Hauraki Rail Trail Charitable Trust ANNUAL REPORT
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1 Hauraki Rail Trail Charitable Trust ANNUAL REPORT July June 2015
2 HAURAKI RAIL TRAIL CHARITABLE TRUST July 2015 CONTENTS Review 2 1 Governance and Management 3 2 Maintenance of the Cycleway 3 3 Trail Marketing and Promotion 5 4 Stakeholder Relationships 6 5 Key Projects Financial 7 7 Budgeted Estimates 8 8 Financial Statements for the year end 30 June
3 HAURAKI RAIL TRAIL CHARITABLE TRUST July 2015 The Annual Report provides an overview of the activities carried out by the Rail Trail Charitable Trust (HRTCT) for the last financial period July 2014 June Governance and Management As at the close of the financial year the Trust Board was represented by the following Trustees: Teena Cornes Sandra Goudie Julie Bubb Joss Karu Wati Ngamane Greg Thorne Chairperson and Matamata Piako District Council Representative Thames Coromandel District Council Representative Hauraki District Council Representative Ngati Tamatera and Ngati Tara Tokanui Iwi Representative Nagti Maru Iwi Representative Ngati Rahiri Tumutumu Iwi Representative In October 2014 Sandra Goudie replaced Warren Male as the Thames Coromandel District Council Representative and Julie Bubb replaced John Tregidga as the Hauraki District Council Representative. Further changes occurred in April 2015 when Sandra Goudie resigned from her position as Trustee, effective from the end of April. Julie Bubb has also signalled her intention to resign from her position as Trustee on the Board. Julie will continue as a Trustee until the Hauraki District Council has secured a replacement. Teena Cornes has signalled her desire to resign from the position as Chairperson of the Trust Board. A new Chairperson is expected to be elected at the July 2015 Annual General Meeting. Board meetings were held on average bi-monthly over the course of the financial year, with good attendance and representation throughout. The capability and capacity of the Trust has been a discussion topic during the financial year. At the time of writing this report, the Settlors are considering various options for a new Trust model and are taking into consideration issues such as: identifying the desired skill set and expertise of governing trustees the opportunity to co-opt members with specific subject matter expertise onto the Trust Board reviewing administrative and management support roles. The Trust Board is expecting the Settlors to reach a decision within the next few months. 2
4 The Trust employed a part-time administrator in September 2014 to replace the outgoing part-time administrator. The 2014 individual employment agreement between the Trust and the incumbent stipulates an average of 24 hours per week to carry-out administrative duties for the Trust. The financial operations of the Trust have continued to be managed by the accounts department of Hauraki District Council. Policies and Procedures To comply with the Audit NZ findings (year end 2014), the Trust has developed the following policies, effective from February Policy: Conflict of Interest Conflict of Interest Register Policy: Sensitive Expenditure Policy: Fraud Prevention At the request of the Trust Board, all of the above policies have a review date of August To comply with Health & Safety in the Workplace, the Trust has created an Incident / Accident / Near Miss Report and Investigation Form. The form follows the New Zealand Cycle Trail Incorporated guidelines. To provide a framework for the Trust moving forward and to promote discussion, the following draft documents have been created for the Trust. Strategic Plan (Purpose, Vision & Strategic Goals) Trail Maintenance Schedule Financial Delegated Authorities Policy Financial Delegated Authorities Register The Trustees will receive and consider the above documents at the next Trust Board meeting. 2. Maintenance of the Cycleway The Trust is responsible for maintaining all of the Cycleway to the standard required for it to be included in the Nga Haeranga / National Cycleway Network. Maintenance of the Cycleway requires routine maintenance activities, for example, fixing fences and removing graffiti plus larger maintenance projects such as trail wide spraying for weeds. The day-to-day trail maintenance activities for the financial year have been undertaken by a Maintenance Contractor, George Udy. Due to personal commitments, George Udy resigned from the position as at 31 st May George Udy was employed on a part-time fixed-term contract at 8 hours per week. 3
