G36
Annual Report 2014/15
Delivering science and technology to
benefit New Zealand’s pastoral sector
G36
Contents
About AgResearch
2
Chair and Chief Executive’s review
4
Corporate governance
6
Corporate social responsibility report
7
Being a good employer
9
Commentary on progress toward achieving AgResearch’s
Statement of Core Purpose (SCP) outcomes
Impact indicators
10
Non-financial operating indicators
15
Financial performance indicators
20
Consolidated financial statements
21
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Statement of accounting policies
Notes to and forming part of the financial statements
1 Other revenue
2 Operating expenditure
3 Other gains and (losses)
4 Finance costs
5 Taxation
6 Equity
7 Trade and other receivables
8 Other non-current receivables
9 Biological assets – livestock
10 Biological assets – forestry
11 Trade and other payables
12 Property, plant and equipment
13 Non-current assets held for sale
14 Heritage assets
15 Provisions
16 Reconciliation of surplus after tax with net cash flow from
operating activities
17 Contingencies and commitments
18 Operating lease arrangements
19 Investments in subsidiaries
20 Investments in associates
21 Other investments
22 Joint operation investments
23 Transactions with related parties
24 Financial instruments
25 Term loans
26 Fair value measurements recognised in the statement of
financial position
27 Capital management
28 Other non-current liabilities
29 Significant events after balance date
Independent Auditor’s Report
21
22
23
24
25
34
34
34
34
34
34
36
37
37
38
38
39
39
40
40
40
41
Statutory reporting
50
Core funding report
52
Statement of responsibility
63
Directory
64
12
41
42
42
43
43
44
44
45
46
46
47
47
47
48
AgResearch 2015 Annual Report [1]
About AgResearch
AgResearch partners with the pastoral sector to identify and deliver the innovation that is needed to create value for the country. It is a
vibrant organisation with staff spread across four campuses and farms in the Waikato, Manawatu, Canterbury and Otago.
Agriculture is New Zealand’s largest export income earner, and AgResearch plays a key role in delivering new knowledge and
technologies which underpin the pastoral, agri-food and agri-technology value chains. We do this by working closely with sector partners
and our strategy is outlined in our Statement of Corporate Intent.
We are the lead CRI in the following areas:
•
Pasture-based animal production systems
•
New pasture plant varieties
•
Agriculture-derived greenhouse gas mitigation and pastoral climate change adaption
•
Agri-food and bio-based products and agri-technologies
•
Integrated social and biophysical research to support pastoral, agri-food and agri-technology sector development.
We work with other research providers and end-users to contribute to the development of the following areas:
•
Biosecurity, land, soil and freshwater management
•
Climate change adaption and mitigation
•
Food and beverage sector (including foods for human nutrition and health, food technologies and food safety).
A snapshot of our capabilities that support the full value chain from paddock to consumer.
Our understanding of plant and endophyte technologies, such as metabolomics and epigenetics, leads the supply chain and supports the
development of a new generation of livestock and plant-derived products. Our subsidiary Grasslanz Technology takes these technologies
to an international market.
Land use and land management are studied in relation to environmental impacts and climate change. Improving dairy, beef, lamb and
deer production systems is addressed by innovative research on soil and water management, pasture fertilisation and farm nutrient
management, while reducing negative impacts on the quality of soil, water and atmosphere and ecosystems.
We are finding ways to improve the nutrition, health and welfare of livestock for efficient and sustainable animal production. AgResearch
scientists have recognised expertise in the parasitic and infectious diseases of pastoral livestock and understanding of rumen and animal
processes behind healthy productive and efficient ruminant livestock. We use a broad range of physiology and genomics-based research
tools that will detect and utilise the natural gene variants that control economically important traits such as growth rate, fecundity, meat
quality and disease resistance and we are developing advanced technology options for animal reproduction and enhancement of animal
performance.
Systems thinking is an integral part of our research and development approach. Our agricultural systems research focuses on creating
more profitable and sustainable farms and agribusinesses and provides the capacity to understand complex, interconnected agricultural
issues.
We are committed to delivering solutions focused on the distinctive needs of Māori in the pastoral sector to assist in increasing the
performance of Māori-owned farms.
Our food research and development creates the knowledge and tools to develop high value foods and ingredients from pastoral-based
industries, tailored to market and consumer preferences for quality, human health and well-being.
Our biocontrol and biosecurity work is on the sustainable management of pests and weeds for the benefit of New Zealand’s pastoral
sector and associated environments. Research includes the development of new biopesticides and technologies, and we play a role in
making sure our national borders are well protected. We also conduct research around the environmental safety of these control options
and the impact of novel biotechnologies such as modified crops.
Our textiles and biomaterials research includes recognising demand, formulating innovative products and seeing them through the
development process to an international market. With strengths in development and engineering, we supply materials for an unlimited
number of applications, from human biomedics to industry and the worldwide fashion scene.
AgResearch’s core value proposition is its ability to:
“Partner with the pastoral, agri-food and agri-technology sectors to identify the innovation that is needed and deliver our
collective expertise to create value for New Zealand.”
The 2014-19 Statement of Corporate Intent identified 18 impacts to which AgResearch will particularly contribute to enable the pastoral,
agri-food and agri-technology sectors to achieve the outcomes they seek. Wherever possible, these impacts are aligned directly with
strategies developed by industry groups or major entities in the sector. This means that AgResearch’s strategy, as reflected in the 201419 Statement of Corporate Intent is co-owned with the sector that it supports, as well as with the intent and priorities of the Government as
shareholder. The identified impacts are as follows:
Outcome area
Dairy On-Farm
Meat & Fibre On-Farm
Dairy Off-Farm
Impacts
1
Improved production from home-grown feed
2
Improved rate of genetic gain in the national herd
3
Adoption of new farm management practices which improve productivity
4
Improved animal health and milk quality
5
Control targets met for nationally monitored diseases
6
Improved animal welfare
7
Improved productivity of forage
8
Improved productivity in meat- and fibre-producing animals
9
Improved animal health status of meat- and fibre-producing animals
10 Continuous improvement in farm management practices
11 New high-value dairy and food solution products and processes
AgResearch 2015 Annual Report [2]
Meat & Fibre Off-Farm
12
Pan-Sector and Māori
Agribusiness
13
14
15
16
17
18
Meat products and processes which consistently meet the needs of existing and
new markets
Improved processing efficiency
Higher value wool products
Reduced environmental footprint of pastoral farming operations
Practical policy solutions developed and adopted
Improve on-farm productivity in Māori agribusiness enterprises
New products from Māori agribusiness enterprises
The AgResearch management structure comprises:
•
Partnerships & Programmes to manage, by portfolio, the relationships with industry partners;
•
Research to undertake the activities of research and development;
•
Shared Services to provide enabling services and systems; and
•
Finance & Business Performance to provide monitoring and evaluation and to support corporate governance.
AgResearch 2015 Annual Report [3]
Chair and Chief Executive’s review
The 2014/15 financial year has been one of successes and challenges for both AgResearch and our sector. We have capitalised on our
successes and successfully navigated the challenges, thanks to a concerted effort from staff and close relationships with our stakeholders.
It has been a very successful year of significant science achievements, driving impacts and delivering outcomes for the pastoral, agri-food
and agri-technology sectors. One example of many is the major gains in our work to reduce methane emissions from sheep and cattle,
which has the potential to reduce New Zealand’s greenhouse gases. In research for the Pastoral Greenhouse Gas Research Consortium
and the New Zealand Agricultural Greenhouse Gas Research Centre, our scientists have identified five different animal-safe compounds
that can reduce methane emissions from sheep and cattle by 30% - 90%.
Other results showed for the first time that cattle vaccinated with a methanogen protein can produce antigen-specific antibody in both
blood and saliva, and these antibodies are delivered to the rumen – providing good support for the idea that ruminants could be
immunised to reduce methane production. This is in addition to the work for a Global Partnerships in Livestock Emissions Research
project done in conjunction with the US Department of Energy’s Joint Genome Institute. It found differences between high methane and
low methane output sheep which, if changes could be implemented across New Zealand’s pastoral sector, could reduce New Zealand’s
greenhouse gases by 5%.
As well as potentially enabling New Zealand to meet its commitments to address global climate change, these approaches are likely to
have a substantial favourable impact on animal productivity, which should encourage farmer uptake and have strong economic benefits to
New Zealand. AgResearch and our partners are now focussing our resources on validating these encouraging early results. More
examples of our research projects across the organisation and the benefits they are delivering for our sector are detailed in the following
pages.
AgResearch constantly balances shifts in agricultural research needs – and therefore revenue – with the need to respond to emerging
science opportunities to maximise impact for New Zealand’s pastoral sector.
Given the changing needs of our sector and focus areas for government investment, the Board and management team carried out a very
thorough review of our business model in the first half of the financial year. This resulted in the development of business plans to
accelerate several areas where we and our stakeholders feel an enhanced AgResearch investment could create greater value for New
Zealand. At a high level these areas include:
•
Assisting New Zealand firms in their desires to move up the value chain by growing our R&D activities in food safety and
security and innovative, high value food products
•
Working much more closely with Māori agribusiness across the agriculture value chain
•
Increasing our R&D to develop future dynamic farm systems that achieve economic, social, cultural and environmental
outcomes
•
More strongly integrating R&D in animal and forage sciences into a farm systems framework
•
Growing our, and assisting others’, understanding and planning for adoption and practice change behaviour to ensure
technology and knowledge generated from R&D is taken up and deployed on New Zealand farms.
Growing the work we do with Māori agribusinesses across the value chain has involved projects such as a cultural competency
programme for staff, signing Memoranda of Understanding with Te Tumu Paeroa and the Poutama Trust and the Board’s approval of our
Māori Agribusiness Business Investment Case in May. The changes will enable AgResearch to create more impact for New Zealand while
supporting the aspirations of these groups.
We have been investing more of our Core Funding towards these growth areas in order to catalyse new projects and grow our (and New
Zealand’s) capability in these areas. Although still relatively early days, we are pleased that the level of stakeholder interest and direct
financial co-investment are well ahead of our expectations and are well on-track to deliver real benefits for New Zealand. This is one
testament to the willingness of sector leaders to co-invest in new innovations for their business. More examples of where we are investing
our Core Funding can be found on page 52.
While we have increased science capacity in areas, like the above, where we see opportunities for our work to increase the benefit to New
Zealand, we also needed to make the difficult decisions to reduce the size of other areas of science and support staff to reflect our view of
the current and future need.
AgResearch’s operating profit and surplus before tax for the year both exceeded budget, a good result considering the $5.4m drop in
group revenue compared to 2014. This performance was the result of targeted operating cost savings and lower extraordinary
items. Nonetheless, operating margin and operating margin per FTE are slightly less than the prior year as a direct result of the volatile
revenue environment we operate in and a relatively high proportion of fixed costs. We will need to remain vigilant.
Our overall financial position remains very strong. We have cash reserves of $59.9 million available to fund our investment areas,
especially our new campuses at FoodHQ (Palmerston North) and Lincoln Hub, the plans for which have advanced significantly this year.
Property revaluations during the period have seen our equity position increase by $9.6 million to $226.5 million at year end.
Increasing our science vitality has been an area of focus for us in the last few years, with initiatives such as our Science and Technology
prizes, Emeritus Scientist positions and increasing our number of PhD students and Post-doctoral researchers. In the last year 121
graduate students were completing post-graduate qualifications with supervision from AgResearch staff, compared with 89 students in
2012.
Our drive to increase the quality of our science is also delivering results, with 66 papers published in 34 bench mark high-impact journals –
our highest-ever number. In addition, 2014 saw our highest-ever number of peer-reviewed papers per FTE. We are also collaborating
more with other organisations with 51% of our publications being co-authored with international authors. Connecting NZ science with the
world’s best remains an important measure for us.
Domestically, the research landscape is also changing to emphasise collaboration, and our deep involvement in the National Science
Challenges reflects this. We are the lead organisation for the Our Land and Water Challenge, and we are contributing to six of the other 10
Challenges: High Value Nutrition, New Zealand’s Biological Heritage, Science for Technological Innovation, A Better Start, Aging Well and
Healthier Lives.
AgResearch 2015 Annual Report [4]
We are also a key participant in the New Zealand Food Safety Science and Research Centre along with Massey University, Cawthron
Institute, ESR, Plant & Food Research, University of Auckland and University of Otago.
Over the last 12 months we have continued to develop the master plans for our four campuses as we lead the creation of science,
education and agri-business hubs and clusters. We have updated our Future Footprint business case to reflect the increased momentum
the hub concepts have gained since our original October 2012 business case, with significant integrated development planned at both
Lincoln and Palmerston North. Similarly, we are very pleased to be partnering with the dairy sector in developing the Southern Dairy Hub a research, demonstration and education facility for southern dairy farmers.
Workplace health and safety has always been important for AgResearch and this is reflected in our tertiary employer accreditation with the
Accident Compensation Corporation. This past year we have focussed on increasing our level of near-miss reporting, thereby improving
our ability to identify potential safety issues before they cause harm. Nothing is more important than ensuring our staff go home safely
each night.
The end of the 2014/15 financial year saw the retirement of director Dr Mike Dunbier, after six years on the board. We thank Mike for his
significant contributions over his two terms – his work has been much appreciated. In his place, we welcome Dr Paul Reynolds, who
recently retired as Chief Executive and Secretary for the Environment at the Ministry for the Environment, and we look forward to
benefiting from his expertise.
Finally, our successes this year have been thanks to our staff. Their dedication to delivering the best science outcomes for New Zealand’s
agricultural sector continues to inspire us.
Sam Robinson
Chair
Dr Tom Richardson
Chief Executive
AgResearch 2015 Annual Report [5]
Corporate governance
The Board promotes the highest standards of corporate governance practice and ethical conduct by all directors and employees of
AgResearch Limited and its subsidiaries. The Board endorses the overall principles embodied in the New Zealand Institute of Directors’
“Code of Practice for Directors”. It has only independent directors on the Board, whose skills and experience bring balance and diversity
to decision making.
Role of the Board
The Board is responsible to shareholders for charting the direction of the Company by:
•
setting objectives, strategy and key policies; and
•
monitoring management’s running of the business to ensure it is aligned with the direction set.
The Board delegates the conduct of the day-to-day affairs of the Company to the Chief Executive. The Board is responsible for the
appointment, from time to time, of the Chief Executive and annually reviews their performance.
The workings of the Board and its code of conduct are governed by the Companies Act 1993, AgResearch’s constitution, the Crown
Research Institutes Act 1992, the Crown Entities Act 2004, the annual Statement of Corporate Intent and the Board’s manual. This manual
sets out all the functions and operating procedures of the Board. The policies approved by the Board clearly set out those matters on
which only the Board can make decisions. These include dividend payments, solvency certificates, raising new capital, major borrowings,
approval of the annual financial statements, appointment of directors to subsidiaries and associates, major capital expenditure and
acquisitions.
Each year, the Company produces a Statement of Corporate Intent and an operating budget, which are reviewed and approved by the
Board. Monthly management accounts are prepared and these are reviewed by the Board throughout the year to monitor management’s
performance against the budget and the Statement of Corporate Intent.
Independent professional advice
With the prior approval of the Chair, each Director has the right to seek independent legal and other professional advice at the Company’s
expense concerning any aspect of the Company’s operations or undertakings to assist in fulfilling their duties and responsibilities as
directors.
Director education
The Board had a budget of $15,000 to assist Directors with the financial costs of attending courses and conferences on governance
matters. Directors who attend report back at Board meetings on matters learnt that would improve the governance of the Company. The
Chair authorises expenditure from this budget.
Board membership
The constitution currently sets the size of the Board at a minimum of two Directors and a maximum of nine Directors. The Board in the
financial year consisted of the Chair and eight other Directors. Directors are generally appointed for a three-year term and may be
reappointed for further terms.
During the year following appointments were made to the Board:
•
Michelle Alexander on 1 July 2014
At 30 June 2015 the Board consists of the Chair and eight other Directors.
The constitution does not permit Directors to hold shares in the Company.
Directors’ and Board Committee meetings
The table below sets out the Board and Committee meetings attended by Directors during the course of the financial year. The Board has
established two standing committees to guide and assist the Board with overseeing certain aspects of corporate governance – the Audit
and Risk Committee and the Remuneration Committee. The Board and each Committee is empowered to seek any information it requires
from employees in pursuing its duties and to obtain independent legal or other professional advice.
Board of Directors
Sam Robinson
Barry Harris
Teresa Ciprian
Dr Michael Dunbier
Jeff Grant
Andrew Macfarlane
Tania Simpson
Michelle Alexander
Dr Peter Stone
Number of meetings
held
Board
meetings
attended
10
9
9
10
8
8
9
9
10
Audit and
Risk
Committee
meetings
attended
n/a
1
4
n/a
n/a
n/a
3
4
2
Remuneration
Committee
meetings
attended
3
3
n/a
3
n/a
n/a
n/a
n/a
n/a
10
4
3
AgResearch 2015 Annual Report [6]
Corporate social responsibility report
AgResearch has incorporated into its Statement of Corporate Intent its commitment to meet high standards of ethical, social and
environmental responsibility.
This is demonstrated by AgResearch:
•
operating in accordance with high standards of legal and ethical compliance;
•
acting in an environmentally responsible manner; and
•
actively participating in, and communicating with, the communities it serves and those within which it is located.
Stakeholders include staff, collaborators and partners, customers, the pastoral sector and community.
Ethical compliance
A significant area of legal and ethical compliance for AgResearch is its legal and moral responsibilities concerning the use of animals in
science. AgResearch values its authorisation to use animals for research and the welfare of those animals is of primary importance.
Approval to use animals for research or teaching must be given by an Animal Ethics Committee (AEC), which operates under a Code of
Ethical Conduct (CEC) approved by the Director-General for the Ministry of Primary Industries. AgResearch maintains three such
Committees, which function under a common CEC. The Committees have representatives from AgResearch farm staff and science, an
animal welfare officer and a minimum of three external representatives from the local community (lay persons) appointed in accordance
with the legislated requirements under the Animal Welfare Act. The AgResearch CEC requires that all approved projects are regularly
monitored by the appropriate AEC to ensure compliance.
AgResearch’s Human Research and Ethical Conduct Policy requires that any research involving human participants is conducted in
accordance with ethical standards. AgResearch seeks to promote ethical practices in research and to ensure that all researchers are
aware of ethical issues concerning research activities that involve human participants and/or human samples.
Robust financial risk management is important to AgResearch. AgResearch’s Fraud Policy facilitates the detection of fraud and sets the
reporting and investigation processes applied when a fraud, theft or corruption is alleged. AgResearch’s regularly promoted Protected
Disclosure Policy encourages staff to disclose information related to serious wrongdoing, misconduct or any serious and sensitive
concerns.
Internal environmental and social initiatives
Internally, there is a process of continuous improvement operating for environmental sustainability. Recycling systems are in place at all
sites and environmentally friendly products are the primary choice for cleaning.
As a positive step towards reducing AgResearch’s carbon footprint, wherever possible, alternatives to travel are promoted through the use
of communication facilities, e.g. tele-conferencing and video-conferencing.
Carbon reporting is in place for travel, petrol, diesel, heating fuel, electricity, refrigerants, fertiliser and livestock.
Health and Safety for staff is a strong focus on every campus. Prevention of injury from workplace hazards and focus on injury
management and rehabilitation are top priorities for AgResearch, with the support of Health and Safety professionals based on each site.
Over the past year the Health and Safety Committees continued to highlight aspects of personal health management to staff and have
recently launched a Discomfort, Pain and Injury Prevention Initiative. Other health initiatives have included flu vaccinations, skin checks
and site-based seminars, displays, sports, massage and recreation.
The latest annual audit under the ACC Partnership Programme has again accredited AgResearch with the tertiary level, this being the
highest level for workplace safety management practices.
Environmental responsibility through research
AgResearch is a core founding member of the New Zealand Life Cycle Management (NZLCM) Centre, which was established in 2009.
The Life Cycle Assessment (LCA) team in AgResearch is actively involved in activities of this Centre and it has provided new opportunities
to collaborate with industrial partners as well as other CRIs and Massey University on environmental footprinting projects. These have
included industry-funded projects on carbon and water footprinting and on greenhouse gas LCA databases. Currently, AgResearch Land
and Environment Principal Scientist Dr Stewart Ledgard and the Associate Professor of the NZLCM Centre are jointly supervising a PhD
student, based at AgResearch’s Ruakura campus, who is applying LCA in agricultural systems.
AgResearch’s goal is to further develop its LCA and LCM capability in agricultural systems, to enhance New Zealand’s capacity to reduce
the environmental impacts of agriculture and to assist in ensuring access to environmentally-sensitive markets of its clients.
Community participation and communication
AgResearch has a strong commitment to communicating the value of its science to the New Zealand public and other stakeholders, to
demonstrate how its research and development are fundamental to the pastoral sector remaining internationally competitive and
sustainable and how the organisation contributes to New Zealand’s well-being.
This year’s National Agricultural Fieldays at Mystery Creek theme was ‘Growing capability in agribusiness’ and the closely aligned theme
of the AgResearch stand was “Science to grow agribusiness capability”. It featured our work that farmers could use to increase their farm’s
performance - ranging from genetics to plant cultivar selection and the identification and eradication of pests.
A range of AgResearch annual sponsorships foster relationships with key pastoral stakeholders and the community. These include being a
sponsor of the Te Ahuwhenua Māori Award, recognising and supporting excellence in Māori farming, and lead sponsor of the New
Zealand Grassland Association, supporting their aim of enhancing pastoral agriculture through providing a forum for communication of
science, technology and knowledge.
AgResearch science staff regularly communicate with stakeholders at conferences, farm events and seminars as well as providing
information for media, reviewing journal papers and students’ theses, participating in scientific societies, hosting visitors from research and
education organisations and hosting international government representatives.
AgResearch 2015 Annual Report [7]
Collaborations and partnerships
AgResearch continues to expand and develop its partnerships and collaborations with other Crown Research Institutes, Universities,
Māori agribusiness and the pastoral sector, as well as linkages with international research organisations.
AgResearch especially values its partnerships with the pastoral industries including, but not limited to, DairyNZ, Beef+Lamb NZ, Fonterra,
Ravensdown, Ballance Agri-Nutrients, Deer Industry NZ, Dairy Goat Co-operative, all Regional Councils and the relationship with PGG
Wrightson through a joint venture with AgResearch’s subsidiary Grasslanz Technology Limited.
In New Zealand AgResearch has a commitment to many sector collaborations including those with the Pastoral Greenhouse Gas
Research Centre, Pastoral Genomics, The EpiGen Consortium, Hopkirk Research Institute, the Riddet Institute, the Liggins Institute,
Gravida (National Centre for Reproduction and Development), the BioProtection Centre of Research Excellence, Massey and Lincoln
Universities, Joint Graduate School in Dairy Research and Innovation, the University of Otago including the Centre for Reproduction and
Genomics, the National Centre for Biosecurity and Infectious Diseases and the New Zealand Agricultural Greenhouse Gas Research
Centre.
AgResearch has important relationships with key Māori incorporations, trusts and collectives including, but not limited to, Te Tumu Paeroa,
Miraka, Ngāti Apa Settlement Trust, Poutama Trust, Waituhi Kuratau Trust, Tuwharetoa Collective, Nga Uri o te Ngahere Trust, Aohanga
Farm Trust and Wairarapa Moana Inc.
AgResearch and Te Tumu Paeroa: the new Māori Trustee have signed a memorandum of understanding (MOU) which signifies a new
long-term relationship with positive implications for the future of Māori agribusiness in New Zealand and wide-ranging research
opportunities to optimise Māori farm performance.
AgResearch is actively involved in many innovation hubs around New Zealand, whose aims are to build centres of collaborative research,
promoting the regions capability and delivering innovation, productivity and sustainability across the agri-sector. AgResearch is a
committed partner in the Lincoln Hub, Waikato AgriHub and FoodHQ.
In 2013, the Government launched the National Science Challenges which are designed to take a more strategic approach to the
Government’s science investment by targeting a series of goals that would have major and enduring benefits for New Zealand.
AgResearch is participating in three Challenges (High-Value Nutrition, New Zealand’s Biological Heritage, Science for Technological
Innovation), and is the host of the Our Land & Water Challenge.
AgResearch 2015 Annual Report [8]
Being a good employer
AgResearch is committed to being a good employer and has introduced many initiatives to build a great place to work.
Organisational culture and staff engagement
Whilst the overall level of staff engagement assessed in our 2015 staff survey did not meet our goal, some important indicators (such as
staff members’ sense of commitment to AgResearch and staff feeling inspired to go the extra mile to help AgResearch succeed) showed
significant improvements over 2014. We expect initiatives put in place during 2014/15 to increase these measures further in 2015/16,
including:
•
leadership development, particularly in the areas of change leadership and developing a coaching culture;
•
enhanced recognition of high performance by allocating 1% of our 2014/15 remuneration budget to lump sum performance
awards.
Accountable and effective leaders and managers
AgResearch’s leaders demonstrate clear strategy, direction and accountability as well as motivating and enabling their teams to meet
organisational goals. Our 2015 staff engagement survey showed significant improvements in the percentage of staff who agreed they
understood how their performance was measured, that line managers communicated goals and objectives effectively with them and that
line managers involved the team in making changes since the last survey.
Recruitment, selection and induction
Recruitment and selection of senior scientists, particularly in growing areas of science capability, is an on-going industry and
organisational challenge. We make effective use of the ScienceNZ recruitment system (https://careers.sciencenewzealand.org/) which enables
pan-CRI employment branding and sourcing via a shared portal and supporting software. New staff are inducted into AgResearch as a
whole and the team in which they work, including thorough coverage of health and safety expectations and responsibilities.
Staff development
In accordance with the 70:20:10 philosophy of learning, we aim to have 70% of our staff development result from stretching assignments
in project work, for which opportunities are identified by line managers and staff members themselves. Leaders work with staff to identify
specific development needs as part of our Apex objective-setting and performance appraisal process. 20% of our staff learning is from
others through feedback, coaching, mentoring and networking and this is an area that we have strengthened over the last year through our
Coaching Capability programme.
For the 10% of learning that takes place through formal learning methods, we have a comprehensive Learning & Development programme
that supports our competency and leadership development frameworks as well as the development of role-specific skills. Learning and
Development is available to all staff and provided through multiple avenues including short courses, on-the-job learning, conference
attendance, professional membership and university study. We support some staff members who are working towards postgraduate
qualifications.
Senior leaders meet on a bi-annual basis to review and plan the growth of organisational talent and those staff being considered for
promotion.
Flexibility and work design
A number of staff continue to take up flexible work opportunities under AgResearch’s Staff Wellbeing policy, which offers flexible options to
attract and retain staff at different stages of their lives. Some of these options include working part-time, flexible working hours and a
gradual retirement programme which assists with succession planning, capability retention and business continuity.
Remuneration, recognition and conditions
Our remuneration strategy focuses on rewarding ongoing high performance through increased remuneration and lump sum payments to
recognise particular outstanding achievements. We monitor our overall remuneration levels using market data to ensure our remuneration
continues to be competitive.
Harassment and bullying prevention / EEO
We aim to have a positive working environment for all staff. Our ‘The Way We Work' principles set clear standards and expectations
regarding workplace behaviours. Bullying or harassment is not tolerated in the workplace. Any allegations are fully investigated, often in
collaboration with the Public Service Association.
We have good Equal Employment Opportunity (EEO) practices including enabling staff to purchase additional annual leave and have
flexible working hours.
