ANNUAL REPORT2014 – 2015

FRONT COVER AND INSIDE FRONT COVER IMAGES: PEEL REGIONAL CANCER CENTRE, ONTARIO, CANADA. DESIGNED BY FARROW PARTNERS ARCHITECTS.

The building uses computer-designed and manufactured glulam beams to create the tree-like shapes, reaching for the sky and natural light. The structure contributes to the feeling of wellbeing and hope amongst many patients at the centre.

Rotorua has a goal of becoming a wood-first city, incorporating excellence in design and innovative use of timber materials that have a positive impact on our community. The peel regional cancer centre exemplifies the values in which we aspire to, as well as the use of cleverly engineered wood products.

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Grow Rotorua’s key purpose is to provide a sustainable

future economic platform on which Rotorua, its people and

its businesses can grow and prosper.

Grow Rotorua is an independently governed Council Controlled

Organisation that was formed in June 2012 for a three year

term in order to implement the Rotorua Sustainable Economic

Growth Strategy.

Year one was about setting the vision and strategic direction

for Rotorua, with the following year about researching and

developing opportunities and initiatives. This past year has

been about consolidating the work Grow Rotorua has been

involved with to-date, implementing growth strategies

and focusing on translating all the background work into

investment projects.

The vision for both Grow Rotorua and the Rotorua Lakes

Council is to develop a vibrant economy which is attractive to

visitors, business investors and as a place to live. This will be

achieved through active partnerships between central and local

government, the commercial sector, iwi and members of the

community. Grow Rotorua’s strategy direction is closely aligned

with the Rotorua 2030 vision and 2016 goals.

This Annual Report details the number of investment

opportunities that exist for potential investors, particularly

in the space of tourism, agribusiness, wood processing and

education. Rotorua is a unique region on a world scale and

there has been a renewed investment confidence in the district,

particularly over the past year, underpinned by a local economy

that has a reasonable level of diversity and exposure.

This report is set out by the key sectors listed above,

highlighting the work done to-date, what’s in the pipeline,

investment opportunities and the potential impact on the

local economy. Geothermal is not included in this report as

it is seen as more of an enabling resource, with a large body

of information already developed and available on the Grow

Rotorua website.

Grow Rotorua will continue to focus on finding growth

opportunities on a strategic scale that will create real change for

Rotorua, by leveraging key assets and continuing to foster key

industry and community partnerships.

INTRODUCTION

CELEBRATING ROTORUA - LAKESIDE CONCERT

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CONTENTS

ReferenceGlossary of acronyms

Grow Rotorua Limited GRL

Council Controlled Organisation CCO

Statement of Intent SOI

Economic Development

AgenciesEDAs

Education New Zealand ENZ

Ministry for Primary Industries MPI

Ministry of Business Innovation

and EmploymentMBIE

Bay of Plenty Regional Council BOPRC

Rotorua Lakes Council RLC

Primary Growth

Partnership FundPGP

Tourism Growth

Partnership fundTGP

Hot Springs Alliance Group HSAG

Foreign Direct Investment FDI

Engineered Wood Products EWP

New Zealand Trade

and EnterpriseNZTE

Nitrogen discharge allowance NDA

Closed Loop Dairy Systems CLDS

Global Spa and Wellness Summit GSWS

Australasian Spa Association ASPA

Cross-laminated timber CLT

Young Enterprise Scheme YES

Rotorua Chamber of Commerce RCOC

Rotorua Sustainable

Economic Growth StrategyRSEGS

Chairman/CEO reports . . . . . . . . . . . . . . . . . . . . . . 6

Meet our team . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Future Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Economic Development . . . . . . . . . . . . . . . . . . . . 10

Highlights for 2015 . . . . . . . . . . . . . . . . . . . . . . . . 12

Statement of intent . . . . . . . . . . . . . . . . . . . . . . . 13

The Rotorua economy . . . . . . . . . . . . . . . . . . . . . 14

Megatrends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Investment overview . . . . . . . . . . . . . . . . . . . . . . 17

Investment portfolio . . . . . . . . . . . . . . . . . . . . . . . 18

Maori economy overview . . . . . . . . . . . . . . . . . . . 19

Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Education and skilled talent . . . . . . . . . . . . . . . . . . 26

Wood processing . . . . . . . . . . . . . . . . . . . . . . . . 32

Activated Carbon. . . . . . . . . . . . . . . . . . . . . . . . . 37

Agribusiness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Director’s Declaration . . . . . . . . . . . . . . . . . . . . . . 54

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Definitions of economic development

In the space of economic growth, there are overarching themes of increasing job

numbers, capital investment, Maori participation and ongoing economic impact.

Within that overall direction, there are three distinct categories Grow Rotorua

works within relating to different activities and strategies. These include:

BUSINESS ATTRACTION

This strategy involves targeted

and sustained marketing

campaigns towards both specific

companies/sectors as well as

more generic exposure. The

aim is to attract businesses to a

region for competitive business

advantages or to expand local

networks, supported by lifestyle

opportunities for staff. The key is

to target sectors where the region

has competitive advantages,

as well as those that align with

the region’s vision. A Business

Attraction strategy is currently

under development by Rotorua

Lakes Council in conjunction with

local business leaders.

ECONOMIC DEVELOPMENT

This creates the most conducive platform

and environment possible for further

investment to occur. Several organisations

have a role to play in this space, including

central and local government, and economic

development agencies. Often some form

of intervention by these organisations will

help unlock growth. The key is to identify the

local and regional investable opportunities

that would create scale growth and also

the barriers that need to be overcome for

that growth to proceed. It is also about

understanding the underlying aspirations

of communities. Grow Rotorua has been

working on four key economic development

sectors as outlined in this Annual Report with

a focus on: tourism, education and skilled

talent, wood processing and agribusiness.

BUSINESS DEVELOPMENT

This is about growing the financial

performance of an individual start-up

or established company. This could

include increasing sales, developing

new products or services, investing

in new technologies, or adding

to their expertise – all in order to

provide more value to the customer.

Grow Rotorua believes the key to

business development is working

collaboratively with specialised

development agencies including the

Chamber of Commerce, Rotorua X,

Export NZ and New Zealand Trade

and Enterprise. Programmes Grow

Rotorua supports include the Growth

Acceleration Programme, Incubate

and the Young Enterprise Scheme.

ECONOMIC DEVELOPMENT CONCEPTUAL PIPELINE

Discover Explore Deliver

Environmental Scan

Opportunity Identifi cation

Feasibility Assessment

Business Case Development

Obstacle Identifi cation

Obstacle Removal

Opportunity Marketing

Investor Search

Investor Identifi cation

Project Consent

Project Announcement

Build Phase

GROW Rotorua Year 3 & 4

5

CEO Report

Welcome to this Grow Rotorua Ltd Annual Report for

2014/15. Economic development generally follows a

three-phase process – that of discovery, exploration and

delivery.

In our first 18 months since establishment, our focus

was mainly on the discovery and exploration, which

included scanning the environment in each main sector,

identifying opportunities, and understanding and

addressing barriers to investment.

This year has been about developing business cases and

preparing investment memorandums, communicating

those investment opportunities and identifying

potential investors. We are now at the delivery phase,

which involves working with the right investors for each

project and convincing them of the nature and scale of

the opportunities.

In terms of return on investment, we managed to

leverage the annual grant from Rotorua Lakes Council

with a further $95,000 from third-party sources, as

well as helping to attract $700,000 of funding into the

district. Overall, the projects Grow Rotorua has delivered

this year will add a further $50 million of economic value

to the Rotorua economy and generate around 120 new

jobs.

Our theme for this year’s Annual Report is, Rotorua is the

opportunity for me. We aim to communicate our vision

and progress to-date, detail the investment and job

opportunities available, and illustrate the value created

and potential future impacts.

Mark Smith and I have worked incredibly hard across

a wide range of projects, both to undertake the

background work, but most importantly to build the

critical relationships for success.

I trust you enjoy this 2014/15 Annual Report and I look

forward to continuing our great relationships to help

grow the Rotorua economy and create exciting new job

opportunities.

Warm regards,

Francis Pauwels

CHIEF EXECUTIVE

Chairman’s Report

The real task for the Grow Rotorua Board is about looking to

the future and realising the potential that Rotorua has.

We have a national and international role to play in

geothermal, education, forestry, agriculture and horticulture.

Success in these sectors takes planning and strategic thinking

but will deliver new and better incomes for our people, attract

new money for our region and reward those who live, work

and play here.

Our ability to adapt to the changing demands of a

sophisticated international tourism market will see more jobs

available for our people and new investments that will help

this sector grow. Rotorua has set an ambitious tourism target

of $1 billion.

We have encouraged investment in infrastructure, particularly

focusing on the huge world-wide growth in the natural health,

wellness and spa sectors. This includes the Lakefront Spa

complex, thermal theme park development in Kuirau and

we are delighted to see the planned redevelopment of QE2

Health.

The change in tourism demographics from China has an

impact on the type and quality of infrastructure and products

demanded, including world-class golf courses, 5-star

accommodation, and retail and night-life activities.

Our focus on forestry has been to find investments which take

current export logs and process them in Rotorua to add value

and jobs. We have focused on engineered wood solutions and

supported Rotorua Lakes Council in implementing its leading

Wood First policy.

Rotorua has achieved International Mountain Biking

Association (IMBA) Gold Status, positioning the destination

as one of six prominent ride centres in the world. We have

helped establish the Rotorua Trails Trust to further develop this

significant growth sector.

GRL has worked closely with Iwi to identify and look at

investment propositions and we expect the pipeline of Iwi

investment to be a significant driver of the Rotorua economy

in the future, as well as a creator of jobs.

We have established the Education Rotorua International (ERI)

group and gained funding support from Education NZ. We

are partnering with the airport to see how the airport facilities

could be further utilised for a flight training school.

GRL has been involved with the BOP Regional Growth Study

and encouraged the focus on key economic growth projects in

the region and GRL has a lead role to play.

Rotorua saw the highest GDP growth for the June 2015 quarter

in NZ, with increasing investment and confidence support

that. Rising interest in economic growth opportunities

from Iwi, and local and external investors bodes well to see

a number of exciting new investments come to fruition,

particularly in the agribusiness and land use areas.

Special appreciation and thanks go to the leadership of our

shareholder the Rotorua Lakes Council.

John Green, QSM

CHAIRMAN

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Grow Rotorua has a

highly commercial and

connected board providing

the governance, strategic

direction and ideas for

economic growth in the

Rotorua district. The chair

and five board members are

highly proactive and propel

investment opportunities

through idea generation,

brokering situations and

influencing key partners and

stakeholders.

JOHN GREEN, QSM

MICHAEL BARNETT, ONZM

WARREN PARKER

TONY MARKS

JANE NEES

GINA RANGI

FRANCIS PAUWELS MARK SMITH

Grow Rotorua has a team

of two – chief executive

officer Francis Pauwels and

commercial technology

manager Mark Smith. This

highly performing team

leverages the effective use

of consultants and experts

locally and from around the

globe for key parts of the

Grow Rotorua projects to

maximise progress and results

in a cost-effective way.

MEET OUR TEAMBOARD OF DIRECTORS

THE GROW ROTORUA TEAM

PHOTO: ADRIAN HODGE

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GOALS

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

TOURISM FORESTRY AGRIBUSINESS TE ARAWA OTHER

TOURISM FORESTRY AGRIBUSINESS TE ARAWA OTHER

✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓

✓ ✓ ✓

2016 PRIORITIES

1. Develop a vibrant city heart that attracts people and activity.

2. Develop our economic base by growing existing and attracting new businesses to the region.

3. Support residential renewal and the creation of healthy homes.

4. Sustainable infrastructure and affordable, effective council services.

2030GOALS

1. A resilient community.

2. Outstanding places to play.

3. Loved homes - meet everyone’s needs.

4. Vibrant city heart, heritage, lakeside.

5. Business enterprise, diverse, sustainable.

6. Employment opportunities - growing education, training.

7. Unspoilt environment, global recognition.

The following table lays out the current Grow Rotorua projects, in

alignment with the Rotorua Lakes Council 2016 priorities and 2030

goals. While these primarily address employment opportunities and

business enterprise, all projects tick different boxes in terms of goals.

Good examples are helping to achieve an unspoilt environment and

resilient communities.

Spa and Welln

ess

Spa and Welln

ess

Hotel

Hotel

Golf Course

Golf Course

Biking Strategy

Biking Strategy

Eng. Wood Products

Eng. Wood Products

Dairy Goats

Dairy Goats

F/water C

oE

F/water C

oE

Activated Carbon

Activated Carbon

Caring Dairy

ing

Caring Dairy

ing

Business

Attracti

on

Business

Attracti

on

Manuka

Manuka

Iwi L

and Devel.

Iwi L

and Devel.