5 Following the resignation of the Maintenance Contractor, the Trust is currently considering its options for on-going maintenance of the Cycleway. In June an Expressions of Interest from Maintenance Contractors was placed in the Hauraki Herald and the Piako Post. Eleven applications have been received to date. One option is to continue with the current model and employ a part-time contractor to carry out routine maintenance on the Cycleway and utilising an external company for larger projects. Another option is to source a company who can carry out both routine and larger scale maintenance projects. The current funding model will be taken into consideration when making the decision. The Service Request Reports received via the Hauraki District Council indicates that the majority of concerns and complaints relate to issues of noxious weeds and overgrown vegetation on or adjacent to the trail. Other requests highlight concerns about signage, dog control and motorbikes on the trail. Regular comments are received from users of the trail regarding the lighting and uneven trail surface in the Karangahake tunnel. Discussions between the Hauraki District Council, DOC and the Trust are on-going in an effort to try and resolve the issues raised by some members of the public. Some users of the trail regularly comment on the section of the trail surface between Paeroa and Te Aroha which has, in places, a grade of metal that is not conducive to a safe and enjoyable ride. A trial sweep of a section of this part of the trail was carried out in April but was unsuccessful. The Trust is now considering options to remedy the issue. It may well be that the metal will need to be removed and replaced with the same grade of metal that has been laid on other trail legs. The Trust utilises the services of professional maintenance contractors to carry out nonroutine trail activities, such as trail-wide spraying. A trail wide weed control spray was carried out during April by Urban Plus Weed sprayers (UPW). This activity is currently conducted two times per year by UPW. However, weed re-growth would indicate that a trail wide spray is needed to be carried out three times per year, particularly in the Waikino to Waihi sections. HELP Waihi personnel commenced work in May clearing privet and wattle and purchasing native plants for re-vegetation along the trail between Kaimanawa Roads and Robinson Road. This project was able to proceed following the receipt of a $4, grant from the Waikato Community Conservation Fund. During early June the Waikato Regional Council (WRC) undertook a project to control the woolly nightshade on the trail between Te Moananui Marae Road and Bridge Street paper Road in the Karangahake. The WRC chose to use Urban Plus Weed sprayers to carry out the control work as UPW are familiar with the area and are registered chemical applicators. Other than the projects mentioned above, no other major maintenance works have been carried out on the trail since July 2014, the beginning of this financial period. It is noted, however, that the following maintenance projects will need to be addressed in the not too distant future: Re-surfacing of some sections of the Paeroa to Te Aroha section of the trail North of Lawrence Road sharp/steep corner improvements Dean s Crossing resurface a section of trail following damage by stock from the neighbouring dairy farms, north of Wharepoa Road. 4
6 Retaining walls built to secure a slip on the trail located at the western end of the Karangahake Gorge tunnel. Ramp filling and associated excavator works A review of the signage at Crown Bridge and Mangaiti Station The above issues will need to be reviewed, costed and funding sought from external agencies. The trail continues to be popular and is expected to all signs indicate continued growth in the foreseeable future. 3. Trail Marketing and Promotion The trail has received positive media attention through a number of magazines and articles over the course of the year. In September 2015 a dedicated A5 magazine was published by T & T Publishing Limited in conjunction with GCRNZ (HRT). The magazine has proved to be a very popular resource and a new edition is currently being developed with input from HRT and the Trust Board. Also proving popular with locals and visitors to the region, is the AA Traveller, New Zealand Cycle Trail Guide This magazine features 23 cycle routes across the country, including the Hauraki Rail Trail. A new edition of the magazine is currently being coordinated by the NZCT and the AA. HRT and the Trust have responded to the NZCT with content changes in anticipation of the release of the new version of the magazine. The local information and I-site centres, including Destination Coromandel continue to actively promote the Hauraki Rail Trail as a regional draw-card. The imminent move of Destination Coromandel and the Thames I-site to new premises on the corner of Mary and Queen Streets in Thames is a positive step. The Marketing Plan has been updated by HRT as per the Management Agreement Principal Trail Operator between Great Cycle Rides New Zealand Ltd and Hauraki District Council. At the request of the Trust Board, the content of the plan is being peer-reviewed by Chris Adams, an ex-trustee and marketing professional. The Principal Trail Operator continues to provide the Trust with a monthly report. The report covers the following topics on a monthly basis: Marketing report Website enquiries Facebook report Trail inspection report Bookings schedule for the month The monthly trail inspection reports provide the Trust Board with useful additional information regarding maintenance activities to be carried out on the trail. The Principle Trail 5