Safe and healthy environment / wellness
We continue to hold a tertiary employer accreditation with ACC. Health and safety advisors are aligned to all sites and work actively with
injured staff and their leaders to assist with rehabilitation plans. Each site has health and safety coordinators who facilitate awareness and
compliance. Accidents and near misses are investigated by line managers with support from health and safety specialists and the Board
receives reports on significant incidents and overall statistics at each of its meetings.
During 2014/15 we focused on increasing our level of near miss reporting, which is improving our ability to identify safety issues before
they cause harm, and we have responded to quad-bike-related incidents during the year by replacing quad bikes with vehicles that are
intrinsically safer wherever possible.
We also offer a range of wellness initiatives such as influenza injections for all staff, retirement planning seminars, reimbursement of eye
tests and subsidised prescription glasses or lenses. Our Employee Assistance Programme provides a supportive and strictly confidential
framework to assist staff with difficult personal or work situations.
AgResearch 2015 Annual Report [9]
Commentary on progress toward achieving AgResearch’s Statement of
Core Purpose (SCP) outcomes
For the year ended 30 June 2015
AgResearch’s Statement of Core Purpose (SCP) defines four outcomes. Progress toward achieving those outcomes is summarised
below. Further detail on the impact indicators underpinning these outcomes is set out in the following section. In some cases, it has been
possible to quantify progress towards measurable target outcomes. In other cases, we have described examples of AgResearch’s
research, development, technology and knowledge transfer activities that are expected to contribute to delivering our SCP outcomes.
AgResearch’s purpose is to enhance the value, productivity and profitability of New Zealand’s pastoral, agri-food and agri-technology
sector value chains to contribute to economic growth and beneficial environmental and social outcomes for New Zealand.
AgResearch will fulfil its purpose through the provision of research and transfer of technology and knowledge in partnership with key
stakeholders, including industry, government and Māori, to achieve the following outcomes:
A.
Increase the value of these industry sectors to the New Zealand economy through the development of high-value pastoralbased products and production systems that meet current and future global market needs

According to Statistics New Zealand's InfoShare database, the value of exported products covered by Harmonised
System (HS) codes 02, 04, 15, 16, 35, 41, 42, 51, 56, 57, 58, 59, 60, 61, 62 and 63 (which represent our industry
sectors)I by New Zealand was $22.5 billion for the year ending June 2015. The trend was (in $ billion):

B.
Position New Zealand as a global leader in the development of environmentally sustainable, safe and ethical pastoral production
systems and products

Out of 133 countries studied in the Social Progress Index initiated by Professor Michael Porter, the Social Progress
Imperative and Deloitteii, New Zealand was ranked fifth overall in 2015 (first in 2014), though our index value
increased from 2014, as shown below.


C.
More specific measures of the impacts that contribute to this outcome are shown on the following pages.
Some of the key contributions by AgResearch to this outcome during FY15 were:
Developing improved breeding strategies for grasses that target multiple traits to lift the rate of gain in the
Forage Value Index.
Working with Beef+Lamb New Zealand to survey New Zealand’s earthworm population, which improves
annual pasture growth and boosts environmental performance.
Leading the Hungate1000 project, an international collaborative effort to generate a reference set of rumen
microbial genome sequences funded by the New Zealand Government in support of the Livestock Research
Group of the Global Research Alliance on Agricultural Greenhouse Gases and with the US Department of
Energy Joint Genome Institute as part of their competitive Community Science Program.
Working with New Zealand biotechnology company PolyBatics Ltd to develop an improved test for bovine
tuberculosis by displaying three or four specific M. bovis proteins on the surface of polyester beads
(bionanoparticles).
Carrying out trials of a product containing a natural insecticide, Yersinia entomophaga, to fight one of New
Zealand’s worst agricultural insect pests, Black Beetle, including investigating the optimum application rate
and production scale-up.
Carrying out Porina management field days on the West Coast of the South Island in association with the
Sustainable Farming Fund.
New Zealand was ranked 34th (32nd in 2014) on the ecosystem sustainability component of the index, which included
measures of greenhouse gas emissions, water withdrawals as a percentage of resources and biodiversity and habitat
protection. New Zealand’s index value for this component was unchanged from 2014. Specific measures of the
impacts that contribute to this outcome are shown on the following pages.
Some of the key contributions by AgResearch to this outcome during FY15 were:
Identifying five different animal-safe compounds that can reduce methane emissions from sheep and cattle
by 30 to 90%.
Contributing to the FoodHQ Ewe Milk Products and Sheep Dairying conference, which attracted 160
delegates and included farmers, consultants, agricultural industry representatives, scientists and staff from
the Ministry for Primary Industries and Ministry of Business, Innovation and Employment. AgResearch Food
Nutrition & Health.
Establishing a new dairy goat research facility at our Ruakura campus, focused on growing the supply of
dairy goat milk through improved forage supply systems and superior animal welfare practices.
Working with DairyNZ, Fonterra, the Dairy Companies Association of New Zealand, Beef + Lamb New
Zealand, Massey and Lincoln Universities and the Ministry of Business, Innovation and Employment in the
Pastoral 21 project to boost farm productivity and reduce environmental impacts.
Ensure that New Zealand’s pastoral, agri-food and agri-technology sectors are able to protect, maintain and grow its global
market access

We do not have an overall measure of this outcome. Specific measures of the impacts that contribute to this outcome
are shown on the following pages.

A key contribution by AgResearch to this outcome during FY15 was:
Holding the “Meating the Future” Workshop which was the biggest in the Meat Industry Workshop’s 11-year
history, covering future technologies, food safety and future research opportunities.
AgResearch 2015 Annual Report [10]
D.
Increase the capacity of rural communities and enterprises to adapt to changing farming conditions in ways that balance
economic, environment, social and cultural imperatives

We do not have an overall measure of this outcome. More specific measures of the impacts that contribute to this
outcome are shown on the following pages.

Some of the key contributions by AgResearch to this outcome during FY15 were:
Supporting the second annual DairyNZ Year 13 Science Career Day, which aims to educate senior science
students about the many and varied career opportunities within New Zealand agriculture along with LIC and
the University of Waikato.
Signing a memorandum of understanding (MOU) with Te Tumu Paeroa: the new Māori Trustee that signifies
a new long-term relationship with positive implications for the future of Māori agribusiness in New Zealand.
Carrying out research for the Whai Hua PGP programme with partners Wairarapa Moana Incorporation and
Miraka Ltd that aims to develop natural dairy milk products targeting health-conscious consumers in Asian
and New Zealand markets.
Declaration that all activities undertaken by the Crown Research Institute are within the scope of operation as specified in its
SCP.
All of the activities undertaken by AgResearch are:

within the scope of our Statement of Core Purpose, or

to assist collaborating research organisations achieve their Core Purposes, where it is most efficient for AgResearch
to provide the capability to do so, or

to develop capability that will enable us to undertake activities to achieve our Core Purpose.
AgResearch 2015 Annual Report [11]
Impact indicators
For the year ended 30 June 2015
AgResearch’s 2014-19 Statement of Corporate Intent (SCI)i identified the following impacts and indicators against which our progress to
achieve our SCI outcomes can be measured. Only limited progress is expected to be observable for many of these targets after three
years, given that many of the impacts are expected to be achieved over a longer timeframe. Also for this reason, the organisations that
measure progress toward those impacts do not report that progress every year and, therefore, objectively-measured progress cannot be
reported for all impacts. Finally, where indicators are based on industry strategies, the strategies referred to below are those that were
current when AgResearch’s 2014-19 SCI was drafted.
In addition to the indicators shown below, the 2014/15 AgResearch Highlights document includes 12 case studies of impacts that
AgResearch has delivered to our sector over the last several years.
No.
Impact
Indicator
Progress Report
Profit from Productivity,
which describes how much of
a farm’s profit in any given
year is due to production
efficiency gains made on that
farm over a period of time.
This is measured across the
whole of New Zealand dairy
farming, as well as at farm
level.
Profit from productivity as reported by DairyNZii was $1,214/ha for the year
ending 2014. The trend was (in $/ha):
Dairy On-Farm
1
Improved
production from
home-grown
feed
(Statement of
Core Purpose
(SCP)
Outcomes A
and B)
While there is significant variability from year to year, there is a clear upward
trend in this measure.
Dairying’s economic contribution to national prosperity is demonstrated by the
value of its exportsiii, which were $13.18 billion in the year to June 2015:
Dairying’s economic
contribution to national
prosperity.
2
Improved rate
of genetic gain
in the national
herd
(SCP
Outcomes A
and B)
3
Improved
animal health
and milk quality
(SCP
Outcomes A, B
and D)
Components of animal
production efficiency,
specifically rate of genetic
gain in Breeding Worth in the
national dairy herd.
The Breeding Worth for Holstein-Friesian cows born into the national herd in
2013 was 138, as reported by DairyNZ and LICiv (data for cows born in 2014
are not yet available). The trend was:
The upward trend in this measure has clearly accelerated since the late 1990s.
Tracking progress on specific
industry initiatives and
regular objective assessment
of border security and
industry preparedness for
biosecurity incursions.
One long-term industry initiative has been to manage somatic cell count in milk.
According to DairyNZ and LICv, the national herd test average for somatic cell
count for the 2013-14 season was 187,000 cells per ml. This figure was lower
than for the 2012-13 season and was the lowest overall somatic cell count
during this period (in thousands of cells per ml):
The Controller and Auditor General reported on New Zealand’s border security
and preparedness for biosecurity incursions in 2013vi and found that “MPI and
its predecessor organisations responsible for biosecurity have been, by and
large, successful at responding to incursions, dealing with between 30 and 40
incursions a year. They have developed generally high-trust relationships with
partners by working together on responses and have improved biosecurity by
sharing knowledge and fostering innovative practice.”
The Auditor General noted some weaknesses and that improvements were
being made but that there was still a lot to do.
4
Adoption of new
farm
management
practices which
improve
productivity
Practice change measures
such as the adoption of farm
planning.
The trend in dairy farm profit from productivity is shown under Impact 1 above.
The cumulative contribution to that trend from total factor productivity, from the
2002-03 to 2013-14 season, was -6% according to our analysis of data
presented by DairyNZvii. The trend over that period was:
.
(SCP
Outcomes A, B
and C)
DairyNZ noted that “High milk prices and dry summer/autumn conditions
generally lead to productivity losses”.
No recent reports were available on the adoption of farm planning in the dairy
sector.
5
Control targets
met for
nationally
monitored
diseases
(SCP
Outcomes A, B
and C)
Maintain national TB infected
annual period prevalence at
the lowest possible level and
at no greater than 0.4%
during the strategy (i.e. to
2025).
According to OSPRIviii, the annual period prevalence percentage of bovine Tb
infected herds in the year ending 2014 was 0.21%. The trend was:
The prevalence of TB infected herds remains close to its lowest recorded level.
AgResearch 2015 Annual Report [12]
No.
Impact
Indicator
Progress Report
6
Improved
animal welfare
Compliance with the New
Zealand Animal Welfare
Code (2010) for dairy cattle.
DairyNZ reported that by the end of 2013/14, there were 211 accredited
national body condition score scorers and a lameness scoring system was
developed and training was provided through Healthy Hoofix.
According to the Beef + Lamb Economic Servicex, the weighted average sheep
and beef farm was forecast to have a profit before tax for the season ending
2015 of $26.90per stock unit. The trend was as follows:
(SCP
Outcomes A
and B)
Development of new forages
and forage management
solutions for pastoral
breeding and finishing farms
that will contribute to a step
change in farm productivity.
Improved
productivity in
meat animals
Increase in production and
profit from lambs and beef
cattle per hectare.
(SCP
Outcomes A
and B)
EBIT/kg venison produced
raised from $2.34/kg in 2013
to $3.82/kg in 2023.
(SCP
Outcomes A, B
and C)
Meat and Fibre
On-Farm
7
8
Improved
productivity of
forage
While there has been considerable variability from year to year, there has been
an overall upward trend in this measure.
From the number of ewes and cattle and the total inspected production of lamb
and beef (with veal)xi, the weight of lamb produced per ewe in the season
ending 2014 was 18.6 kg. The trend was:
The weight of beef and veal produced per adult cattle was 61kg. The trend
was:
By these measures, the productivity of lamb production has continued to
increase over time while the productivity of beef production has changed little
over time. It should be noted that most of the cattle included in the beef
production calculation were dairy cattle so more important productivity
measures for most of those animals were dairy-related measures.
Steer and heifer carcass weights at slaughter averaged 276kg for the season
ending 2014. The trend was:
Bull carcass weights at slaughter for the season ending 2014 averaged 301kg.
The trend was:
While these weights were variable from year to year, the trend over time was
downwards in each case.
According to Deer Industry New Zealandxii, earnings before interest and tax
(EBIT) of deer farms averaged $2.22 per kg of venison, unchanged from 2013.
The trend was:
Deer Industry New Zealand’s Passion to Profit programme aims to increase
this measure by a further $1.60/kg by 2023.
9
Improved
animal health
status of meat
animals
(SCP
Outcomes A
and C)
10
Continuous
improvement in
farm
management
practices
(SCP
Outcomes A, B
and D)
Contribution to fulfilling the
National Pest Management
Strategy for Bovine Tb.
The trend in annual period prevalence for bovine TB was reported for Impact 5.
Contributions to reducing the
incidence and cost of
economically significant
pests and diseases in sheep,
beef and deer.
In addition to indicators of
improved farm productivity
and management practices
(Impacts 7, 8, 9, 15 & 16),
AgResearch will contribute to
improved adoption and value
chain alignment in the red
meat sector.
Indicators of farm productivity and profitability were shown above for indicators
7 and 8.
Contributions to new
combinations of products,
processes and services for a
range of foods and food
Researchers from University of Auckland, the University of Otago, Massey
University, AgResearch and Plant and Food Research lead the High Value
Nutrition National Science Challenge, which aims to develop high value foods
with validated health benefits, including dairy products.
Farm planning using software such as Farmax has been estimated to have
added $425 million in gross margin to sheep and beef farms over ten years to
2013xiii.
Dairy Off-Farm
11
New high-value
dairy and food
solutions
products and
AgResearch 2015 Annual Report [13]
No.
Impact
Indicator
processes
solutions with high dairy
content.
(SCP
Outcomes A, B
and C)
Progress Report
Meat and Fibre
Off-Farm
12
13
14
Meat products
and processes
which
consistently
meet the needs
of existing and
new markets
(SCP
Outcomes A, B
and C)
Improved
processing
efficiency
(SCP
Outcomes A, B
and C)
Higher value
wool products
(SCP
Outcomes A, B
and C)
Contributions to new
differentiated products for
existing and new markets.
Researchers from University of Auckland, the University of Otago, Massey
University, AgResearch and Plant and Food Research lead the High Value
Nutrition National Science Challenge, which aims to develop high value foods
with validated health benefits, including meat products.
New technologies that
contribute to improved
processing efficiency.
No quantitative data were available for the past year on the use of new
technologies to improve processing efficiency.
Contributions to new
differentiated fit-for-market
products for new markets.
According to Statistics New Zealand's InfoShare database, the f.o.b. value of
New Zealand’s exports of Carpets and other textile floor coverings (HS57),
relevant to these stain resistance and insect resistance technologies in the year
to June 2015 totalled $130 million. The trend over time, in $million, was:
Pan-Sector and
Māori Agribusiness
15
Reduced
environmental
footprint of
pastoral farming
operations
50% of dairy farms with
waterways will have a
riparian management plan by
31 May 2016.
DairyNZ reported in 2014 that 20,400km of waterways had been fenced offxiv .
(SCP
Outcomes B
and C)
16
Practical policy
solutions
developed and
adopted
(SCP
Outcomes B, C
and D)
AgResearch hosts the Our Land and Water National Science Challenge, which
carries out research to enhance primary sector production and productivity
while maintaining and improving our land and water quality for future
generations.
Inform three policies each
year in the areas of natural
resource management and
primary production activity at
regional or national scale.
AgResearch staff contributed during the year to informing policies that included
the Waikato Regional Council Healthy Rivers Plan for Change, Environment
Canterbury’s Canterbury Water Management Strategy and Environment
Southland’s Water and Land 2020 & Beyond project.
AgResearch’s contribution to developing and adopting policy solutions for
regional, district and unitary councils can be quantified by the science revenue
received from those councils. In FY15, that figure was $1.18 million according
to AgResearch’s financial records. The trend over time, in $million, was:
While this revenue was relatively stable for most of the period, it increased
significantly in FY14 and continued to increase in FY15.
17
18
Improved onfarm
productivity in
Māori
agribusiness
enterprises
(SCP
Outcomes A, B
and D)
New products
from Māori
agribusiness
enterprises
(SCP
Outcomes A, B
and D)
Contribution to improved
Māori agribusiness
enterprise productivity.
A report for the Ministry for Primary Industries by PricewaterhouseCoopers
developed a framework to analyse the potential economic impact of increasing
the productivity of Māori land. Among other findings, the report concluded that
“several prototype interventions associated with dairy farming result in large
economic returns relative to their economic costs, reflecting the high
productivity potential of dairy farming”xv.
Contribution to new products
from Māori agribusiness
enterprises.
AgResearch is a key research partner in the Whai Hua Primary Growth
Partnership programme with Ministry for Primary Industries co-investment of
$1.75 million for the three-year programme, worth $3.5 million in total. During
early 2015, the programme reported that “Two in-vivo efficacy trials have been
completed and preliminary results indicate that one of the target compounds
has been able to suppress the population of a specific pathogenic bacterium in
the gut of mice. This is an important finding from the perspective of future
marketing activities.”xvi
AgResearch 2015 Annual Report [14]
Non-financial operating indicators
For the year ended 30 June 2015
AgResearch’s 2014-19 Statement of Corporate Intent (SCI) identified the following non-financial operating indicators against which
progress to achieve the SCI operating outcomes are measured. Trends in these indicators over time are shown graphically in the right
hand column of the following table, with the first available value shown in blue on the left of the graph, and the latest available figure
shown in red on the right of the graph and the limits of the graph shown in black at the right. Years shown are financial years ending in
June 2015 or calendar years ending in December 2014xvii. Trends are shown for as many years as could be readily obtained for each
indicator. Target figures in [brackets] are from AgResearch’s 2014-19 SCI.
ID
Indicator
Definition
Measure [target] and trend
G.1
End user
collaboration
Revenue per FTE from commercial sources.
$102k [$102k]
G.2
Research
collaboration
Publications with collaborators. (Percentage of
publications with a) only AgResearch authors, b) with
other NZ authors, c) with international authors or d) with
a combination of NZ and international authors).
(a) 20% [13%]
(Data for this indicator are reported for calendar years.
(b) 29% [36%]
(c) 29% [34%]
(d) 21% [17%]
G.3
Technology &
knowledge
transfer
Commercial reports per scientist FTE.
1.0* [1.8]
*This figure may be understated due to
reports not being captured during the
transition to AgResearch’s new
publications database in FY15.
G.4
Science quality
Impact of scientific publications. (The average value of
2-year citations per document for scientific journals
assessed by SCImago, in which AgResearch staff
published during the year, weighted by the number of
AgResearch publications in each journal).
2.62 [2.7]
(Historical figures are calculated from the 2014 2-year
citations per document reported by Scimago for each
journal or conference. Data for this indicator are
reported for calendar years.)
G.5
Financial indicator
Revenue per FTE.
$213k [$211k]
ID
Indicator
Definition
Measure and trend
1.1
Confidence of
stakeholders
(a) Percentage and number of relevant funding partners
and other end-users that have a high level of confidence
in the CRI’s ability to set research priorities, and (b) the
percentage with confidence in the effectiveness of the
collaboration or partnership.
(a) 70% [65%]
(b) 80% [95%]xviii
Note that the MBIE CRI Stakeholder Survey from which
these measures are drawn was not carried out in 2015
so the figures shown here are from 2014.
1.2
Revenue from
stakeholders
Revenue coming directly from stakeholders. Excludes
revenue from central Government, includes coinvestment from stakeholders with central Government
$48.7m [$56m]
AgResearch 2015 Annual Report [15]
ID
Indicator
Definition
Measure and trend
2.1
Collection
requests
Percentage change in the number of requests and
enquiries for access to AgResearch’s publicly available
collections.
The Margot Forde Germplasm Centre
issued 3079 [4000] samples from its
collection.
2.2
Stakeholder
reports
Number of client reports submitted by AgResearch staff.
264* [600]
*This figure may be understated due to
reports not being captured during the
transition to AgResearch’s new
publications database in FY15.
2.3
Trade
publications
Number of published articles in stakeholder-relevant
outlets, including trade magazines, applied industry
journals, popular media and stakeholder blogs.
NA* [100]
*Data were not captured for this indicator
due to the transition to AgResearch’s
new publications database in FY15. An
alternative way to measure this indicator
will be obtained for FY16.
2.4
Licensing deals
(a) Total revenue, (b) number and (c) percentage of
licensing or other deals of CRI-derived IP (including
technologies, products and services) with New Zealand
and international partners per annum.
The AgResearch group received a total
of $10.513m [$9m] of royalty revenue.
Executed 11 [20] licensing and other
deals.
Of which 36% [85%] were with New
Zealand partners.
2.5
Adoption
Percentage of relevant end-users who have adopted
knowledge and/or technology from CRIs.
Note that the MBIE CRI Stakeholder Survey from which
these measures are drawn was not carried out in 2015
so the figures shown here are from 2014.
3.1
Effective
relationships with
Māori
Percentage of Māori agribusiness partners and endusers who rate AgResearch as “good” or better for
effective collaboration and partnering in the annual
customer relationship survey.
90% [95%] of stakeholders had adopted
knowledge or technology from
AgResearch in the past three yearsxix.
67%* [80%]xx
*Three Māori agribusinesses responded
to the survey out of six that were invited.
3.2
Revenue from
Māori
stakeholders
Revenue (direct and leveraged) from Māori agribusiness
stakeholders.
$1.04m [$1m]
4.1
International
linkages
a) Number and percentage of peer-reviewed scientific
papers co-authored with an international author.
AgResearch published 171 [100]
Scopus-indexed papers co-authored
with at least one international author in
the 2014 calendar year.
(Data for this indicator are reported for calendar years).
In 2014, papers with international
collaborators comprised 51% [50%] of all
Scopus-indexed papers published by
AgResearch during the calendar year.
b) Number of technologies licensed in from offshore.
0 [1] technologies were licensed in from
offshore during the financial year.
AgResearch 2015 Annual Report [16]
ID
Indicator
Definition
Measure and trend
4.2
Research
collaboration
(a) Number and (b) percentage of joint scientific peerreviewed publications and (c) number and (d)
percentage of IP outputs with other New Zealand or
international research institutions per annum.
a) AgResearch published 270 [180]
Scopus-indexed papers co-authored
with other NZ or international research
institutions.
(Data for items (a) and (b) are reported for calendar
years. Our approach to reporting items (c) and (d) was
re-evaluated during the year to draw on IP that was
recorded as “accepted” during the financial year in the
IPONZ patent, plant variety right and trademark
databases. The new approach avoids counting IP that is
protected in many different jurisdictions multiple times,
as we had previously done, and therefore provides a
clearer indication of the amount of IP produced by
AgResearch and its partners. The targets in our 2014
SCI applied to the previous approach and are therefore
not relevant to the new approach.)
b) This was 84% [87%] of all
AgResearch publications.
c) AgResearch produced 0 IP outputs
with other organisations during the
financial year.
d) This was 0% [41%] of AgResearch’s
10 IP outputs, for which the trend was:
5.1
Publications in
peer-reviewed
scientific journals
Number of peer-reviewed scientific papers per full time
equivalent (FTE) in research teams.
(Data for this indicator are reported for calendar years).
AgResearch published 338 Scopusindexed publications in the 2014
calendar year.
AgResearch published 0.75 [0.5]
Scopus-indexed papers per FTE in
research teams during 2014 calendar
year.
5.2
Quality of
scientific
publications
Number of publications in journals included in
AgResearch’s list of 34 benchmark high-impact journals
that are relevant to our SCPxxi.
(Data for this indicator are reported for calendar years).
AgResearch published 66 [60] papers
during 2014 in journals that were
included the list of 34 benchmark highimpact journals relevant to our SCP.
6.1
Staff satisfaction
Staff survey result for overall level of staff engagement.
The value of the “engagement index” in
AgResearch’s staff engagement survey
was 58.2 [68].
6.2
Develop and
unleash talent to
deliver our value
proposition
a) Staff survey shows a positive trend in career
development / training (measured by the percentage of
staff agreeing that “there are career development
opportunities for me in AgResearch”) and (b) a positive
trend in team co-operation (measured by the percentage
of staff agreeing that “teams at AgResearch work well
together”).
When staff were surveyed in 2015, the
statement “there are career development
opportunities for me in AgResearch”
received a weighted mean score of
48.1% [54%].
The statement “teams at AgResearch
work well together” received a weighted
mean score of 61.9% [65%].
AgResearch 2015 Annual Report [17]
ID
Indicator
Definition
Measure and trend
(c) number of graduate students completing
postgraduate qualifications and (d) postdoctoral (fixed
term) research either in AgResearch or with significant
AgResearch staff supervision.
121 [90] graduate students were
completing postgraduate qualifications in
AgResearch or with significant
AgResearch staff supervision in June
2015.
13 [15] postdoctoral fellows were
working in AgResearch in June 2015.
6.3
Assets fit for
purpose
Infrastructure reinvestment relative to depreciation, as
an indicator of the “current-ness” of equipment and
infrastructure.
8.1
Workforce Composition and Demographics
8.11
Total FTEs and %
of total FTEs
Excluding casuals and fixed term employees
of less than 6 months duration, by:
a) Research Teams
b) Research Support
c) Other
d) Total
8.12
Total FTE and
Headcount in
Research Teams
0.71 [1.2]
a) 448.95 (64%) [484 (64%)]
b) 177.03 (25%) [186 (25%)]
c) 76.14 (11%) [83 (11%)]
d) 702.12 [753]
Divided into:
a) Scientists FTE
a) 267.56 [279]
b) Scientists Headcount
b) 286 [294]
c) Technicians/Technologists FTE
c) 212.99 [245]
d) Technicians/Technologists Headcount
d) 248 [275]
Headcount of other staff was 238 and total
headcount was 772.
i
http://www.socialprogressimperative.org/, accessed 17 August 2015.