Intl. Educatio

n

Intl. Educatio

n

Flight T

raining

Flight T

raining

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Grow Rotorua - Project response to 2016 - 2030 Priorities and Goals

FUTURE VISION

Grow Rotorua has laid out a five-year vision of what the future

could look like for Rotorua, both at an individual project level and

also at a more comprehensive economy-wide level.

This is our evolving vision for the Rotorua economy:

By 2020 Rotorua will have:

These investments will underpin a strong future for the Rotorua economy.

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ECONOMIC DEVELOPMENT

Grow Rotorua and the Rotorua Lakes Council are actively

involved in these initiatives.

The Business Growth Agenda (BGA) is central to delivering

a more productive and competitive New Zealand economy.

Lifting productivity and competitiveness is critical to creating

business opportunities, more jobs, higher wages and the higher

living standards to which New Zealanders aspire.

Achieving the goal of building a strong competitive economy

with increasing numbers of higher paid jobs will require

ongoing and significant increases in business investment.

International investment will be an important component in

terms of sourcing capital.

High-quality investment will assist with increasing national

exports to 40% of GDP, help lift research and development

intensity to 1% of GDP, and bring additional benefits to the

economy.

The Ministry of Business, Innovation and Employment’s (MBIE)

research suggests that $160 to $200 billion of additional

business investment is required. Our domestic markets alone

cannot service these capital demands and the country has not

yet been as effective as it could be in attracting the type of

high-quality investment needed.

THE WIDER ECONOMIC AND INVESTMENT ENVIRONMENT

There are three major initiatives underway championed and supported by central government

to drive economic growth throughout the country, with an increased focus on the regions – the

Bay of Plenty being one. Initiatives include the Business Growth Agenda, the Regional Growth

Study programme and the Investment Attraction programme.

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ROLE OF INTERNATIONAL INVESTMENT

High-quality international investment can bring

a range of benefits, including:

• Financial capital

• Enhancing New Zealand’s access to export markets,

integration with global value chains and linkages with

international knowledge networks

• Bringing new technologies, processes and know-how to

domestic firms and industries, improving the economic

infrastructure that underpins growth and productivity

improvement in key industries

• Creating skilled jobs and lifting investment in human capital

• Increasing regional economic activity and competitiveness,

especially in areas with unrealised economic potential.

Due to awareness issues New Zealand is often off the radar for

many international investors, presenting a barrier to investment.

New Zealand is a small market and the costs of acquiring

information can be a hurdle.

MBIE, alongside New Zealand Trade and Enterprise (NZTE),

Callaghan Innovation, the Ministry of Foreign Affairs and

Trade (MFAT), the Ministry for Primary Industries (MPI) and

the Treasury have prepared a draft New Zealand Investment

Attraction Strategy in order to address this particular barrier.

Grow Rotorua is working closely with those government

agencies in positioning Rotorua Investment Opportunities (refer

to Investment Portfolio section, page 18). This includes direct

contacts on specific investment projects, involvement with the

NZTE Capital Team and also the wider Bay of Plenty Regional

Growth Study.

REGIONAL GROWTH STUDY RGS PROGRAMME

The RGS programme is jointly sponsored by the Ministers of

MBIE and MPI. It is part of a Central Government programme to

identify the economic growth opportunities in the regions on

the premise that the New Zealand economy is made up of all

the regional economies. By inference, the regional economy is

a collection of all the economic drivers and sectors centred in

those regions.

The Bay of Plenty RGS is one of three studies, with Northland

and Manawatu having also been completed. The Bay of Plenty

study has been coordinated through the Bay of Connections and

Rotorua is represented on both the Governance Group and the

Action Group for the RGS. Virtually all the Rotorua key initiatives

are listed as priority opportunities in the RGS, including tourism

(spa, wellness, golf and cycling), geothermal resources, wood

processing, afforestation and Maori land utilisation.

The content has largely been a ground-up build of known

opportunities at both a pan-regional and sub-regional level,

including the Maori economy. This means decisions are

being made closest to where the actions and investments are

happening. Any policy needs that flow from that can then be

elevated through appropriate regional and central government

channels.

Grow Rotorua and Council see Rotorua as aligning with

different districts and regions depending on sector groupings.

For example, we relate strongest with Taupo and Kawerau in the

primary sectors (energy/geothermal, forestry, dairy, meat); we

relate strongest with Western Bay around predominantly the

services (financial, property, health, logistics); and in tourism

with Auckland and Queenstown.

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HIGHLIGHTS FOR 2015

Bay of Plenty Regional Council chair Doug Leeder opening the LUC Symposium

Education Rotorua International members

• Grow Rotorua helped to facilitate the Lakefront Spa complex

development on the Rotorua Lakefront, providing international

research information and access to industry expertise to inform

its design. Once completed, it will contribute $35-$45m to the

local economy and create 120 new jobs.

• Grow Rotorua is part of a joint venture partnership, along with

Waikato River Trails Trust, Rotorua Trails Trust and Rotorua Lakes

Council, that is looking to establish a multi-day 240km cycling

trail, linking the South Waikato River Trail and Rotorua’s Te Ara

Ahi cycleway. A feasibility study is in progress.

• Grow Rotorua is partnering with the airport and making good

progress to attract a new general aviation business to Rotorua.

• Grow Rotorua is helping to facilitate new investment into a

major agribusiness plant in Rotorua.

• Grow Rotorua has helped attract $700,000 of funding into the

district, with further funding programmes in the pipeline.

• Traction is growing in terms of implementing 13 economic

development strategies from an initial target of five for the year.

• The Education Rotorua International (ERI) group has been

established to attract international students to Rotorua, and

has achieved nearly 20% growth this year. The next phase

is underway to establish ERI as a stand-alone Incorporated

Society. Marketing collateral has been developed and

translated into 13 languages. The KORU Global Communication

Study Programme has also been launched with a focus on

Japanese school students.

• The Business Growth Acceleration Programme has been

established with 11 companies going through the first

programme. The Young Enterprise Scheme is ongoing and now

has five Rotorua schools participating.

• A very successful Land Use Change Symposium was held, with

over 200 attendees and 25 industry presenters showcasing

new information including business cases developed by Grow

Rotorua for new land uses.

• Grow Rotorua is supporting the Rotorua Lakes Council with its

Wood First Policy and the first building (ACC building in Pukaki

Street) is underway, with a further three in the pipeline.

Grow Rotorua has achieved a number of highlights

• Grow Rotorua has partnered with Council and Destination

Rotorua in working with world-renowned Professor Terry

Stevens on benchmarking Rotorua for best case destination

development and management.

• Representing Rotorua economic development opportunities

on the Bay of Plenty Regional Growth Study.

• Partnering with key government agencies on opportunities

to grow the local economy including NZTE, MBIE, MPI,

Tourism New Zealand and Education New Zealand.

• Facilitating investor interest in a new timber manufacturing

plant and a new tourism facility.

• Supporting developers in attracting investment partners for

a new accommodation development.

• Hosting high net worth investors from several Asian

countries (Japan, China, Korea, Taiwan) interested in

opportunities for investment in Rotorua.

Grow Rotorua’s Francis Pauwels with Mick Ross, editor of Flow Magazine at Crankworx Rotorua

12

STATEMENT OF INTENT

Performance Targets 2014 – 15

This report sets out Grow Rotorua’s progress

against expectations of the shareholder,

Rotorua Lakes Council, as set out in the

2014/15 Statement of Intent.

TARGET MEASURE TIMING PROGRESS AS AT 30 JUNE 2015

That the company is

operating eff ectively

The business plan is aligned

and approved with the budget

by the board.

June 30

2014

Done within timeframe. Budget for 2014-

15 approved by board. Indicative project

expenditure allocated across 11 projects.

Compliance

The audit of the company does

not highlight any material

issues.

Annually

Audit of company for the year ending 30 June

2014 completed. No material issues identifi ed.

Unmodifi ed audit opinion received.

Business operations

Eff ective business strategies are

in place to ensure the company

operates within revenue and

cash fl ow limitations.

Reviewed

annually

Business strategies and expenditure policies

in place. Financial reporting monthly at board

meetings. Operating well within budget and

cash fl ow limitations as per YTD accounts.

Potential investment

projects

Six new projects announced for

the district.

June 30

2015

Three projects announced to-date, seven potential in

the pipeline. Roles in attracting $795,000 funding.

Economic

development project

implementation

Five projects being

implemented including project

oversight and advisory groups.

June 30

2015

13 economic development projects at various stages of

implementation and advisory group establishment:

• Rotorua Trails Trust established

• International Education Group and funding established

• Koru Global / JTB programme launched

• Business Growth Acceleration Programme established

• Young Enterprise Scheme support

• Land Use Change Symposium held

• Global Spa Summit bid submitted

• First ‘Wood First’ building underway, three promoted.

• Terry Stevens Destination Management

Benchmarking underway

• Business Attraction programme initiated

• Freshwater Centre project ongoing

• Maori Geothermal Group started

• Regional Growth Study Leads (3)

Investment cases

Seven cases developed

and promoted to the target

investment communities

including off shore.

By June 30

2015

Four investment cases currently under

consideration by targeted investors.

Three investment cases developed and into public realm.

Two investment cases at various stages and

costings: Kuirau Park, bottling plant.

On NZTE FDI programme.

Note: No prior year comparatives are available due to measures being rewritten as part of the development of a new Statement of Intent.

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THE ROTORUA ECONOMY

The past year has highlighted a renewed investment confidence

in Rotorua, as well as a changing perception around Rotorua as

a destination for travel and also to live, work, invest and play.

Rotorua is no different than most of regional New Zealand, in

that growth is not easy to achieve. However, the economy has

a reasonable level of diversity and exposure, allowing it to ride

the highs and lows well.

There has been significant investment in the wood processing

sector over the past 12 months, particularly at Red Stag and

Pedersen’s Lumbercube sites, as well as new capital into Verda,

with combined investment approaching $100 million.

This year commercial building consents in Rotorua hit the

highest level in at least five years, with more than $65 million

worth issued in the past 12 months, $25 million more than

the previous year. This includes the $4.2 million Countdown

supermarket development at Fairy Springs, a new $1 million vet

clinic in Reporoa, as well as the $13 million Lynmore Junction

entertainment development on Te Ngae Rd. House sales were

also significantly higher than in previous years.

Tourism figures are also taking off, with guest nights up 8%

and hotel occupancy rates the best they have been for many

years. Operators such as Skyline Rotorua have made significant

investment into site developments, including its $2 million

restaurant redevelopment and construction of its Mountain

Bike Gravity Park, which hosted the world’s largest mountain

biking festival, Crankworx, in March this year.

Crankworx is estimated to have brought around $3.7 million

into the local economy, as well as displaying Rotorua to a

world-wide audience throughout the festival, with a massive 1.7

million fans worldwide watching Crankworx Rotorua through

digital channels. Mountain biking is a growing special interest

sector for New Zealand tourism, and is approaching around $17

million in value annually for Rotorua. Rotorua also played host

to the 2015 TRENZ tourism trade show, helping put Rotorua

and its tourism offerings front and centre to an international

audience.

GDP in the Rotorua District was up 3.2% for the year to June

2015, while the June quarter showed 4.3% economic growth -

the highest in New Zealand for the quarter. According to data

from job search engine Seek, January to June 2015 listings in

the Bay of Plenty were up 11% on last year. TradeMe figures

for the April to June quarter also showed a 19.4% year-on-year

increase in the average number of applications for Rotorua-

based roles, reflecting the growing attractiveness of the region.

With the likes of the NZ Animation College opening up its first

regional hub in Rotorua earlier this year, more is in the pipeline for

skills and education across the Bay of Plenty. International student

numbers have also grown by nearly 20% over the past year.

With the Government’s BOP Regional Growth Study set to

develop key industries throughout the region, the resulting

support and collaboration at all levels of government will help

to encourage further investment in Rotorua and the wider Bay

of Plenty.

14

MEGATRENDS

1. Water

2. Climate Change

3. Youth

Demographic

MEGATREND ROTORUA-SPECIFIC GROW-SPECIFIC

A megatrend is a pattern or movement which has a major impact on business and

society, having both current and future impacts. These transformative global forces

will define our future world and its increasing pace of change, with far-reaching

impacts on culture and personal lives as well.

There are a number of megatrends, with the following seen as critical for Rotorua.

Global water scarcity will

challenge food and energy

scarcity. Water has often

been referred to as the oil of

the 21st century, affecting

factors such as urbanisation,

population growth and

climate change. The United

Nations estimates that by

2030 demand for water may

be 40% more than supply

and water shortages could

affect almost 50% of the

world’s population.

Rotorua is uniquely placed in

terms of its relative abundance

and quality of water. With a

great deal of work having gone

into water restoration projects

over recent times, the district

is well placed to address future

water constraints, increased

consents etc.

Grow Rotorua is involved

in advocating for land use

change in the Lake Rotorua

catchment to decrease

nitrogen seepage into the

lake, as part of a wider lakes

restoration programme.