7 Operator also conducts an annual In-depth trail inspection, for the purpose of recording slow wear and tear to the trail and associated assets. The 2015 annual inspection occurred in early June and the report highlights the need to regularly maintain the trail surface and to keep on top of weed control, particularly noxious weeds across all legs of the trail. The Trust has 34 active Accommodation Providers. In February the Trust approved an Accommodation Agreement received from Uppekha Healing Centre & Retreat, Waihi and also received a general Concession Agreement from Jolly Bikes. Jolly Bikes is located in Thames and users of the trail can hire electric bikes via the HRT website. The electric bikes are less than 300W and are proving a popular alternative to non-powered bicycles. 4. Stakeholder Relationships The trail has received positive media attention through a number of magazines and articles over the course of the year. In the last year an emphasis has been placed on building relationships with key stakeholders such as: Tourism NZ ATEED I-Site personnel (Waihi, Paeroa and Thames) NZ Cycle Trails Destination Coromandel HELP Waihi Sport Waikato Department of Conservation Hauraki Rail Trail personnel The three Settlors To improve communication between the Trust and the three Councils, the Trust Administrator has been invited to attend the Tri-Council Staff Representative project team meetings. These meetings are usually held 2-3 weeks prior to the Trust Board meeting. 5. Key Projects As mentioned previously in this report, the future direction and focus of the Trust is expected to be determined by the Settlors within the next few months. In the meantime, the Trust will continue to focus on the following key projects: Kaiaua to Kopu leg The Trust will continue to seek additional sources of funding for the future implementation of the Kopu to Kaiaua section of the trail. The development of the K2K section of the trail is expected to enhance the trail s appeal as a multi-day ride. 6
8 Although sourcing and securing funding for the Kopu to Kaiaua section is a priority goal, the Trust will also focus on securing funding for special projects and funding towards trail maintenance activities. Commercial Concessions and Partnership Programme review Identifying potential opportunities for future partnership programmes with local businesses and enterprises to attract additional funding is a priority for the Trust moving forward. Vegetation Management Strategy A long-term plan for the enhancement of the trail through strategic restoration and amenity plantings is a work in progress. The Trust will focus on obtaining additional advice and input from vegetation management specialists to progress the Vegetation Management Strategy. Interpretational Signage Strategy The trail now has in place town orientation signage and trail kilometre marker posts, however, a strategy to consider interpretation signage has yet to be developed. Friends of the Trail A process for formalising and coordinating the involvement of outside parties through a Friends of the Trust / Trail network is on-going. 6. Financial The Trust s finances continue to be administered by Hauraki District Council personnel and are currently manually prepared. The Trustees are aware that the Trust will need to consider the acquisition of an e-accounts package such as is available on the Cloud and to prepare the accounts through that. Budgeted Estimates The draft HRTCT Budget forecast for the YE 2016 to YE 2022 can be viewed on pages The Trust continues to seek sources of income and funding for the Trail to cover both current day-to-day operations as well as its future development. At this stage the Trust remains largely reliant on the shortfall funding provided bi-annually by the three participating District Councils in accordance with the Underwriting Agreements (HDC and MPDC) and the Memorandum of Understanding (TCDC). Potential income to the Trust from Commercial Commissions is showing slow growth. It is expected that, once funding is secured, the Kopu 2 Kaiaua extension will offer users a multiday ride and thus increase income to the Trust from commercial commissions. Financial Statements for the year end 30 June 2015 The pre-audit Financial Statements for the year end 30 June 2015 have been prepared for the Trust by the Hauraki District Council. A final audit opinion from Audit NZ is due to be received mid to late December. The Financial Statements can be viewed on pages 9-17 of the Annual Report. 7
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12 THE HAURAKI RAIL TRAIL CHARITABLE TRUST Financial Statements for the year ended 30 June 2015 DRAFT 11