DairyNZ (2014) DairyNZ Economic Survey 2013-14 [http://www.dairynz.co.nz/publications/dairy-industry/dairynz-economic-survey-201314/], p.16, Figure 3.7.
iii
Obtained from Statistics NZ's Infoshare database Imports and Exports data, from Exports - Summary Data - EXP Table: Key Statistics
Table 7.04 - Value of principal exports (excluding re-exports) - SH (Annual-Jun), including “Dairy Produce: Total” and “Casein and
Caseinates”.
iv
DairyNZ and LIC (2014) New Zealand Dairy Statistics 2012-14
[http://www.dairynz.co.nz/media/434163/new_zealand_dairy_statistics_2012-13.pdf], p.47, Graph 4.21.
v
DairyNZ and LIC (2014) New Zealand Dairy Statistics 2013-14
[http://www.dairynz.co.nz/media/434163/new_zealand_dairy_statistics_2012-13.pdf], p.27, Table 4.3.
vi
OAG (2013). Ministry for Primary Industries: Preparing for and responding to biosecurity incursions. Wellington, New Zealand, Controller
and Auditor General [http://www.oag.govt.nz/2013/biosecurity/docs/oag-biosecurity.pdf].
vii
DairyNZ (2014) DairyNZ Economic Survey 2013-14 [http://www.dairynz.co.nz/publications/dairy-industry/dairynz-economic-survey-201314/], p.23, Figure 3.4.
viii
OSPRI, TBfree New Zealand and Animal Health Board Annual Reports 2008 to 2014 [http://www.tbfree.org.nz/annual-report.aspx,
http://www.ospri.co.nz/]
ix
DairyNZ (2014). 2013/14 Annual Report. Hamilton, New Zealand, DairyNZ, p.16.
x
http://www.beeflambnz.com/Documents/Information/Farm%20survey/nz%20class%209%20nz%20all%20classes.xls
xi
Beef + Lamb New Zealand Annual Reports, 2001 to 2014, and sheep number trends from 2004 to 2014 [Source:
http://beeflambnz.com/Documents/Information/New%20Zealand%20sheep%20trend.pdf]
ii
AgResearch 2015 Annual Report [18]
xii
http://www.agresourced.co.nz/case-studies/case-study/ and Deer Industry New Zealand “At a glance industry statistics” for 2013 and
2014 [http://www.deernz.org/about-deer-industry/nz-deer-industry/deer-industry-statistics/glance-industry-statistics#.U-vnl62KCHs].
xiii
http://farmax.co.nz/news-and-resources/media-room/general-news/decade-of-farm-analysis-and-planning-adds-425-million-to-pastoralindustry-/
xiv
DairyNZ (2014). 2013/14 Annual Report. Hamilton, New Zealand, DairyNZ, p.15.
xv
PwC (2014) Economic Analysis of Prototype Interventions to lift Māori Agribusiness Productivity, Ministry for Primary Industries,
Wellington, New Zealand.
xvi
https://www.mpi.govt.nz/document-vault/7848
xvii
Data reported for calendar years mainly related to publications, for which data were obtained from the Scopus database. Scopus data
was found to be more complete if searches were done by calendar year than the monthly searches required to obtain data for an
AgResearch financial year.
xviii
AgResearch stakeholders surveyed during the July 2014 CRI stakeholder survey who responded to these two questions, this is the
percentage that provided a score between 6 and 10.
xix
Of the AgResearch stakeholders surveyed during the July 2014 CRI stakeholder survey who responded to this question.
xx
Of those Māori stakeholders who were surveyed in AgResearch’s customer survey and who provided a rating.
xxi
In our 2012 SCI, this indicator read “At least 5% of peer-reviewed scientific papers in the top 10%, and at least 10% of peer-reviewed
scientific papers in the top 25% respectively, of scientific journals (based on impact factors) relevant to AgResearch’s SCP”.
AgResearch 2015 Annual Report [19]
Financial performance indicators
For the year ended 30 June 2015
Group
Actual
Budget
Actual
2015
2015
2014
Net cash flow from operating activities $m
11.0
7.5
16.8
Net cash flow from investing activities $m
(7.0)
(33.3)
27.2
Net cash flow from financing activities $m
-
-
-
4.0
(25.8)
44.0
Cash at the beginning of the year $m
55.8
55.8
11.9
Cash at the end of the year $m
59.9
30.1
55.8
Operating Margin %
5.3%
6.6%
7.1%
Operating Margin per FTE $k
11.4
13.9
14.8
(4.7%)
(1.5%)
0.9%
3.9
2.7
3.5
Interest Coverage
2,674
n/a
1,888
Operating Margin Volatility %
Projected cash flow
Total net cash flow $m
Revenue Growth %
Quick Ratio
33.3%
26.5%
19.1%
Forecasting Risk %
0.0%
(0.3%)
(1.4%)
Adjusted Return on Equity %
0.0%
(0.5%)
1.9%
Capital Renewal
(0.7)
3.2
(2.8)
83.3%
82.9%
82.4%
Equity Ratio %
Indicator definitions
Adjusted Return on Equity: Surplus after tax (excluding fair value movements net of associated tax impact) ÷
Average shareholder’s funds excluding asset revaluation reserve, expressed as a percentage.
All other indicators are based on the Treasury prescribed calculations which may differ from normal accounting
calculations for that indicator.
AgResearch 2015 Annual Report [20]
Consolidated statement of comprehensive income
For the year ended 30 June 2015
in thousands of New Zealand dollars
Note
Actual
Budget
Actual
2015
2015
2014
Revenue
Ministry of Business, Innovation and Employment
- Core Funding
38,889
38,889
38,889
- Other
21,810
22,609
19,313
Commercial
72,581
77,185
77,923
5,816
6,875
10,792
Farm produce
Other revenue
1
16,283
13,955
13,841
155,379
159,513
160,758
2
(154,408)
(159,200)
(160,937)
2,140
Total operating revenue
Operating expenditure
Other gains and (losses)
3
264
97
Finance costs
4
(3)
-
(6)
Share of surplus/(deficit) of associates
20
(928)
(1,130)
(924)
304
(720)
1,031
417
(28)
(974)
(113)
(692)
2,005
Surplus/(deficit) before tax
Tax expense/(tax benefit)
5
Net surplus/(deficit) after tax for the year
Other comprehensive income
Items that will not be reclassified subsequently to surplus or deficit:
Revaluation of properties
6
16,693
-
4,762
Impairment of revalued properties
6
(3,585)
-
(3,742)
13,108
-
1,020
(546)
-
(754)
(546)
-
(754)
Items that may be reclassified subsequently to surplus or deficit:
Revaluation increases/(decreases) from available-for-sale financial assets
Income tax relating to components of other comprehensive income
6
(2,679)
-
1,415
Other comprehensive income for the year net of tax
5
9,883
-
1,681
Total comprehensive income for the year net of tax
9,770
(692)
3,686
(113)
(692)
2,005
9,770
(692)
3,686
Net surplus/(deficit) is attributable to:
Equity holders of the parent
Total comprehensive income is attributable to:
Equity holders of the parent
The statement of accounting policies and the accompanying notes form an integral part of these financial statements.
AgResearch 2015 Annual Report [21]
Consolidated statement of financial position
As at 30 June 2015
in thousands of New Zealand dollars
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Biological assets - livestock
Current tax
Inventory
Derivative financial instruments
Non-current assets held for sale
Total current assets
Non-current assets
Investments in associates
Other investments
Property, plant and equipment
Biological assets - forestry
Other non-current receivables
Intangible assets
Total non-current assets
Note
7
9
5
13
20
21
12
10
8
Total assets
Less:
Current liabilities
Trade and other payables
Current tax
Derivative financial instruments
Finance leases - current
Provisions
Total current liabilities
Non-current liabilities
Deferred tax
Finance leases - term
Other non-current liabilities
Provisions
Total non-current liabilities
11
5
15
5
28
15
Net assets
Equity
Share capital
Revaluation reserves
Retained earnings
Total equity
6
6
6
Actual
2015
Budget
2015
Actual
2014
59,915
30,091
2,321
4,254
13
1,498
98,092
30,091
27,466
2,269
3,342
746
2,529
4
66,447
55,838
32,419
1,821
4,489
2,228
960
97,755
660
4,714
161,141
794
3,966
968
172,243
620
3,751
177,619
744
1,640
184,374
620
6,098
152,214
744
3,778
799
164,253
270,335
250,821
262,008
23,634
16
4
6,415
30,069
24,435
6,673
31,108
27,324
43
27
6,600
33,994
12,715
7
804
240
13,766
10,369
363
453
11,185
10,736
399
11,135
226,500
208,528
216,879
47,268
84,872
94,360
226,500
47,268
56,886
104,374
208,528
47,268
73,622
95,989
216,879
-
-
-
The statement of accounting policies and the accompanying notes form an integral part of these financial statements.
Sam Robinson
Chair
28 August 2015
Michelle Alexander
Director
28 August 2015
AgResearch 2015 Annual Report [22]
Consolidated statement of changes in equity
For the year ended 30 June 2015
Revaluation reserves
in thousands of New Zealand dollars
Note
Balance at 1 July 2013
Surplus after tax for the year
Revaluation of properties
Impairment of revalued properties
Loss from available-for-sale financial assets
Income tax relating to components of other comprehensive income
Prior period adjustments transferred to retained earnings through
the Statement of Comprehensive Income
Total comprehensive income
Transfer of revaluation reserve on sold assets
Balance at 30 June 2014
Loss after tax for the year
Revaluation of properties
Impairment of revalued properties
Revaluation increases/(decreases) from available-for-sale financial
assets
Transfer of revaluation reserve on assets held for sale
Income tax relating to components of other comprehensive income
Prior period adjustments transferred to retained earnings through
the Statement of Comprehensive Income
Total comprehensive income
Transfer of revaluation reserve on sold assets
Balance at 30 June 2015
Property,
Share plant and
capital equipment
Availablefor-sale
asset
Retained
earnings
Total
equity
47,268
102,218
1,415
62,292
213,193
-
4,762
(3,742)
1,204
(754)
211
2,005
-
2,005
4,762
(3,742)
(754)
1,415
6
-
576
2,800
10
(533)
(586)
1,419
3,686
6
47,268
(32,278)
72,740
882
32,278
95,989
216,879
6
6
-
16,693
(3,585)
-
(113)
-
(113)
16,693
(3,585)
6
6
5
-
(2,835)
(546)
(10)
156
10
-
(546)
(2,679)
6
-
2,322
12,595
(400)
(2,471)
(2,574)
(149)
9,621
6
47,268
(945)
84,390
482
945
94,360
226,500
6
6
6
5
The statement of accounting policies and the accompanying notes form an integral part of these financial statements.
AgResearch 2015 Annual Report [23]
Consolidated statement of cash flows
For the year ended 30 June 2015
Actual
Budget
Actual
2015
2015
2014
153,423
157,903
160,590
2,354
1,495
549
87
-
116
155,864
159,398
161,255
Payments to employees
72,631
72,232
73,540
Payments to suppliers
in thousands of New Zealand dollars
Note
Cash received from operating activities
Receipts from customers
Interest received
Dividends received
Total cash received from operating activities
Cash disbursed on operating activities
69,102
76,424
67,452
Restructuring
1,937
2,151
1,215
Income tax paid
1,173
1,088
2,235
3
-
6
144,846
151,895
144,448
11,018
7,503
16,807
897
9,737
37,123
74
491
27
971
10,228
37,150
6,531
40,448
8,132
Purchase of other investments and intangible assets
448
3,030
501
Partner contribution to research consortiums
976
-
1,300
7,955
43,478
9,933
(6,984)
(33,250)
27,217
Interest paid
Total cash disbursed on operating activities
Net cash flow from operating activities
16
Cash received from investing activities
Disposal of property, plant and equipment
Disposal of investments and intangible assets
Total cash received from investing activities
Cash disbursed on investing activities
Investment in property, plant and equipment
Total cash disbursed on investing activities
Net cash flow from investing activities
Total net cash flow
4,034
(25,747)
44,024
Cash at beginning of year
55,838
55,838
11,865
Effect of exchange rate changes on the balance of cash held in
foreign currencies
Cash at end of year
43
59,915
30,091
(51)
55,838
The statement of accounting policies and the accompanying notes form an integral part of these financial statements.
AgResearch 2015 Annual Report [24]
Statement of accounting policies
For the year ended 30 June 2015
REPORTING ENTITY
AgResearch Limited (the Company) is a limited liability company incorporated in New Zealand. Operating as a Crown Research Institute,
its principal activity is research and development in the pastoral sector of New Zealand. The financial statements have been prepared in
accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 2013, the Crown Research Institutes Act 1992
and the Public Finance Act 1989. The Company, its subsidiaries, associates and joint arrangement interests comprise the Group.
STATEMENT OF COMPLIANCE
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP).
They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable financial
reporting standards as appropriate for profit-orientated entities.
The financial statements were authorised for issue by the Directors on 28 August 2015.
BASIS OF PREPARATION
The financial statements have been prepared on the basis of historical cost, except for the revaluation of biological assets, certain noncurrent assets and financial instruments. Cost is based on the fair value of the consideration given in exchange for assets.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of
relevance and reliability, so that the substance of the underlying transactions or other events is reported.
The accounting policies set out as follows have been applied in preparing the financial statements for the year ended 30 June 2015 and
the comparative information presented for the year ended 30 June 2014.
The Group has chosen not to early adopt the following standards and interpretations that were issued but not yet effective as at 30 June
2015:
•
NZ IFRS 9 ‘Financial Instruments’ (effective for accounting periods beginning on or after 1 January 2018)
•
NZ IFRS 15 ‘Revenue from Contracts with Customers’ (effective for accounting periods beginning on or after 1 January 2017)
•
2014 Omnibus Amendments to NZ IFRS (effective for accounting periods beginning on or after 1 April 2015)
•
Amendments to NZ IFRS 11 – ‘Accounting for Acquisitions of Interest in Joint Operations’ (effective for accounting periods
beginning on or after 1 January 2016)
•
Amendments to NZ IAS 16 and NZ IAS 38 – ‘Clarification of Acceptable Methods of Depreciation and Amortisation’ (effective for
accounting periods beginning on or after 1 January 2016)
•
Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (Amendments to NZ IFRS 10 and NZ IAS
28) (effective for accounting periods beginning on or after 1 January 2016)
•
Annual Improvements to NZ IFRSs 2012-2014 Cycle (effective for accounting periods beginning on or after 1 January 2016)
•
Disclosure Initiative (Amendments to NZ IAS 1) (effective for accounting periods beginning on or after 1 January 2016)
The Directors anticipate that the above Standards and Interpretations will have no material impact on the financial statements of the Group
in the period of initial application.
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also
requires the Directors to exercise judgement in the process of applying the Group's accounting policies. The areas involving a higher
degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements, are disclosed in the
relevant accounting policy or note.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
periods affected by the revision.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies, that have the most
significant effect on the amounts recognised in the financial statements, are:
Significant Influence
Meat Biologics Consortium, Pastoral Genomics Consortium, Pastoral Greenhouse Gas Consortium and Johne’s Disease Research
Consortium are deemed to be associates of the Group although the Group has less than 20% ownership interest in each. The Group has
significant influence over these consortia by virtue of its participation in the Board activities of the Consortium, the provision of funding to
the Consortium and undertaking by AgResearch Limited of science research for the Consortium.
AgResearch 2015 Annual Report [25]
Joint Operation
Grasslands Innovation Limited is deemed to be a joint operation by virtue of the contractual arrangements which specify the parties’ rights
to the economic inputs and outputs of the joint arrangement and retention of ownership rights to pre-existing IP contributed by the parties.
Impairment of Assets
Before balance date each year, the Directors review investments and other assets for indications of impairment using an asset impairment
methodology. In particular, consideration is given to whether there are indications that:
•
The market value of the asset has significantly declined;
•
Significant changes have taken place during the period, or will take place in the near future, in the technological, market,
economic or legal environment in the market to which the asset is dedicated;
•
Market interest rates or other market rates of return on investments have increased during the period, and those increases are
likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount
materially;
•
There has been obsolescence or physical damage of the asset;
•
Significant changes with an adverse effect on the Group have taken place during the period, or are expected to take place in the
near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These changes include the
asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset
before the previously expected date, and reassessing the useful life of an asset;
•
From internal reporting, the economic performance of an asset is, or will be, worse than expected; and
•
Other relevant factors.
Where indication of impairment exists, the recoverable amount is the higher of fair value less costs to sell or value in use. The value in
use is based on the net present value of future cash flows where no active market exists.
Impairments made appear in note 2 and note 6.
Revenue Recognition
In determining the revenue to be recognised in the year from rendering of services the Directors have exercised their judgement in respect
of the percentage of completion of contracts.
In making their judgement, the Directors considered:
•
whether total contract revenue could be measured reliably;
•
the probability that economic benefits associated with the contract will flow to the Group;
•
whether the costs to complete the contract, and the stage of contract completion at balance date, could be reliably measured;
and
•
whether the costs attributable to the contract could be clearly identified and measured reliably so that the actual costs incurred
could be compared with prior estimates.
Following review of the Group’s contracts in progress at year end, the Directors are satisfied that the revenue recognised in the current
year is appropriate, in conjunction with the recognition of an appropriate uninvoiced receivable/revenue in advance.
Non-Current Assets Held for Sale
In determining the non-current assets (and disposal groups) to be classified as held for sale the Directors have exercised their judgement
in respect to the correct classification for those non-current assets as outlined in the Non-Current Assets Held for Sale accounting policy.
Following review of the Group’s non-current assets, the Directors are satisfied that the criteria outlined in the policy have been met and the
classification as “held for sale” in the current year is appropriate.
Campus Land and Buildings Revaluation
The property, plant and equipment classes ‘Campus Land and Buildings” were revalued at 30 June 2015 by Darroch Limited (independent
valuers), by reference to market evidence of recent transactions for similar properties. The valuations conform to International Valuation
Standards. Some assets cannot be valued on a market basis and have been valued using the optimised depreciated replacement cost
method.
Fair Value Estimates
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement, or for disclosure purposes.
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The
quoted market price used for financial assets held by the Group is the current bid price. The appropriate quoted market price for financial
liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at
each balance date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining
financial instruments. The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the
reporting period.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to
the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are
described as follows:
•
Level 1 – fair value measurements are those from quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2 – fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
•
Level 3 – fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
AgResearch 2015 Annual Report [26]
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation and presentation of the financial statements are as follows:
(A) BASIS OF CONSOLIDATION
The consolidated financial statements comprise AgResearch Limited (the Company) and entities controlled by the Company and its
subsidiaries. Control is achieved when the Company:
•
has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
•
has the ability to use its power to affect its returns.
The directors reassess whether or not the group controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The directors consider all relevant facts
and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
•
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
•
potential voting rights held by the Company, other vote holders or other parties;
•
rights arising from other contractual arrangements; and
•
any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control
of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the Profit and
Loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling
interest. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even
if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.
Subsidiaries
Subsidiaries are entities controlled by the Group.
The results of any subsidiaries that become, or cease to be, part of the Group during the year are consolidated from the date that control
commenced or until the date that control ceased.
The interest of non-controlling shareholders is stated at the non-controlling interest’s proportion of the fair values of the identifiable assets
and liabilities recognised on acquisition together with the non-controlling interests’ share of post-acquisition surpluses.
A list of subsidiaries appears in note 19.
Investments in Associates
An associate is an entity over which the Group has the capacity to exercise significant influence through participation in the financial and
operating policy decisions of the investee, but does not control or have joint control over those policies.
The Group financial statements incorporate the Group’s interests in associates using the equity method, except when the investment, or a
portion thereof, is classified as held for sale, in which case it is accounted for in accordance with NZ IFRS 5.
Under the equity method, an investment in an associate is initially recognised in the consolidated Statement of Financial Position at cost
and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the
Group’s share of losses of an associate exceeds the Group’s interest in that associate, the Group discontinues recognising its share of
further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On
acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.
The goodwill is assessed for impairment as part of the investment. Whenever there is an indication that the goodwill may be impaired any
impairment is recognised immediately in the Profit and Loss and is not subsequently reversed.
Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised in the Profit and Loss in the period in which the investment is acquired.
The Group recognises its share of an associate’s post acquisition net profit or loss for the year in its Profit and Loss. The Group’s share of
an associate’s profit or loss is adjusted to align the accounting policies of the investee with that of the Group. The Group recognises its
share of other post-acquisition movements in reserves in equity. Dividends received from associates are recognised directly against the
carrying value of the investment. In the Statement of Financial Position the investment and the reserves are increased by the Group’s
share of the post-acquisition retained surplus and other post-acquisition reserves of the associates. In assessing the Group’s share of
earnings of associates, the Group’s share of any unrealised surpluses between the Group and investee is eliminated.
AgResearch 2015 Annual Report [27]
The Group discontinues the use of the equity method from the date an investment ceases to be an associate, or when the investment is
classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the
Group measures the retained interest at fair value at that date in accordance with NZ IAS 39. The difference between the carrying amount
of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from
disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the
Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as
would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or
liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is
discontinued.
When the Group reduces its ownership interest in an associate but continues to use the equity method, it may reclassify previously
recognised gains or losses. It does so, if that gain or loss would be reclassified to the profit or loss on the disposal of the related assets or
liabilities. Where it does, the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to
that reduction in ownership interest is taken to the Profit and Loss.
When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are
recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the
Group.
A list of associates appears in note 20.
Interests in Joint Operations
Joint operations are joint arrangements between the Group and another party in which there is a contractual agreement to undertake a
specific business project in which the venturers share several liability in respect of costs and liabilities of the project and share in any
resulting output. The Group’s share of the assets, liabilities, revenues and expenses of joint operations are incorporated into the Group
financial statements on a line by line basis using the proportionate method. Where the Group transacts with its jointly controlled entities,
unrealised profits and losses are eliminated to the extent of the Group’s interest in the joint operation.
A list of joint operations appears in note 22.
(B) COMPARATIVES
When the presentation or classification of items is changed, comparative amounts are reclassified unless the reclassification is
impracticable. In addition, a Statement of Financial Position is presented as at the beginning of the earliest comparative period, when the
Group has applied an accounting policy retrospectively, makes a retrospective restatement of items, or when it has reclassified items.
(C) REVENUE RECOGNITION
Sale of Goods
Revenue from the sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership
of the goods.
Rendering of Services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract at the end of the
reporting period. The stage of completion is the proportion that contract costs incurred for work performed to date bear to the estimated
total contract costs.
Royalties
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.
Dividend and Interest Revenue
Dividend revenue from investments is recognised in the financial period in which the right to receive payment is established. Interest
revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
(D) GOVERNMENT GRANTS
Government grants are assistance provided by the Government in the form of transfers of resources to the Group in return for past or
future compliance with certain conditions relating to the operating activities of the Group. The primary condition is that the Group should
undertake research activities as defined under the contractual agreement which awards the funding. The Government grant relating to this
funding is recognised as income in the profit or loss on a systematic basis in the period it is received. Core Funding from the Crown
commenced from 1 July 2011 and is recognised in the Profit and Loss in the year it is received.
(E) INCOME TAX
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for
the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred Tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent
that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax offsets (for
example losses) can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to
them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences
arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, associates and joint
ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with
AgResearch 2015 Annual Report [28]
these interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the assets and liabilities
giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting
date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to the income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net tax basis.
Current and Deferred Tax for the Period
Current and deferred tax is recognised as an expense or income in the Profit and Loss, except when:
•
it relates to items recognised in equity, in which case the deferred tax or current tax is also recognised directly in equity; or
•
it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of
goodwill or excess.
Foreign Tax Liabilities and Assets
Exchange differences on deferred foreign tax liabilities or assets recognised in the Profit and Loss for the period are classified as deferred
tax expense or income.
Foreign deferred tax assets that result from operating losses in respect of subsidiaries, associates, joint venture entities or interests in joint
venture operations are recognised, except where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the future.
(F) FOREIGN CURRENCY
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the Group’s financial statements, the results and financial position of each
group entity are expressed in New Zealand dollars (NZ$), which is the functional currency of the Group and the presentation currency for
the Group’s financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance date, monetary items
denominated in foreign currencies are retranslated to the functional currency at the rate prevailing at the end of the reporting period. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated to the functional currency at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences are recognised in the Profit and Loss in the period in which they arise except for:
•
exchange differences which relate to assets under construction for future productive use, which are included in the cost of those
assets when they are regarded as an adjustment to interest costs on foreign currency borrowings;
•
exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
•
exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign
currency translation reserve and recognised in profit or loss on disposal of the net investment.
(G) FINANCIAL ASSETS
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms
require delivery of the investment within the timeframe established by the market concerned. Investments are initially measured at fair
value, plus transaction costs, except for those financial assets classified as “at fair value through the Profit and Loss”, which are initially
measured at fair value.
Other financial assets are classified into the following specified categories:
•
financial assets ‘at fair value through the Profit and Loss’,
•
‘held to maturity investments’,
•
‘available-for-sale’ financial assets’ and
•
‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial Assets at Fair Value through the Profit and Loss
This category has two sub-categories:
•
financial assets held for trading; and
•
those designated at fair value through the Profit and Loss at inception.
A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by
management. Derivatives are categorised as held for trading if they are not designated and effective as a hedging instrument.
Financial assets at fair value through the Profit and Loss are recognised initially at fair value. Gains and losses arising from changes in
the fair value are included in the Profit and Loss in the period in which they arise. The net gain or loss recognised incorporates any
dividend or interest earned on the financial asset.
Held to Maturity Investments
Financial instruments purchased with the intention of being held for the long-term or until maturity are recorded at amortised cost using the
effective interest rate method less impairment, with revenue recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset or, where appropriate, a shorter period, to the net carrying amount of the financial asset.
AgResearch 2015 Annual Report [29]
Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories.
Certain shares held by the Group are classified as being available-for-sale and are stated at fair value less impairment. Fair value is
determined in the manner described in note 21.
Gains or losses arising from changes in fair value are recognised within “other comprehensive income” in the Profit and Loss and
accumulated in the available-for-sale revaluation reserve with the exception of impairment losses, interest calculated using the effective
interest method and foreign exchange gains and losses on monetary assets, which are recognised directly to the profit or loss in the Profit
and Loss. Where the investment is disposed of or is impaired, the cumulative gain or loss previously recognised in the available-for-sale
revaluation reserve is included in profit or loss for the period.
Portfolio Investments
Portfolio investments are individually valued by the Fund Manager using the International Private Equity and Venture Capital valuation
guidelines. The Group recognises revaluation losses on individual investments as they arise. Revaluation gains that are not a reversal of
a previously recognised revaluation loss are not recognised until realised.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Loans and receivables are stated at amortised cost using the effective interest method less impairment. Interest income is recognised by
applying the effective interest rate.
Impairment of Financial Assets
Financial assets, other than those accounted for at fair value through profit or loss, are assessed for indicators of impairment at the end of
each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial assets, the estimated future cash flows of the investment have been impacted.
For unlisted shares classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is
considered to be objective evidence of impairment.
For all other financial assets, including redeemable notes classified as available-for-sale and finance lease receivables, objective evidence
of impairment could include:
•
significant financial difficulty of the issuer or counterparty; or
•
default or delinquency in interest or principal payments; or
•
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are assessed
for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past
experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60
days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the financial asset’s original effective rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered
uncollectible, it is written off through the Profit and Loss. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognised in the Profit and Loss.
With the exception of available-for-sale equity instruments, if in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss
is reversed through the Profit and Loss to the extent that the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, impairment losses previously recognised though profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated
in the available-for-sale reserve.
Assets Carried at Fair Value
Financial assets accounted for at fair value through profit or loss are not assessed for impairment as their fair value reflects the credit
quality of the instrument and changes in the fair value are recognised in profit or loss.
(H) PAYABLES
Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the
purchase of goods and services. Trade and other payables are subsequently measured at amortised cost using the effective interest
method. This represents their fair value given the short term nature of the liability.
(I)
INVENTORIES
Inventories are valued at the lower of cost, determined on a first in first out basis, and net realisable value. The cost of harvested
agricultural produce is measured at fair value less estimated point-of-sale costs at the point of harvest.
AgResearch 2015 Annual Report [30]
(J) PROPERTY, PLANT AND EQUIPMENT
The Group has the following classes of property, plant and equipment:
•
Land - Campus
•
Land - Farm
•
Land Improvements
•
Buildings - Campus
•
Buildings - Farm
•
Leasehold Improvements
•
Vehicles
•
Plant and Equipment
•
Capital Work in Progress
Land, land improvements and buildings are measured at fair value. Fair value is determined on the basis of an independent valuation
prepared by external valuation experts less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Land, land improvements and buildings are revalued at least every 3 years or whenever there has been a significant movement in the fair
value. The fair values are recognised in the financial statements of the Group and are reviewed at the end of each reporting period to
ensure that the carrying value of land, land improvements and buildings is not materially different from their fair values.