Grow Rotorua is also

working alongside industry

to develop activated carbon

for water purification.

The earth’s changing climate,

its impact on food production

and the need to reduce

greenhouse gases is well

documented. With the risk

profile of economic growth

changing as a result, alternative

values need to be added to

products and services.

Challenges for business centre

around how to operate in this

changing environment and

ensuring sustainability of land

use and end products.

With an ageing global

population, young people

are in short supply. This

means New Zealand will

increasingly compete

for migrants, as well as

attracting and retaining

skilled workers, but we

also need to provide

opportunities to hold onto

youth in rural economies.

Land use change opportunities

and geothermal energy provide

opportunities for Rotorua to

contribute to options that could

both mitigate carbon dioxide

emissions and look to use more

underutilised land for food

production.

Forestry and wood fibre

is another key sector that,

through careful management,

can be used as a renewable

energy source.

Despite an ageing population,

Rotorua also has increasing

numbers of youth, particularly

Maori, providing both a

challenge and opportunity.

With a changing demographic

and nature of work in terms

of increased automation and

technology, many industries

and education will be impacted.

Increased skills levels for youth

will be key for future growth

and Rotorua has a number

of special-interest sectors in

which to grow both economic

and educational aspects, for

example forestry and tourism.

Grow Rotorua is promoting

a number of land use

change alternatives.

Work is also underway in

developing a sustainable

wood fibre industry, as

well as activated carbon

production. Finding new

ways to add value to supply

chains and products will

be key, for example wood

processing.

Grow Rotorua is working

alongside a number of local and

regional organisations, including

local and regional government,

in terms of developing skills and

education in key sectors.

An emphasis has also

been placed on attracting

international students to study

in Rotorua, with the potential

for encouraging them to stay in

the district once their studies are

completed.

Grow Rotorua also develops skills

through supporting programmes

such as Incubate, Young

Enterprise Scheme and the

Growth Acceleration Programme.

continued overleaf...

15

4. Health,

wellness and

wellbeing

5. Energy and raw

materials

6. Urbanisation

and the growing

middle class

MEGATREND ROTORUA-SPECIFIC GROW-SPECIFIC

Rotorua is well-positioned to

exploit its natural advantages

around spa and geothermal

waters with different wellness

characteristics. Combined with

a focus on outdoor activities

such as biking, walking, hiking

etc, Rotorua offers unique

possibilities in this area.

Spa and wellness is a key

special interest sector, with

Grow Rotorua, Destination

Rotorua, council, iwi and

other investors/stakeholders

working together on a

number of developments, the

most significant of which is

the Lakefront Spa complex

development on the Rotorua

Lakefront and planning for

further development of

Kuirau Park. Grow Rotorua

has also been involved with

international research to spark

spa growth.

A growing global population

with higher spending power

means a significant increase

in the demand for natural

resources such as crude oil,

coal, natural gas, iron ore etc.

Given these resources are

limited, it is becoming more

important to supplement

and replace them with

sustainable resources where

possible.

The growth of megacities in

developing economies and

the wealth being generated

means more people will have

the need and the means

to travel to less-congested,

more green vacation spots.

Growing demand and shifting

supply are driving innovation,

with Rotorua well placed to

capitalise on this due to its

abundance of natural resources

such as geothermal energy

and wood for construction as

well as potentially biofuels.

Rotorua also has relatively good

sunshine hours for solar energy

and heating.

Rotorua will be able to

leverage its green reputation

including clean lakes,

outdoor activities and health

and wellness opportunities

to attract greater numbers of

higher yielding tourists.

Grow Rotorua is focused on

developing the engineered

wood products sector, which

includes partnering with local

iwi to invigorate the Maori

economy and utilise the

significant land assets available

for the likes of afforestation.

Industrial Symbiosis is also

being considered where one

by-product becomes another

feedstock.

Grow Rotorua is working

alongside the council and

Destination Rotorua with

strategies and projects that

aim to increase the value

of tourism in Rotorua to

$1 billion by 2030.

The world’s population is

ageing, requiring greater

demand on healthcare,

wellness and wellbeing. As

a result, public healthcare

will become increasingly

unaffordable, with a move

to more holistic solutions

possible.

MEGATRENDS...continued:

16

INVESTMENT OVERVIEWGrow Rotorua’s mandate from Rotorua Lakes Council (RLC) has been to take a leadership

role in the execution of the council’s economic strategy, with a priority focus on four sectors:

forestry and wood processing, tourism, geothermal and agriculture.

Within those four priority sectors, the expectation is to attract

and facilitate investment into tangible projects that would

deliver new jobs, capital investment and ongoing economic

contribution to the Rotorua economy.

Where possible, Grow Rotorua is to ensure its priorities and

goals are strongly aligned with those set down by the council,

which have both a near-term (2016) and longer-term (2030)

horizon. In developing key investment prospects, Grow Rotorua

is also cognisant of global, national and regional trends which

could present opportunities and/or major disruptions.

Grow Rotorua strategy

• Identify and develop logically robust investment value

propositions

• Communicate and promote new propositions to the

investment community

• Facilitate private sector investment

• Identify and propose solutions for the barriers to creating

investment wealth

• Understand and promote to the local education sector the

capability and skills required

How does Grow Rotorua help benefit investors?

Grow Rotorua has five key roles: leadership, opportunity

identification and facilitation, enabler issues and strategies,

stakeholder relationships and organisation capability.

• LEADERSHIP: To provide leadership with council and its agencies,

iwi, and other key stakeholders to ensure active and focused

economic development initiatives are progressed for Rotorua.

• OPPORTUNITY IDENTIFICATION AND FACILITATION: To identify

a portfolio of suitable projects and to facilitate the involvement

of iwi and private sector investments in business development.

• ENABLER ISSUES AND STRATEGIES: To identify constraints

and/or barriers to economic development and to develop

strategy ideas for their resolution in conjunction with Council

or other appropriate parties.

• STAKEHOLDER RELATIONSHIPS: To develop effective

relationships with council and its agencies, regional iwi,

Chamber of Commerce, potential investors and the community

to understand the role of Grow Rotorua and to seek their input

into project priorities and investment opportunities.

• ORGANISATION CAPABILITY: To maintain Grow Rotorua as a

small and flexible organisation, using the resources of other

groups to the fullest extent.

Grow Rotorua is focused on finding growth opportunities

on a strategic scale which create real change for Rotorua

business, jobs and perception, by leveraging key assets

and fostering key industry partnerships. Grow Rotorua

is also focused on developing the connections, knowledge

and big picture thinking to identify, refine and facilitate these

opportunities.

Grow Rotorua’s mandate has been to find growth opportunities

through holistic leadership and collaboration, with a focus on

collating valuable project-level information for consideration,

as well as gaining an understanding of the barriers to potential

development and strategies to overcome them.

Contact Grow Rotorua today to find out how they can assist you.

W: www.rotoruanz.com/do-business

P: 027 544 9054 - Francis Pauwels, CEO

E: francispauwels@growrotorua.com

17

OPPORTUNITYINVESTMENT

REQUIREDSTATUS

PUBLIC/PRIVATE

FURTHER DETAIL

TITOKI LUXURY TOURISM AND

PROPERTY DEVELOPMENT

$2 – $50million

Investors, funding partners sought

PrivateThis is a prime location for a luxury tourism development on 472ha and includes opportunities for geothermal activities, a world-class golf resort, spa and wellness retreats and other tourism ventures.

KUIRAU THERMAL WATER PARK

DEVELOPMENT

$10-$15 million

IM stage, investment-ready

Public/private

The development will fill a key gap in the family hot springs market, combining food, mineral bathing, mud pools and theme park. It will provide strategic alignment with planned developments for the Aquatic Centre, Beppu Onsen Kitchen and wider public landscaping and amenities of Kuirau Park. Work is set to commence mid-2016.

ARIKIKAPAKAPA GOLF COURSE

$5-$10 million

Concept designs available, funding

partners sought

Public/private

This will fi ll a key gap in the high-value NZ golf tourism market and will be the only golf course in the world on an active geothermal fi eld. It is also in alignment with the government’s goal of increasing the value of golf tourism to $400m by 2020.

THE RING OF FIRE$3-$5

million

Corporate sponsorship/ funding grants sought,

concept designs available

Public/private

A multi-day, multiple-access 240km trail linking the South Waikato River Trail with Rotorua’s Te Ara Ahi cycleway has been proposed. A full trail scoping/feasibility study is underway and set for completion by the end of 2015. An investment proposal will be developed in early 2016.

CROSS LAMINATED TIMBER CLT

$20-$30 million

Investors sought PrivateEngineered timber opens up excitng possibilities in architectural design, off -site precision manufacturing, and environmentally-friendly, fast construction solutions. NZTE is assisting with this project, including a major export focus.

FLIGHT TRAINING SCHOOL

$2-$10Investors sought, IM

stagePrivate

Grow Rotorua is working with interested parties, Rotorua Airport and NZTE to establish a fl ight training centre at Rotorua Airport for international pilots, particularly for Asian students. Capacity is planned for 100 student pilots initially.

AORANGI PEAK 5STAR

ACCOMMODATION

$20-$30 million

Proposed, investors sought

PrivateThis developments looks to combine a restaurant, chalets, day spa and wedding venue to fi ll an identifi ed niche in the luxury tourism market. Grow Rotorua is working closely with NZTE’s foreign direct investment team to promote the opportunity.

DAIRY GOAT FARMING

$5-$30 million

Proposed, investors sought

Private

Land use change opportunity. There is the long-term potential for a co-operative structure amongst Rotorua and Bay of Plenty land owners, of particular interest to Maori land trusts. Discussions are underway with MPI and MBIE. Investment opportunities include expansion of processing, farm investment, supplier contracts, supply of stock and farm support.

MANUKA HONEY AND OILS

$2,000/haProposed, investors

sought, business case available

Private

Manuka plantations for honey and oil have been identifi ed as a viable land use alternative and research by Comvita identifi ed Rotorua as ideal for plantation and riparian planting. This would also help protect and improve the water quality of the lakes and rivers. Support funding available and a $2.9 million Primary Growth Partnership-funded research project underway.

CARING DAIRYING MILK BOTTLING

PLANT

$10-$20 million

Investors sought, IM stage

Private

Caring Dairying is gaining premium prices in export markets due to its superior taste, qualities and consumer trust. Grow Rotorua is working to help Caring Dairying with plans to build a processing facility in Rotorua to grow the milk export business and to encourage farmers to take up Caring Dairying farming methods.

OSPREY ENGINEERED

BUILDING COMPONENTS

$2-$5 million

Investment ready, IM stage

Private

Osprey’s high-tech building components include European-style windows, doors, fl ooring and complete off -site house construction solutions. Specialist plant already established, opportunity to up-scale manufacturing, sales and distribution for both the domestic and export markets.

OHAAKI GEOTHERMAL

INDUSTRIAL PARK

Development stage, investment ready

Private

Ohaaki Geothermal Heat Industrial Park is centrally-located for transport, ports, forestry, dairy and skilled labour. The 50ha park also includes 10ha of geothermal reserve with possible tourism potential. Current timber kiln-drying business on-site, as well as existing supply agreements with Contact Energy. There are a range of commercial options available, including land lease/rent options, with or without thermal supply, joint venture options or outright sale.

As projects are developing there is always a view towards the

final phase, meaning right from the early stages, potential

investment partners are being identified. This is particularly

the case where Maori interests are involved, such as access to

geothermal resources.

Grow Rotorua is systematically building a Portfolio of

Investment Opportunities in Rotorua which are being loaded

onto the Grow Rotorua website. Currently these are focused

on Grow Rotorua-related projects, however, could well include

those from other parties seeking investment capital and/or

strategic partnerships.

Below is a list of investment opportunities, with

more details available on Grow Rotorua’s website:

www.rotoruanz.com/do-business

INVESTMENT PORTFOLIOVirtually all projects being worked on have an investment requirement attached. The

exceptions are areas such as International Education, where it is predominantly about

utilising existing assets and resources more efficiently in order to achieve economic growth.

18

With recent settlements occurring, this is providing some of the

much-needed capital to be able to explore further investments.

Grow Rotorua supports the inclusive approach for He Mauri

Ohooho representation (Bay of Connections Maori Economic

Development Strategy).

Grow Rotorua also supports the national Maori Economic

Development Strategy and Action Plan, He kai kei aku ringa,

which translates beautifully to: “There is food at the end of my

hands”.

Features of the local Maori economy:

• Māori land owners in the Rotorua district and wider Waiariki

(Bay of Plenty) region have comparative and increasingly

competitive scale and expertise in forestry, dairy, horticulture,

property, fisheries and geothermal.

• There is significant existing sector, supply and value chain

knowledge and experience in Māori collectives in the Waiariki

region.