13 STATEMENT OF FINANCIAL POSITION As at 30 June 2015 Actual Actual Note $ $ ASSETS Current Assets Cash and Cash Equivalents 2 217, ,647 Trade and Other Receivables 3 333, ,315 Prepayments 11,459 11,901 Total Current Assets 562, ,863 Current Liabilities Trade and Other Payables 4 545, ,577 Income in Advance Payroll Liabilities 5 3,317 1,140 GST (6,370) 5,173 Total Current Liabilities 542, ,890 NET ASSETS 20,082 17,973 Represented by: EQUITY Retained Earnings 20,082 17,973 TOTAL EQUITY 20,082 17,973 STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2015 Actual Actual $ $ Balance at 1 July 17,973 50,960 Net Surplus (Deficit) 2,109 (32,987) Balance at 30 June 20,082 17,973 The accompanying notes form part of these statements. 12
14 STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2015 INCOME Actual Budget Actual Note $ $ $ Underwriting 6 176, , ,939 Commissions 36,384 76,500 34,423 Grants / Funding 50,000 - Official Partners Programme 5,000 - Fundraising ,000 2,250 Leases (Sub Leases) 1,517 1,050 - K2K Feasibility Project Funding 244, ,000 - TOTAL INCOME 458, , ,612 EXPENDITURE Audit Fees 12,355 12,000 20,257 Personnel 55,216 40,000 30,627 Administration 2,681 5,232 6,744 Trustee Expenses and allowances 8,386 12,000 13,151 Communications 7,500 - Fees & Commissions 24,334 51,000 22,937 Trail Operations Lease Reimbursement 43,608 37,000 36,490 Repairs & Maintenance 64, ,000 66,027 Other Trail Expenses 76 50,000 7,833 K2K Feasibility Project 244, ,000 - Total Trail Operations 351, , ,350 Other Professional Services 1,500 4,000 4,532 Trust Establishment Costs Total Other 1,500 4,000 4,532 TOTAL EXPENSES 456, , ,599 SURPLUS/(DEFICIT) BEFORE TAX 2,109 0 (32,987) Income Tax Expense SURPLUS/(DEFICIT) AFTER TAX 2,109 0 (32,987) Other Comprehensive Income $ - $ - $ - Total Comprehensive Income 2,109 0 (32,987) 13
15 The accompanying notes form part of these statements. NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Accounting policies for the year ended 30 June 2015 REPORTING ENTITY The Hauraki Rail Trail Charitable Trust is a Public Benefit Entity (PBE). It is the governance entity for the Hauraki Rail Trail and includes one representative from each of Hauraki District Council(HDC), Matamata-Piako District Council (MPDC) and Thames-Coromandel District Council (TCDC), (the councils) and three Iwi representatives selected from Iwi that have Mana Whenua status over the route of the Hauraki Rail Trail. The Hauraki Rail Trail Charitable Trust is a Council Controlled Organisation (CCO) as defined under section 6 of the Local Government Act 2002, by virtue of 50% of the votes at Trust meetings being indirectly controlled by councils. The Trust has been exempted as a CCO during the financial year. These financial statements for the period ended 30 June 2015 were approved by the Board of Trustees on xxxx The nature and scope of the Hauraki Rail Trail Charitable Trust s activities under the Trust Deed are relatively narrow and limited to governance of the Hauraki Rail Trail. BASIS OF PREPARATION Statement of Compliance The financial statements of the Trust have been prepared in accordance with generally accepted accounting practice in New Zealand (NZ GAAP). They comply with approved International Public Sector Accounting Standards (IPSAS) as appropriate for public benefit entities. The Trust is a Tier three Not-for-profit Public Benefit Entity within the Public Benefit Entity tiers. The Trust qualifies on the basis that it is not publicly accountable and has expenditure less than $2,000,000. The Trust has taken all advantage of Tier 3 reporting concessions. Measurement Base The financial statements have been prepared on a historical cost basis. Functional and Presentation Currency The financial statements are presented in New Zealand dollars. The functional currency of The Hauraki Rail Trail Charitable Trust is New Zealand dollars. Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted 14
16 In May 2013, the External Reporting Board issued a new suite of PBE accounting standards for application by public sector entities for reporting periods beginning on or after 1 July The Trust has applied these standards in preparing the 30 June 2015 financial statements. In October 2014, the PBE suite of accounting standards was updated to incorporate requirements and guidance for the not-for-profit sector. These updated standards apply to PBEs with reporting periods beginning on or after 1 April The Trust will apply these updated standards in preparing its 30 June 2016 financial statements. The Trust expects that there will be minimal or no change in applying these updated accounting standards. Changes in accounting policies The only change in accounting policies during the year has been the adoption of IPSAS. This has had no effect on the Surplus/Deficit reported. Comparatives The comparative figures are for the 12 month period ended 30 June Comparatives for 2015 are made against the adopted budget for the period end 30 June