Any revaluation increase arising on the revaluation of land, land improvements and buildings is accumulated in the asset revaluation
reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in profit or
loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying
amount on the revaluation of land, land improvements and buildings is charged as an expense in profit or loss to the extent that it exceeds
the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.
All other assets are recorded at cost less accumulated depreciation and accumulated impairment.
Capital work in progress is recorded at cost.
Depreciation is provided for on a straight line basis on all tangible property, plant and equipment, other than freehold land and capital work
in progress, at depreciation rates calculated to allocate the assets’ cost or other revalued amount over their estimated useful lives.
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight
line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.
Depreciation on revalued buildings is charged to the Profit and Loss. On the subsequent sale or retirement of a revalued property, the
attributable revaluation surplus remaining in the asset revaluation reserve, net of any related deferred taxes, is transferred directly to
retained earnings.
The following estimated useful lives are used in the calculation of depreciation:
Land Improvements
5-50 years
Buildings (including farms)
5-80 years
Leasehold Improvements
3-40 years
Vehicles
3-10 years
Plant and Equipment
Dairy Plant and Equipment
5-25 years
Computer Hardware
3-5 years
Other Plant and Equipment
3-15 years
(K) BIOLOGICAL ASSETS
Livestock
Livestock are valued at their fair value less estimated point-of-sale costs by reference to the most relevant active market. An allowance is
made for diminution in value of certain livestock held for research trials. Changes in the valuation of livestock are recognised in profit or
loss for the period. Gains or losses for livestock held throughout the year are recorded as holding gains and losses and are included in the
fair value changes recognised in profit or loss.
Forestry Assets
Forests are recorded at their fair value less point-of-sale costs on an annual basis using anticipated harvesting timing and yield and an
applicable discount rate. Changes in the valuation of forests are accounted for through profit or loss.
Emissions Trading Scheme
Forestry land is subject to the provisions of the New Zealand emissions trading scheme (ETS). Should the land be deforested (the land is
changed from forestry to some other purpose), a deforestation liability will arise.
Compensation units are recognised based on their market value on the date received. They are recognised as income in the financial
statements. Any income from the receipt or sale of these units is not taxable.
The deforestation contingency is not recognised as a liability on the balance sheet as there is no current intention of changing the land use
subject to the ETS.
(L) LEASED ASSETS
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee. There are currently no finance leases within the Group. All other leases are classified as operating leases.
Group as Lessor
Operating lease receipts are included in profit or loss in equal instalments over the lease term.
Group as Lessee
Operating lease payments are included in profit or loss in equal instalments over the lease term.
AgResearch 2015 Annual Report [31]
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of
financial position as a finance lease obligation.
(M) INTANGIBLE ASSETS
Purchased Intangible Assets
Purchased intangible assets such as intellectual property, patents, trademarks and licences are recorded at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is charged over their estimated useful lives, which varies between 5 and 15
years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
These costs are amortised over their estimated useful lives (between 3 and 5 years on a straight line basis). Costs associated with
maintaining computer software programmes are recognised as an expense as incurred.
Internally-Generated Intangible Assets - Research and Development Expenditure
Research expenditure is expensed in the period incurred.
The cost of an internally generated intangible asset represents expenditure incurred in the development phase of the asset only.
Development expenditure is expensed in the period incurred unless all of the following conditions have been demonstrated:
•
the intention to complete the intangible asset and use or sell it;
•
how the asset created will generate future economic benefits;
•
the ability to measure reliably the expenditure attributable to the intangible asset during its development; and
•
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset.
Internally-generated intangible assets that satisfy the asset recognition criteria above, are amortised on a straight line basis over future
periods from which benefits are expected to accrue. These future periods are between 5 and 7 years.
Computer software development costs that are directly associated with the production of identifiable and unique software products
controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible
assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.
Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding 5 years).
Other Intangible Assets
Assets with indefinite useful lives are not amortised, but are tested at least annually for impairment. Whenever there is an indication of
impairment, the asset is recorded at a revalued amount, being fair value less any accumulated impairment losses. Revaluations are for
each intangible asset, not for a class of asset.
Disposal of Intangible Assets
Realised gains and losses arising from disposal of intangible assets are recognised in the Profit and Loss in the period in which the
transaction occurs.
(N) NON-CURRENT ASSETS HELD FOR SALE
Non-current assets (and disposal groups) classified as held for sale are recorded at the lower of carrying amount and fair value less costs
to sell.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when:
•
the sale is highly probable;
•
the asset (or disposal group) is available for immediate sale in its present condition; and
•
the sale of the asset (or disposal group) is expected to be completed within one year from the date of classification.
(O) IMPAIRMENT OF ASSETS
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets that are subject to amortisation or
depreciation to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (if any). Where the asset does
not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs.
Goodwill, intangible assets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently reversed.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost
to sell and value in use. An impairment loss is recognised in the Profit and Loss immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is first treated as a revaluation decrease to the extent of the asset’s previously
revaluation.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised in the Profit and Loss immediately, unless the relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation increase.
(P) PROVISIONS
Provisions are recognised when:
•
the Group has a present legal or constructive obligation as a result of past events;
AgResearch 2015 Annual Report [32]
•
•
it is more likely than not that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
All provisions are recorded at the best estimate of the expenditure required to settle the obligation at balance date. Where the effect is
material, the expected expenditures are discounted to their present value using pre-tax discount rates.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is
recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
Onerous Contracts
A provision for an onerous contract is recognised where the economic benefits expected to be derived from a contract are less than the
unavoidable costs of meeting the Group’s obligation under the contract. Present obligations arising under onerous contracts are
recognised as a provision to the extent that the present obligation exceeds the economic benefits estimated to be received.
(Q) EMPLOYEE BENEFITS
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, retirement leave/gratuities and sick
leave where it is probable that settlement will be made and they are capable of being measured reliably.
Provision for employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration
rates as at the reporting date and are recorded as current liabilities.
Provision for employee benefits which are not expected to be settled within 12 months, are measured at the present value of the estimated
future cash outflows to be made by the Group in respect of services provided by employees up to reporting date and are recorded as noncurrent liabilities.
Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
Defined Contribution Plan
There are a small number of employees that are a part of the Crown Defined Benefit Superannuation Plan. Future benefits are generated
by the Crown and the Group has no legal or financial contribution liability for future benefits. The Group’s contributions to the Plan are
expensed when incurred.
All employees of the Group can elect to join the KiwiSaver scheme. The only obligation of the Group is to contribute a specified
percentage to the KiwiSaver scheme in line with employee contributions as part of payroll costs.
(R) GOODS AND SERVICES TAX (GST)
The financial statements are prepared on a GST exclusive basis with the exception of receivables and payables which include GST.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, demand deposits and other highly liquid investments readily convertible
into cash.
Operating Activities
Operating activities include all transactions and other events that are not investing or financing activities.
Investing Activities
Investing activities are those activities relating to the acquisition and disposal of current and non-current investments and any other noncurrent assets.
Financing Activities
Financing activities are those activities relating to changes in the equity and debt structure of the Group.
(S) SEGMENTAL REPORTING
The Group operates in one segment.
(T) INSURANCE CONTRACTS
The Group is part of the Accident Compensation Commission (ACC) Partnership Programme. Under the Partnership Programme the
Group is liable for all its claim costs for a period of 4 years up to a specified maximum. At the end of the 4 year period, the Group pays a
premium to ACC for the value of residual claims, and the liability for ongoing claims from that point passes back to ACC.
The liability for the ACC Partnership Programme is recognised in the ACC provision and measured as the present value of expected future
payments to be made in respect of the employee injuries and claims up to the reporting date using actuarial techniques. Consideration is
given to expected future wage and salary levels and experience of employee claims and injuries. Expected future payments are
discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
(U) BUDGET FIGURES
The budget figures are those approved by the Board. They have been prepared using the same accounting policies as for these financial
statements.
CHANGES IN ACCOUNTING POLICIES
Accounting policies are changed only if the change is required by a standard or interpretation or otherwise provides more reliable and
more relevant information.
There were no changes in accounting policies.
AgResearch 2015 Annual Report [33]
Notes to and forming part of the consolidated financial statements
For the year ended 30 June 2015
1 Other revenue
in thousands of New Zealand dollars
Other revenue
Interest
Dividends
Royalties
Rent
2015
2014
2,897
99
10,513
2,774
16,283
738
116
10,052
2,935
13,841
2015
2014
70,785
1,929
72,631
2,028
246
9,715
3,223
23,158
20,367
6,419
13,968
311
9,482
3,438
24,612
18,839
6,732
15,391
272
8
74
384
1
2,331
277
13
238
348
1
2,297
647
881
154,408
124
313
3,862
160,937
2015
155
65
(46)
(32)
11
69
(411)
453
264
2014
(120)
(43)
2,807
(72)
(44)
167
(560)
5
2,140
2015
3
3
2014
6
6
2015
2014
1,351
(234)
(700)
417
2,044
(915)
(2,103)
(974)
417
(974)
2 Operating expenditure
in thousands of New Zealand dollars
Employee related
Note
Salary and wages
Defined contribution plans
Operational
Amortisation of intangible assets
Depreciation
Operating lease expenses
Other operating expenses
Science 3rd party sub-contracts
Site and property expenses
Supplies
12
Financial and administration
Auditors' remuneration - for services as auditors
Bad debts
Change in provision for doubtful debts
Directors' fees
Donations
Financial and legal expenses
Impairments and write downs
Impairment of investments in associates
Impairment of available-for-sale financial assets
Impairment of property, plant and equipment
21
12
3 Other gains and (losses)
in thousands of New Zealand dollars
Net gain/(loss) from foreign currency exchange
Net gain/(loss) on sale of property, plant and equipment
Net gain/(loss) on sale of non-current assets held for sale
Net gain/(loss) on sale of investments
Change in fair value of derivative financial instruments
Change in fair value of forestry
Change in fair value of livestock
Change in fair value of non-current assets held for sale
Change in fair value of financial assets or liabilities designated at fair value
Note
10
9
4 Finance costs
in thousands of New Zealand dollars
Interest on bank overdrafts and loans
5 Taxation
in thousands of New Zealand dollars
Tax expense comprises:
Current tax expense
Adjustments recognised in relation to the current tax of prior years
Deferred tax expense relating to the origination and reversal of temporary differences
Total tax expense/(benefit)
Attributable to:
Continuing operations
AgResearch 2015 Annual Report [34]
in thousands of New Zealand dollars
The total charge for the year can be reconciled to the accounting profit as follows:
Surplus from continuing operations
Income tax expense calculated at 28% (2014: 28%)
Effect of revenue that is exempt from tax
Foreign surplus/(deficit) not recognised for tax
Effect of expenses that are not deductible
Impairment losses that are not deductible
Associates' results reported net of tax
Non assessable capital gain
2015
2014
304
85
(179)
2
272
229
5
(119)
295
1,031
289
(293)
2
349
121
(25)
(400)
43
122
417
(1,017)
(974)
(2,835)
156
(2,679)
1,204
211
1,415
576
228
804
534
272
806
791
13
849
(43)
Opening Charged to
Charged to
balance
surplus
other
comprehensive
income
Closing
balance
Adjustments recognised in the current year in relation to the current and deferred tax of prior
years
Income tax expense/(benefit) recognised in profit or loss
Income tax recognised directly in other comprehensive income
Deferred tax
Arising on income and expenses taken directly to equity:
Property revaluations
Revaluations of available-for-sale financial assets
Total deferred tax recognised directly in other comprehensive income
Current tax assets and liabilities
Current tax assets
Tax refund receivable
Benefit of current year tax losses
Current tax liabilities
Income tax payable
Net current tax liability
in thousands of New Zealand dollars
Deferred tax assets/(liabilities) arise from the following:
2015
Temporary differences
Biological assets
Property, plant & equipment
Intangible assets
Available-for-sale financial assets
Provisions
Unused tax losses and credits
Tax losses
2014
Temporary differences
Biological assets
Property, plant & equipment
Intangible assets
Available-for-sale financial assets
Provisions
Unused tax losses and credits
Tax losses
in thousands of New Zealand dollars
Income tax effects relating to each component of other comprehensive income
2015
Revaluation of properties
Available-for-sale financial assets
(295)
(13,122)
1,235
(314)
1,758
(10,738)
(34)
838
(143)
(29)
70
702
(2,835)
156
(2,679)
(329)
(15,119)
1,092
(187)
1,828
(12,715)
2
(10,736)
(2)
700
(2,679)
(12,715)
(574)
(15,247)
1,106
(1,133)
1,554
(14,294)
279
921
129
608
204
2,141
1,204
211
1,415
(295)
(13,122)
1,235
(314)
1,758
(10,738)
40
(14,254)
(38)
2,103
1,415
2
(10,736)
Before tax
amount
13,108
(546)
12,562
Tax
Net of
expense tax amount
(2,835)
156
(2,679)
10,273
(390)
9,883
AgResearch 2015 Annual Report [35]
Before tax
amount
in thousands of New Zealand dollars
2014
Revaluation of properties
Available-for-sale financial assets
1,020
(754)
266
in thousands of New Zealand dollars
Unrecognised taxable temporary differences associated with investments and interests
Foreign subsidiaries
Imputation credits
Imputation credits available for subsequent reporting periods
Tax
Net of
expense tax amount
1,204
211
1,415
2,224
(543)
1,681
2015
2014
685
685
1,510
1,314
The above amounts represent the balance of the imputation credit account as at the end of the reporting period adjusted for:
- Imputation credits that will arise from the payment of the amount of the provision for income tax;
- Imputation debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
- Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
6 Equity
Share capital
Capital consists of 47,268,000 fully paid ordinary shares of $1.00 each (2014: 47,268,000 fully paid ordinary shares).
Reserves
The asset revaluation reserve arises on the revaluation of land and buildings. Where revalued land or buildings are sold, the portion of the asset revaluation
reserve that relates to that asset, and is effectively realised, is transferred directly to retained earnings.
The available-for-sale revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, the portion of
the reserve that relates to that financial asset, and is effectively realised, is recognised in the profit or loss. Where a revalued available-for-sale financial asset
is impaired, the portion of the reserve that relates to that financial asset is recognised in the profit or loss.
Revaluation Reserves
in thousands of New Zealand dollars
2015
Balance at beginning of year
Surplus/(deficit) attributable to equity holders of the parent
Revaluation increases/(decreases)
Impairment losses
Prior period adjustments transferred to retained earnings through the Statement of
Comprehensive Income**
Transfer of revaluation reserve on sold assets
Transfer of revaluation reserve on assets held for sale
Transfer to deferred tax
Balance at end of year
2014
Balance at beginning of year
Surplus attributable to equity holders of the parent
Revaluation increases/(decreases)
Impairment losses
Prior period adjustments transferred to retained earnings through the Statement of
Comprehensive Income *
Transfer of revaluation reserve on sold assets
Transfer to deferred tax
Balance at end of year
Retained
earnings
Property,
plant and Available-forsale asset
equipment
Total
95,989
(113)
-
72,740
16,693
(3,585)
882
(546)
-
169,611
(113)
16,147
(3,585)
(2,471)
945
10
94,360
2,322
(945)
(2,835)
84,390
(10)
156
482
(149)
(2,679)
179,232
62,292
2,005
-
102,218
4,762
(3,742)
1,415
(754)
-
165,925
2,005
4,008
(3,742)
(586)
32,278
95,989
576
(32,278)
1,204
72,740
10
1,415
169,611
211
882
* As part of the transfer of amounts from the asset revaluation reserve to retained earnings on the sale of property, a reconciliation of the deferred tax liability
within the reserve was undertaken. As a result of that review an adjustment has been made to correct prior year balances. As the adjustment relates to the
deferred tax represented in prior years, the adjustment has been taken from the reserve directly to retained earnings in the current period.
** During the period a reconciliation of the asset revaluation reserve was performed on an asset by asset basis. As a result of the reconciliation performed it
was identified that a number of assets had negative balances against them within the reserves and a number of previous revaluation movements had not been
correctly associated with identifiable assets. This related to a historical position dating back a number of years. Given the amount related to reserves, the
amount has been taken directly to retained earnings to correct the position. There has also been an immaterial amount of $149k adjusted through impairment
accounts as a result of the reconciliations performed.
AgResearch 2015 Annual Report [36]
7 Trade and other receivables
in thousands of New Zealand dollars
Trade receivables
Receivables from associates
Receivables from other related parties
Total receivables
Less provision for doubtful debts
Net receivables
2015
28,489
1,521
514
30,524
433
30,091
2014
28,458
3,173
1,147
32,778
359
32,419
The fair value of trade and other receivables is approximately equal to their carrying value.
Receivables from related parties past due were $74,525 (2014: $Nil).
Terms of trade vary according to individual customer contracts. Trade receivables are assessed for impairment on an individual basis. The only receivables
impaired are provided for within doubtful debts. As at 30 June 2015, trade receivables of $324k (2014: $641k) were past due but not impaired. These relate to
a number of independent customers for whom there is no recent history of defaults. The Group does not hold any collateral over these balances. The aging
analysis of trade receivables is as follows:
in thousands of New Zealand dollars
2015
Gross
Doubtful
Debts
Net
Current
1 to 2 months
26,818
914
27,732
-
26,818
914
27,732
598
159
757
(274)
(159)
(433)
324
324
28,489
(433)
28,056
26,632
826
27,458
-
26,632
826
27,458
575
425
1,000
(359)
(359)
575
66
641
28,458
(359)
28,099
2015
2014
359
82
(8)
433
121
251
(13)
359
Past due
2 to 3 months
Over 3 months
Total trade receivables
2014
Current
1 to 2 months
Past due
2 to 3 months
Over 3 months
Total trade receivables
in thousands of New Zealand dollars
Movement in the provision for doubtful debts
Balance at beginning of year
Additional provisions made during the year
Receivables written-off during the year
Balance at end of year
8 Other non-current receivables
During the year ended 30 June 2014 the Company entered into an agreement for the sale of land, buildings and other property, plant and equipment at its Flock
House site. With the exception of one parcel of land (and associated improvements) - referred to as Property B - delivery of, and payment for, those assets
also occurred during that year.
Under the sale and purchase agreement the parties have agreed to defer settlement of Property B until May 2019. The non-current receivable represents the
present value of the sale price of Property B, as set out below:
in thousands of New Zealand dollars
Amount receivable under Sale & Purchase Agreement
Less discount to net present value
Present value of non-current receivable
2015
4,700
(734)
3,966
2014
4,700
(922)
3,778
Under the terms of the sale and purchase agreement the purchaser has acquired possession of the property through a lease subject to a peppercorn rent and
has full rights to, and obligations for, the economic benefits and liabilities flowing from use of the land. To minimise the risk of loss to the Company through
default by the purchaser, title to the property will be retained until settlement of the amount due.
The purchase price of Property B has been discounted to net present value using the treasury discount rate applicable at 30 June 2014, being 4.55%. There
has been no material change during the period to the underlying assumptions used in calculating the discount rate applied.
Under NZ IAS 18 Revenue, the discount will be taken to the profit and loss and recognised as interest income over the period of deferral. The interest income
recognised in the year ended 30 June 2015 is $187,500 (2014: $15,625). The interest income to be recognised in future periods is:
in thousands of New Zealand dollars
In the first year
Beyond 1 year
2015
188
546
734
2014
188
734
922
AgResearch 2015 Annual Report [37]
9 Biological assets - livestock
in thousands of New Zealand dollars
2015
Reconciliation of changes in the carrying value
Balance at beginning of year
Increases due to acquisitions
Decreases due to sales
Net increase due to births, growth and deaths
Changes in fair value less estimated point-of-sale costs
Balance at end of year
Quantity of livestock at end of year
2014
Reconciliation of changes in the carrying value
Balance at beginning of year
Increases due to acquisitions
Decreases due to sales
Net increase due to births, growth and deaths
Changes in fair value less estimated point-of-sale costs
Balance at end of year
Quantity of livestock at end of year
Sheep
Beef
cattle
Dairy
cattle
Deer
Total
1,358
584
(1,451)
971
(224)
1,238
1,094
869
(1,403)
430
30
1,020
1,739
98
(378)
439
(244)
1,654
298
3
(90)
104
27
342
4,489
1,554
(3,322)
1,944
(411)
4,254
12,837
1,159
368
(1,068)
791
108
1,358
13,074
1,468
1,143
1,039
713
987
(1,090)
554
(70)
1,094
3,491
52
(2,743)
784
155
1,739
340
1
(150)
133
(26)
298
1,922
1,006
900
5,703
1,408
(5,051)
2,262
167
4,489
Livestock valuation method
Livestock was valued by PGG Wrightson Limited by reference to market evidence of recent transactions for similar livestock, taking into account the age,
breed, type, condition, and location of the animals.
Financial risk management strategies
The Group is exposed to financial risks arising from damage from climatic changes, diseases and other natural forces. The Group has processes in place
aimed at monitoring and mitigating those risks, including pest and disease monitoring and management strategies.
10 Biological assets - forestry
The Group has radiata pine tree crops at Whatawhata, Ballantrae, Invermay and Woolford.
in thousands of New Zealand dollars
Reconciliation of changes in the carrying value
Balance at beginning of year
Increases due to capitalised expenditure
Decreases due to harvesting and sale of forestry
Changes in fair value less estimated point-of-sale costs
Balance at end of year
Area (ha) of forest at end of year
2015
2014
744
(19)
69
794
1,737
61
(1,010)
(44)
744
254
259
Forestry valuations
Forestry was valued by Alan Bell and Associates as at 30 June 2015. The value of forestry at 30 June 2015 was $794,037 (2014: $743,973). Forestry includes
the Company's share of forestry held as part of a joint operation with Tainui.
The methodology used is "stand-based" in line with forestry management practices and harvesting. Where transactions have occurred for similar tree crops,
value is based on those transactions. Where there have been no such transactions, value is based on:
• for mature crops, estimates of future costs and returns;
• for young crops, standard investment costs; and
• for intermediate crops, a mixture of the above.
Additional inputs to the value arrived at are:
• anticipated harvest timing and yield;
• a 10% real discount rate on pre-tax cash flows;
• an assumed 3% compounding rate on standard costs; and
• current market prices and long term trends in log prices. Log prices used are based on current market prices and 12 quarter rolling average
prices published by the Ministry of Primary Industries.
Details of the fair value hierarchy is included in note 26.
AgResearch 2015 Annual Report [38]
Emissions units
Units have not been revalued during the period and those on hand at 30 June 2015 are recorded as an intangible asset using the 2014 estimated market value
of $4.15 per unit as there was no anticipation of a material value change.
Under the Emissions Trading Scheme (ETS) no units have been received during the year (2014: 51,220 units) or surrendered (2014: 19,590 units).
No tax is payable on the receipt or sale of these units.
Financial risk management strategies
The Group is exposed to financial risks arising from changes in timber prices. The Group is a long-term forestry investor and does not expect timber prices to
decline significantly in the foreseeable future. It has therefore not taken any measures to manage the risks of a decline in timber prices.
Land value and contingency
In the event that the forest areas are harvested, a deforestation liability equivalent to the decrease in carbon will be incurred.
11 Trade and other payables
in thousands of New Zealand dollars
Trade payables
Payables to associates
Goods and services tax (GST)
Income in advance
Accrued salaries and wages
Total payables
2015
16,001
12
1,622
5,794
205
23,634
2014
16,104
1
1,797
7,340
2,082
27,324
The fair value of payables is approximately equal to their carrying value as all amounts are expected to be settled within 90 days. No interest is charged on
trade payables.
Financial risk management strategies
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.
12 Property, plant and equipment
in thousands of New Zealand dollars
2015
Balance at beginning of year
Additions
Disposals
Revaluations
Impairments
Depreciation
Balance at end of year
Cost or valuation
Accumulated depreciation
Balance at end of year
in thousands of New Zealand dollars
2014
Balance at beginning of year
Additions
Disposals
Revaluations
Impairments
Depreciation
Balance at end of year
Cost or valuation
Accumulated depreciation
Balance at end of year
Land & Land
Improvements
Buildings
Leasehold
Improvements
Plant &
Equipment
Vehicles
Total
66,073
242
(8)
6,026
156
(627)
71,862
69,358
885
(283)
7,082
(1,032)
(3,998)
72,012
476
(49)
427
16,103
5,561
(50)
(5)
(4,966)
16,643
204
68
(75)
197
152,214
6,756
(341)
13,108
(881)
(9,715)
161,141
74,117
(2,255)
71,862
87,813
(15,801)
72,012
1,999
(1,572)
427
84,369
(67,726)
16,643
503
(306)
197
248,801
(87,660)
161,141
Land & Land
Improvements
Buildings
Leasehold
Improvements
Plant &
Equipment
Vehicles
Total
80,354
526
(17,020)
3,381
(518)
(650)
66,073
78,803
896
(1,375)
(2,361)
(2,757)
(3,848)
69,358
1,051
87
(584)
(78)
476
14,459
6,898
(419)
(3)
(4,832)
16,103
208
96
(26)
(74)
204
174,875
8,503
(18,840)
1,020
(3,862)
(9,482)
152,214
67,875
(1,802)
66,073
80,468
(11,110)
69,358
1,999
(1,523)
476
79,764
(63,661)
16,103
435
(231)
204
230,541
(78,327)
152,214
The budget for property, plant and equipment shown in the statement of financial position did not reflect any revaluations.
Fair value measurement of the Group's land and buildings
The Group’s land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent depreciation and
impairments.
Campus land and buildings have been revalued in the current period. These valuations were performed by independent valuers Darroch Limited under the
requirements of the International Valuation Standards 2013 and NZ IAS 16 Property, Plant and Equipment.
Campus land and buildings have been valued using either market value or optimised depreciated replacement cost. For assets where there is an active market
for the same or a similar asset, value is determined by one or more of the following:
• direct comparison;
• income; and
• cost approach.
AgResearch 2015 Annual Report [39]
The total impairment of $4,466,134 (2014: $7,604,140) was reflected:
in thousands of New Zealand dollars
Through the asset revaluation reserve, being a reversal of prior year revaluations
Through the profit and loss account
2015
3,585
881
4,466
2014
3,742
3,862
7,604
Revaluations upwards as a result of independent valuations obtained for the 2015 financial year are $16,692,967 (2014: farm land and buildings $4,790,754).
Information about the fair value hierarchy is included in note 26.