• Māori have a significant, young population available as a

catalyst for change.

• There are significant existing Government co-funding

programmes that can support Māori land utilisation and

optimisation initiatives.

• There is also a political willingness to address systemic and

regulatory issues with respect to Māori land.

Virtually all Grow Rotorua projects involve Te Arawa interests

in some form or other, and is one of the strengths of the future

Rotorua economy that will help position us as world-leaders.

Grow Rotorua recognises and engages with the established

Waiariki and National Maori Economic Development advisory

groups. Our focus is on the actual investment opportunities

and business case development, working directly with

interested trusts and their advisors, as well as the wider public.

MAORI ECONOMY OVERVIEW

Māori interests are heavily involved in many of the region’s economic growth opportunities.

While there is a strong focus on better land utilisation, Maori trusts are also significant

shareholders in geothermal developments, farming, forestry, fisheries and property.

PHOTO: ADRIAN HODGE

19

TOURISMTourism is a key sector in the New Zealand economy and has

recently emerged as the number one export sector. Similarly,

tourism is a cornerstone of the Rotorua economy and a

significant employer across the district.

The sector in Rotorua is currently valued at around $500 million

and the district has set a target of growing this to $1 billion by

2030. This will require investment into existing facilities and

attractions, sustained marketing campaigns and increasing

the value yield from visitors. Achieving the goal also requires

investment in new, innovative, game-changing products.

These tourism goals firmly align with those of the Rotorua Lakes

Council’s (RLC) 2030 Vision and 2016 Priorities including a focus

on spa and wellness, contemporary Maori culture and mountain

biking.

It will require a collaborative effort to achieve these targets,

with the responsibility and roles shared across the district.

RLC focuses on providing the regulatory and infrastructure

environment, as well as iwi partnerships, to enable new

investment to proceed effectively.

Destination Rotorua is focused on promoting the destination,

working in a public/private partnership with its industry-

funding partners, while Rotorua Airport is focused on ensuring

air-connectivity is optimised.

Grow Rotorua’s role is to focus on attracting investment into

new, innovative and industry-leading products and facilities

across the district.

20

PHOTO: ADRIAN HODGE

If all current projects come to fruition in

this sector alone, this will result in over

$120 million being invested, 400 new jobs

created and annual economic impact of

around $140 million for Rotorua.

The recent announcement of a Lakefront

Spa development on Rotorua’s lakefront, as

well as growing mountain biker visitation,

increased spending and growing visitor

numbers are contributing significantly

toward achieving those outcomes.

Projects underway include facilitating investment into three new

world-class spa/hot springs facilities, attracting funding to

upgrade Arikikapakapa golf course, attracting funding to

complete a 240km multi-day cycle trail and hosting investor

inquiries into a range of opportunities across the district.

21

Arikikapakapa golf course redevelopment

Background

Tourism New Zealand (TNZ) currently has a special interest

inbound tourism focus on golf, with a goal of growing the

sector from $180m to $400m in value, and promoting New

Zealand as a premier golfing destination.

In line with TNZ’s special interest focus, Grow Rotorua has been

working closely with the Rotorua Golf Club, Pukeroa Oruawhata

and Rotorua Lakes Council to investigate the opportunity for

development within Rotorua and its potential effect on the local

economy.

Grow Rotorua commissioned Greg Turner

Golf to provide an analysis of the region’s

current golfing facilities and it was decided

that the Rotorua Golf Club’s Arikikapakapa

course had the most potential for

development.

Arikikapakapa was identified due to its

unique geothermal attributes, Maori

history, proximity and synergy with the

visitor attraction of Te Puia, as well as its

position within the city boundaries.

Golf visitation is currently experiencing

considerable growth in New Zealand,

increasing 30% annually – particularly

with North American and Chinese markets

– which fits in with Rotorua’s focus on

growing high-yield tourism offerings.

The Arikikapakapa golf course

development, once finished, would make

it the world’s only indigenous geothermal

golf course.

Achievements and impact

Greg Turner Golf supplied Grow

Rotorua with an initial analysis of

current golfing facilities in Rotorua and

once Arikikapakapa was selected for

development, a renovation plan was

proposed in order to bring the course up to

an international standard.

It is envisaged that this high-value product

will not only attract more international special interest visitors,

but will also link to other high-value tourism offerings within

the Central North Island – linking from Ohope and Opotiki,

through Rotorua and down to Napier – such as food and

wine in Hawke’s Bay, and Rotorua and Taupo’s adventure and

wellness offerings.

It is expected the development of the geothermal golf course

would contribute $10 million to the local economy annually.

Work is also currently underway

in conjunction with New Zealand

Transport Agency in relation to roading

developments including the Hemo Rd

Roundabout, which runs alongside the golf

course.

In the pipeline

Greg Turner Golf is currently assisting with

the development of an economic business

case to present to the Ministry for Business

Innovation and Employment (MBIE), as part

of a Tourism Growth Partnership (TGP) fund

application.

Tourism New Zealand is promoting golf

internationally and once developed, Grow

Rotorua and Arikikapakapa would work

closely with TNZ to raise the profile and

market the new high-end offering.

Investment opportunities

STATUS: Funding partners sought

AVAILABLE: Concept designs

INVESTMENT REQUIRED:$5 - $10 million

Public/private partnership

1

10

$

30

Arikikapakapa golf course would be the world’s only indigenous geothermal golf course

Special interest golf visitors to NZ increasing 30% each year – particu-larly from North America & China markets

Development would contribute $10 million to Rotorua’s economy

Particular focus for TNZ, with a promotional campaign

TNZ goal to grow the sector from $180m to $400m in value

400

PH

OT

O: M

ILE

S H

OL

DE

N

22

Kuirau Park

Ring of Fire

Background

A geothermal water park development has been proposed at

Kuirau Park, incorporating the existing Aquatic Centre, as well

as the creation of water slides and thermal activity features,

geothermal mineral bathing pools and a geothermal steam

café.

The proposed concept looks to strategically align four popular

and attractive customer experiences into one multi-faceted

facility, taking into account global hot springs research which

strongly suggests diversity and uniqueness will appeal to a

broad range of users. The development will also fill a key gap

in the family market, while having the ability to morph into a

backpacker attraction at night.

The park development is in line with Rotorua 2030’s vision to

increase tourism to $1 billion annually, through becoming the

spa and wellness capital of the South Pacific.

Achievements and impact

Grow Rotorua has been working with relevant parties to

facilitate a concept for the thermal water park in Kuirau Park.

A business plan is also under development, including an

investment memorandum.

Once built, the thermal park will create 80 new jobs, as well as

inject $8 million into the local economy annually.

Background

The Central North Island is a popular cycling

destination for domestic and international

special interest visitors, with many

multi-hour trails. However, a key gap

in the market has been identified in

terms of multi-day rides that will

attract longer-stay visitors.

As a result, a multi-day, multiple-

access 240km trail linking the

South Waikato River Trail with

Rotorua’s Te Ara Ahi cycleway has

been proposed.

Grow Rotorua is leading a joint

venture between Waikato River

Trails Trust and Rotorua Lakes Council.

It offers a great opportunity to leverage

off each region’s combined strengths to

create an important cross-region, high-value

tourism asset.

The initiative reflects a Destination Rotorua and Tourism New

Zealand special interest focus on cycling, as well as a wider

Central North Island initiative to promote inter-regional cycling

connections to add further value to existing assets, through

the likes of the Cycling and Mountain Biking Tourism Marketing

Network (CMBTMN).

Achievements and impact

Two feasibility studies have been conducted by the Waikato

River Trails Trust on behalf of the joint venture parties, with a

full scoping/feasibility study currently under

development.

It is estimated that the potential

economic impact of the multi-day

trail will be around $12 million for

the local communities of both

Rotorua and South Waikato per

year, and the creation of around

120 jobs (based on Otago Rail

Trail figures).

In the pipeline

A full trail scoping/feasibility study

is currently being carried out by the

Waikato River Trails Trust. It is set for

completion by the end of 2015, with an

investment proposal to then be developed

in early 2016.

Investment opportunities

INVESTMENT REQUIRED:

$3 - $5 millionPublic/private partnership

SEEKING:

Corporate sponsorship/

funding grants

AVAILABLE: Concept designs

$8mEVERY YEAR

NEW JOBS80

Kuirau Thermal Park

LINKIN

G THE SOUTH W

AIKATO RIVER TRAIL AND ROTORUA’S TE ARA

AHI

CYC

LEW

AY

AND CREATE 120 JOBS

POTEN

TIAL

TO IN

JECT $12 MILLION INTO LOCAL ECONOM

Y ANNUALLY

MULT

I-DAY 240KM CYCLING TRAIL

In the pipeline

Work is set to commence mid-2016.

Investment opportunities

INVESTMENT REQUIRED:

$10 - $15 millionPublic/private partnership

STATUS: Investment ready

IM stage

23

Lakefront Spa

Background

Rotorua has a long history of being a premier spa destination,

but its 3.2 million yearly visitors only make 500,000 commercial

spa visits. Grow Rotorua and Rotorua Lakes Council have set a

goal of 1.5 million commercial spa visits yearly.

Grow Rotorua joined the Hot Springs Alliance Group (HSAG) in

January 2014 and since then, has been involved in an HSAG-

led 18-month global research project across 19 countries, to

identify best spa commercial practices and trends.

The project was completed in December 2014, having involved

120 facilities and 160 interviews. The information has helped

form the basis of design concepts, business models and

operational best practice for a new global spa complex called

Lakefront Spa, which will be developed on Rotorua’s lakefront.

Grow Rotorua has forged relationships with the likes of

Charles Davidson of Peninsula Hot Springs in Melbourne

and James White of Methven, New Zealand, in order to work

collaboratively towards a common vision. This has arguably

given Grow Rotorua the world’s best information, contacts and

models of how to develop a range of spa and wellness facilities.

From this knowledge, combined with the experience gathered

through the global research, Rotorua should be able to treble

the number of spa and hot springs visitors it currently has.

Achievements and impact

Rotorua’s aspirations to become New Zealand’s wellness

capital ignited earlier this year with Prime Minister John Key

announcing Tourism Growth Partnership funding of $350,000

for the new Lakefront Spa complex.

The multi-million dollar development will be part of 11 hectares

of prime lakefront property and is forecast to open in 2017. The

spa and wellness complex aims to have a variety of spa-oriented

treatments from around the world and will tap into the global

trend of wellness spa treatments.

It is also expected the spa development will attract and be

supported by 4.5 to 5 star hotels to the region, filling a key gap

in the market.

Developers of the site are Pukeroa Oruawhata Group.

It is estimated the potential economic benefit to New Zealand

would be between $30-$40 million per year by 2020 and create

120 jobs. It is also envisaged the development of the complex

would tie in with education providers in terms of creating skills

and training opportunities for local young people.

In the pipeline

Development/building is set to begin in 2016.

TGP(Tourism Growth

Parntership) funding of $350,000

Set to help increase

commercial spa visits from 500,000

to 1.5 million

PH

OT

O: C

LA

IRE

TA

KA

CS

24

Destination management

Background

In order for Rotorua to achieve its ambitions of being a highly

competitive, sustainable and internationally recognised tourism

destination, Grow Rotorua, Destination Rotorua and the Rotorua

Lakes Council have commissioned an international destination

case study research project to identify ways in which Rotorua

can adopt international best practice. The goals are to create

economic, social and cultural wealth for residents and the

business community.

The destination development support project will provide

Rotorua with information, insight and analysis of how

comparative destinations around the world are succeeding in

delivering sustainable growth, while remaining competitive in

the international marketplace.

The aim of the research project is that the council, Grow

Rotorua, stakeholders and the wider community will gain a

greater understanding of:

• How to create an environment that will ensure the sustainable

development of tourism

• Encourage, stimulate and nurture investment in the wise

development of the destination’s natural, cultural and

human assets.

Achievements and impact

The research project idea evolved through a meeting with

award-winning international tourism consultancy Stevens &

Associates managing director Professor Terry Stevens at a recent

Global Spa Summit about his work with several leading tourism

destinations from a wide-range of countries. The research

project is being conducted by Stevens & Associates, and is set

for completion in December 2015.

Comparative destinations being looked at include cities in

Slovenia, Austria, France, Switzerland, Canada and the USA. Each

destination looked at relates as closely as possible to Rotorua’s

main characteristics, eg. tourism the main economic driver,

minimum 90-minute drive from a major urban centre, inland

with close proximity to lakes and highland, etc.

As well as looking at international best practice, the project

will also identify key tourism sector gaps that, if filled, would

position Rotorua comparatively with world-class best practice.

The study will help clarify Rotorua’s vision as a tourism

destination on its sustainable growth journey to achieve its $1

billion tourism value target.

In the pipeline

Once the project report is received, the information will be

shared with the wider community, stakeholder groups and

Te Arawa, with a resulting strategy developed and agreed for

moving forward.