SIGNIFICANT ACCOUNTING POLICIES Revenue Revenue is measured at fair value of consideration received. The main sources of revenue are from underwriting agreements with the councils and commission from bookings through the rail trail website. Leases Operating leases An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straightline basis over the lease term. Goods and Services Tax All items in the financial statements are presented exclusive of goods and service tax (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 recoverable from, or payable to, the IRD is included as part of receivables or payables in the statements of financial position. Commitments and contingencies are disclosed exclusive of GST. Income Tax The Trust is a registered charity and is exempt from income tax. Accordingly, no provisions have been made for income tax. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, and other short term highly liquid investments with original maturities of three months or less. 15
17 Trade and other receivables Short-term debtors and other receivables are recorded at their face value, less any provision for impairment. Trade and other payables Trade and other payables are recognised at fair value. 16
18 Actual Actual $ 2 Cash & Cash Equivalents Cash at bank and in hand 217, ,647 Cash & cash equivalents 217, ,647 3 Trade & Other Receivables Trade Receivables 2,840 1,396 Related parties receivables 331, ,919 Net Trade Receivables 333, ,315 4 Trade & Other Payables Trade Payables 13,579 40,444 Related parties payable 531, ,133 Total Trade Payables 545, ,577 5 Payroll Liabilities Payroll Liabilities 3,317 1,140 Total Payroll Liabilities 3,317 1,140 17
19 6 Related Party Disclosure The Hauraki Rail Trail Charitable Trust is a Council Controlled Organisation of the Hauraki (HDC), Matamata- Piako (MPDC) and Thames-Coromandel (TCDC) District Councils. Key Management Remuneration The total cost consists of Trustee Meeting Allowances of $6,200. (2014, $8,900) Trustees The trust also reimbursed trustees for $2,186 of expenditure. (2014, $4,251) Hauraki District Council During the year HDC provided underwriting funding of $94,586 (2014 $78,817). At balance date the trust owed HDC $531,560 (2014, $223,133) and HDC owed the trust $190,377 (2014 $131,535). The increases are mainly attributable to the costs and recharge of the Kaiaua to Kopu Feasibility Project. Matamata-Piako District Council During the year MPDC provided underwriting funding of $25,796 (2014 $21,495). At balance date MPDC owed the trust $0 (2014 $0). Thames-Coromandel District Council During the year TCDC provided underwriting funding of $55,800 (2014 $38,627). At balance date TCDC owed the trust $140,761 (2014 $ $383). The increase is mainly attributable to the recharge of 50% of the costs relating to the Kaiaua to Kopu Feasibility Project. 7 Commitments The Hauraki Rail Trail Charitable Trust has no capital or operating commitments as at 30 June 2015, (2014 $0). 8 Contingent Liabilities There are no contingent liabilities as at 30 June 2015, (2014 $0). 18
20 9 Contingent Assets The Hauraki (HDC), Matamata-Piako (MPDC) and Thames-Coromandel (TCDC) District Councils (the councils) are party to a trust deed which formed the Hauraki Rail Trail Charitable Trust (the Trust). The deed, signed on 2 March 2012, allows the Trust to own, operate, maintain, repair, develop and facilitate the use and enjoyment of a rail trail within the region. Upon formation of The Trust, it also entered into a Management Agreement to manage the rail trail. As part of that agreement, the Trust is required to obtain income from the rail trail to provide funding for its management obligations. If the Trust is unable to obtain sufficient income from the rail trail to meet its management obligations, HDC, MPDC and TCDC have agreed to contribute additional funding to the Trust (as set out in the management agreement). If HDC is notified that a shortfall exists, then HDC is required to pay to the trust the lesser of: One third of the shortfall specified in the relevant Trust s notice; or the following amount. $94,586 for the year ended 30 June 2015; or $94,586 for the year ended 30 June 2016; or $94,586 for the year ended 30 June If MPDC is notified that a shortfall exists, then MPDC is required to pay the trust the lesser of: One third of the shortfall specified in the relevant Trust s notice; or the following amount. $25,796 for the year ended 30 June 2015; or $25,796 for the year ended 30 June 2016; or $25,796 for the year ended 30 June If TCDC is notified that a shortfall exists, then TCDC is required to pay the trust the lesser of: One third of the shortfall specified in the relevant Trust s notice; or the following amount. $55,800 for the year ended 30 June 2015; or $57,500 for the year ended 30 June 2016; or $60,000 for the year ended 30 June Events after Balance Date There are no significant events after balance date. 19
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