Had the Group's land and buildings (other than land and buildings classified as held for sale or included in a disposal group) been measured on a historical cost
basis, their carrying amount would have been as follows:
in thousands of New Zealand dollars
Land and land improvements
Buildings
2015
19,785
47,052
2014
22,247
50,872
2015
2014
-
5
886
69
960
13 Non-current assets held for sale
As at 30 June 2015, the Group has no non-current assets which have been classified as held for sale.
in thousands of New Zealand dollars
Non-current assets held for sale include:
Land and land improvements
Buildings
Plant and equipment, vehicles and software
14 Heritage assets
Heritage assets are those assets that are held for the duration of their physical lives because of their unique cultural, historical, geographical, scientific and or
environmental attributes. The Group has identified a germplasm collection as a heritage asset. The nature of this heritage asset, and its significance to the
science the Group undertakes, makes it necessary to disclose it. The Directors believe there is no practical basis upon which to reliably measure the value of
this collection. Details of the collection are outlined below:
Asset
Margot Forde Germplasm Centre
Description
New Zealand's national genebank of grassland plants and Australia's genebank for perennial
grasses and legumes
15 Provisions
in thousands of New Zealand dollars
2015
Balance at beginning of year
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at end of year
Represented by:
Current liabilities
Non-current liabilities
Total provisions
2014
Balance at beginning of year
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at end of year
Represented by:
Current liabilities
Non-current liabilities
Total provisions
Onerous
uring
Contract Restruct
Employee
Entitlements
ACC
Total
25
(25)
-
786
1,388
(1,739)
435
5,667
6,979
(6,802)
(101)
5,743
521
349
(32)
(361)
477
6,999
8,716
(8,573)
(487)
6,655
-
435
435
5,503
240
5,743
477
477
6,415
240
6,655
25
25
891
786
(833)
(58)
786
5,813
6,217
(6,314)
(49)
5,667
514
424
(417)
521
7,218
7,452
(7,564)
(107)
6,999
25
25
786
786
5,268
399
5,667
521
521
6,600
399
6,999
All provisions except for long term employee entitlements are expected to be paid within the following financial year. The provisions made are based on the best
current estimate of the outflows required to settle these obligations.
The restructuring provision represents the direct costs of restructuring which is not associated with the ongoing activities of the Group and includes termination
benefits.
Employee entitlements represents annual leave, alternative days leave, sick leave, long service leave and performance pay.
AgResearch 2015 Annual Report [40]
ACC partnership programme
Liability valuation
An independent actuarial valuer (AON New Zealand) has calculated the Group's liability as at 30 June 2015. The valuer has attested satisfaction as to the
nature, sufficiency and accuracy of the data used to determine the outstanding liability.
For the claim year ended 2015 the Group has chosen a stop loss limit of 175% of risk which means that the Group will only carry the total cost of claims up to a
limit of $145,930. Pre-valuation date claim inflation has been taken as 50% of movements in the CPI and 50% of the movements in the Average Weekly
Earnings (AWE) Index. Post-valuation date claim inflation has been taken as 2.1% per annum. A discount rate of 3% has been used.
The value of the liability is not material for the Group's financial statements. Therefore, any changes in assumptions will not have a material impact on the
financial statements.
The Group is not exposed to any significant concentrations of insurance risk as work related injuries are generally the result of an isolated event to an individual
employee.
Objectives for managing risks
The Group manages its exposure arising from the programme by promoting a safe and healthy working environment by:
• implementing and monitoring health and safety policies;
• induction training on health and safety;
• actively managing work place injuries to ensure employees return to work as soon as practical;
• recording and monitoring work place injuries and near misses to identify risk areas and implementing mitigating actions; and
• identification of work place hazards and implementation of appropriate safety procedures.
16 Reconciliation of surplus after tax with net cash flow from operating activities
in thousands of New Zealand dollars
Surplus after tax
2015
(113)
2014
2,005
Non-cash items
Depreciation
Intangible assets amortisation and impairment
Equity accounted loss
Investment write down and revaluation
Change in fair value of forestry
Change in fair value of non-current assets held for sale
Change in fair value of financial assets or liabilities designated at fair value
Asset impairment/write down
Net (gain)/loss from foreign currency exchange
Change in fair value of derivative financial instruments
Decrease in deferred tax
Other non-cash items
9,715
246
928
647
(69)
(453)
881
(43)
(11)
(730)
680
9,482
311
924
437
44
560
(5)
3,862
51
72
(2,103)
(101)
(56)
730
235
2,609
(502)
(159)
(3,711)
(1,122)
1,016
1,214
(960)
41
(118)
4,263
(19)
32
(2,764)
-
(9)
190
11,018
(457)
155
16,807
2015
2014
1,300
3,825
5,125
616
1,550
2,166
Movements in working capital
Change in current taxation
(Increase)/decrease in inventory
(Increase)/decrease in livestock
(Increase)/decrease in receivables
(Increase)/decrease in prepayments
Increase/(decrease) in provisions
Increase/(decrease) in payables
Items classified as investing activities
Net gain/(loss) on sale of property, plant and equipment
Net gain/(loss) on sale of investments and intangible assets
Increase/(decrease) in property, plant & equipment, intangible assets &
investment accruals
Other repayments reclassified as investing activities
Net cash flow from operating activities
17 Contingencies and commitments
in thousands of New Zealand dollars
Capital commitments
Asset purchases committed to and contracted for at balance date
Funding commitments to research consortiums
Total capital commitments
Other commitments
During the year the Board approved, in principle and subject to a number of conditions (including the procurement of an appropriate property), the investment of
$5 million into a joint arrangement with Dairy NZ and Southland Dairy Development Trust. The investment is to purchase property and develop a dairy hub
(SDH) to address dairying issues particular to the Southern region.
Litigation and other contingent liabilities
The Group is involved in settlements with employees. The liability the Group may incur is estimated at $10,000 (2014: $30,000).
The Group continues to shift its capabilities with reference to our strategic initiatives and revenue outlook. As a result it is expected that a number of
redundancies will arise. The estimated cost of meeting these redundancies in the 2016 financial year is $4 to $5 million.
There are no known other contingent liabilities or pending litigation.
AgResearch 2015 Annual Report [41]
Contingent assets
Currently there is a claim with the Company's insurer in respect of damage as a result of the Christchurch earthquake which has been accepted by the insurer.
The quantum of the claim is currently being determined, but the insurance proceeds are estimated to be in the range of $0.8 to $1.0 million.
18 Operating lease arrangements
in thousands of New Zealand dollars
Non-cancellable operating lease payables
Payable no later than 1 year
Payable later than 1 year and not longer than 5 years
Total non-cancellable operating leases
2015
2014
3,226
2,855
6,081
3,172
5,743
8,915
All significant operating lease commitments relate to land and buildings.
The land lease with Tainui Group Holdings Limited is in perpetuity but with rights of renewal that are executable by AgResearch Limited. The lease has a
restriction in respect of the right to occupy in perpetuity, which only continues if AgResearch Limited is using the land primarily for agricultural purposes and/or
research and development purposes.
Building leases are for at least 10 years or have rights of renewal which are, in aggregate, for at least that period. All leases have normal provisions for periodic
rent reviews to market rates.
Refer to note 2 where the operating lease expense for the year is disclosed.
Non-cancellable operating lease receivables
Receivable no later than 1 year
Receivable later than 1 year and not longer than 5 years
Receivable later than 5 years
Total non-cancellable operating leases
1,553
3,082
712
5,347
1,408
3,233
1,055
5,696
Operating lease receivables relate to land and buildings owned and leased by AgResearch Limited. The lease terms are between 1 month and 6 years, with
one lease having an option to extend for a further five terms, each of 5 years. With one exception (refer to note 8), operating leases have normal provisions for
periodic rent reviews to market rates. No lessees have an option to purchase the property at the expiry of the lease period.
19 Investments in subsidiaries
% of ownership interest and
voting power held by the
Group
Subsidiary companies
Celentis Limited
Grasslanz Technology Limited
AgResearch (USA) Limited
Balance date
30 June
30 June
30 June
2015
100
100
100
2014
100
100
100
AgResearch (Pastoral Genomics Consortia) Limited
AgResearch (Meat Biologics Consortia) Limited
AgResearch (PPGR Consortia) Limited
AgResearch (Johne's Disease Research Consortium) Limited
Covita Limited
Phytagro New Zealand Limited
Phytagro Corp **
Phytagro LLC **
Phytagro Corp **
Phytagro Inc **
30 June
30 June
30 June
30 June
30 June
30 June
31 December
31 December
31 December
31 December
100
100
100
100
100
100
8
80
66
80
100
100
100
100
100
100
8
80
66
80
Principal activity
Holding company
Cultivar development and management
Cultivar development and management in
the USA
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Develop and licence IP in forage crops
Develop and licence IP in forage crops
Develop and licence IP in forage crops
Not trading
Grasslanz Technology Limited is a direct subsidiary of Celentis Limited. AgResearch (USA) Limited is a direct subsidiary of Grasslanz Technology Limited.
Phytagro LLC is a direct subsidiary of Phytagro New Zealand Limited. Phytagro Corp is a direct subsidiary of Phytagro LLC. All other subsidiary companies are
direct subsidiaries of AgResearch Limited.
** Phytagro LLC, Phytagro Corp and Phytagro Inc's balance dates are different from the Group's due to being incorporated in the United States of America.
These entities form part of the group consolidated financial accounts and are compiled using their June 2015 management financial accounts.
All subsidiary companies are incorporated in New Zealand, except Phytagro LLC, Phytagro Corp and Phytagro Inc which are incorporated in the United States
of America.
AgResearch 2015 Annual Report [42]
20 Investments in associates
% of ownership interest and
voting power held by the
Group
Associate companies
Clone International Pty Limited
Balance date
30 June
2015
2014
25
25
Principal activity
Cloning high value horses, cattle and sheep
Ovita Limited*
30 June
-
50
Not trading - IP holding entity
Ultrafine Merino Company Limited*
30 June
-
20
30 September
50
50
Breeding sheep which produce high quality
fine wool
Managing investments in velvet antler
research and commercialising the
intellectual property
DEEResearch Limited
30 June
50
50
Research and development relevant to
deer farming and processing for deer
products (except deer velvet)
BioPacific Management Limited*
30 June
-
50
Biopolymer Network Limited
30 June
33
33
Genetic Engine Holding Company Limited*
30 June
-
25
Managing fund investing into life sciences,
biotechnology, medicine, food and
agriculture
Research and development of high
performance bio based products
Holding assets related to Genetic Engine
software
Meat Biologics Consortium (AgResearch [Meat Biologics
Consortia] Limited)*
30 June
-
16
Pastoral Genomics Consortium (AgResearch [Pastoral
Genomics Consortia] Limited)
30 June
9
9
Pastoral Greenhouse Gas Research Consortium (AgResearch
[PPGR Consortia] Limited)
30 June
20
19
To undertake research into greenhouse
gases produced by ruminants and exploit
any resulting intellectual property
Johne's Disease Research Consortium (AgResearch [Johne's
Disease Research Consortium] Limited)
30 June
12
12
To undertake research on effective
methods of reducing Johne's disease in
livestock industries
Farmax Limited
30 June
50
50
Encoate Holdings Limited
30 June
50
50
Development and distribution of farm
management software
To research and develop bacteria and
probiotics stabilisation technologies
Velvet Antler Research New Zealand Limited
Not trading
To undertake research into clover
genomics and exploit any resulting
intellectual property
All of the above associates are accounted for using the equity method in these consolidated financial statements.
*During the year, AgResearch sold its investment in BioPacific Management Limited. Investments in Ovita Limited, Ultrafine Merino Company Limited, Genetic
Engine Holding Company Limited and Meat Biologics Consortium were exited following cessation of the business activities of these entities.
All associates are incorporated in New Zealand except for Clone International Pty Limited which is incorporated in Australia. There are no restrictions on the
ability of any associate to pay dividends, repay loans or otherwise transfer funds to the investor company.
All associates are private entities and there is no quoted market price available for the investments.
Summarised financial information for individually immaterial associates
in thousands of New Zealand dollars
Share of profit/(loss) from continuing operations
Share of total comprehensive income
Aggregate carrying amount of the Group and Company's interest in the associate investments
2015
(928)
(928)
660
2014
(924)
(924)
620
in thousands of New Zealand dollars
Available-for-sale financial assets
2015
4,714
2014
6,098
Fonterra Co-operative Group Limited
BioPacific Ventures
Other investments
2,469
1,667
578
4,714
2,978
2,395
725
6,098
21 Other investments
Valuation of other investments
• Investments held through the BioPacific Ventures investment fund are carried at cost, less any impairment arising from revaluations undertaken
by the Fund Manager.
• Fonterra shares are valued using the quoted market price on the NZX market.
• Livestock Improvement shares valued using the quoted market price on the NZAX market.
• Other investments are unlisted equities or cooperatives whose share prices are set by the individual entities.
Disposals
There were no disposals during the year. (2014: $Nil)
Impairment of other investments
During the year, other investments were impaired relating to:
in thousands of New Zealand dollars
BioPacific Ventures Fund
2015
647
2014
313
AgResearch 2015 Annual Report [43]
22 Joint operation investments
Details of the Group's material joint operations at the end of the year are as follows:
% of ownership interest and
voting power held by the
Group
Grasslands Innovation Limited
Balance date
30 June
2015
30
2014
30
Principal activity
To identify, develop and exploit product
opportunities in proprietary forage cultivars
and other forage technologies
The 30% interest in Grasslands Innovation Limited is held via Grasslanz Technology Limited, a wholly-owned subsidiary of AgResearch Limited. Grasslands
Innovation Limited is incorporated in New Zealand.
Grasslands Innovation Limited is accounted for using the proportional consolidation method in these consolidated financial statements.
23 Transactions with related parties
The ultimate shareholder of the Group is the Crown. The Group undertakes many transactions with other crown entities, state owned enterprises and
government departments, which are carried out on a commercial and arms length basis. A summary of the transactions is detailed below.
Trading transactions with related parties
in thousands of New Zealand dollars
Research, development and other services
Transactions between the Company and related parties:
Associates *
Jointly controlled entities
Other related parties
Sale of services
2015
2014
Due from
2015
2014
10,159
1,252
1,011
11,346
1,147
724
1,521
514
279
3,173
333
310
13,242
12,718
4,009
3,545
Due to
2015
2014
Transactions between the Group and related parties:
Entities of which key management personnel are associated **
in thousands of New Zealand dollars
Research, development and other services
Transactions between the Company and related parties:
Associates
Other related parties
Purchase of services
2015
2014
45
124
471
-
12
-
1
-
9,114
7,344
854
535
Transactions between the Group and related parties:
Entities of which key management personnel are associated **
The amounts outstanding are unsecured, on normal trade terms and will be settled in cash. No guarantees have been given or received. No expense has
been recognised in the period for bad or doubtful debts in respect of the amounts owed by related parties.
During the year AgResearch Limited made interest payments of $212,327 (2014: $156,632) to its subsidiaries on intercompany loans. The weighted average
interest rate on the loans is 4.26% (2014: 3.43%).
* Associates
Included within Associates is the Pastoral Genomics Consortium for which Dr Michael Dunbier is a director. AgResearch Limited had sales of $4,000,873
(2014: $4,135,601) during the year to Pastoral Genomics Consortium. Pastoral Genomics Consortium owed the Group $1,150,000 as at 30 June 2015 (2014:
$2,124,625).
AgResearch 2015 Annual Report [44]
** Trading transactions with entities of which key management personnel are associated include:
Sale of services
in thousands of New Zealand dollars
2015
2014
ANZCO Foods Limited
143
591
AsureQuality Limited
79
107
CSIRO
3
29
DairyNZ Incorporated and DairyNZ Limited
7,303
7,591
Deer Industry New Zealand
2
Dunbier Trust
Firstlight Foods Limited
39
6
Firstlight Venison (NZ) Limited
7
6
Foundation for Arable Research
975
668
Kowhai Consulting Limited
Hamilton City Council
Landcare Research New Zealand Limited
881
893
Lincoln Hospitality Limited
Lincoln University
1,463
1,219
Macfarlane Rural Business Limited
13
Gravida (National Research Centre for Growth & Development)
6
116
Overeer Limited
907
Silver Fern Farms Limited
74
TBFree New Zealand Limited
1,347
1,492
Tru-Test Limited
Zenoch Management Limited
-
Purchase of services
2015
2014
14
410
676
198
164
3,047
2,765
13
18
37
3
36
470
454
1,863
1,629
5
2,916
1,606
13
21
30
23
3
7
37
-
Due from (due to)
2015
2014
8
70
10
16
1,444
2,010
39
597
447
(25)
(106)
(35)
698
221
21
279
13
198
260
-
Equity interest in related parties
Details of the percentage of interests held in related parties are disclosed in notes 19 and 20 to the financial statements.
Key management personnel compensation
The compensation of the Directors and Executives, being the key management personnel of the Group, comprised:
in thousands of New Zealand dollars
Salaries and other short term employee benefits
2015
2,372
2,372
2014
2,638
2,638
24 Financial instruments
Financial instruments carried in the statement of financial position include cash and cash equivalents, investments, derivative financial instruments, receivables
and trade creditors. The particular recognition methods adopted are disclosed in the accounting policies where relevant.
Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• market risk
• liquidity risk
The Group has a treasury policy which it applies to actively manage these risks (refer below). This treasury policy was updated during the current period.
Credit risk
The financial instruments which potentially subject the Group to credit risk are cash, short term deposits, forward rate agreements and accounts receivable.
Credit risk is managed through the treasury policy which:
• places restrictions on the level of investment with any one counterparty;
• restricts the counterparties that may be used to A Grade registered banks and the New Zealand Government; and
• sets parameters within which short-term investments must be made.
The Group has no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying value of each financial asset in
the statement of financial position.
Market risk
Currency risk
Revenues and expenses in foreign currency are translated to New Zealand dollars at the exchange rates in effect at the time of the transaction, or at rates
approximating them. Assets and liabilities are converted to New Zealand dollars at the rates of exchange ruling at balance date.
Currency risk in respect of the Group's transactions is managed in accordance with the Group's treasury policy and includes the use of forward foreign
exchange contracts.
It is estimated that a 10% decrease in the New Zealand dollar would increase profit and equity by $148,627 (2014: $129,818). It is estimated that a 10%
increase in the New Zealand dollar would reduce profit and equity by $121,604 (2014: $106,214).
Cash flow hedges
For those currency exposures less certain in their timing and extent, such as future sales and purchases, it is the Group's policy to manage the risk on a group
wide basis. Under the treasury policy the purchased cover is between 0% and 95% depending on how far out the anticipated exposure is (to a maximum of 12
months).
The Group uses foreign currency forward exchange contracts, within the above treasury policy limits, to manage these exposures.
There has been no change during the year to the Group's exposure to currency risks or the manner in which it measures the risks.
AgResearch 2015 Annual Report [45]
Interest rate risk
The Group has no borrowings and is therefore not exposed to interest rate risk other than in relation to its investments, which are not material.
Liquidity risk
Liquidity risk represents the Group's ability to meet its financial obligations on time. Generally, the Group generates sufficient cash flows from its operating
activities to make timely payments. It does however maintain committed credit lines to cover any shortfalls. The Group has a multi-option credit facility of up to
$2 million (2014: $5 million). As at 30 June 2015 there were no funds drawn against the facility (2014: $Nil).
Liquidity risk is managed:
• by monitoring cash flow forecasts (both operational and anticipated non-recurring items) and aligning investment decisions with these;
• through compliance with the treasury policy, which sets a liquidity buffer for unforeseen cash flows;
• through monthly review by senior management; and
• through regular oversight by the Audit & Risk Committee.
There has been no change during the year to the Group's exposure to liquidity risks or the manner in which it manages and measures the risks.
Maturity analysis - financial liabilities
On demand
in thousands of New Zealand dollars
2015
Trade and other payables
Derivative financial instruments
Finance leases
-
2014
Trade and other payables
Derivative financial instruments
Between 1
Less than 1 year and 5
year
years
Later than 5
years
Total
-
23,634
16
4
23,654
7
7
-
23,634
16
11
23,661
-
27,324
27
27,351
-
-
27,324
27
27,351
Fair value
Cash and cash equivalents, trade receivables, other receivables and payables
The carrying amounts of financial assets and financial liabilities recorded at cost in the financial statements approximate their fair value.
Investments
Investments, except for 'other investments' which are valued at fair value, are carried at cost. It is not practical to estimate the fair values of unlisted
associates.
Derivative financial instruments
Foreign currency contracts are shown at fair value.
Fair value of financial assets and financial liabilities
in thousands of New Zealand dollars
2015
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non current receivables
Other investments
Financial liabilities
Trade and other payables
Derivative financial instruments
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non current receivables
Other investments
Financial liabilities
Trade and other payables
Derivative financial instruments
Note
7
8
21
11
7
8
21
11
Financial
liabilities at
Available-for- amortised
sale
cost
Loans
and
receivables
Designated
at fair value
59,915
30,091
3,966
93,972
-
4,714
4,714
-
-
55,838
32,419
3,778
92,035
-
Total
Fair value
-
59,915
30,091
3,966
4,714
98,686
59,915
30,091
3,966
4,714
98,686
16
16
17,840
17,840
17,840
16
17,856
17,840
16
17,856
-
6,098
6,098
-
55,838
32,419
3,778
6,098
98,133
55,838
32,419
3,778
6,098
98,133
-
27
27
19,984
19,984
19,984
27
20,011
19,984
27
20,011
25 Term loans
AgResearch Limited has a multi-option credit facility of up to $2 million (2014: $5 million) secured by way of a negative pledge covenant agreement. No amount
has been drawn at 30 June 2015 (2014: $Nil).
26 Fair value measurements recognised in the statement of financial position
The following table provides an analysis of items that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the
degree to which the fair value is observable:
Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
AgResearch 2015 Annual Report [46]
in thousands of New Zealand dollars
2015
Available-for-sale financial assets
Other investments*
Non financial assets
Livestock
Forestry
Land and land improvements
Buildings
Note
Level 1
Level 2
21
2,520
498
9
10
12
12
-
4,254
794
71,862
72,012
-
4,254
794
71,862
72,012
16
2,536
149,420
-
16
151,956
Financial liabilities designated at fair value
Derivative financial liabilities
Level 3
Total
3,018
2014
Available-for-sale financial assets
Other investments*
21
3,072
631
-
3,703
Non financial assets
Livestock
Forestry
Land and land improvements
Buildings
9
10
12
12
-
4,489
744
66,073
69,358
-
4,489
744
66,073
69,358
27
3,045
141,295
-
27
144,340
Financial liabilities designated at fair value
Derivative financial liabilities
There were no transfers between any levels during the year.
The changing of one or more inputs would not change significantly the fair value of the Level 3 investments.
*Other investments consist of Fonterra shares $2,469k (2014: $2,978k) and other investments $578K (2014: $725) as per note 21. The level classification
determined is based on the fair value within these investments.
27 Capital management
The Group's capital is its equity which is made up of:
• share capital;
• asset revaluation reserve;
• available-for-sale asset revaluation reserve; and
• retained earnings.
The Crown Research Institutes Act 1992 requires AgResearch Limited to maintain its financial viability in order to undertake research for the benefit of New
Zealand.
The Group is not subject to any externally imposed capital requirements.
The Group's policies in respect of capital management and allocation are reviewed regularly by the Board of Directors.
There have been no material changes in the Group's management of capital during the year.
28 Other non current liabilities
Key Money
In the current period AgResearch Limited sold a building and entered into a sub-lease of the land on which the building is located. The leasee has paid an
upfront lump sum as key money in relation to the lease. The key money will be recognised as income over the term of the lease (including renewal periods).
in thousands of New Zealand dollars
Key money received in advance
Key money referrable to lease in current period
2015
2014
839
(35)
804
-
29 Significant events after balance date
There were no significant events after balance date that would have a material effect on the financial statements.
AgResearch 2015 Annual Report [47]
INDEPENDENT AUDITOR’S REPORT
TO THE READERS OF AGRESEARCH LIMITED AND GROUP’S
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
The Auditor-General is the auditor of AgResearch Limited and its New Zealand domiciled subsidiaries.
The Auditor-General has appointed me, Bruno Dente, using the staff and resources of Deloitte, to carry
out the audit of the financial statements of the group, consisting of AgResearch Limited and its
subsidiaries (collectively referred to as ‘the Group’), on her behalf.
Opinion
We have audited the financial statements of the Group on pages 21 to 47, that comprise the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated 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.
In our opinion, the financial statements of the Group:

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 New Zealand equivalents to International Financial Reporting Standards.
Our audit was completed on 28 August 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 Auditor-General’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 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. 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. The procedures selected depend on our judgement, including our
assessment of risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the preparation of the
Group’s financial statements 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 Group’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

the overall presentation of the financial statements.
AgResearch 2015 Annual Report [48]
We did not examine every transaction, nor do we guarantee complete accuracy of the financial
statements. Also, we did not evaluate the security and controls over the electronic publication of the
financial statements.
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’ responsibilities arise from the Crown Research Institutes Act 1992.
The Board of Directors is responsible for such internal control as it determines is necessary to enable
the preparation of financial statements 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,
whether in printed or electronic form.
Responsibilities of the Auditor
We are responsible for expressing an independent opinion on the financial statements 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 Auditor-General,
which incorporate the independence requirements of the External Reporting Board.
Other than the audit, we have no relationship with or interests in the Group.
Bruno Dente
Deloitte
On behalf of the Auditor-General
Hamilton, New Zealand
AgResearch 2015 Annual Report [49]
Statutory reporting
For the year ended 30 June 2015
To our shareholders and stakeholders
The Directors are pleased to report that AgResearch Limited met its obligations in all material aspects under the Crown Research
Institutes Act 1992 for the year ended 30 June 2015.
Dividends
No dividends were declared during the year to 30 June 2015.
Directors’ interests
The Board received no notices during the year from Directors requesting the use of Company information that would not otherwise have
been available to them. There were no share dealings by Directors with the Company.
Directors’ interests disclosed during the year to 30 June 2015 are set out in the table below. Interests are directorships unless otherwise
stated and do not include trusteeships, directorships or shareholdings in private trusts and small companies with whom no transactions
have occurred during the year. These interests have been appropriately recorded within the interest register which is updated regularly.
