Overview
The first six months of the year have been challenging. While revenues were expected to be lower than the same period last year, these still fell $2.2 million below budget. This was offset by lower than budget expenditure, but the current fiscally constrained environment is challenging NIWA’s ability to meet full year budget targets. Management is actively pursuing measures in response to this challenge with a focus on NIWA’s financial sustainability.
Our new research vessel Kaharoa II successfully completed its maiden voyage from Spain, arriving in its home port of Wellington in early August. The vessel was blessed at a dawn ceremony led by Te Āti Awa rangatira Kura Moeahu through a series of karakia steeped in whakapapa and kōrero tuku iho. This was followed a week later by the christening of the vessel by the Hon Judith Collins KC, with more than 180 stakeholders in attendance. Kaharoa II is fitted with state-of-the-art equipment and capabilities that have exceeded NIWA’s expectations. It is fully operational and has now successfully completed four research voyages, including a 60-day collaborative voyage with the US to Chile and back as part of the international Argo programme.
NIWA is currently harvesting 2,000kg of kingfish per week from its new experimental, commercial-scale Recirculating Aquaculture System (RAS), and our high value kingfish product is being exported to Australia and the US in addition to being sold in the domestic market. Commercialisation of land-based kingfish culture represents establishment of a new industry for New Zealand and the potential to attract foreign investment.
On Thursday 26 September, Minister Collins released the in-principle decision by Cabinet for NIWA to acquire MetService, based on recommendations of the Weather Forecasting Review undertaken by Sapere. Putting NIWA and MetService back together again was identified as the best way to ensure that New Zealand has a cohesive forecasting system that incorporates climate and weather science and forecasting, hydrology and coastal hazards. This is expected to improve planning for, and build resilience to, the increase in severe weather events associated with our changing climate. Following the Minister’s announcement, the Boards and Executives of NIWA and MetService prepared a high-level transition plan for the integration of the two organisations to support Cabinet’s final approval of the acquisition. The plan also identified options for improving access to NIWA and MetService’s observational weather data.
More information on these initiatives follow, along with summaries of other significant science advances achieved over the past six months.
Financial results
The first six months of the year presented considerable challenges for NIWA, as reflected in the financial results. Despite achieving revenue of $81.0M during this period, the result fell $2.2M short of the budget and was $7.2M lower than the same period last year.
Total expenditure of $85.1M was $0.6M lower than budget and $6.5M lower than the same period last year, reflecting the impact of the financial sustainability plan implemented at the end of the previous financial year.
Loss before tax was $(6.7)M, compared with a budgeted loss before tax of $(1.8)M. Loss after tax for the six-month period was $(4.5)M, against a budget of $(3.5)M.
The closing cash balance and short-term borrowings of $43.8M were $3.0M higher than budget, driven by higher-than-budgeted cash outflow and lower-than-budgeted cash inflow from operating activities.
Capital spending for the period was $9.2M, against a budget of $14.0M, due to changes in the timing of investment spending compared with budget assumptions.