate Intent (SCI) and Business Plan, both of which must be signed off by its shareholding ministers (see Directors' report). The procedure establishes business priorities, and sets targets for financial and non-financial performance. Ministerial approval was delayed in 2004/05, largely because of debate over the national value of Manaaki Whenua’s public good science, provisions for future dividends given the expected economic constraints of our business, and concern over salaries for our scientists (as signalled in our 2004 Annual Report). We worked through these issues with CCMAU, but all parties agreed it was not a desirable governance process to miss the deadline date for ministerial signoff .
We are pleased to report that, by commencing very open dialogue with CCMAU and Ministers much earlier, the SCI and Business Plan for 2005/06 were approved in good time.
Recognition and awards
Manaaki Whenua’s reputation as a leader in sustainable development and corporate responsibility continues to be recognised. The Board is committed to maintaining that position.
 |
| Green Ribbon Award. Image - Birgit Rhode. |
Manaaki Whenua’s 2004 annual report was awarded the best environmental report, and shortlisted for best annual report by a government entity, by the Institute of Chartered Accountants of New Zealand (ICANZ)—the fifth consecutive year we have won an award. The Report also received a silver award at the Australasian Annual Reporting Awards (ARA). Our 2003 Annual Report was ranked 15th among sustainable development reports globally by Standard & Poors, SustainAbility and United Nations Environmental Performance (UNEP) in their 2004 survey.
Our new sustainable building on the Tamaki campus, Auckland, won the Ministry for the Environment’s Green Ribbon Award for urban environmental management, and at the Property Council of New Zealand awards, it won the EECA Energy Wise Commercial Building Award.
Manaaki Whenua was the inaugural winner of Vision Manawatu’s Business Heart Award for outstanding corporate responsibility.
The Integrated Catchment Management project, based in Nelson, won the cultural heritage section of the Tasman District Council’s environmental awards for the Travelling River exhibition—a “creative collision” between art, science and resource management.
In addition, a number of staff won individual awards in recognition of their research achievements and contribution to science. The most outstanding of these are listed in this reoprt. We congratulate all these staff .
Board matters
 |
| Above & below: The Directors’ field trip to Craigieburn. Images - Ian Whitehouse. |
 |
Field trips
The Board continued its practice of undertaking at least one overnight science field trip each year as these provide valuable experience and insights into Manaaki Whenua’s research. The trips are an excellent opportunity for researchers to interact with senior managers and Directors in informal settings. This year, the Board visited Craigieburn beech forests to look at projects on carbon sequestration and the relationships between carbon management and biodiversity.
Changes to the Board
At the start of the year, we welcomed Alastair Lawrence, a merchant banker and member of the Takeovers Panel, to the Board. At year-end, we farewelled deputy chair Julian Raine, who has made a very significant contribution during six years on the Board. His fellow Directors thank him for his deep interest in the company, and the practical and commercial experience he provided. In July 2005, post-balance date, Graeme Boyd, Chief Executive of Comvita, joined the Board.
Sirtrack Board
We appointed Julian Raine to take over as Chairman of Sirtrack Ltd, our wholly-owned wildlife tracking subsidiary, following the departure of Andy Pearce. Mr Dean Joiner was also appointed as a Sirtrack Director. He has a background in international large-scale, high-tech manufacturing enterprises, including a long-term senior executive role at Fisher and Paykel.
Staff
The whanau of Manaaki Whenua endured a most challenging year fighting for and winning around 60% of their FRST revenue in a highly-contested bidding round, with FRST piloting the new OBI approach. While the outcome was a triumph, the stakes were very high and the stress on staff was manifest. The Directors wish to record their profound appreciation of the dedication of all staff and managers under such trying, uncertain conditions. We extend our congratulations to everyone for a job well done!
Chairman of Directors
Ko tēnei mea te hōhonutanga o te tikanga Māori ka whāia tonutia e Manaaki Whenua ki tōna mutungakore. Koianei te kaupapa i whakatakototia mai te tīmatanga, kua pupuritia mai rā anō.
Landcare Research’s commitment to Māori concerns in all that it does will continue unabated. This was the philosophy established at the very beginning, and it will perservere.