Sam Robinson
Brownrigg Agriculture
Shareholder of Rangeland Farms Limited
(Chair)
Centralines Limited (Chair)
Shareholder of Ravensdown Fertiliser Co-op
Hawke's Bay Regional Investment Company Limited
Shareholder of Silver Fern Farms
Opihi Limited
Shareholder of Tourere Asset Management Limited
Shareholder of Ballance Agri-Nutrients
Shareholder of Wools of New Zealand
Shareholder of Farmlands Limited
The Co-operative Bank Limited
Shareholder of Primary Wool
Tourere Asset management Limited
DairyNZ Incorporated & subsidiaries
Employee of Hamilton City Council
Dexcel Holdings Limited
Primary Industry Training Organisation
Barry Harris (Deputy Chair)
Food Waikato
TBfree New Zealand Limited
National Animal Identification and Tracing (NAIT) Limited
Wel Networks
OSPRI New Zealand Limited
Teresa Ciprian
ASPEQ Limited
Zenoch Management Limited
Firstlight Foods Limited
Zespri
Zenoch Trust
Dr Michael Dunbier
Jeff Grant
Andrew Macfarlane
Expert review panel for the Foundation of Arable Research
(FAR) (Chair)
Pastoral Genomics Limited (Chair)
Foundation for Arable Research
Horticulture Research & Innovation (Chair)
Reviewer of a Landcare Research Ministry of Business, Innovation &
Employment bid
Cooper Valley Holdings
Southern Institute of Technology Board member
Finance Now Limited
Shared Services Southland (Chair)
Milford Sound Development Authority Limited (Chair)
Shareholder of Cooper Valley Holdings
Mount Linton Station Limited (Chair)
Shareholder of Tower Hill Trust
National Animal Identification and Tracing (NAIT) Limited
TBfree New Zealand Limited (Chair)
OSPRI New Zealand Limited (Chair)
Trustee Tower Hill Trust
SBS Bank
Trustee of Massey-Lincoln and Agricultural Industry Trust
ANZCO Foods Limited
Fernside Holdings Limited & subsidiaries
Carradale Farm Limited
Kintore Farm Limited
Creighton Properties Limited
Lincoln Hospitality Limited
Deebury Pastoral Limited
Lincoln University Councillor Limited
Deer Industry New Zealand (Chair)
NZIPIM
Pastoral Genomics Consortium (Chair)
Dumbarton Land Company Limited
Edgewater Resort Hotel Limited & subsidiaries
Tania Simpson
Dr Peter Stone
Michelle Alexander
Deep South National Science Challenge
Reserve Bank
Kowhai Consulting Limited
Global Woman
Oceania Group Limited
National Centre for Engineering in Agriculture (University of
Southern Queensland)
Tropical Landscapes Joint Venture (CSIRO - James Cook
University)
Employee of Commonwealth Scientific and Industrial
Research Organisation (CSIRO)
Antares Restaurant Group Limited
Shareholder of Mighty River Power Limited & subsidiary
Shareholder of Argo Investments Limited
Antares Restaurant Group Project Company Limited
Tango Holdings New Zealand
Antares New Zealand Holdings Limited
Tango New Zealand Limited
Shareholder of Nufarm Limited
Kiwi Pacific Foods Limited
AgResearch 2015 Annual Report [50]
Directors’ remuneration
Remuneration and other benefits paid or due and payable to Directors for services as a Director, including membership of Board
Committees, during the year were as follows:
Directors
2015
2014
Sam Robinson (Chair)
69,500
70,555
Barry Harris (Deputy Chair)
44,000
45,054
Teresa Ciprian
35,750
36,804
Dr Michael Dunbier
35,750
36,804
Jeff Grant
35,750
2,108
John Loughlin
-
34,272
Andrew Macfarlane
35,750
36,804
Tania Simpson
35,750
36,804
Michelle Alexander
40,750
-
Dr Peter Stone
35,750
33,795
15,000
15,000
Grasslanz Technology Limited
Robert John Hay (Chair)
Remuneration greater than $100,000
During the year ended 30 June 2015, 233 staff received remuneration of or exceeding $100,000 per annum as follows:
Group
$100,000 to $109,999
$110,000 to $119,999
$120,000 to $129,999
$130,000 to $139,999
$140,000 to $149,999
$150,000 to $159,999
$160,000 to $169,999
$170,000 to $179,999
$180,000 to $189,999
$190,000 to $199,999
$200,000 to $209,999
$210,000 to $219,999
$220,000 to $229,999
$230,000 to $239,999
$240,000 to $249,999
$250,000 to $259,999
$270,000 to $279,999
$320,000 to $329,999
$330,000 to $339,999
$340,000 to $349,999
$370,000 to $379,999
$630,000 to $639,999
46
45
35
28
20
9
16
6
7
5
1
4
1
2
1
1
1
1
1
1
1
1
Remuneration included performance awards, superannuation benefits, vehicle benefits, severance and exit payments.
Remuneration above was received by Science (187), Chief Executives’ Office, Shared Services and Finance & Business Performance
(40) and subsidiaries (6).
Termination payments
During the year, the Group made the following payments to former employees in respect of termination of their employment with the
Group.
Total amount paid
Number of Employees
$1,739,147
34
Donations
No donations were paid during the year ended 30 June 2015.
Directors and employees indemnity and insurance
During the year, the Company indemnified Directors and certain employees to the fullest extent permissible by law. The Company also
has Directors and Officers insurance.
Auditor
Mr Bruno Dente of Deloitte is the appointed auditor of the Company under contract from the Office of the Controller and Auditor-General
and under Section 21 of the Crown Research Institutes Act 1992.
AgResearch 2015 Annual Report [51]
Core funding report
For the year ended 30 June 2015
In 2014/15 AgResearch received $38.889m (2013/14: $38.889m) from the Ministry of Business, Innovation and Employment as Core
Funding.
Core Funding is funding that is devolved to a crown research institute (CRI) to support achieving its Core Purpose delivered in accordance
with its Statement of Corporate Intent and the Core Funding Agreement with the Crown. Activities supported by Core Funding can include:
• undertaking basic and applied research and experimental development of importance to New Zealand;
• transferring knowledge and technologies to end-users and stakeholders;
• providing policy advice to Government;
• maintaining Nationally Important Assets;
• responding to emergencies and changing national priorities; and
• building stronger national and international collaborations that further the CRI’s Core Purpose.
AgResearch’s Core Purpose is to enhance the value, productivity and profitability of New Zealand’s pastoral, agri-food and agri-technology
sector value chains to contribute to economic growth and beneficial environmental and social outcomes for New Zealand.
AgResearch fulfils its purpose (as outlined in the Statement of Core Purpose (SCP)) through the provision of research and transfer of
technology and knowledge in partnership with key stakeholders, including industry, government and Māori, for the following outcomes:
1. to increase the value of the above industry sectors to the New Zealand economy through the development of high-value
pastoral-based products;
2. to position New Zealand as a global leader in the development of environmentally sustainable, safe and ethical pastoral
production systems and products;
3. to ensure that New Zealand’s pastoral, agri-food and agri-technology sectors are able to protect, maintain and grow its global
market access;
4. to increase the capacity of rural communities and enterprises to adapt to changing farming conditions in ways that balance
economic, environment, social and cultural imperatives.
The following table lists key achievements from Core-funded projects undertaken in the 2014/15 financial year:
Project Title
Dairy on Farm
Organising cow health and
production through
improved recommendations
on nutrition and cow
management during the
transition period
Research capability in
animal physiology
(ruminant nutrition)
Strategies to improve
reproductive performance
in dairy cattle
Project Update
2014/2015 $13.6m
2013/2014 $14.7m
Effective maintenance of dairy cow health during the “transition” between pregnancy and lactation is a function of nutrition and
management. This project seeks to investigate a range of nutrition and management strategies to determine their impact on
whole body metabolism and will define management and/or nutrition strategies that optimise immune function, cow health, milk
production and reproduction. This will directly increase productivity and profitability in the New Zealand dairy industry.
2014/2015 Key Achievements:
Immunocompetence (ability to develop a normal immune response) of dairy cows during the transition period was investigated
in relation to body condition score (BCS) and feeding levels during pregnancy. These studies clearly showed that cytokine
(molecules that aid cell to cell communication in immune responses and stimulate the movement of cells towards sites of
inflammation, infection and trauma) responses are modulated during the week after calving. It was also demonstrated that
changes in diet and BCS are the driving forces for immunomodulation (therapeutic interventions aimed at modifying the
immune response) in transition cows. These results directly support the hypothesis that optimally conditioned dairy cows might
benefit from restricted dietary energy pre-calving, whereas under-conditioned cows should be fed to requirements. Dairy
farmers will benefit from these findings through being able to optimise nutrition of pregnant cows, which will ultimately improve
cow/calf health and performance, and directly increase profitability within the New Zealand dairy industry.
The primary goal of this project is to expand existing Ruminant Nutrition research to improve animal productivity on pastoral
systems. To achieve this, three project goals have been set: 1) development of a strategy to expand animal nutrition research,
initially focused on dairy cattle performance; 2) heifer development for pastoral dairy herds; and 3) managing dietary transitions
in dairy cattle (i.e. using supplements and sensors). Successfully achieving these objectives will lead to improved feeding
management on New Zealand dairy farms, which will directly improve the productivity and profitability of the dairy sector.
2014/2015 Key Achievements:
Interaction with external science and extension stakeholders (DairyNZ, Livestock Improvement Corporation [LIC], Universities
and commercial companies) was initiated to identify and prioritise dairy cattle nutrition research to improve dairy cattle
performance (health, reproduction milk yield and welfare). Scientists form DairyNZ agreed to develop a national strategy for
dairy cattle nutrition and for collaborative work.
• An internal science landscape was completed, with a view to strengthening dairy cattle nutrition research within AgResearch
in order to target dairy animal performance. As a result, a number of themes for future collaborative work among AgResearch
teams in the area of dairy animal nutrition and physiology were identified. Three such themes include: 1) Plant–animal
interactions (including endophytes, plant breeding); 2) Nutrition, immunology and health of dairy animals (including immune
system development in heifers); and 3) Rumen microbiology and nutritional management of dairy cattle (including enzymes,
silage inoculants, probiotics).
Milk and milk products are New Zealand’s largest food export and the dairy industry continues to grow. Among the challenges
faced by the industry is the well-recognised observation that, as milk production has steadily increased over the last 40 years,
the fertility of the lactating dairy cow has decreased. In response to this, the dairy industry has set a target of achieving an
average in-calf rate at 6 weeks (from the planned start of mating) of 78% by 2020. The overarching aim of this research
programme is to develop strategies to improve reproductive performance in dairy cattle through understanding the underlying
causes of the decrease in fertility and to use this knowledge to improve reproductive management.
2014/2015 Key Achievements:
• Successfully completed the first year of a two year on-farm project with DairyNZ, to determine the timing of conception failure
in dairy cows. Results in NZ dairy cows determined that the majority of embryonic mortality occurs within the first 15 days of
gestation. This is significant in that it reduces the focus of the research programme from 35 days to 15 days to identify why
pregnancies are failing, in order to meet the aim of improving the 6-week in-calf rate from 65% to 78%, without hormonal
intervention.
• The oestrus activity (the period of the sexual cycle in which the cow is in heat) data collected showed a positive correlation
between increased activity and successful pregnancy rate following artificial insemination (AI). Notably, AI on the first and
second oestrus gave suboptimal pregnancy rates, contributing to a decreased 6-week In-calf rate. This finding could be used
in designing new reproductive management strategies to optimise reproductive efficiency, and in turn, New Zealand dairy
AgResearch 2015 Annual Report [52]
Molecular breeding
From livestock to
pluripotent stem cells and
back again -- a new
direction for producing
high-value animals for
agriculture and biomedicine
Sheep dairy industry –
genetics
Trophectoderm lineage
determination in cattle
(FY15 AgResearch Science
Prize)
AgPest
(previously titled 'Pestweb')
industry productivity and profitability.
• Research demonstrated that transferring half an embryo (at Day 7) into an advanced (Day 9) uterus resulted in the half
embryo attaining the same size and development as a whole embryo. In addition, embryo development was advanced when
compared to transferring into a Day 7 uterus. This is a simple, cost-effect method to potentially increase pregnancy rates with
no additional costs or hormones and could be used for split or biopsy generated embryos in animal breeding programmes to
accelerate the rate of genetic gain.
The project aims to develop the capability for precision animal breeding through the targeted introduction of desirable and
elimination of undesirable sequence variants to improve livestock genetics within a single generation. In addition, the project
will develop genetically improved cattle, sheep and goat models demonstrating improved production characteristics or
producing novel milks with additional health benefits. This will contribute towards increased productivity and profitability in New
Zealand's livestock industries.
2014/2015 Key Achievements:
• Using genome editing (a type of genetic engineering in which DNA is inserted, replaced, or removed from a genome using
artificially engineered nucleases, or 'molecular scissors') into one-cell bovine embryos, a pre-defined genetic variant could be
efficiently introgressed (introgression is the process in which genes from one gene pool are moved to another). This will enable
the introduction of beneficial genetic variants or elimination of undesirable genetic variants in elite genotypes and provide a
step-change for improving livestock genomes.
• A goat model was developed to evaluate a genetic system that was shown (in a mouse model) to cause non-Mendelian
inheritance for its functionality in livestock. Mendel's law states that, in the process of breeding, recessive genes will always be
masked with dominant ones, and thus the resulting offspring will always inherit the dominant genes (which is not always
desirable). It is therefore hugely important that the genetic system is able to produce animal offspring which inherit chosen
recessive genes. This can now be applied to produce bulls with the ability to father single sex offspring (with desirable genetic
characteristics) for increased productivity in the New Zealand dairy and meat industries, as well as reduced animal welfare
burden.
The aim of this project is to identify high genetic value bovine embryos, and convert these into embryonic pluripotent stem cells
(ePSCs) from which animals can be produced. This will directly increase the intensity of selection and the multiplication of
high-value animals, to accelerate the rate of genetic gain in the New Zealand dairy industry compared to conventional methods
of selection. The impact of improved genetic gain will be improved animal productivity, which will directly increase the
profitability of the New Zealand dairy industry.
2014/2015 Key Achievements:
• As a result of the first proof-of-principle industry trial on embryo genomic selection, two bulls have entered a progeny testing
scheme (a process for testing the value for selective breeding of an individual's genetic characteristics by looking at the
progeny [descendants] produced by different matings). This demonstrates the potential of embryo genomic selection to
contribute towards accelerating the rate of genetic gain.
• Using bovine embryos and embryo-derived stem cells as sequential chemical screening platforms, the project identified JAKSTAT signals as crucial for establishing molecular pluripotency. JAK-STAT is a signalling pathway which transmits information
from chemical signals outside the cell, through the cell membrane, and into gene promoters on the DNA in the cell nucleus,
which causes DNA transcription and activity in the cell. This finding helps to define culture conditions required to derive
authentic pluripotent stem cells in cattle.
• Bovine in vitro fertilised (IVF) embryos were converted into isogenic (having the same or closely similar genotypes)
embryonic stem cell cultures which were then reprogrammed into cloned embryos. This effectively recycles high-value IVF
embryos into embryonic cell-derived clones, multiplying their genetics for production of high-value animals.
This small project was a 'one-off' investments during 2014/15. The objective of the project was to assess the current state of
dairy sheep genetics, both in New Zealand and globally, and to subsequently provide recommendations on a strategy for
genetic improvement within the industry. These recommendations will benefit the New Zealand sheep dairy industry by
enabling improved breeding decisions, which will improve animal health and productivity, and in turn increase industry
profitability. The research carried out in the project involved Māori trusts and agri-business enterprises, among other industry
stakeholders.
2014/2015 Key Achievements:
• This project was an extremely successful scoping exercise for dairy sheep genetics. There has been successful engagement
on many levels with key stakeholders in the industry including academics, consultants, agribusinesses, Māori trusts and
individual producers. It is envisioned that these established connections will be leveraged to begin development of a national
breeding tool, which will enable better genetic selection of livestock, and therefore improved sheep dairy industry productivity
and profitability.
• A scoping document was produced providing key background information on the New Zealand dairy sheep industry together
with recommendations for further AgResearch investment and engagement. A clear need was identified for a project using
AgResearch expertise and capability to deliver increased revenue to the dairy sheep industry through a national genetic
improvement scheme. This project would be strategically aligned with existing genomics research and the current dairy sheep
project with the Ministry of Business, Innovation and Employment (MBIE).
• Existing genomic (genetics) developments and data from international projects were used to analyse a subset of the existing
New Zealand sheep flock and to explore breed structure, in order to provide producers and livestock breeders with important
information to inform future (improved) breeding decisions.
The aim of this project is to reveal new information regarding the genetic mechanisms in cattle embryo development, with a
focus on understanding why and when embryo mortality occurs. Understanding the complex mechanisms that drive this
development will generate new knowledge and can be applied to reduce embryo loss during cattle pregnancies. This will
directly lead to improved animal health and productivity, which will in turn raise productivity and profitability in New Zealand's
dairy and cattle industries.
2014/2015 Key Achievements:
• During this first year of the project, an important research collaboration was established between Dr. Peter Pfeffer, Victoria
University and the AgResearch Animal Reproduction team. A joint project was formed that will focus on the exploring the
mechanisms involved in bovine embryo perigastrulation stage (one of the critical developmental events and a stage where
approximately 10% of bovine embryos arrest and fail to develop further). The knowledge generated from this collaboration will
be directly applied to the DairyNZ/MBIE partnership “Pillars of an sustainable and responsible dairy system,” and will benefit
industry and farmer end-users alike.
AgPest (formerly Pestweb) is a website that was conceived and designed by AgResearch insect pest and weed scientists to
provide relevant, up-to-date and independent information to farmers and agribusiness consultants (including Māori
agribusiness) on the identification and control of pastoral weeds and pests. It provides a decision support system that will
ultimately help to reduce expenditure on weed and pest management. Continued development is required to embed the
website as the 'one-stop' extension tool to deliver pest and weed science to New Zealand stakeholders.
2014/2015 Key Achievements:
• AgPest continued to provide the New Zealand pastoral industry with independent information on the control, biology and
management of over 80 key pasture weeds and pests. Over the past year, five new weed and pest pages were added to the
website and over 70 pest alerts were disseminated in collaboration with Beef+Lamb NZ. In this way, AgPest has ensured that
farmers continue to be provided with up-to-date, independent information in a timely manner to assist in the rapid control of
pests, leading to greater pasture productivity and profit.
AgResearch 2015 Annual Report [53]
Weed ecology and
management in pastures
and forage crops
(previously titled
'Undermining weeds')
Animal welfare for market
success
Forage value
Resolving the molecular
basis limiting condensed
tannin production in white
clover
MeriNet
AgResearch nationally
significant database
(Margot Forde Germplasm
Centre)
The primary aim of this research programme is to improve understanding of the population dynamics and impacts of weeds in
New Zealand pasture and forage cropping systems, in order to provide major stakeholders and end-users in the New Zealand
pastoral agricultural sector with a sound scientific basis for sustainable weed management.
2014/2015 Key Achievements:
• Development of a matrix model of the perennial weed, Californian thistle, resulted in a better understanding of how defoliation
affects population growth of this weed in a pasture. This will enable New Zealand pastoral farmers to boptimise their
management of the weed, resulting in lower control costs and greater production benefits.
• Research demonstrated, through the development of a bio-economic model of nassella tussock (a pasture weed), how
different strategies to remove plants from populations of this weed in dry hill pastures (through control operations) affect the
population growth and economics of controlling the weed. This will help pastoral farmers design a long-term cost-effective
regional management programme for nassella tussock.
• Research demonstrated, through the development of a bio-economic model of Chilean needle grass in Canterbury, the large
influence that the assumed rate of the invasion has on the outcome of a cost: benefit analysis for a regional control
programme. The model has been used as a basis for a Web App for the economic evaluation of regional weed management
programmes which will become part of a ‘tool box’ for regional council decision-makers to assist them in meeting the
requirements of the Biosecurity Act. This will let regional councils conduct their cost: benefit analyses in the nationally
consistent manner specified in the National Policy Direction for Regional Pest Management Plans and make regional weed
management more cost-effective.
• The leaf-scale retention models developed within this programme, and in conjunction with Queensland University of
Technology, were implemented within a research version of AGDISP. AGDISP is a publically available, free, spray application
simulation software package used by a number of international regulatory authorities. Including the process-driven retention
models implemented within AGDISP Research will realise improved predictions of spray retention compared to experimental
results, with better outcomes for regulatory authorities that rely on AGDISP models to develop best practice guidelines for
ground and aerial application of a range of pesticides.
The primary aim of this project is to respond to emerging animal welfare issues in New Zealand, by applying rigorous sciencebased approaches to assure market access and demonstrate a national commitment to animal welfare.
2014/2015 Key Achievements:
• A multi-year research programme (in collaboration with DairyNZ) began to deliver best practice management options for dairy
cows off-paddock. This work directly supported contributions to a DairyNZ publication: 'Good practice guide for dairy housing in
New Zealand.' Dairy farmers will benefit from being provided with information about good practice options for off-paddock
management of their livestock.
• A nationwide survey of dairy farmers found that approximately one-quarter used an off-paddock facility and the most
commonly identified negative impacts of using these off-paddock systems are mastitis and lameness. This survey's results will
inform the programme's research focus in 2015/16, to provide information and recommendations on good practice around New
Zealand off-paddock systems (which in turn safeguards the welfare of the cows) to up to 2,900 NZ dairy farmers.
• Use of cryosurgery as an alternative method of preventing horn growth in dairy calves showed promising results and will
continue to be refined in 2015/16 along with assessing the animal welfare aspects of the procedure. This will assist dairy
farmers to meet public expectations around management of painful husbandry procedures. Use of pain relief is not currently
common on dairy farms due to issues such as cost and practicality. Alternatives to drug injections and anaesthesia will help
address this and improve public perception of the New Zealand dairy industry.
• Studying the behaviour of dairy calves using automated milk feeding technology showed promise for detecting sick calves.
The results will assist dairy farmers to utilise this technology to assure the welfare of their young stock. Losses to disease
during the calf rearing stage are estimated to cost the New Zealand dairy industry as much as NZ$50 million per year. Early
and accurate detection of sick calves will reduce this cost.
The Forage Value Index (FVI) is a seven year (2013-2020) New Zealand initiative led by DairyNZ and the New Zealand Plant
Breeding Research Association (NZPBRA). The vision for this programme is to develop a collaborative, world-best forage
evaluation system, linked directly to future genetic gain targets agreed by the key stakeholders. Specifically, research in the
programme will strengthen the scientific base of the existing forage value index, and will identify and facilitate achievement of
forage genetic gain targets that will move the industry forward in both productivity and environmental sustainability. Dairy
farmers, and the New Zealand economy in general, will benefit through improved rates of genetic gain in economicallyimportant pasture plant traits, allied to easy-to-use decision tools to select the pasture cultivars that deliver the best productivity
(and, in due course, environmental) outcomes.
2014/2015 Key Achievements:
• Completed Simple Sequence Repeats (SSR) marker analysis of the populations from National Forage Variety Trials (NFVT)
persistence trial sites in the Waikato, for a number of forage cultivars (Bronsyn SE, Alto AR37 and One50 AR37) and their
equivalent reference cultivars. Preliminary analysis of the SSR data indicates genetic differentiation between reference cultivar
and field populations; this finding is a fundamental step forwards in understanding the genetic basis for variation in persistence
of ryegrasses in pastures. It will contribute towards achieving improved growth and productivity in New Zealand pastures
through light manipulation of plant reproduction.
The aim of this project is to answer fundamental questions relating to the regulation of the Condensed Tannin (CT) pathway in
white clover, specifically Trifolium arvense. A greater understanding of these processes will allow the future delivery of new
clover varieties with high CT content for use on pastoral farms across New Zealand.
2014/2015 Key Achievements:
• Gene expression analysis identified the key genes responsible for the high tannin phenotype (trait) in Trifolium arvense
leaves. There are significant benefits to animal health, productivity gains and environmental improvements associated with
high tannin forages, therefore this finding will directly contribute towards future development of high tannin white clover forage
varieties for New Zealand farmers. This, in turn, will increase the productivity, profitability and sustainability of New Zealand's
pastoral and forage industries.
This project is a joint AgResearch-Plant and Food Research effort to discover fundamental knowledge about the genetic,
molecular and physiological mechanisms controlling plant development and plant persistence. The aim is to provide New
Zealand’s biological industries with “leading-edge” knowledge and intellectual property relating to aspects of plant development
that have a high potential for economic impact via plant improvement. There is a specific focus on the identification of basic
genetic mechanisms underlying plant production and plant architecture, which is required to improve the rate of genetic gain of
forages and provide a sustainable increase in feed supplies for pastoral farming in New Zealand.
2014/2015 Key Achievements:
• The receptor for the branching hormone in plants has been identified and the molecular mechanisms regulating the
environmental regulation of shoot branch outgrowth were examined. This knowledge may be used to alter growth form (the
number of shoot branches and fruiting buds) to increase plant production. Increased plant production will in turn have a direct
impact on raising profitability in the New Zealand pastoral farming sector.
• A gene acting as a negative regulator of steroid signalling in plants has been identified. The protein encoded by this gene
controls the plasticity of plant growth in response to environmental fluctuations. This knowledge has the potential to accelerate
the rate of genetic gain for beneficial growth characteristics in a wide range of crop, forage and forestry plants.
The Margot Forde Germplasm Centre (MFGC) is New Zealand's national gene-bank of grassland plants, and also hosts the
New Zealand Endangered Species Seed-bank of native species that are endangered in the wild. The primary roles of the
MFGC are to obtain germplasm, to conserve it, replenish it and distribute it for research and product development. The Centre
provides a facility for storing seeds and associated information from countries across the world. It also provides a platform for
AgResearch 2015 Annual Report [54]
public information sharing, fostering conservation and sustainability and enabling future research and development that meets
the new and existing needs of pastoral markets and stakeholders.
Two aggregated projects
(common sector
alignment):
i) 'AR37: a novel endophyte
technology'; and
ii) 'Sensing and signalling
intercalary growth in
epichloë endophytes'
Meat & Fibre
On-Farm
Clover root weevil
biological control in
Southern New Zealand
Strategies to improve
reproductive performance
in sheep
Vaccine pipeline
(Ran as two separate
projects prior to 2014/15,
namely: 'Haemonchus
vaccine' & 'Ovine
Pneumonia')
2014/2015 Key Achievements:
• During FY15, the MFGC processed more than 3,000 accessions and 200 seed requests for national and international
researchers. As such, the centre has continued to have a significant impact on, and contribution to, research in New Zealand
and abroad.
• Updated protocols were developed to confirm the reliability of the workflow at the MFGC. In addition to streamlining activities,
these updates ensure ongoing full compliance required by the involvement of the Environmental Protection Agency (EPA) and
Ministry for Primary Industries (MPI). Furthermore, the updated protocols will provide quality assurance for future operation of
the centre, with respect to forage seed and the related micro-organism import, processing, conservation and research.
• Progress has also been made in other long-term improvements to processes relating to the database, collection trip
coordination and compliance. Most notably, collection trips to centres of diversity of important forage and endophyte species
have been standardised and streamlined. This will have a positive impact on access to the most exotic germplasm, and
potential genes for resistance and tolerance to unpredicted changes in climate and its effect on New Zealand’s agricultural
practice.
Whilst the research carried out in each of these projects is distinct, both are aimed at contributing toward the profitability of the
pastoral agriculture sector by understanding the biological mechanisms of endophytes (micro-organisms living within the tissue
of a plant, without causing symptoms of disease) in forage crops. This understanding can then be applied to the development
of new and improved endophytes to the New Zealand forage industry, which will enhance the agronomic performance of
temperate pasture grasses (such as perennial ryegrass and tall fescue) and domesticated cereal grasses (such as wheat,
barley, rye and triticale), respectively.
2014/2015 Key Achievements:
• 'AR37: a novel endophyte technology' project: The analysis of data from wheat-endophyte associations differing in
compatibility outcomes has resulted in a list of putative genes required for endophyte infection of wheat. This has enabled
gene targets for functional studies to be identified and prioritised for gene deletion studies. The knowledge generated from
functional studies will be used to select for potentially compatible endophytes from AgResearch's genetically diverse
endophyte collection for inoculation studies into wheat. Ultimately this will contribute towards development of endophytes with
enhanced agronomic performance, which will raise productivity and profitability in the New Zealand pastoral agricultural sector.
• 'Sensing and signalling intercalary growth in epichloë endophytes' project: research confirmed that mechanical stretch
stimulates growth in the fungal symbiont, E. festucae. The result will enable stretching experiments to be initiated that will
provide further data for publication, and will also be used to identify the genes and pathways required for intercalary growth.
Ultimately this will contribute towards development of endophytes with enhanced agronomic performance, which will raise
productivity and profitability in the New Zealand pastoral agricultural sector.
2014/2015 $3.3m
2013/2014 $2.3m
Clover root weevil (CRW) causes severe damage to pastures, which reduces pastoral productivity and increases production
costs. The aim of this programme is to deliver a proven effective biological control agent, the Irish parasitoid wasp, quickly and
widely to farmers in affected areas of New Zealand in order to eliminate CRW and allow pastures to recover. In the long term,
reduced CRW population (as a result of work carried out in this project) will allow productivity and persistence of white clover to
return to near pre-CRW infestation levels and improve farming profitability in dairy, sheep and beef sectors across New
Zealand.