The goals are to create economic, social and cultural wealth for residents and the

business community

An international destination case study research project will identify ways in which

Rotorua can adopt international best practice

25

EDUCATION AND SKILLED TALENTA key objective for Grow Rotorua is to identify the skill and

training requirements needed to drive existing and new

investments. This spans from early start-up phase through to

established businesses. Top-quality talent at the timing and

numbers required, is essential to realise growth potential. It is

also encouraging to see that the government has modified its

immigration criteria to attract skilled migrants to the regions,

with a specific focus on the IT sector.

Grow Rotorua projects include developing the Education

Rotorua International group and gaining funding which is

focused on increasing the number of international students

and their visiting friends and relatives to the district. The group

has gained fast momentum, attending major agent trade fairs,

developing marketing material, translating it into 13 languages

and achieving growth rates approaching 20%.

For the third year, Grow Rotorua has been the lead supporter in

the Young Enterprise Scheme and this has been rewarded with

five Rotorua secondary schools engaged in the programme.

For existing businesses, Grow Rotorua is a key supporter of

the Growth Acceleration Programme which provides existing

business owners with skills and networks focused on trebling

their growth rates.

At the start-up end of the spectrum, Grow Rotorua is a partner

with local professional firms and the Chamber of Commerce in

the Rotorua X Incubate programme.

In other key project areas such as agribusiness and spa/

wellness, Grow Rotorua maintains linkages with education

providers to make sure they are aware of the numbers, timing

and skills range that will be needed to operate and drive new

investments.

Grow Rotorua is also working with Rotorua Airport on

opportunities to expand its commercial operations including

identifying potential tenants for an industrial park and also

26

utilising Airport facilities for new businesses such as a flight

training school.

The most exciting part of this work is that there is a strong value

of wanting to create new, additional and meaningful job and

career opportunities for our young people as well as attracting

experienced talent to help drive growth.

Grow Rotorua is involved with the KORU Global Communication

Study Programme, which aims to bring Japanese students to

Rotorua to build leadership skills and global thinking.

If all current projects come to fruition, they will result in over

$25 million being invested, 75 new jobs being created and

annual economic impact of around $120 million. The interesting

aspect of the education sector as an economic opportunity

is that it has next to no environmental footprint and does

not require a lot of new capital, yet results are significant in

contributing to the local economy.

$

75 NEW JOBS CREATED

ANNU

AL ECONOMIC IMPACT $120MILLION

$25 MIL

LION

INVE

STED

The interesting aspect of the education

sector as an economic opportunity is

that it has next to no environmental

footprint and does not require a lot of

new capital, yet results are significant in

contributing to the local economy.

27

Growth Acceleration Programme

Led by Grow Rotorua and the Chamber

of Commerce, the Growth Acceleration

Programme (GAP) provides a skills and

mentoring programme for existing

businesses, and is aimed at sparking

business growth and improvement. The

two hour fortnightly sessions, held over

10 months, are facilitated by McGarvie

Business Coaching and have a large

focus on sales and leadership skills.

The goal of the programme is to triple

the growth rate of the 11 participating

businesses.

Incubate

Grow Rotorua is a key sponsor of the

Rotorua X Incubate programme, which

is a 12-week mentor programme for

local start-up businesses and social

enterprises. The most recent programme

included nine businesses selected on

their growth potential to learn vital

business knowledge and skills, helping

them to launch and accelerate their

business while contributing to the

growth of the Rotorua economy.

Incubate has grown significantly from

just two applicants in 2014 to 18 in

2015. The programme is generating

savvy Rotorua business people who

are equipped to achieve sustainable

growth, while having the knowledge and

ability to adapt to changing business

environments.

For the programme to continue growing,

more financial sponsors and mentors are

required for 2016.

Young Enterprise Scheme

Grow Rotorua is a proud supporter of

the Lion Foundation Young Enterprise

Scheme (YES) for the Rotorua region.

YES is an annual programme which

allows high school students to set up

their own company, create real products

or services, compile and implement

a business plan and make real profit

or loss. It also includes pitching their

ideas to a Dragons Den (of which Grow

Rotorua is on the judging panel) and

provides the chance to compete at a

national level.

The Rotorua programme is operating

in conjunction with Taupo and Tokoroa.

Participation has grown over the past

year, with five Rotorua schools currently

involved in the scheme.

The Young Enterprise Scheme gives

students real-world business tools and

social experience that they can take with

them further in life.

Incubate group

Young Enterprise participants from John Paul College

28

Flight training

Background

Rotorua Airport has been identified as a perfect location for

General Aviation and Flight Training, due to its accommodation

of jet services (commercial and private) and fully controlled air

space, fire safety crews and secure access.

Rotorua is already home to a large and diverse range of

international students who enjoy the ideal environment in

which to study, while the government has specific targets to

increase international education in New Zealand.

Grow Rotorua is working with interested parties, Rotorua

Airport and New Zealand Trade and Enterprise (NZTE) to

establish a flight training school for international pilots,

particularly for Asian students.

The training school will offer the opportunity to achieve a

Multi-Engine Rating and to fly an aircraft by instruments only

(Instrument Flight Rating). This is a requirement for all pilots

who wish to fly for an airline as a career. The New Zealand Civil

Aviation Authority Instrument Rating is an International Civil

Aviation Organisation (ICAO) recognised rating, so international

students can convert this rating and continue to use it when

they return home, if their country is also ICAO accredited.

Achievements and impact

A Heads of Agreement has been signed with an interested

party and Grow Rotorua is working with the NZTE Foreign

Direct Investment (FDI) team on promoting the investment

opportunities.

It is estimated the flight training school will stimulate around

$20 million into the local economy in terms of students’ living

costs, as well as fees. Capacity is planned for 100 student pilots

initially.

Investment opportunities

Flight training IM stage

INVESTMENT NEEDED: $5-$10 million

STATUS: Private, investors being sought

RotoruaAirport:

Secure

access

Fire sa

fety

crew

Jet s

ervices

(commercial/private)

Controlle

d

airspace

CAPACITY FOR 100STUDENT PILOTS INITIALLY

STIMULATE $20 MILLION INTO LOCAL ECONOMY

FlightTrainingSchool

29

International education

Background

International education is New Zealand’s fifth largest export

earner, currently bringing in $2.85 billion into the national

economy, up 12% on last year. The government has set a target

of increasing this figure to $5 billion by 2023.

Due to Rotorua’s close proximity to Auckland and the great

many lifestyle and cultural benefits the city offers, it is looked

upon favourably in terms of an international education

destination by international agents.

Education New Zealand estimates that each international

student brings approximately $42,000 into the economy, taking

into account fees, accommodation, activities, spending money

etc. Based on this assumption, the current value of international

students in Rotorua is around $36 million, with this number set

to grow to $100 million by 2020.

Achievements and impact

In late-2014, Grow Rotorua and Action Group Ltd facilitated

the creation of the Education Rotorua International (ERI) group,

which grew out of an education project aimed at developing a

10-year strategy to treble the value of international education

to Rotorua.

ERI consists of a cluster of education providers in the high

school, tertiary and English language sectors, but with further

potential to include primary and intermediate educators as

well. Current members include Waiariki Institute of Technology,

Rotorua English Language Academy (RELA), Western Heights

High School, John Paul College, Rotorua Lakes High School, and

Rotorua Boys and Rotorua Girls High Schools.

Grow Rotorua has been successful in obtaining funding from

Education New Zealand, in order to support the government’s

30

projected growth target. ERI has been working together

collaboratively, sharing ideas to develop marketing material

in order to attract international students to the region. This

marketing material has already been translated into 13

languages. The ERI group also worked together to promote

Rotorua at the Australian New Zealand Association (ANZA)

Agents Fair held in Auckland.

Market potential includes attracting students from Japan,

China, Russia, Indonesia, Spain, South America, Korea, Vietnam,

Brazil, Hong Kong – and many more.

Grow Rotorua and ERI set average target growth of 10% per

year, however in the last year the growth achieved has been

closer to 20%.

In the pipeline

Further ERI work is underway in terms of a market

development strategy, as well as additional collateral and a

multi-language interactive website.

In terms of the primary and intermediate sector, there is

potential for students to study in New Zealand who will be

accompanied by a family member, which will provide a further

boost to the economy.

31

WOOD PROCESSINGThe forestry and wood processing sector is one of Grow

Rotorua’s key priority areas. Work to date has focused almost

exclusively on wood processing and the conversion of more

export logs to value-add wood products in New Zealand.

This is consistent with the focus of the Wood Council of New

Zealand (WoodCo), the leading industry body. Grow Rotorua

efforts have been focused on engineered wood products (EWP)

and in particular, the opportunity with pre-fabrication and

panelisation (off-site construction) using cross laminated timber

(CLT).

The WoodCo WoodScape analysis indicated that export logs are

primarily A and K grade and the main opportunity is in the EWP

space, including CLT, optimised engineered lumber (OEL) and

laminated veneer lumber (LVL). There are currently three LVL

plants and one CLT plant in New Zealand.

The domestic market is small, approximately 100,000 cubic

metres log in, and will not realise the extent of log conversions

needed, which is around two million cubic metres log in. An

export market play is necessary and this has been further

reinforced by overseas investor interest in New Zealand recently.

Grow Rotorua is in discussions with the world’s leading CLT

manufacturer and engineered timber solutions provider and

is working closely with the NZTE Capital Team to assist with

attracting investment. The objective is to establish an export-

focused plant in Rotorua.

As part of the Rotorua Lakes Council’s Wood First Policy,

32

RED STAG TIMBER SAWMILLPHOTO: NICK LAMBERT

Grow Rotorua is providing assistance by identifying new

building projects early and working with the developers to

see if incorporating more timber, particularly EWP, is a viable

alternative. Local developer Ray Cook of R & B Consultants,

is taking the lead through a new design build for ACC,

which utilises CLT panels and LVL. There are also three other

developments in the pipeline to use this approach.

We are fortunate to have many innovative firms in Rotorua,

producing leading-edge wood products such as decking,

weatherboards and appearance grade products that are

finding acceptance in discerning export markets. Another

innovative development is the utilisation of pine and veneers to

manufacture European style three-way opening windows and

solid doors.

And finally, the human interest story Grow Rotorua is most

proud of is the chainsaw story. This is where saying yes and

working with Ocean Watch New Zealand to assist in the clean-

up after Cyclone Pam has seen remote Solomon Islanders learn

about using chainsaws for clean-up, but more importantly

in making boards from wind-blown trees for use in housing

construction.

If all current projects come to fruition this will result in over $45

million being invested, 100 new jobs being created and annual

economic impact of around $120 million.

If all current projects come to

fruition this will result in over $45

million being invested, 100 new jobs

being created and annual economic

impact of around $120 million.

33

Background

Grow Rotorua has undertaken research over the past year

to look at different approaches to increase domestic wood

processing, and identified engineered wood products as the

most viable option, in particular, cross laminated timber (CLT).

Rotorua has the potential to become national leaders in

the panelised prefabrication process using CLT and other

engineered timber products, due to the forestry, wood

processing, geothermal resources and research capability in

the city. The objective is to establish an export-focused plant in

Rotorua.

Particular emphasis is placed on global trends and demand

in terms of CLT, which include seismic and extreme weather

resilience, low-carbon footprint, sustainable materials, fast

recovery/build, clever design and affordability.

Panelised prefabrication is an efficient form of off-site

construction and enables the resulting CLT wall, floor and roof

panels to be erected in a matter of days. Greater quality control,

a higher level of safety and minimised waste are also achieved.

Auckland has been identified as the immediate domestic target

market, where prefabricated CLT would serve as a fast solution

to the current lack of housing supply.

However, the New Zealand market would probably not provide

the volume required for a sustainable manufacturing plant,

so research is being conducted to identify countries for future

exportation, particularly those where New Zealand radiata pine

is known.

Achievements and impact

Grow Rotorua organised a Wood First workshop in May 2015

where over 40 builders, architects and engineers came together

with Offsite Design managing director Johann Betz. He spoke of

the benefits of panelised prefabrication, how it can be adopted

and the importance of engaging with the key professional

services and integrating the various design elements into a

single set of CAD/CAM/engineering files.

R & B Consultants developer, Ray Cook, has been the first to

lead the way in Rotorua with a prefabricated CLT building for

the new ACC offices on Pukaki Street. CLT was chosen as the site

had geotechnical issues which called for a lighter construction

material and also enabled the building to be two-storeys as

opposed to one built from concrete and steel.

Engineered wood processing

34

Grow Rotorua undertook a study trip to Europe and the United

Kingdom in June to meet with industry and potential investors,

as well as to look at current CLT projects. Grow Rotorua has also

been working with the NZTE Capital Team to help smooth the

way for investment.

