Landcorp - Crown Ownership Monitoring Unit

INFORMED FARMINGCHIEF EXECUTIVE'S REPORT CONTINUEDMORE INFORMATIONWe are embracing thebenefits of electronicidentification for moreregular and more reliabledata gathering and hence,better animal and herdmanagement.Refer INFORMED LIVESTOCKMANAGEMENT, pages 24–26.Operating ConditionsClimate and pasture growth varied widelyacross the regions during 2009/10. Summerdrought settled on Northland early andLandcorp moved quickly to disperse dairycows from this region to suitable propertiesfurther south. In the central North Island,production was impacted by unseasonal coldin spring, including snowfall in October, andthen by a cold, dry autumn. Meanwhile, eastcoast regions of both North and South Islandshad conditions more favorable than for someyears through much of the growing season.Generally, the South Island had an excellentseason as evident in record lambing andcalving rates on Landcorp properties.The New Zealand Dollar rose against mostmajor currencies during the year, with thetrade-weighted index in June 2010 up byaround 10 per cent on its level of 12 monthspreviously. At one stage, the index was up byaround 12 per cent with the Kiwi then valuedabove US72 cents.Farm SalesLandcorp completed the sale of threeproperties and two other farm blocks during2009/10, producing a pre-tax profit of $8.7million. The three complete properties –Sweetwater, Te Karae and Te Raite – weretransferred to the Crown on 30 June 2010for later inclusion in Treaty of Waitangisettlements with five Far North Iwi. To enablethis sale, the Crown waived the land salesmoratorium that was imposed on Landcorpunder the Protected Lands Agreement ofSeptember 2007. Landcorp has leased backTe Karae and Te Raite for ongoing farmmanagement, and it has become a sharemilkeron Sweetwater. Iwi are expected to acquirethe three when relevant legislation is passed,probably in 2012.The two farm block sales were part of the largeAratiatia and Rotomahana properties, bothnear Taupo. These two sales were exempt fromthe moratorium under the original terms ofthe 2007 agreement.Balance SheetLandcorp made significant progress ondebt reduction during 2009/10, therebystrengthening its balance sheet and reducinginterest expenses. At 30 June 2010, totaldebt was down to $149.4 million (June 2009:$181.8 million) and the debt to-debt-plusequityratio was 11.0 per cent (June 2009:11.1 per cent). Debt reduction puts Landcorpin a stronger position to make strategicacquisitions of property as opportunities arise.Total assets were $1.52 billion at 30 June2010, down from $1.67 billion at the previousbalance date due mainly to a decline in thevalue of Landcorp’s land and buildings. Thecompany reduced capital expenditure overallduring the year but continued to invest inprojects with strategic importance to futuregrowth in revenue and profitability.SubsidiariesLandcorp Estates LimitedThe property development subsidiary earned agross profit of $982,000 for 2009/10 but afterexpenses, interest and tax, it showed a net lossof $220,000. The result, better than budget,was reasonable given New Zealand’s economicrecession and low level of demand for sections.Almost all gross profit was from section saleson the Lakeside Terraces development, Taupo.On all other projects, sales were minimalor Landcorp Estates decided not to activatesubdivision consents previously granted.Subdivision consent has been sought for a newproject at Eyrewell in Canterbury while a new10