2014/2015 Key Achievements:
• In response to the severe clover root weevil (CRW) outbreak in Southland and parts of Otago, its biocontrol agent, the Irish
parasitoid wasp, was released in 250,000 parasitised CRW in Southland, Otago and south Canterbury in the past year. As at
June 2015, this programme of accelerated parasitoid releases has resulted in ~900,000 parasitised CRW being distributed to
~6000 sites, the majority of which were located in Otago and Southland. By carrying out the current releases, the Irish wasp
will become established more rapidly in southern areas of the South Island. This will result in a shortening of the period over
which farm income is significantly reduced due to CRW-inflicted damage to pastures.
• A cost benefit analysis (CBA) was undertaken to evaluate how quickly the programme of accelerated releases in Southland
and Otago returned a benefit to these regions. For Southland alone, the results showed that the biological control release
programme has returned $14.78/hectare (ha) per year or $2.3 million over the total area of 158,017 ha of dairy farming. On
sheep and beef farms, the estimated return was $6.86/ha per year or $4.7 million over the total area of 719,854 ha. These
results indicate that the ~$650,000 cost of the programme over 2 years has already been returned to the agricultural economy
in Otago and Southland via increased clover growth, nitrogen fixation and animal production. This provides stakeholders in the
programmer with confidence that the investment in CRW biocontrol research provides a positive return, and will also provide
the basis for value propositions in future proposals.
The primary aim of this research programme is to improve reproductive efficiency in the New Zealand sheep industry. This will
be accomplished through providing new science-based management solutions - to the sheep industry and farmers - to
optimise lamb production over a ewe’s lifetime, with particular focus on the young ewe. A secondary focus is on how nutritional
restriction during gestation (pregnancy) affects ovarian development, and ultimately lifetime reproductive efficiency.
2014/2015 Key Achievements:
• A key focus during 2014/15 was understanding factors that may affect the reproductive performance of the young ewe (up to
2 years of age), which has the potential to improve productivity of the farm through improving efficiency of hogget lambing and
increasing the reproductive potential of the ewes as adults. Lower ovulation rate was determined to be a key limiting factor
and thus developing strategies to improve ovulation rate of young animals, particularly hoggets, without inducing high order
multiples (i.e. triplets or quadruplets) in the ewes as they reach maturity, has the potential to improve reproductive efficiency
and thus productivity of the New Zealand sheep industry.
• Research demonstrated that feeding a ewe a restricted diet (60% of normal maintenance allowance for the first 55 days of
gestation and then ad-lib for the remainder of gestation) did not negatively affect her lamb’s birth weight or growth, nor did it
affect attainment of puberty nor ovulation rate (i.e. number of eggs released at a reproductive cycle) of her female lambs. This
information has the potential to inform farmer decision making in times of feeding limitations.
• Research demonstrated that Leptin Receptor (LEPR) Single-Nucleotide Polymorphisms (SNPs - DNA sequence variations
occurring commonly within a population) appear to have a similar negative association with ovulation rate and number of
lambs at scanning as observed in adult ewes. Selection to remove these SNPs from the sheep flock could potentially improve
hogget lambing by 10 % and increase the number of farmers undertaking hogget lambing to improve efficiency of lamb meat
production.
The aim of this project is to develop and deliver effective and sustainable vaccines to control animal diseases that cause
significant productivity and profitability losses across New Zealand’s livestock industries. Specifically, the programme will build
on recent successes within AgResearch in developing prototype vaccines against ovine pneumonia and the blood-feeding
parasite Haemonchus contortus. The vaccine/s developed will reduce the cost for farmers to control infections with
Haemonchus contortus, as well as improve animal productivity and hence profitability in New Zealand's livestock industries.
2014/2015 Key Achievements:
• A prototype vaccine that protects lambs from the detrimental effects of infections with the nematode parasite Haemonchus
contortus was developed. The vaccine is novel and consists of a cocktail of recombinant proteins. This success will enable
farmers to protect livestock against this parasite and will be a major step in the future development of a multigeneric vaccine.
AgResearch 2015 Annual Report [55]
Parasitology programme
(Ran as three separate
projects prior to 2014/15,
namely: 'Cattle
parasitology,' 'Controlling
cattle parasites' & 'Reversal
of parasite
immunosuppression')
Four aggregated projects
(common sector
alignment):
i) 'MoxiMilk';
ii) 'Whole genome
sequencing analysis of
variability in Orongorongo
bovine tuberculosis (TB)
isolates';
iii) 'Ultra-fine wool – the
generation of Argali sheep
embryos'; and
iv) 'DNA resource: Jersey x
Limousin'
Dairy Off Farm
Genetically modified (GM)
forages
Forages for reduced nitrate
leaching (FRNL)
The aim of this programme is to provide a new approach to parasite control in grazing livestock; with a focus on developing a
remedy that does not require direct treatment of the animal. This will directly contribute to improved animal health and
productivity (and therefore increased profitability in New Zealand's livestock industries), while reducing the direct inputs of
chemicals to food animals and improving sustainability through reduced development of anthelmintic drug resistance.
2014/2015 Key Achievements:
• A project was completed showing that use of combination drenches, in conjunction with appropriate best-practice
management, not only didn’t accelerate the state of drench resistance in sheep worms but in fact tended to improve the
efficacy of some drenches. This finding is opposite to what is thought around the world and, importantly, we have produced
both a theoretical mechanism and supporting evidence to explain why this happens.
• Confirmation of anthelmintic resistance in the cattle parasite Ostertagia ostertagi has been confirmed on more farms
throughout the North Island. This is the most pathogenic parasite of cattle and widespread resistance in this species is likely to
have significant production consequences for both beef and dairy farmers. This is a priority area for parasite research in
future.
These small projects were 'one-off' investments during 2014/15. Whilst the research carried out in each project was distinct, all
were aligned to the Meat & Fibre On-Farm sector. The projects were aimed at improving productivity and profitability in New
Zealand's livestock industries, by developing new knowledge which will be used to assist farmers to improve disease control,
and livestock breeders to improve genetic selection of animals with desirable attributes, such as meat quality.
2014/2015 Key Achievements:
• 'MoxiMilk' project: Completed research to investigate if anthelmintic drugs (parasite control drugs) can be transferred from
ewes to suckling lambs via milk, in cases where the ewes were treated prior to lambing. Specifically, the research focused on a
high-selling drug product, Moxidectin LA. The knowledge generated in this project will improve the farmers’ ability to control
parasitic diseases while at the same time reducing the risk of developing parasites that are resistant to anthelmintics.
Reduction in the amount of chemical control of parasites is desirable for maintaining the ‘clean’ image of New Zealand exports
from livestock.
• 'DNA resource: Jersey x Limousin' project: Extracted DNA on a historical AgResearch beef cattle genetics resource where
high-quality phenotypes (observable genetic characteristics), including meat quality, were recorded on a group of 400 offspring
from 3 Jersey x Limousin male cattle (sires). This DNA resource will contribute to efforts to determine the genetic mechanisms
that control these important - and hard to measure - traits. The resource can now be used in ongoing projects to progress
DNA tests that farmers use to select cattle.
2014/2015 $5.6m
2013/2014 $5.0m
The purpose of this project is to develop genetically modified (GM) forages which improve forage production and quality,
thereby contributing directly towards the profitability of the New Zealand pastoral agriculture sector. Two specific streams of
research seek to achieve this goal. Firstly, GM forage ryegrass cultivars will be developed with 10% greater metabolisable
energy (MJME) than the current 12 MJME/Kg dry matter and, secondly, warm-effective high sugar ryegrasses will be
developed to raise milk solid production, accelerate animal growth and reduce nitrogen leaching.
2014/2015 Key Achievements:
• A seven-year business plan for the programme was developed and completed, outlining a pathway to field and animal
nutrition trials in future financial years.
• The Water Soluble Carbohydrate (WSC) sub-project has led to the successful development of breeding populations with
increased water soluble carbohydrates and increased plant biomass. The breeding material is now available for the breeders
in the NZ forage industry to develop further. These developments are significant, because increased sugar content and
increased biomass should confer a 25% reduction in nitrogen loss in urine, as well as potential enhancement in animal
performance. This will directly contribute to improved productivity and profitability in the New Zealand pastoral agriculture
sector.
• A new technology for increasing grass biomass called Peapod (PPD) has been developed, and a patent was filed in
November 2014. PPD will be an effective backup for the High Metabolisable Energy (HME) technology in the unlikely event
that the former fails to progress due to technical challenges.
This project, in support of the wider Forages for Reduced Nitrate Leaching programme, covers soil, plant and animal science.
The aim is to ultimately reduce nitrate leaching losses from New Zealand dairy, arable, beef/sheep and mixed farm businesses
by 20% (by 2020) from current levels by delivering proven, adoptable pasture and forage crop options for end-users in all of
these industries. Whilst there is applicability to all end-users in these industries, parts of this programme are specifically
relevant to Māori and Māori land.
2014/2015 Key Achievements:
• Urine sensor – the project demonstrated a strong linear relationship between the refractive index of urine and its total
Nitrogen (N) content. This is important because the relationship is fundamental to the AgResearch-developed urine sensor,
allowing real time data of urinary volume and N content when attached to cows. The cow information is valuable because
urine is the major source of N loss to water and the atmosphere in grazed systems. The urine sensor provides us with a tool to
measure urine N content and investigate methods of reducing it, with potential benefit to the efficiency of the production
system.
• The project demonstrated that if experiments measure only the cycling of urinary N in the area where urine is directly voided
onto the soil, this underestimates the amount of N taken up by the pasture. Thus, for example, lysimeter experiments with
confined edges may over-estimate nitrogen leaching and this needs to be taken into account when evaluating the data.
Similarly, computer models need to be able to account for this extra uptake outside of the urine patch or they will also
overestimate losses. This underestimation of uptake can be as great as 40% because of pasture roots outside of the urine
patch being able to access the N in the patch. The aim of this project is to understand these processes better and to be able
to model them. AgResearch's ability to model urine patch dynamics is essential for underpinning our farm systems models
such as OVERSEER and the DairyNZ 'Whole Farm' Model.
• The project found that measuring amino acid concentrations in blood would help determine the fermentation patterns and
microbial community structure in the rumen of cows fed 0%, 20%, 40% and 60% of the dry matter intake as fodder beet. This
knowledge is key to inform dietary transitions and feeding strategies (e.g. number of allocations of fodder beet within a day,
how to manage adaptation period to the diet).
Added value foods
(Ran as three separate
projects prior to 2014/15,
namely: 'High value dairy
ingredients for optimised
nutrient uptake', 'Superpremium red meat petfoods
for export' and 'Providing
scientific evidence for the
development of novel red
meat based foods for the
petfood industry.')
The aim of this programme is to undertake a number of research initiatives which support the development of added value
foods in New Zealand’s meat and dairy sectors. This includes new information on opportunities to differentiate New Zealand
meats in the Wagyu beef and premium pet-food markets, models supporting optimisation of the digestive behaviour of foods,
and increased understanding of the impact of dairy processing on both the functional and physical properties of foods, which
will lead to the development of foods with improved health benefits and desirable consumer characteristics.
2014/2015 Key Achievements:
• A method for objectively measuring beef marbling scores was developed and compared to traditional methods. The
development of an objective scoring system is the first step in understanding the impacts of production processes on the
quality of New Zealand-specific beef and venison products, supporting the development of meat products which consistently
meet the needs of existing and new markets.
• Models for predicting and measuring the digestion of proteins and lipids in dairy products were developed. These models
were utilised in a study which compared the digestibility of homogenised and un-homogenised milks, leading to the
AgResearch 2015 Annual Report [56]
Food nutrition project
(Ran as six separate
projects prior to 2014/15,
namely: 'New capability:
dairy foods & nutrition
metabolomics',
'Accelerating
AgResearch/Fonterra
project [Dairy-based food
solutions for improved
intestinal barrier function]',
'Postdoctoral fellow for
MBIE project [Dairy-based
food solutions for improved
intestinal barrier function]',
'Nutritional strategies for an
ageing population',
'Tracking the nutritional
value of foods through
processing' and 'Dairy polar
lipids.')
Modelling the complex
interactions between
fermentable carbohydrates,
commensal bacteria, and
intestinal cells
Three aggregated projects
(common sector
alignment):
i) 'Effects of milk
phospholipids on
neuromuscular function in
aged rats';
ii) 'Influence of protein
structures on the in vitro
digestion of whey proteins';
and
iii) 'Mapping milk protein
polymorphism'
Meat & Fibre
Off-Farm
Hitting Targets for Deer
Industry Profitability
(HITDIP)
(previously titled 'A
profitable future for the New
Zealand deer industry' and
'Venison supply systems
project [VSSP]')
identification of lipids and proteins whose digestion rate is altered by this common processing step. Understanding of the
factors influencing the digestibility supports the development of new high-value dairy and food products and processes with
tailored nutritional properties.
• A study into the health benefits of New Zealand meat petfoods was completed and presented to industry. Targets were
identified which may enable the New Zealand petfood industry to differentiate its products in the international marketplace.
This information will support the development of meat products which consistently meet the needs of existing and new
markets.
• The effect of key steps in dairy processing on the activity of specific bioactive components in milk (lactoferrin, exosomes and
the milk fat globule membrane) were investigated. This identified functional changes which may alter the health-supporting
properties of milk following processing. By understanding the mechanism by which this occurs, AgResearch scientists can
now work with industry to develop new high-value dairy products and processes which retain the natural goodness of dairy.
The aim of this programme is to contribute to the knowledge base and provide tools and technologies that will increase the
capacity (of the High Value Nutrition National Science Challenge and NZ food companies) to support the development of novel
ingredients/food products for the infant and aged markets. The benefits of this will be two-fold: better health for consumers
both in New Zealand and in overseas markets, and increased export earnings by New Zealand food companies through
applying the knowledge generated by this research to develop high-value food ingredients or products. The impact will be
provided by increasing the competitive advantage of New Zealand food exporters through validated claims of quality and/or
health.
2014/15 Key Achievements:
• A method for objectively measuring beef marbling scores was developed and compared to traditional methods. The
development of an objective scoring system is the first step in understanding the impacts of production processes on the
quality of New Zealand-specific beef and venison products, supporting the development of meat products which consistently
meet the needs of existing and new markets.
• Models for predicting and measuring the digestion of proteins and lipids in dairy products were developed. These models
were utilised in a study which compared the digestibility of homogenised and un-homogenised milks, leading to the
identification of lipids and proteins whose digestion rate is altered by this common processing step. Understanding of the
factors influencing the digestibility supports the development of new high-value dairy and food products and processes with
tailored nutritional properties.
• A study into the health benefits of New Zealand meat petfoods was completed and presented to industry. Targets were
identified which may enable the New Zealand petfood industry to differentiate its products in the international marketplace.
This information will support the development of meat products which consistently meet the needs of existing and new
markets.
• The effect of key steps in dairy processing on the activity of specific bioactive components in milk (lactoferrin, exosomes and
the milk fat globule membrane) were investigated. This identified functional changes which may alter the health-supporting
properties of milk following processing. By understanding the mechanism by which this occurs, AgResearch scientists can
now work with industry to develop new high-value dairy products and processes which retain the natural goodness of dairy.
It has been established that diet has a marked effect on the growth of specific strains of bacteria (known as commensal
bacteria) within the human large intestine, many of which are essential to human health. However, the relationship between
dietary components, the bacterial community in the intestine and host (human) function remains to be fully understood. The
goal of this postdoctoral project, therefore, is to better understand this relationship through developing mathematical models of
the complex interaction between fermentable carbohydrates from diet, bacteria in the intestine and intestinal cells.
2014/2015 Key Achievements:
• A prototype mathematical model of the interactions between fermentable carbohydrates, commensal bacteria, and the
intestinal cells of the large intestine was developed. The model can now be used to predict the effect of fermentable
carbohydrates on the concentration of colonic short chain fatty acids produced by the commensal bacteria. This information is
important for the targeted delivery of nutrients and for understanding how human gastrointestinal tract health is maintained.
Ultimately food processors, such as dairy companies, will be able to use this information in the development and manufacture
of functional foods which confer intestinal health benefits. These companies will benefit through being able to manufacture
differentiated functional food products, which will raise demand and subsequently increase New Zealand food industry
profitability.
• A model was developed to predict the changes in the proportions of bacteria and their respective metabolites (substances
produced during cell metabolism) in the large bowel as a result of changes in diet. This model can now be used for further
testing to ultimately aid in development of functional foods (by New Zealand food companies) that target intestinal bacteria and
the concentrations of short chain fatty acids produced by the commensal intestinal bacteria. As above, functional food
manufacturers will benefit in the form of product differentiation, which will raise food sector profitability.
These small projects were 'one-off' investments during 2014/15. Whilst the research carried out in each project was distinct, all
were aligned to the Dairy Off-Farm sector and they aimed to improve productivity and profitability in the New Zealand dairy
industry by supporting the industry to develop food products with tailored health benefits.
2014/2015 Key Achievements:
• 'Effects of milk phospholipids on neuromuscular function in aged rats' project: A dietary intervention study in aged rats was
completed, using compounds derived from milk. The rats are a model of neuromuscular (muscle) degeneration which is seen
in humans during ageing, and the study will therefore provide a basis for future functional assessment of the effects of dietary
interventions on neuromuscular function, based on compounds derived from milk. Muscle tissue samples were collected, and
analysed for outcomes relevant to muscle structure and function. The findings will enable further engagement with Fonterra in
developing scientific evidence for the efficacy of novel, value-added food products targeting the ageing population, with the aim
of maintaining mobility and thereby improving quality of life.
• 'Mapping milk protein polymorphism' project: Using high throughput High Performance Liquid Chromatography (HPLC) and
Liquid Chromatography-Mass Spectrometry (LC-MS) methods, casein and whey protein phenotype variants were determined
by HPLC fingerprints and accurate molecular weight measurements. The method will potentially provide information for animal
genetic selection to improve milk production, yield and nutritional quality. This, in turn, would increase New Zealand dairy
industry productivity and profitability.
2014/2015 $8.1m
2013/2014 $9.5m
The aim of this project is to assist the New Zealand deer industry in achieving outcomes of improved productivity, profitability
and sustainability by delivering underpinning science and technology. This large project includes - but is not limited to research into efficient land use, early life nutrition, genetics and genetic selection, genomics, animal health and product
traceability within the context of the New Zealand deer industry. The project is managed by DEEResearch Limited, a joint
venture with Deer Industry New Zealand (DINZ), with board representation from producers and processors and other research
providers.
2014/2015 Key Achievements:
• Analysis of the heritability of meat traits from the Deer Progeny Test (DPT) showed significant opportunities for the NZ deer
industry to improve carcass value by genetic means. The study has shown that there is an opportunity to implement genetic
selection to increase the mass of high-value muscles (e.g. loin) at the expense of low value muscles (e.g. in the shoulder) that
could increase industry export returns by $1.1 million per annum over an 8-10 year period. The study also demonstrated
opportunities to genetically select higher-valued deer co-products such as tails and hides to increase returns to New Zealand
venison producers.
AgResearch 2015 Annual Report [57]
Driving NZ beef production
- role of early life nutrition
Bringing the best of genetic
evaluation to the NZ
agricultural industry
Red meat combifoods: endto-end management of
protein value
NZ beef and lamb: value
from quality (VFQ)
• A paper on 'Whole Farm Systems' modelling has been submitted for publication in a modelling science journal, and a further
two papers that used the model to evaluate alternative meat production systems have been submitted to systems science
journals. This approach to modelling on-farm productivity is novel, and better accounts for how farm inputs for specific
components of the farm system impact the entire farm system and its profitability. In this way it is possible to make more
informed investment decisions across a range of multi-species farm systems. The model can also be used to look at industrywide issues around profitability of current and future production systems, e.g. by assessing the economic impacts of adopting
genetic selection for specific traits.
• A paper on deer behaviour in high-country systems has been submitted to a farm systems science journal. This study
highlighted the consequences of extensive deer systems within our iconic high-country on deer behaviour, resource utilisation
of extensive rangelands by deer and impacts of their grazing on ecosystems sustainability. This study will lead to improved
management practices to optimise deer performance/profitability while maintaining the quality of the high-country environment,
particularly plant biodiversity.
The objective of this programme is to understand the impact of nutrition in early postnatal life on the growth performance,
development of key tissues and/or organ systems, immune function and metabolic development of dairy-beef calves in early
life, and the impact on lifetime performance (time to slaughter, meat production/quality). Understanding these factors will lead
to recommendations on improved early-life nutrition in dairy-beef calves, which will ultimately improve industry productivity and
profitability.
2014/2015 Key Achievements:
• By comparing contrasting nutritional regimes during the pre-weaning period, it was demonstrated that the increased growth
performance of calves fed high levels of milk is also associated with enhanced immune function, which is important for the
health of calves in artificial rearing systems. Improved health and wellbeing of livestock leads to increases in productivity and
performance, therefore this finding (together with recommendations on nutrition management for calves) will directly contribute
towards raising New Zealand dairy beef industry profitability.
• A comparison was made between rearing systems that utilise either meal or only a fibre-based solid feed which
demonstrated that the nature of the solid feed can influence the development of the rumen and endocrine system, and hence
influence pre-weaning growth, while no long-term detrimental effects were observed. These results will contribute to the
development of alternative systems for producers targeting a whole of life grain-free system for beef production (a niche
market opportunity for added-value beef).
• Comparison of contrasting nutritional regimes pre-weaning and diet quality post-weaning provided valuable insights into the
complex interactions between nutrition, immune function, development or key organs (e.g. the gastrointestinal tract) and
ultimately the growth performance and health of dairy-beef calves. This knowledge will contribute to the development of calf
rearing practices that improve live weight gain and thereby decrease time to slaughter. This will result in direct cost savings for
New Zealand dairy beef farmers, thus improving profitability both at farm-level and in the industry as a whole.
The purpose of this project is to develop capability in quantitative animal genetics at AgResearch. In 2013/14, a Senior
Scientist with expertise in Animal Genomics was strategically recruited, in order to provide scientific leadership in applied
quantitative genetics to ensure that AgResearch continues to position itself as a world-leading livestock genetics research unit.
Specifically, this leadership will involve consistent delivery of high quality animal genetics research - relevant to New Zealand
beef, sheep and industries - as part of multiple collaborative, multi-disciplinary project teams.
2014/2015 Key Achievements:
• The Senior Scientist (Dr. Miller) recruited during 2013/14 is now established in New Zealand as an important member of the
animal genetics community, with recognition in the beef, sheep and dairy sectors. In the past year Dr. Miller has been invited
to present to or participate in seventeen events in New Zealand and Australia with recognition from important industry players
such as Beef+Lamb NZ Genetics, DairyNZ, CRV Ambreed, Meat and Livestock Australia, CSIRO and Dairy Australia.
• International collaborations: Dr. Miller became a member of the organising committee of the 11th World Congress on
Genetics Applied to Livestock Production (WCGALP) which will be held for the first time in New Zealand (Auckland) in
February 2018. The WCGALP is held every 4 years and is the most important conference in animal quantitative genetics. Dr.
Miller's involvement in this major conference will further raise AgResearch's profile in livestock genetics research, both in New
Zealand and internationally.
• Imputation accuracy in New Zealand sheep: Imputation is a process where high density genotypes are inferred in animals
genotyped using a low density panel. This technique underpins the animal industries' application of genomic selection.
Research during 2014/15 - including collaboration with Dr. Ricardo Ventura, Brazil - has benchmarked the accuracy of
imputation in the New Zealand recorded sheep flock. This will directly contribute to optimised genomic selection in sheep,
which will maximise animal performance and productivity, and therefore contribute to increased sector profitability in the future.
Proteins in red meat and co-products are a rich resource that can be captured for wider application in foods beyond traditional
dishes. The Combifoods project is a platform for technologies and industry engagement to support the creation and export of
added-value, meat-based ingredients by food and petfood manufacturers. The aim is to optimise nutritional composition,
desirable organoleptics, and physiological and processing benefits. The project's research focuses on deconstruction of raw
materials and is complimentary to conventional meat science work on the structure and qualities of intact meat.
2014/2015 Key Achievements:
• Based on experience and methods developed previously in the project, a new contract was secured during 2014/15 with an
industry partner, Taranaki Bio Extracts, to quantify the processing functionality of their proprietary bone collagen co-product
stream.
• The project's ‘consortium’ of small-medium enterprise super-premium petfood manufacturers continued their involvement in
pre-competitive research, particularly regarding red meat nutrition and health benefits, and control of processing
characteristics. This shows the value and opportunities for creating joint research aims across companies of this scale.
• AgResearch Combifoods scientists' expertise in protein science and advocacy for the untapped value of proteins from meat
and co-products has raised the potential for meat-based collaborations with nutrition researchers who traditionally work with
dairy. This will be beneficial because accelerating the value-add proposition for New Zealand red meat requires that a wide
range of scientists are willing to work with it.
Value From Quality (VFQ) aims to enable the New Zealand meat industry to meet increasing demand for high-value premium
meat products and also to enhance NZ’s reputation as an efficient producer of safe premium quality red meat and co-products.
Adoption of new knowledge and technologies developed in this programme will add value and differentiate New Zealand meat
products, and contribute to increased earnings through reduced wastage along the logistics chain. Additionally, it will allow the
industry to maintain and access new markets by improving product consistency and shelf-life as well as adding value to
commodity and low value products.
2014/2015 Key Achievements:
• Results revealed a lower glycolytic potential (a factor which affects meat quality characteristics) in lamb compared to beef
and venison that is different from any other published literature to date. The results confirm that this was a major contributor to
the different behaviours observed among spoilage bacteria on lamb compared to beef and venison. This will be instrumental in
further work to reduce spoilage (and therefore increased shelf life and greater food safety) of fresh lamb mea and will
ultimately increase lamb meat's value, which will in turn increase New Zealand red meat industry profitability.
• Results indicate that confinement odour is an early indicator of microbial spoilage of meat. This will allow for the early
assessment of shelf-life and enable the New Zealand meat industry to formulate strategies to manage products to minimise the
incidence of consumers purchasing spoilt or sub-standard red meat.
• Results of a Chinese consumer survey confirmed the outcomes of our discussions that overall the Chinese consumer prefers
fattier beef than lean, but the interaction between age and gender means there are opportunities for lean beef that could still be
realised. A similar survey is now being conducted with Japanese and Korean consumers. Outcomes of these surveys would
AgResearch 2015 Annual Report [58]
Food provenance and
assurance
Integrated wool science
(Ran as two separate
projects prior to 2013/14,
namely: 'Applied science
for wool' and 'Keeping New
Zealand wool products at
the cutting-edge through
enhanced wool quality')
Two aggregated projects
(common sector
alignment):
i) 'Meat condiments'; and
ii) 'Risk assessment of
residues in food: the cost:
benefit of prevention
against mitigation'
Across all sectors
AgResearch Science
Conference
enable us develop strategies to increase the utilisation of lean beef in Asia.
• A strong collaboration of providers in the Halal space - from technology manufacturers to religious authorities - has been
established, which has attracted overseas interest in AgResearch's capability developed during the life of this programme. This
is important as it will provide credibility to the research in this space and potential for future collaborative Halal meat research
in the programme.
Food exports form a central pillar of New Zealand’s economy and are critical to the nation’s prosperity. The Food Provenance
and Assurance programme has a major role in protecting and enhancing the export value of the pastoral sector and
undertakes research along the whole “fork-to-farm” continuum to ensure that New Zealand’s exports are safe, of superior
quality, have defendable provenance, are produced in ways that are attractive to consumers and underpin the “New Zealand
Brand”. This includes food safety, animal welfare and opportunities to create value through New Zealand products.