Investment opportunities

Prefabrication businesses are encouraged to start out small

and achieve organic growth, making it a viable investment

opportunity for anyone interested. Existing construction

companies can also shift to prefabrication easily, however, must

be mindful of the increase in collaboration.

35

Helping the Solomon Islands re-build

After Cyclone Pam hit the Pacific in 2015, the little-known but

badly affected Taumako Islands (also known as Duff Islands)

were in dire need of help. With a population of around 500

people, most housing and buildings are made from semi-

permanent materials and a significant number of these were

damaged in the cyclone, as well as many trees being knocked

over.

Through a connection with NGO Ocean Watch New Zealand,

Grow Rotorua donated a Stihl chainsaw to the community in

order to support the rebuild process and ongoing restoration

and maintenance work. Part of the donation also involved

training the locals how to use the chainsaw, as well as general

safety and best practice.

The donation of the chainsaw was an opportunity to start a

conversation with people working in the Pacific, such as Ocean

Watch, about the ongoing needs of the communities there –

particularly from a building perspective.

With Rotorua’s key focus area of manufacturing engineered

wood products, there is the potential for an ongoing

relationship which would allow for the manufacture and

sub-assembly of pre-fabricated buildings that could then be

shipped to Pacific communities where needed.

Wood First

Social conscience

Rotorua Lakes Council and Grow Rotorua are working alongside

key local forestry businesses and stakeholders to firmly establish

the district’s position as New Zealand’s leader in the forestry

industry.

The Wood First initiative recognises the economic,

environmental, cultural and social significance of wood within

the community by actively promoting wood as the first

material of choice for construction, interior design and living

developments within Rotorua.

The council is endorsing this approach through its own projects,

including the CBD Revitalisation Strategy, for example the Eat

Streat development, inner city seating, and the new bus stop

down Arawa Street.

Grow Rotorua has also been working with an early-stage

Rotorua company called Osprey, which utilises pine and veneers

to manufacture European-style three-way opening windows,

solid doors, flooring and complete off-site house construction

solutions. Grow Rotorua is assisting with business planning and

identifying sources of growth capital.

Osprey’s specialty is in precision weather-tight certified

systems that have both architectural appeal and high-quality

performance. With high-tech plant facilities currently in place,

the company is looking to expand its operations in terms

of design, manufacturing, sales development and export

distribution.

Grow Rotorua held a Wood First workshop in May on the

benefits of panelised prefabrication. Rotorua is also set to host a

wood innovation symposium later in 2015 and wood products

are actively being promoted for future developments such as

the Lakefront Spa development on the Rotorua Lakefront.

Cultural

Environmental

Economic

Social

Recognising significance of wood within the community

36

ACTIVATED CARBON

Due to its high degree of microporosity - just one gram of activated carbon can have a surface area in excess

of 1,000 m2 (about the area of four tennis courts) 1k

Background

Activated carbon is produced from many different carbon-

based materials such as wood, lignite, coal, coconut husk and

nutshells. It is typically produced and sold in one of three forms

– powder, granular particles or extruded as pellets.

Activated carbon is a material that has been processed to

have many small pores that increase the surface area, allowing

chemicals to be trapped (or absorbed) onto its surface. In this

way it acts as a very effective filter and has many diverse uses

such as water purification, gas purification, sewage treatment,

decaffeination, gold purification, air filters in gas masks and

respirators, filters used in compressed air and so on.

Unprecedented growth is expected in the US market, with the

current market for wood-based activated carbon estimated

at around 250,000 tonnes per year at a price ranging from

US$1,000 to US$1,500 per tonne, depending on quality.

Rotorua, with its strong forestry sector focus and increase in

residues from planned mill developments and upgrades such as

Red Stag and Pedersen’s, offers an ideal location for processing

wood residues such as chips, sawdust or shavings, into an

activated carbon product. This is particularly so given greenfield

and brownfield wood processing announcements in the district

over the last year.

Grow Rotorua’s vision is for Rotorua to become the hub for

this new technology and leverage off the well-established and

growing forestry sector.

Achievements and impact

Traditional processes for manufacturing wood-based activated

carbon are capital intensive and require significant focus around

environmental management due to the nature of the chemistry.

Grow Rotorua has been working with local investors to

investigate new, alternative processes that address issues

in terms of lower capital cost per tonne of activated carbon

produced and more of a clean tech focus in terms of the

technology used.

Grow Rotorua has also identified that activated carbon could be

effective for water purification and in highly intensive farming.

This carbon acts like a giant sponge to lock onto free nitrates

and gradually releases them as needed, like a slow release

fertiliser.

In the pipeline

The indicative economics of the processes look encouraging

and due diligence on these technologies is continuing largely

around process engineering validation.

Investment opportunities

Knowledge, plant and

technology development

Investment needed: $15 million

Planning stages

37

Small to mid-sized

activated carbon plant

5,000 to 10,000 tonnes of product per year

40,000 to 80,000 tonnes of wood residue as feedstock

5-10K

40-80K

AGRIBUSINESSAgriculture is a major economic sector for the Rotorua economy.

It is also the sector undergoing a number of current pressures,

including the rapid decline in the dairy payout and resulting

impact on land valuations, proposed nitrogen discharge rules,

general economic viability and the desire for landowners,

particularly Maori land trusts, to improve the economic

performance and utilisation of their blocks.

Against that background, the sector has seen a significant

increase in the high UMF Manuka prices, increasing interest

in non-lactose dairy products and a rapid uptake of fresh full-

cream milk products (eg. Lewis Road Creamery), both in New

Zealand and overseas (eg. ATA Milk).

The established sectors are well serviced with farming and

veterinary advisors, so Grow Rotorua’s response has been to

work with emerging industry players to look at the potential

for alternative land uses. The focus has been on agribusinesses

that have a reasonable level of history and route to market so

that new entrants could relatively easily obtain the technical

38

knowledge and support required, plus obtain supply contracts

for their produce.

The agribusinesses selected to date are: dairy goats, biological

dairy farming and Manuka plantations for honey and oil.

Additional contact has been established with hazelnut and

blueberry growers, plus a watching interest across research into

cold-tolerant kiwifruit varieties.

Presentation materials on all the above land uses plus business

cases are featured on the Grow Rotorua website. These business

cases have been developed with respected industry players

and show various yield, payout and capital scenarios to give an

indicative return on investment.

Grow Rotorua is working with counterparts across the Bay of

Plenty and relevant government ministries, including current

funding mechanisms, to identify ways these new land uses and

industry developments can be accelerated.

www.rotoruanz.com/do-business/key-investment-sectors

Grow Rotorua is working with counterparts

across the Bay of Plenty and relevant government

ministries, including current funding mechanisms,

to identify ways these new land uses and industry

developments can be accelerated.

39

Background

When Grow Rotorua started operations in early 2013, a key

sector of interest was agriculture. The three big drivers were the

need to reduce nitrogen discharges into the lakes, to improve

economic returns and, where possible, to diversify the income

risks where farmers were highly exposed to a single commodity

sector.

In 2014, the Bay of Plenty Regional Council (BOPRC) also

signalled a required 320 tonne reduction in nutrient discharges

into Lake Rotorua to be achieved by 2032.

In response, Grow Rotorua began a series of research into both

pastoral and horticultural alternatives that had some level of

proven performance in New Zealand and the Bay of Plenty,

with a reasonably established route to market. This resulted in

four substantial business cases being developed, which then

required a public roll-out and dissemination of information.

Grow Rotorua initiated a Land Use Opportunities Symposium

which was held in June 2015, supported by BOPRC and the

agriculture industries.

Achievements and impact

Over 200 land owners and agriculture industry members came

to listen to 25 high-profile guest speakers at the symposium,

who discussed environmentally sustainable farming, business

innovation and opportunities for land use change. Grow

Rotorua and some of the guest speakers have since been

contacted by landowners and others with business interests to

find out more about the opportunities presented.

In the pipeline

Understanding the difficulties that lie ahead for landowners,

Grow Rotorua is working with various interested parties, as

well as through the Bay of Plenty Regional Growth Study, to

establish dedicated agribusiness investment support, including

a strong focus on assisting Maori land utilisation objectives.

Investment opportunities, including a bottling plant for high-

quality fresh milk and large-scale Manuka plantations, are also

being followed through. In addition, discussions are underway

with MPI’s Primary Growth Partnership (PGP) programme to

help support scale uptake of new agribusiness opportunities.

Investment opportunities

Dairy goats Manuka plantations

Biological farming Closed loop dairy

N loss range

kgN/ha/yrSector and definitionAverage reduction

from current N losses

30-40Dairy: Includes the effective pasture area in the milking platform, fodder and effluent but excludes run-off (e.g. dairy support) and forest.

30%

10-20Drystock: Includes the effective pasture area in sheep, beef, deer, alpacas, horticulture, cropping and dairy support but excludes forest.

20%

3Forest: Includes native bush as well as forestry. Nil

Land Use Opportunities

N loss range Average reduction

40

Dairy Goats

Background

There is a steady increase in demand for goats milk, as

consumers become more educated about the nutritional

benefits. Goats milk is suitable for those who are lactose

intolerant and is also thought to be the closest possible

alternative to human milk, making it easier to digest and

assimilate in the human body. Because of this, it is ideal for

infant formula, as well as fresh milk, yoghurt and milk powder.

Identified as a viable land use alternative, particularly for land

in the Lake Rotorua Catchment, the farming of dairy goats can

reduce nitrogen discharge levels significantly. Goats require

less space and food than dairy cows – typically you can raise six

goats on the same acreage as two cows. Dairy goats are also

housed in barns which means run-off is more easily managed.

The major New Zealand-based processor is the Dairy Goat

Cooperative located in Hamilton, however due to tightly

controlled supplier strategies, Grow Rotorua has identified other

processor options available for Rotorua, which will be notified

when details can be announced.

Supply growth requires careful monitoring to maintain value.

The target market for fresh products is domestic, while Asia

is a focus for infant formula and there is also capacity in the

Middle East and Europe. These new markets are currently being

researched by Grow Rotorua.

Achievements and impact

A full farm business case has been developed and is being

discussed with interested farmers. This was presented at

the Land Use Opportunities Symposium in June, receiving

a number of enquiries. While there is a multi-million dollar

cost to converting or establishing a dairy goat farm, recent

developments such as the Lakes Incentives Fund may

encourage farmers to make the investment.

In the pipeline

There is the long-term potential for a co-operative structure

amongst Rotorua and Bay of Plenty land owners, of particular

interest to Maori land trusts given the lower nitrogen impact,

potential scale uptake and job creation opportunities.

Discussions are underway with the MPI and MBIE Maori

Development team.

Investment opportunities

Investment opportunities include expansion of processing,

farm investment, supplier contracts, supply of stock and farm

support.

Suitable for lactose intolerance

Closest alternative to human milk – infant formula

Also used for milk, yoghurt and milk powder products

41

Background

An insatiable demand across the world for high UMF grade

Manuka honey in cuisine, medical and healthcare sectors is an

opportunity Grow Rotorua is working to harness.

Manuka plantations for honey and oil have been identified as a

viable land use alternative and research conducted by Comvita

identified Rotorua as the ideal candidate for plantation and

riparian planting. This would also help protect and improve the

water quality of the lakes and rivers.

Three Manuka presentations were made at the Land Use

Opportunities Symposium from Comvita, Manuka Bioactives

and Kauri Park, discussing the entire Manuka process from

planning to production.

Achievements and impact

The Manuka Research Partnership is an existing multi-year

PGP-funded research programme, aimed at developing the

necessary cultivars, husbandry and support tools to enable the

commercialisation of Manuka plantations as a viable land use,

including on marginal land.

As a result of the farm business case work and presentations,

Comvita has established a 20 hectare trial with a local

landowner and a farming group is looking at establishing a 240

hectare plantation for both honey and oils.

In the pipeline

The Manuka opportunities for the Rotorua region are gaining

traction, including incorporation into the Bay of Plenty Regional

Growth Study. The next phase is to establish how these

opportunities can be accelerated at scale, and working with a

number of groups including Maori land trusts, and regional and

central government. Opportunities for skills training such as

bee-keeping are also under discussion.

Support funding such as the Afforestation Grants Scheme

($1500/ha) are being accessed to assist with planting high UMF

seedlings on new blocks.

Investment opportunities

INVESTMENT REQUIRED: $2,000/ha

Private

STATUS: Investors being sought

AVAILABLE: Manuka Honey Business Case

Manuka Honey and Oils

PH

OT

O: C

RE

DIT

TB

C

42

20+ UMF grade Manuka honey

= $100/kg

PH

OT

O: R

OB

ER

T T

RA

TH

EN

Background

Caring Dairying has been developed

as a transformational project to

lead change in the way we farm

towards more ecologically

friendly, sustainable farming

methods and stronger, resilient

rural communities.

The concept of Caring

Dairying came about as the

result of a 2008 in-depth

survey of 92 large herd dairy

farms in New Zealand and

other research into the needs

and performance of dairy farms

in New Zealand, Australia, Africa,

Europe and the US.

