Chair & Chief Executives report
Chief Executive Warren Parker and Chair Jo Brosnahan
New Zealand’s natural environment is at the heart of its social and economic well–being. The international competitiveness of our primary industries and the tourism sector, in particular, is critically dependent on the resources and services (natural capital) that our natural ecosystems provide. To maintain economic options for present and future generations, and retain the high quality of life that we all enjoy, New Zealand must achieve economic growth with good environmental stewardship.
Addressing this challenge aligns with Landcare Research’s core purpose: to undertake research and development to protect and enhance New Zealand land environments and enable their sustainable use with economic development. Our expertise in multidisciplinary research enables us to play a key role in providing solutions to complex, multi–faceted issues such as land use intensifi cation, water quality, climate change and control of invasive species. We are conscious of the need to demonstrate that even in tough economic times it is prudent to manage natural capital as well as financial capital.
To this end, we are working closely with our customers to identify and facilitate the uptake of opportunities to improve financial performance and market advantage through better environmental management.
Financial performance
Strong relationships with both our public and business sector customers underpinned a successful fi nancial year. Our net profi t after tax of $1.4m exceeded the target of $0.3m and equated to a return on equity (ROE) of 5.3%. Revenue of $60.5m was recognised during the year ($56.2m 2008). The 16% increase in non–FRST/MoRST revenues was especially pleasing given the current fi nancial environment. Operating cashflows at $8.9m ($4.3m 2008) reflect a high level of activity during the year.
National databases & collections
We were also pleased to receive inaugural backbone funding of $1.8m dedicated to the seven nationally signifi cant databases and collections that we manage. They are used extensively to support New Zealand’s biosecurity, biodiversity, export/import trade, and land management. We are committed to increasing the value of these national assets for both public and private benefit. The high–speed KAREN network, which our five main sites are now connected to, is an important component in realising this vision.
The S–map prototype, developed for the Bay of Plenty Region this year, illustrates the functionality we are able to achieve. By using visualisation tools based on GoogleEarth, we are able to make the most up–to–date digital soil information and decision support tools available at a regional, property or paddock scale. This provides a signifi cant step change in access to the Land Resource Information System (part of the nationally significant databases we host) for endusers. Within fi ve years we aim to make S–map accessible to every landowner in New Zealand – transforming the way they make decisions in managing their land – with supporting fact sheets for irrigation, nutrient, water quality, biodiversity and carbon management. This information will also enable environmental risks and economic opportunities (new crops for example) to be assessed by land managers quickly and cost–effectively.
Review of outcome–based investments (OBI)
Landcare Research hosts three OBIs and is partner in an OBI led by AgResearch. These were all established in 2005, and collectively represent a quarter of the research we undertake. Governance oversight by the major end–users of the research, and the long–term nature of funding, are positive distinguishing features. All OBIs were independently reviewed during the year, resulting in a pleasing 8.2% increase in funding.
Commercialisation of environmental technologies
Global investment in environmental technologies is growing rapidly as governments and businesses seek solutions to their environmental challenges. Commercialisation of science discoveries therefore represents a large opportunity for Landcare Research and New Zealand. With this in mind, we are building pipelines of technologies in niche areas.
Environmental certification
The carboNZeroCert™ and Enviro–Mark®NZ programmes are the main areas of internal investment at present. These business units provide products and services for the independent certifi cation of greenhouse gas and environmental management, respectively.
A strong performance from the carboNZero programme resulted in 75% revenue growth and a 25% increase in the number of New Zealand and offshore clients. A new service, CEMARSTM (Certified Emissions Measurement and Reduction Scheme), which enables companies to reduce greenhouse gas emissions without committing to full carboNZero certification, was launched through our licence agreement with Achilles Group in the United Kingdom in July 2008, and in New Zealand with Energy for Industry in September 2008. Enviro–Mark (a staged environmental management system specifically for New Zealand businesses) significantly increased its membership and signed important partnership agreements with PrintNZ and Telarc SAI. We plan to upgrade the product in the new fi nancial year and work with other business organisations to drive membership growth.
Wildlife management
Investment to incubate two new business units to market some of our wildlife management expertise is promising to be rewarding. In its second year of operation, EcoGeneTM, which provides DNA diagnostic services, achieved revenues well ahead of budget, a reflection of its growing reputation on both sides of the Tasman.
Invasive Species International, an expert consultancy service, was established this year to consolidate and more effectively market our work in international pest management. This business draws on our world–leading expertise in pest management and eradication. During the year our scientists contributed to strategic planning meetings or completed contracts for agencies in seven countries.
SIRTRACK – Our wholly owned subsidiary
Sirtrack designs and produces wildlife tracking equipment, with over 90% of its products exported. Record revenue of $5.5m and a net operating surplus before tax of $0.15m ($0.06m business plan) was achieved despite the difficulties imposed by a volatile exchange rate. The company relocated into completely rebuilt facilities in August 2008 and, importantly for its successful future, the product development group released a new generation of VHF transmitters, which are being integrated in standard products in the coming year.
Our organisational sustainability
We have an important role in providing leadership in corporate social responsibility (CSR). We practise what we recommend to customers. In support of this, we launched an extensive new section on our website in October 2008 to report more comprehensively and dynamically on our organisational sustainability and to improve the sharing of our learnings with others. Web–based reporting also enables us to make greater connections with our science and keep at the forefront of CSR best practice. The Global Reporting Initiative (GRI) confirmed that our reporting was at the A level. We encourage you to explore the detail on our website. Key initiatives to reduce the environmental impact of our activities and improve organisational resilience are highlighted in this report.
Concluding remarks
We thank all staff for their enthusiasm and dedication to improving New Zealand’s environmental and economic performance, and for their hard work in meeting all of the goals we set ourselves over the past 12 months. We congratulate the staff and business groups who won awards and prestigious recognition during the year.
We wish to make special recognition of the three retiring Directors. Anne Urlwin has provided eight years of service, including seven years as Chair of the Audit & Risk Committee and the last three years as Deputy Chair of the Board. Willie Te Aho (six years) in particular made a major contribution to our initiatives and relationships with Māori. Jill White (five and a half years) brought a unique in–depth understanding of public policy and local government. We wish them well in their future endeavours and look forward to welcoming Tania Simpson, John Luxton, Peter Schuyt and Vicky Taylor to the Board.
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| Signed – Jo Brosnahan | Signed – Warren Parker |