2014/2015 Key Achievements:
• Results from this year’s programme contributed to New Zealand’s overall understanding of the risks posed by Shiga ToxinProducing Escherichia coli (STEC - a disease-causing bacterium) and spore-forming bacteria to its agricultural economy and
market access to two key markets: the United States and China.
• The programme completed the first-ever New Zealand study to focus on the prevalence of the “top 6” STEC at the herd level
in farm dairy effluent. The study has provided an improved understanding of the prevalence of the “top 6” STEC associated
with natural contamination of livestock entering the slaughter plant, which will inform future risk assessment and intervention
strategies both on-farm and at the slaughter plant.
• A discussion paper entitled ‘On-farm intervention/pre-harvest control strategies for the reduction of STEC in New Zealand
dairy cattle’ was prepared and circulated for feedback to AgResearch staff with expertise in animal welfare, environmental
microbiology, nutrient management, farm systems, farm adoption/management and animal nutrition; and to external
stakeholders and collaborators with expertise in veterinary and public health, modelling and statistics, government and food
export regulation.
• A Bayesian network model (a type of probabilistic statistical model) to identify critical control points for the reduction of STEC
on-farm was developed by AgResearch internal experts and external stakeholders. This model, together with the discussion
document (described above) will provide a framework through which effective on-farm interventions can be identified and
evaluated. These outputs also provide a framework through which the impacts of new technologies and future farming
practices on food safety and animal welfare can be investigated discussed and considered in the meat and dairy industries.
• Consultation with meat and dairy industry partners resulted in the definition of priority areas for food provenance, and
counterfeiting was identified as being an issue which is very relevant to these industries. This consultation has supported the
development of a science plan that aligns well with stakeholder needs.
The aim of this programme is to deliver a comprehensive mix of fundamental and applied science across the whole of the wool
value chain, in order to facilitate development of novel wool products and wool processing techniques, discover new uses for
wool, and ensure sustainability of the New Zealand wool industry. Ultimately this will lead to increased export earnings and
improved economic sustainability for the New Zealand wool industry, from grower to late-stage processor. Some aspects of
this large wool research programme involve Māori stakeholders.
2014/2015 Key Achievements:
• A model was created and adapted into a high-throughput wool fibre analysis tool which uses data on the form and structure
of wool fibres (known as morphological phenotypic data) to calculate a particular wool fibre's buckling behaviour. This model is
significant in that it will enable several industry applications including reduction of prickle in woollen apparel to make the
apparel more comfortable for the wearer. Such developments are of great value to the New Zealand wool industry, as they
provide product differentiation and superior quality wool products.
• A hydroentangling process (the use of high-speed water jets to bond fibres in a web to produce a coherent fabric structure
with the required properties) has produced lightweight wool fabrics. There is the potential for these newly-developed
lightweight wool products to enter the market of interlinings (a type of trimming which is placed in between two layers of fabric
in apparel), which would result in lighter garments which are more comfortable for the wearer. This is a significant opportunity
because the interlinings market is high volume and successful entry of these products into the market would result in increased
export earnings from New Zealand wool products.
• Research into human foot skin health revealed that skin health is improved when wearing wool socks versus other materials.
This information can now be used by project stakeholders, including New Zealand Merino, in their marketing material for
woollen socks. Credible scientific evidence to support the health benefits of these socks will add value to the products,
increasing revenues and profitability in national and export wool markets.
• Developed a non-chlorine based shrink-resist treatment for woven wool products. This will help to improve the eco-rating of
wool processing and improve market access.
These small projects were 'one-off' investments during 2014/15. Whilst the research carried out in each project was distinct, all
were aligned to the Meat & Fibre Off-Farm sector. The projects were aimed at increasing the value of New Zealand meat
products via improved food safety and product differentiation, in order to meet the needs of new and existing markets.
Ultimately the results will contribute towards improving consumer perceptions and demand for New Zealand meat, which in
turn will increase sector profitability. Additionally, the 'Meat Condiments' project is specifically relevant to Māori (see below for
details).
2014/2015 Key Achievements:
• 'Meat Condiments' project: Two AgResearch teams visited Bryce-Hare Whanau Trust and gathered information regarding
Kinaki (traditional Māori meat condiments). The information gathered was subsequently used to develop a proposal on
'Functional Kinaki' (condiment) for the Trust and the wider Tuhoe iwi at the Ruatoki Valley to consider. The proposed work has
the potential to increase the revenue of the Ruatoki Valley Hapu and the Iwi as a whole through export of high value functional
condiments.
• 'Risk assessment of residues in food: the cost: benefit of prevention against mitigation' project: A comprehensive literature
review was completed into the issue of contaminants and residues in food, which can have serious detrimental impact on New
Zealand international market access. While the New Zealand food and safety system has well established programmes to
monitor the contamination/food residue problem at national level, there is an imminent risk to the industry due to seasonal
changes affecting farms. Overall, the review identified that the most suitable way to deal with the problem is via a systems
approach, as there are several sets of information available which can be connected to offer a useful solution to farmers and
industry to deal with the risks posed by residues in food.
2014/2015 $0.9m
The AgResearch Science Conference is a biennial event. It is strategically significant because it provides a rare opportunity for
a large number of AgResearch science staff to come together in a single-location conference aimed at knowledge sharing,
collaboration building and scientific excellence. This is especially important given that AgResearch staff are located in four
cities across New Zealand (Hamilton, Lincoln, Palmerston North and Mosgiel), and face-to-face staff interactions across these
sites are limited due to distance. Each Science Conference follows a different theme, which is informed by 'here and now'
issues in the New Zealand pastoral sector.
2014/2015 Key Achievements:
• The 2015 Science Conference was held in Palmerston North on the 21st and 22nd of April 2015. These dates were
coordinated to coincide with a Science Advisory Panel (SAP) visit. The general theme of the conference was 'Science Vitality,'
and it provided a good balance between robust science content, informative presentations and opportunities for engagement.
Many links between staff and external parties have been established as a direct result of the conference, which has in turn
AgResearch 2015 Annual Report [59]
Curiosity Fund
enabled the potential for some exciting opportunities for future internal and external collaborations across all AgResearch
science groups and teams.
The Curiosity Fund is one of the mechanisms by which AgResearch helps seed early stage ideas. Core Funding has been
allocated to this fund because it represents an opportunity to research interesting and creative ideas that may not otherwise be
enabled through other Core Funding. Each year, funding for projects of up to $35,000 each is available. During 2015/15, there
was a total of 23 Curiosity projects, 6 of which were 50% co-funded by KiwiNet ($17,500 each). The Curiosity Fund is focused
on alignment with the Statement of Corporate Intent (SCI) and supporting the achievement of the Impacts therein.
2014/2015 Key Achievements:
• 'The human brain shield: how can eating dairy products prevent Alzheimer's?' project: Laboratory studies have shown that
several dairy-based ingredients have a positive effect on the human Sirtuin1 gene (a protein which is linked to longevity in
mammals). This is a positive step towards identifying the mechanisms by which dairy intake positively influences brain function
and lowers the risk of developing dementia.
• 'Adding value to milk: a product to enhance iron uptake' project: A laboratory-based test to quantify the bioavailability of iron
in foods was developed. This test will be a valuable tool in developing foods with enhanced nutrient delivery properties and for
understanding the effect of processing on the nutritional quality of foods.
Agricultural Policy
& Māori
Agribusiness
Climate change and the
pastoral sector: impacts
and adaptation
Life Cycle Assessment
(LCA) methodology and
application
Delivering green growth in
the New Zealand pastoral
sector value chain:
industry case studies
Overseer science and
capability
(Ran as two separate
projects prior to 2014/15,
namely: 'Capability and
capacity building to support
scientific development of
the OVERSEER Nutrient
Budgets decision support
tool' and 'Overseer
Questions & Answers
[Q&A]')
2014/2015 $7.3m
2013/2014 $7.4m
The primary aim of this project is to provide forewarning of the impacts of climate change on soil/plant/animal interactions in
pastoral agriculture and to develop adaptations that will enable New Zealand agriculture to ameliorate or take advantage of the
changing environment. Such adaptational activity includes future-proofing key technologies (e.g. biocontrol) so that they
remain effective under projected future Carbon Dioxide (CO2)/moisture conditions. A further goal is to provide the information
necessary for decision makers (farm/regional/national scales) to make informed choices in areas where the timescale and
nature of the activity mean they may be influenced by climate change.
2014/2015 Key Achievements:
• Investment in the New Zealand Free Air Carbon Dioxide Enhancement (FACE) experiment has produced data and expert
knowledge on climate impacts that are used nationally and internationally to conduct climate change impact studies and
develop adaptations that will enable pastoral agriculture to meet the challenges and opportunities presented by climate
change. Future-proofing important technologies is one way this is achieved.
Current projects involve scientists from New Zealand, Australia, Europe, Asia, Africa and America.
Indications of reduced nitrogen fixation (conversion of atmospheric nitrogen to a usable form of ammonia which is essential for
productivity in plants) under elevated CO2 have now been confirmed in a range of white clover and lotus germplasm pastures,
which is an undesirable consequence of climate change as it negatively affects pasture productivity. Research and
experimentation in 2014/15 has demonstrated that the impact of this is significantly reduced using plant material adapted to
CO2. This is an important finding, as it indicates that effort will be required to maintain nitrogen fixation over the next decades.
Life Cycle Assessment (LCA) is a key methodology to evaluate the multiple resource use and environmental effects of
agricultural products throughout their life cycle from production to consumption and waste stages. This project develops
capability in LCA by examining new and developing environmental indicators and evaluating these methods for their
applicability to products produced from New Zealand pastoral farming systems.
2014/2015 Key Achievements:
• Capability in Life Cycle Assessment (LCA) has been enhanced through training and development of several researchers.
This will enable greater impact and scientific vigour in future project research (on environmental analysis of farm systems and
agricultural products throughout the supply chain) carried out with the Ministry for Primary Industries (MPI) and the New
Zealand agricultural industry.
• A preliminary LCA of dairy intensification using multiple environmental impact categories revealed an increase in most
impacts per kilogram of milk. This can be used to identify contributors to environmental impacts and opportunities for reduction
of impacts while avoiding trade-offs between different impacts.
• Methodology development occurred in the preliminary assessment of multiple environmental impact categories for New
Zealand dairying. This led to the project's lead scientist being selected by MPI, Fonterra and Beef+Lamb NZ as a technical
expert in liaising with a key new European Commission project on development of methods for Product Environmental
Footprinting of milk and red meat products.
The aim of this project is to generate (via industry case studies) the knowledge, technology and opportunities required to
enable the NZ pastoral sector to transition to green growth. Green growth is defined as "the NZ pastoral sector contributing to
economic growth and enhancing NZ’s provenance". The current case study is being undertaken on the Taupo Beef supply
chain.
2014/2015 Key Achievements:
• The Green Growth project connected three models: a farm system optimisation model, Life Cycle Analysis, and a Value
Chain Model, in order to integrate New Zealand red meat product attributes such as environment and supply chain. Learnings
put in context the challenges for farmers (Taupo Beef) focusing on niche markets that promote provenance in order to remain
financially viable while farming within environmental limits such as a nitrogen cap. Farmers must adapt their farm systems and
supply chain relationships to manage supply and demand of niche markets. For the particular case studied, findings showed
the cost of year-round supply from a single farm meant the market premium achieved was not enough to cover the cost of
supply and farming under a nitrogen cap, however the information gathered will inform strategies that will have the potential to
economically deliver red meat products that meet key attributes of the New Zealand provenance in relevant overseas markets.
It will also enable AgResearch to provide industry partners with technologies and practices that have been demonstrated to
enhance key attributes of the New Zealand provenance. This will support the industry partners in maintaining and growing
access to high-value markets for New Zealand’s pastoral products.
The OVERSEER® Nutrient Budgets Model (Overseer) is the primary tool used to support good nutrient management practice
in New Zealand farming systems and AgResearch has managed its development since the early 1990s. Overseer is jointly
owned by the Fertiliser Association of New Zealand (FANZ), the Ministry for Primary Industries (MPI) and AgResearch. The
primary goal of this core funded project is to develop the capability and capacity of AgResearch staff to deliver a robust and
relevant Overseer model more effectively and thereby benefit sustainable production across all sectors of the New Zealand
agricultural industry.
2014/2015 Key Achievements:
• Nitrogen immobilisation research: A soil incubation experiment has shown that animal urine addition stimulates nitrogen (N)
cycling, and that soils recently converted from forest to grazed pasture show net immobilisation (removal of N) whereas soil
under grazed pasture for greater than 25 years show net release of N. These findings represent an advance in understanding
of N turnover in grazed pastures. The novel methodology and conceptual model developed in the project has potential to be
developed and used in other research programmes to estimate N release.
• Overseer Science Projects: A science peer review of the phosphorus (P) loss model was conducted by AgResearch,
communicated with the Overseer General Manager and is currently under review by the Overseer owners. The report has
significant implications for how Overseer may be used to estimate P loss in regional council policy planning.
• Model developments and improvements: Overseer Science and Capability continued to support capability building,
fundamental nitrogen research and science-model development in six projects in 2014/15. Major developments included the
Overseer Re-Design process in collaboration with the Overseer owners, which re-defined and improved the Overseer software
AgResearch 2015 Annual Report [60]
Factors affecting
phosphorus leaching and
relevance for Overseer
Adoption and practice
change project
Better border biosecurity
(B3)
Resilient communities
(previously titled 'Rural
futures')
Research capability: Māori
social scientist linked to
development workflow processes in response to the increasing demands from stakeholders. Science-related model
development consisted of four major projects: fundamental soil nitrogen research, science peer review and sub-model
evaluation exercises, all of which provide evidence and represent a commitment to robust science quality assurance in
Overseer.
Until recently, leaching loss of phosphorus (P) from soils had been considered insignificant and escaped research interest
because of the assumptions that P is relatively tightly bound to soil and does not leach into groundwater. However, recent
evidence suggests P enrichment of groundwater is occurring, especially under some intensive land-use activities. Where there
is connectivity, P loss to groundwater may negatively impact surface water quality. This project, therefore, aims to 1) enhance
understanding of the factors which may affect leaching loss of P from soils and its transport in groundwater; and 2) incorporate
this data into the Overseer Nutrients Budget Model, thereby making the model more relevant and robust.
2014/2015 Key Achievements:
• Research has demonstrated that P loss from free drainage soils is affected by both urine and farm dairy effluent application
(FDE). Results showed that while irrigation intensity had no effect, urine application significantly reduced P loss. Additionally, it
has been demonstrated that there is greater P loss from soils irrigated with FDE, as well as significant differences between soil
types on the farm. These results highlight the importance of land management decisions that can affect P loss.
• Several experiments investigating the rates of movement and attenuation of different sources of P (farm dairy effluent,
municipal effluent and inorganic P) in groundwater have been completed. Results indicate that P is moving in a high velocity
gravel aquifer - which is similar to many unconfined aquifers across New Zealand - although it is limited to less than 40 metres,
and there are differences depending on the on the source of P. In summary, the study shows that in some situations, the
contribution of P to surface water through groundwater is limited.
AgResearch undertook this project in 2013/14 to ensure that it is better equipped to fulfil its Core Purpose, specifically through
enhanced delivery of the 18 target Impacts presented in the 2013-2018 Statement of Corporate Intent. By implementing the
Adoption and Practice Change (A&PC) Roadmap, AgResearch will ensure that effective adoption and practice change occurs
from its research activities, thereby playing a catalysing role in ensuring more effective adoption and practice change across
the wider New Zealand pastoral agriculture sector.
2014/2015 Key Achievements:
• Developed practical methodologies to apply an innovation systems approach to better understand the barriers and
opportunities to adoption and practice change. This will enable more contracts with stakeholders, for example with Horizons
Regional Council and the Ministry for Primary Industries (MPI), where an innovation systems approach was used to identify
barriers and opportunities to the adoption of farm plans in the Horizons Region.
• Tools and processes (developed in 2013/14) for planning, monitoring and evaluation for impact at the project level, have
been used within AgResearch for major proposals and funding rounds. This is enabling researchers to plan and monitor for
impact from the beginning of the project, and consider the involvement of next and end users throughout the programme, in
order to deliver the outcome benefits required in the SCI.
• The Beyondresults.co.nz website and associated communication material have been developed to clearly deliver the
messages associated with the programme to internal and external audiences. Understanding of adoption and practice change
concepts will be enhanced with clear messages and examples that are available to all.
• Developed research capability in monitoring and evaluation, innovation systems and adoption and practice change.
Additionally, four conference / journal abstracts / papers (related to this project) were accepted for presentation or publication.
Via these avenues, AgResearch is gaining credibility in field of monitoring and evaluation and adoption and practice change.
B3 is the premier science vehicle underpinning New Zealand’s current practice for plant-based border biosecurity. It is a
voluntary collaboration between science partners including AgResearch, Plant & Food Research and Scion. The programme
delivers science-based solutions (along five Science Themes) to support and protect the international competitiveness of New
Zealand's export industries and its unique terrestrial ecosystems. Additionally, research in the programme is specifically
relevant to Māori and protection of Māori land.
2014/2015 Key Achievements:
• AgResearch provided technical support to the Ministry of Primary Industries (MPI) and Department of Conservation (DOC)
during two major eradication programmes: for the great white butterfly in Nelson and the Queensland fruit fly in Auckland.
Modelling and geospatial data analysis by AgResearch researchers underpinned many of the operational decisions made
during these programmes. Both eradication programmes appear to have been successful, with the last butterfly being
observed in December 2014 and the last fruit fly in March 2015.
• Completed a proof-of-concept study of the PRONTI (Prioritising risks of non-target invertebrates) model, with AgResearch
contributing one of the case studies. PRONTI has been proposed as a more objective method of determining a test species list
for biosafety testing at the NZ border for intentional introductions. In the case of the Moroccan biotype of Microctonus
aethiopoides (biocontrol agent for Sitona discoideus) the model successfully prioritised a large proportion of the species now
known to be attacked in the field by this parasitoid. The Environmental Protection Agency (EPA) now wishes to see PRONTI
used in an application for a biological control agent release to determine the extent to which it will assist in decision-making in
the future.
• Completed the first version of a risk-based tool to quantify and optimise allocation of sampling effort to detect new pests and
diseases in forestry. This tool has potential for use in the pastoral sector, should the New Zealand pastoral industries wish to
implement a biosecurity surveillance system.
• B3 became a member of the International Plant Sentinel Network, which will lead to reciprocal international research in the
future.
The aim of the Resilient Communities programme is to continue to build capacity through the use of the Exploring Futures
Platform and multi-agent simulation model, both of which were developed in the previous Rural Futures project. This will
directly contribute towards increasing the capacity of rural communities and enterprises to adapt to changing farming
conditions in ways that balance economic, environmental, social and cultural imperatives. New Zealand rural communities will
therefore be able to increase their long term resilience and sustainability and to prosper in an environment of limits, market
volatility and uncertainty.
2014/2015 Key Achievements:
• Use of the Exploring Futures Platform (EFP) process by external stakeholder groups demonstrated its potential to assist
groups to explore possible future scenarios for their region, and the possible impacts, consequences and unintended
consequences of these futures. The EFP will be a key tool for policy makers to use to inform policy decisions for their region.
• Use of the Exploring Futures Platform (EFP) process within AgResearch demonstrated its potential to assist groups to
explore the relevance and potential impacts of their science on farming systems of the future (10-20 years out). The EFP will
be a key tool for AgResearch staff to use to explore the relevance and potential impact of new technologies on future farming
systems.
• Libraries of data which represent pastoral farming systems and the appropriate tools to develop these libraries were extended
in the RFMAS (multi-agent simulation model). This will enable wider use of the EFP within AgResearch and with external
stakeholder groups. It will also enable appropriate validation of the RFMAS model.
• Publications, reports and conference presentations were a key focus of the project this year. These publications and
presentations will raise awareness of the existence and increase use of the EFP and enable appropriate validation of the
RFMAS model.
• Data from all outputs were integrated and used to improve the Exploring Futures Platform (EFP) and to enhance and further
validate the RFMAS.
Up to 80% of Māori land in New Zealand has been identified by the government as being unproductive and relationships
between Crown Research Institutes (CRIs) and Māori agribusinesses have historically yielded mixed results. The aim of this
AgResearch 2015 Annual Report [61]
Primary Innovation
programme
Future farming systems
The future rumen
project, therefore, is to co-develop with Māori entities an integrated set of research principles, in the form of a framework (He
Korero Rangahau Ahuwhenua; KRA) to guide the formation and maintenance of research relationships between Māori
agribusinesses and CRIs. Further, this research is intended to inform future work, namely, the introduction of Agricultural
Innovation Systems approaches into research with Māori agribusiness. Through the strengthening of Māori agribusiness/CRI
relationships, the project will contribute towards increasing production from Māori agribusiness, which will in turn improve the
productivity and profitability of the New Zealand pastoral sector as a whole.
2014/15 Key Achievements:
• A framework and kaupapa for research-Māori entity engagement (He Korero Rangahau Ahuwhenua; KRA) was documented
and evaluated for an engagement of AgResearch Māori Agribusiness and research staff with Te Tumu Paeroa (The New
Māori Trustee). The importance of AgResearch-Māori entity relationships embodying the principles and practices in He Korero
Rangahau Ahuwhenua was highlighted in the overall positive scoring against these principles of AgResearch staff involved in
the engagement with Te Tumu Paeroa. He Korero Rangahau Ahuwhenua provides a proven framework for supporting the
success for AgResearch and Māori of future AgResearch-Māori entity engagement.
The objective of this project is to take a proactive thought leadership role in future farming systems to ensure the future
prosperity of the New Zealand pastoral sector. This will be achieved by developing capability to interrogate future opportunities
and threats, and subsequently using this information to guide the design of potential farm systems and linked research
programmes. An integrated research-based analytical assessment structure will be generated to aid the development and
evaluation of pastoral farming futures.
2014/2015 Key Achievements:
• The major achievement of the first year of this programme was the development of a comprehensive set of future farming
systems drivers. The development of these drivers was carried out in consultation with industry, stakeholders and farmers,
thereby representing a diverse range of end-user viewpoints. This is significant in that it will ensure that future research in the
programme is relevant to both current and future industries, which will directly increase its impact for New Zealand.
• Consultation with Māori agribusiness sector led to Te Kakenga Ngatahi, a MBIE Vision Matauranga project with The New
Māori Trustee Te Tumu Paeroa (TTP). That project will investigate how Māori landowners can achieve greater returns from
their land whilst meeting community, culture and inter-generational objectives. It also creates an opportunity to develop further
research to support current and emerging farming systems for Māori business.
• The use of the ‘framework’, tools that have been identified from the literature and existing research networks has enabled the
project team to undertake new and more comprehensive approaches to evaluating future farming systems. This has increased
the potential for greater impact for New Zealand industry from AgResearch research activities.
• Bayesian network modelling (a type of statistical modelling that represents a set of random variables and their conditional
dependencies), training and application - to systems thinking in nitrogen efficiency research - has enabled new approaches to
identifying research gaps and opportunities which are systems-based and cross-disciplinary. New approaches to addressing
industry challenges will increase impact of research and will contribute towards ensuring the future prosperity of the New
Zealand pastoral sector.
• Thought leadership, new teams, approaches and tools have enabled project team members to develop a much deeper
understanding of the future challenges for farming systems, to begin to develop thought leadership positions and to consider
the implications and opportunities for future systems and component research.
The aim of this project is to characterise the microbial community structure of the rumen (the first chamber of a cow's stomach)
of dairy animals with differing feed conversion efficiency (FCE). Improved FCE is a major aim of the New Zealand dairy
industry as it improves animal health and productivity, and therefore increases industry profitability. The project's research
outcomes will generate new knowledge of whether high and low feed conversion efficiency (expressed as residual feed intake)
in dairy cattle is linked to rumen microbial community structure or activity. If it is, this would indicate that feed conversion
efficiency differences may be a consequence of differences in rumen function. An understanding of its mechanisms may then
help enhance feed conversion efficiency.
2014/15 Key Achievements:
• Profiling the microbial populations in the rumens of dairy cows and weaner calves with differing residual feed intakes, which is
a measure of feed conversion efficiency (FCE) showed that apparent differences in the rumen microbial populations that
correlate with FCE may arise by chance. Scrutiny of data from overseas studies suggests that other reports of rumen microbial
community correlations with FCE may also be due to chance associations. This suggests that FCE, at least as measured in
the two groups of animals used in this study, is not a result of rumen microbial community structure, and that its causes are
elsewhere in the animal-rumen system or are the result of differences in rumen microbial gene expression.
AgResearch 2015 Annual Report [62]
Statement of responsibility
For the year ended 30 June 2015
AgResearch Limited certifies that:
1.
The Board of AgResearch Limited accepts responsibility for the preparation of the annual financial statements and the judgements
used in them;
2.
The Board of AgResearch Limited accepts responsibility for establishing and maintaining a system of internal control designed to
provide reasonable assurance as to the integrity and reliability of financial reporting; and
3.
In the opinion of the Board of AgResearch Limited, the annual financial statements for the financial year ended 30 June 2015 fairly
reflect the financial position and operations of AgResearch Limited and Group.
Sam Robinson
Chair
28 August 2015
Michelle Alexander
Director
28 August 2015
AgResearch 2015 Annual Report [63]
Directory
Executive Team
Dr Tom Richardson
Chief Executive
David Godwin
Finance & Business Performance Director
Dr Warren McNabb
Research Director
Andrew McSweeney
Shared Services Director
Information
Auditors
Deloitte on behalf of the Auditor-General
Bankers
Westpac Banking Corporation
Solicitors
Buddle Findlay, Auckland
Patent Attorney
James & Wells, Hamilton
Dr Greg Murison
Partnership & Programme Director
Board of Directors
Contact details
Sam Robinson
Chair
AgResearch Limited Corporate Office and
AgResearch Ruakura
Ruakura Research Centre
10 Bisley Road, Private Bag 3123
Hamilton 3240
New Zealand
Barry Harris
Deputy Chair
Teresa Ciprian
Director
Jeff Grant
Director
Dr Michael Dunbier
Director
Andrew Macfarlane
Director
Tania Simpson
Director
Dr Peter Stone
Director
Michelle Alexander
Director
Corporate Office
Tel: 64 7 856 2836
Fax: 64 7 834 6640
Ruakura
Tel: 64 7 856 2836
Fax: 64 7 838 5012
AgResearch Grasslands and Hopkirk Research Institute
Grasslands Research Centre
Tennent Drive, Private Bag 11008
Palmerston North 4442
Grasslands
Tel: 64 6 356 8019
Fax: 64 6 351 8032
Hopkirk
Tel: 64 6 351 8600
Fax: 64 6 353 7853
National Centre for Biosecurity and Infectious Diseases
(NCBID) - Wallaceville
Ward Street, PO Box 40063
Upper Hutt 5140
Tel: 64 4 529 0300
Fax: 64 4 529 0413
AgResearch Lincoln
Lincoln Research Centre
Cnr Springs Road and Gerald Street, Private Bag 4749
Christchurch 8140
Tel: 64 3 321 8800
Fax: 64 3 321 8811
AgResearch Invermay
Invermay Agricultural Centre
Puddle Alley, Private Bag 50034
Mosgiel 9053
Tel: 64 3 489 3809
Fax: 64 3 489 3739
www.agresearch.co.nz
AgResearch 2015 Annual Report [64]
Ruakura Research Centre
10 Bisley Road, Ruakura
Private Bag 3123
Hamilton 3240
Phone:+64 7 856 2836
agresearch.co.nz