This research led to:

• The defining of good dairy farming

practice

• The development of the Caring Dairy Protocol

which defines sustainability

• Identified that good practice can improve output, quality and

profitability

• Showed that more caring people working with cows on-farm

can improve productivity and performance, while lowering

environmental impact

• Identified the opportunity for dairying to lead the change to

more resilient rural communities

• Identified that there are many consumers who are prepared to

pay more for ethical fresh products produced under audited

good practice standards.

Good farming practice defines sustainability and provides

benchmarks against which farms can be audited to assure

the provenance of products derived from such farms. The

benchmarks represent industry good practice in all elements

of farming, defined in four key sectors of animals, people,

environment and business.

Products from such farms can be

differentiated in the market by

the Caring Dairying mark and

achieve premium returns. Caring

Dairying is currently exporting

wholesome, high-quality

fresh milk differentiated by

provenance to high-value

markets in Asia.

Farms following defined Caring

Dairying good practice farm

with low environmental impact,

in particular nitrogen discharges

are well below the targets set for

Lake Rotorua.

Edgecumbe farmer, Peter Berryman,

who follows the Caring Dairying farming

methods, has slashed the average discharge

levels by more than 66% to less than 10 Kg N/ha. In

doing so, he has also quashed misconceptions that biological

farming is less profitable by being recognised as one of the

most productive and profitable farms in New Zealand.

In the pipeline

Grow Rotorua is working to help Caring Dairying with its plans

to build a processing facility in Rotorua to grow the milk export

business and to encourage farmers to take up Caring Dairying

farming methods. This will contribute significantly to the

reduction of nitrogen in Lake Rotorua and allow dairy farmers

to continue to farm profitably in a sensitive environment.

It provides a commercial

solution to a difficult

environmental and

political issue.

Fresh Milk Plant – Caring Dairying

43

FARMING METHODS

GOOD BUSINESS

GOOD MILK

ENV

IRO

NM

ENTA

L VA

LUES PRO

DU

CT

ION

ME

THO

DS

HUMAN VALUES

Te Kau

Te Miraka

Nga Tangata

Te Taiao

FINANCIALS INDEXGROW Rotorua Limited - 2014/2015

Statement of Responsibility

Entity Information FOR THE YEAR ENDED 30 JUNE 2015

FOR THE YEAR ENDED 30 JUNE 2015

The Directors of Grow Rotorua Limited accept responsibility for:

• The preparation of the Company’s financial statements, and

statements of expenses and capital expenditure, and for the

judgements expressed in them;

• Having in place a system of internal control designed to

provide reasonable assurance as to the integrity and reliability

of financial reporting;

• The accuracy of any end-of-year performance information

prepared by the Company, whether or not that information is

included in the annual report.

In the Directors opinion:

• The financial statements fairly reflect the financial position

of the Company as at 30 June 2015 and its operations for the

year ended on that date.

Legal NameGrow Rotorua Limited

Type of entity and legal basisGrow Rotorua Limited is a limited liability company and

is domiciled in New Zealand. The Company is a Council

Controlled organisation as defined under Section 6 of the Local

Government Act 2002.

The company’s purpose or missionThe Company exists to facilitate economic growth in the

Rotorua District in the Forestry/Wood processing, Tourism,

Geothermal and Agricultural sectors.

Structure of the Company’s operations, including governance arrangementsThe Company comprises of a Board of Directors being; John

Green QSM (Chairperson), Michael Barnett ONZM, Anthony

Marks, Jane Nees, Warren Parker, and Gina Rangi (retired 1 July

2015), and two full time staff who support the company in

delivering its objectives. The Company has designated itself as

a public benefit entity (PBE).

Main sources of the Company’s cash and resourcesOperating grants received by the Rotorua District Council

and other agencies are the primary sources of funding to the

company.

24 SEPTEMBER 2015 24 SEPTEMBER 2015

DirectorDirector

Statement of Responsibility .............................. 44

Entity Information ............................................... 44

Statement of Financial Performance ............... 45

Statement of Financial Position........................ 45

Statement of Changes In Equity ....................... 46

Statement of Cash Flows .................................... 46

Notes to the Financial Statements ................... 47

44

Statement of Financial Performance FOR THE YEAR ENDED 30 JUNE 2015

Statement of Financial Position FOR THE YEAR ENDED 30 JUNE 2015

Actual Notes Actual

2014 2015

$ $

Revenue

800,000 Council funding 2 800,000

93,581 Other grants and income 3 95,750

4,039 Interest Received 4 4,515

897,620 Total Revenue 900,265

Expenses

18,314 Advertising, marketing

and communications 5 27,906

16,205 Depreciation 13 11,210

80,000 Director Fee Remuneration 6 70,000

333,719 Personnel Costs 7 335,803

532,578 Projects 8 296,563

195,475 Other expenses 9 173,865

1,176,291 Total Expenses 915,347

(278,671) Surplus/(defi cit) before tax (15,082)

(5,698) Income tax 24 0

(272,973) Surplus/(defi cit) after tax (15,082)

The accompanying notes form part of these fi nancial statements

Actual Notes Actual

2014 2015

$ $

Assets

Current assets

127,835 Bank accounts and cash 10 95,082

5,750 Receivables 11 49,753

1,150 Other current assets 12 1,060

2,619 Resident withholding tax 1,513

137,354 Total current assets 147,408

Non-current assets

36,920 Property, plant and equipment 13 25,710

36,920 Total non-current assets 25,710

174,274 Total assets 173,118

Liabilities

Current liabilities

95,591 Payables and accrued expenses 14 108,801

21,645 Provisions 15 22,361

117,236 Total current liabilities 131,162

Non-current liabilities

0 Total non-current liabilities 0

117,236 Total liabilities 131,162

57,038 Net Assets 41,956

Equity

56,938 Retained earnings 16 41,856

100 Share capital 100

57,038 Total equity 41,956

The accompanying notes form part of these fi nancial statements

45

Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2015

Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2015

Actual Notes Actual

2014 2015

$ $

330,011 Balance at 1 July 57,038

(272,973) Surplus/(defi cit) (15,082)

57,038 Balance at 30 June 41,956

The accompanying notes form part of these fi nancial statements

Actual Notes Actual

2014 2015

$ $

Cash fl ows from operating activities

7,883 Interest Received 4,515

900,508 Receipts from Grants and Sponsorship 868,076

(1,075,451) Payments to suppliers and employees (807,737)

(85,985) Directors Remuneration Paid (69,442)

64,630 Goods and services tax (net) (29,271)

(1,124) Resident Withholding Tax paid IRD 1,106

(189,539) Net cash fl ow from operating activities 17 (32,753)

Cash fl ows from investing activities

0 Net cash fl ow from investing activities 0

Cash fl ows from fi nancing activities

0 Net cash fl ow from fi nancing activities 0

(189,539) Net (decrease)/increase in bank accounts and cash (32,753)

317,374 Bank accounts and cash at the beginning of the year 127,835

127,835 Bank accounts and cash at the end of the year 10 95,082

The accompanying notes form part of these fi nancial statements

46

Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2015

1. STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2015

ACCOUNTING POLICIES APPLIED

BASIS OF PREPARATION

The board of directors has elected to apply PBE SFR-A (PS)

Public Benefit Simple Format Reporting – Accrual (Pubic

Sector) on the basis that the Company does not have public

accountability (as defined) and has total annual expenses of less

than $2 million.

All transactions in the financial statements are reported using

the accrual basis of accounting.

The financial statements are presented in New Zealand dollars

and all values are rounded to the nearest dollar.

The financial statements have been prepared on the assumption

that the company will continue to operate in the foreseeable

future.

GOODS AND SERVICES TAX (GST)

The Company is registered for GST. All amounts in the financial

statements are recorded exclusive of GST, except for debtors

and creditors, which are stated inclusive of GST.

SIGNIFICANT ACCOUNTING POLICIES

Revenue

Grants

Council, government, and non-government grants are

recognised as revenue when the funding is received unless

there is an obligation to return the funds if conditions of

the grant are not met (“use or return condition”). If there is

such an obligation, the grant is initially recorded as a liability

and recognised as revenue when conditions of the grant are

satisfied.

Interest received

Interest revenue is recorded as it is earned during the year.

Advertising, marketing, administration and other expenses

These are expensed when the related service has been received.

Personnel costs

Wages, salaries and annual leave are recorded as an expense as

staff provide services and become entitled to wages, salaries

and leave entitlements.

Performance payments are recorded when the employee is

notified that the payment has been granted.

Superannuation contributions are recorded as an expense as

staff provide services.

Bank accounts and cash

Bank accounts and cash comprise cash on hand, cheque or

savings accounts, and deposits held at call with banks.

Receivables

Debtors are initially recorded at the amount owed. When it is

likely the amount owed (or some portion) will not be collected,

a provision for impairment is recognised and the loss is

recorded as a bad debt expense.

Property, plant and equipment

Property, plant and equipment is recorded at cost, less

accumulated depreciation and impairment losses.

Depreciation is provided for on a diminishing value basis that

will write off the cost of the assets over their useful lives. The

useful lives and associated depreciation rates of major classes of

assets have been estimated as follows:

Motor Vehicles 30%

Office Equipment 50%

Payables

Creditors and accrued expenses are measured at the amount

owed.

Provisions

The Company recognises a provision for future expenditure of

uncertain amount or timing when there is a present obligation

as a result of a past event, it is probable that expenditure will be

required to settle the obligation and a reliable estimate can be

made of the amount of the obligation.

Equity

Equity is the Shareholders investment in the Company and

is measured as the difference between total assets and total

liabilities. Equity is disaggregated and classified as shareholders

funds.

Commitments

Commitments are future expenses and liabilities to be incurred

on contracts that have been entered into at balance date.

Income Tax

Tax expense is calculated using the taxes payable method. As

a result, no allowance is made for deferred tax. Tax expense

includes the current tax liability and adjustments to prior year

tax liabilities.

Tier 2 PBE Accounting Standards applied

The Company has taken advantage of the following Tier 2

Accounting Standards:

Statement of changes in equity as per PBE IPSAS 1.21 (c)

Reconciliation of Net Surplus/Deficit after tax to Net cash from

Operating activities as per PBE IPSAS 2.29.

CHANGES IN ACCOUNTING POLICIES AND

TRANSITION TO THE NEW PBE SFR-A (PS) STANDARD

This is the first set of financial statements prepared using the

new PBE SFR-A (PS) standard, and comparative information for

the year ended 30 June 2014 has been restated to comply with

the new standard. There are no significant adjustments arising

on transition to the new standard.

47

2. COUNCIL FUNDING Actual Actual

2014 2015 $ $

800,000 Rotorua District Council 800,000

800,000 Total council funding 800,000

3. OTHER GRANTS AND INCOME 2014 2015 $ $

25,000 Bay of Plenty Regional Council 25,464

6,770 Young Enterprise Scheme 5,313

25,000 Education New Zealand 51,798

7,475 Pukeroa Lakefront Holdings Ltd 7,475

3,478 Enterprise Lake Taupo 3,000

10,000 Energy Effi ciency and Conservation Authority 0

10,000 Ministry of Business, Innovation and Employment 0

3,000 Te Puni Kokiri 0

652 Rotorua Energy Charitable Trust 2,000

652 MJC Legal 0

652 EMA Northern 0

652 BDO Rotorua 0

250 Westpac 0

0 Waiariki Institute of Technology 700 93,581 Total other grants and income 95,750

4. INTEREST RECEIVED Actual Actual

2014 2015 $ $

4,039 Interest received 4,515 4,039 Total interest received 4,515

5. ADVERTISING, MARKETING AND COMMUNICATIONS Actual Actual

2014 2015 $ $

18,314 Advertising, marketing and communications 27,906 18,314 Total advertising, marketing and communications 27,906

6. DIRECTORS REMUNERATION

Directors’ remuneration was paid as follows:

2014 2015

10,000 Michael Barnett ONZM 10,000 20,000 John Green QSM 20,000 10,000 Anthony Marks 10,000 10,000 Jane Nees 10,000 10,000 Warren Parker 10,000 10,000 Gina Rangi 10,000

10,000 James Rolleston (Retired with eff ect 1 July 2014) 0 80,000 Total remuneration 70,000

No other benefi ts have been provided by the Company to a Director or in any other capacity. No loans have been made by the Company to

a Director nor has the Company guaranteed any debts incurred by a Director

48

7. PERSONNEL COSTS Actual Actual

2014 2015 $ $ 333,719 Salaries and Wages 335,803

333,719 Total personnel costs 335,803

The total annual remuneration by band for employees as at 30 June was as follows: 2014 2015 0 <$60,000 0 0 $60,000-$79,000 0 0 $80,000-$99,000 0 2 $100,000 - $199,000 2 2 Total Employees 2

8. PROJECTS Actual Actual

2014 2015 $ $

532,578 Consultancy and projects 296,563 532,578 Total project costs 296.563

9. OTHER EXPENSES Actual Actual

2014 2015 $ $ 7,652 Fees to Audit New Zealand for audit of fi nancial statements 8,531

(750) Fees to Audit New Zealand for disbursements 866

845 Accident Compensation Levy 1,861

46,120 Conference Expenses 5,890

9,973 Motor vehicle expenses 10,948

9,031 Printing and stationery 17,767

38,721 Travel and accommodation 44,310

83,883 Other Expenses 83,692 195,475 Total other expenses 173,865

10. BANK ACCOUNTS AND CASH Actual Actual

2014 2015 $ $ 127,835 Cheque account 95,082 127,835 Total bank accounts and cash 95,082 127,835 Net bank accounts and cash for the purposes of the statement of cash fl ows 95,082

49

11. RECEIVABLES Actual Actual

2014 2015 $ $ 5,750 Debtors (gross) 37,577

(0) Less provision for impairment (0)

5,750 Net Debtors 37,577

0 GST Receivable 12,176 5,750 Total Receivables 49,753

12. OTHER CURRENT ASSETS Actual Actual

2014 2015 $ $

1,050 Prepayments 960

(0) Less provision for impairment (0)

1,050 Net Current Assets 960

100 Shareholder Current Account 100

– Rotorua District Council 1,150 Total other current assets 1,060

13. PROPERTY, PLANT, AND EQUIPMENT

Movements for each class of property, plant and equipment are as follows:

Offi ce Motor Total

Equipment Vehicle

$ $ $

Carrying amount at 1 July 2013 1,336 51,788 53,124

Additions 0 0 0

Disposals (net of accumulated depreciation) 0 0 0

Depreciation expense (668) (15,536) (16,204)

Carrying amount at 30 June 2014 668 36,252 36,920

Carrying amount at 1 July 2014 668 36,252 36,920

Additions 0 0 0

Disposals (net of accumulated depreciation) 0 0 0

Depreciation expense (334) (10,876) (11,210)

Carrying amount at 30 June 2015 334 25,376 25,710

14. PAYABLES AND ACCRUED EXPENSES Actual Notes Actual

2014 2015 $ $ Payables

64,947 Creditors 100,937

30,644 Taxes payable (e.g. GST and PAYE) 7,864 95,591 Total Payables and accrued expenses 108,801

50

15. PROVISIONS Actual Notes Actual

2014 2015 $ $

21,645 Annual Leave 22,361

21,645 Total Provisions 22,361

16. EQUITY Actual Actual

2014 2015 $ $

Equity 330,011 Balance at 1 July 57,038

(278,671) Surplus/(defi cit) (15,082)

5,698 Taxation paid by

Rotorua District Council losses off set 0

57,038 Balance at 30 June 41,956 57,038 Total Equity 41,956

17. RECONCILIATION OF NET SURPLUS/(DEFICIT) TO NET CASH FLOW FROM OPERATING ACTIVITIES Actual Actual

2014 2015 $ $ (278,671) Net Surplus/(defi cit) (15,082)

Add/(less) non-cash items:

0 Total non-cash items 0

Add/(less) items classifi ed as investing or fi nancing activities

16,206 Depreciation 11,210

16,206 Total investing or fi nancing items 11,210

Add/(less) movements in statement of fi nancial position items

7,021 (Increase)/Decrease in receivables (44,003)

3,630 (Increase)/Decrease 90

in other current assets

56,501 (Increase)/Decrease in payables 13,210

0 (Increase)/Decrease in provisions 716

6,898 (Increase)/Decrease 1,106

in Resident Withholding Tax

74,050 Total net movement in working capital items (28,881)

(188,415) Net cash fl ow from operating activities (32,753)

18. RELATED PARTY TRANSACTIONS

Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/

recipient relationship on terms and conditions no more or less favourable than those that it is reasonable to expect the Company

would have adopted in dealing with the party at arm’s length in the same circumstances. Further, transactions with other

government agencies (for example, government departments and Crown entities) are not disclosed as related party transactions

when they are consistent with the normal operating arrangements between government agencies and undertaken on the normal

terms and conditions of such transactions.

51

19. TRANSACTIONS WITH PARENT

The Company entered into transactions with:

Actual Actual

2014 2015 $ $ 835 The company paid rent to

Rotorua District Council (excl. GST) 835

800,000 Received a grant from Rotorua

District Council (excl. GST) 800,000

13,444 Accounts payable to Rotorua

District Council 5,757

100 Accounts receivable from Rotorua

District Council 100

350,356 Tax losses transferred from Rotorua District

Council by loss off set to eliminate tax liability 0

80,000 Paid directors remuneration (excl. GST) 70,000

20. EMPLOYEE REMUNERATION

The following number of employees, who were not directors, received remuneration and benefi ts which exceeded $100,000 in value

for the 2015 fi nancial year are Two (2014: Two).

21. DONATIONS

No donations were made by the company during the year.

22. CONTINGENT LIABILITIES

At balance date contingent liabilities have been estimated at NIL (2014: NIL).

23. COMMITMENTS

There were no commitments to projects as at balance date (2014 $NIL).

24. AUDITORS

The Auditor General is appointed under Section 15 of the Public Audit Act 2001. Audit New Zealand has been appointed to provide

these services on her behalf. Provision for audit fee for the year was $9,031 excl. GST (2014 $7,652 excl. GST).

25. INCOME TAX Actual Notes Actual

2014 2015 $ $

Components of income tax expense

0 Current tax 0

(5,697) Adjustment to current tax in prior years 0

(5,697) Income tax expense 0

Relationship between income tax expense and accounting surplus

(278,671) Accounting profi t for the year (15,082)

(77,804) Tax at 28% (4,223)

Plus/(less) tax eff ects of:

0 - Non taxable income 0

800 - Non-deductible expenditure 0

(5,697) - Prior period adjustment 0

77,004 - Tax losses not recognised 4,223

(5,697) Total Income tax expense 0

Tax losses of $299,101 are available for carry forward and off set against future taxable income.

52

26. EVENTS AFTER BALANCE DATE

There have been no signifi cant events after the balance date.

27. CAPITAL MANAGEMENT

The Company’s capital is its equity, which comprise shareholders’ funds. Equity is represented by net assets.

The objective of managing the Company’s equity is to ensure that the Company eff ectively achieves its goals and objectives for which it has been established while remaining a going concern.

The company is reliant for a large part of its revenue from its 100% parent Rotorua District Council (The Council).

The Council has accepted the Company’s Statement of Intent, which includes funding up to 30 June 2016.

The funding agreeent indicates that support will be provided until 30 June 2016. The support provided to Grow Rotorua Limited shall include:

1. $700,000 + GST funding to support the necessary budgeted operating activities in a timely manner (and all obligations and liabilities incidental to such activities)

The company has received a letter of comfort from Rotorua District Council which enables the directors to adopt the ‘going concern’ doctrine for preparing these fi nancial statements. The letter of comfort highlights that support will be provided by Rotorua District Council including suffi cient funding to support the necessary budgeted operating activities.

28. INTEREST REGISTER

The Company is required to maintain an interest register in which the particulars of certain transactions and matters involving the Directors must be recorded. The interest register is available for inspection at the registered offi ce.

INFORMATION USED BY DIRECTORS

During the fi nancial year, there were no notices received from directors of Grow Rotorua Limited as, or any subsidiary, requesting to use information received in their capacity as a director which would not otherwise have been available to them.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has not arranged policies of the Directors’ and Offi cers’ Liability Insurance and separate Director’s and Offi cers’ defense costs insurance.

The following transactions were entered into between entities listed in the Directors Interest Register and Grow Rotorua Limited.

1. John Green QSM is a Councillor for the Waiariki Institute of Technology. During the year Grow Rotorua Limited;

a) Made a payment during the 2015 $NIL (2014 year of $4,000 excl GST to support the Engineered Wood Products Study Tour).

2. Jane Nees is a Councillor for the Bay of Plenty Regional Council. During the year Grow Rotorua Limited;

a) Received a grant of $10,000 (2014 $10,000) excl GST for Economic Development work.

b) Received a grant of $NIL (2014 $10,000) excl GST for Maori Economic Development work.

c) Received a grant of $15,464 for Land Use Symposium.

d) Made a payment to Bay of Plenty Regional Council of $NIL (2014 $10,000) excl GST for Lake Competition.

3. Warren Parker is the Chief Executive of Scion. During the year Grow Rotorua Limited;

a) Made a payment to Scion of $11,250 (2014 $NIL) excl GST for the Industrial Symbiosis Project.

53

29. INDEPENDENT AUDITORS REPORT

To the readers of Grow Rotorua Limited’s financial statements and performance information for the year ended 30 June 2015

The AuditorGeneral is the auditor of Grow Rotorua Limited (the

company). The AuditorGeneral has appointed me, Clarence

Susan, using the staff and resources of Audit New Zealand, to

carry out the audit of the financial statements and performance

information of the company on her behalf.

OPINION ON THE FINANCIAL STATEMENTS AND THE

PERFORMANCE INFORMATION

We have audited:

• the financial statements of the company on pages 45 to 53,

that comprise the statement of financial position as at 30 June

2015, the statement of financial performance, statement of

changes in equity and statement of cash flows for the year

ended on that date and the notes to the financial statements

that include accounting policies and other explanatory

information; and

• the performance information of the company on page 13.

In our opinion:

• the financial statements of the company:

• present fairly, in all material respects:

• its financial position as at 30 June 2015; and

• its financial performance and cash flows for the year

then ended; and

• comply with generally accepted accounting practice in

New Zealand and have been prepared in accordance with

Public Benefit Entity Simple Format Reporting Standards –

Accrual (Public Sector).

• the performance information of the company presents

fairly, in all material respects, the company’s achievements

measured against the performance targets adopted for the

year ended 30 June 2015.

Our audit was completed on 24 September 2015. This is the

date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we

outline the responsibilities of the Board of Directors and our

responsibilities, and explain our independence.

BASIS OF OPINION

We carried out our audit in accordance with the

AuditorGeneral’s Auditing Standards, which incorporate the

International Standards on Auditing (New Zealand). Those

standards require that we comply with ethical requirements

and plan and carry out our audit to obtain reasonable assurance

about whether the financial statements and the performance

information are free from material misstatement.

Material misstatements are differences or omissions of amounts

and disclosures that, in our judgement, are likely to influence

readers’ overall understanding of the financial statements

and the performance information. If we had found material

misstatements that were not corrected, we would have referred

to them in our opinion.

An audit involves carrying out procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements and in the performance information. The procedures

selected depend on our judgement, including our assessment

of risks of material misstatement of the financial statements

and the performance information, whether due to fraud or

error. In making those risk assessments, we consider internal

control relevant to the preparation of the company’s financial

statements and performance information in order to design

audit procedures that are appropriate in the circumstances

but not for the purpose of expressing an opinion on the

effectiveness of the company’s internal control.

An audit also involves evaluating:

• the appropriateness of accounting policies used and whether

they have been consistently applied;

• the reasonableness of the significant accounting estimates

and judgements made by the Board of Directors;

• the adequacy of the disclosures in the financial statements

and in the performance information; and

• the overall presentation of the financial statements and the

performance information.

We did not examine every transaction, nor do we guarantee

complete accuracy of the financial statements and the

performance information. Also, we did not evaluate the security

and controls over the electronic publication of the financial

statements and the performance information.

We believe we have obtained sufficient and appropriate audit

evidence to provide a basis for our audit opinion.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS

The Board of Directors is responsible for the preparation and

fair presentation of financial statements for the company

that comply with generally accepted accounting practice in

New Zealand. The Board of Directors is also responsible for

preparation of the performance information for the company.

The Board of Directors’ responsibilities arise from the Local

Government Act 2002.

The Board of Directors is responsible for such internal control

as it determines is necessary to enable the preparation of

financial statements and performance information that are free

from material misstatement, whether due to fraud or error. The

Board of Directors is also responsible for the publication of the

financial statements and the performance information, whether

in printed or electronic form.

RESPONSIBILITIES OF THE AUDITOR

We are responsible for expressing an independent opinion

on the financial statements and the performance information

and reporting that opinion to you based on our audit.

Our responsibility arises from section 15 of the Public Audit

Act 2001.

INDEPENDENCE

When carrying out the audit, we followed the independence

requirements of the AuditorGeneral, which incorporate the

independence requirements of the External Reporting Board.

Other than the audit, we have no relationship with or interests

in the company.

Clarence SusanAUDIT NEW ZEALAND

On behalf of the AuditorGeneral

Tauranga, New Zealand

54

55

CONTACT DETAILS:

Grow Rotorua Ltd1061 Haupapa StPrivate Bag 3007, Rotorua 3046www.rotoruanz.com/do-business