2011 Year in Review
Chairman and Chief Executives' Report
From the top of the atmosphere to the bottom of the ocean, NIWA is focused on enhancing the benefits of New Zealand's natural resources
Download the full 2011 Year in Review (PDF 3.1 MB)
Despite predictions that New Zealand would continue to face significant economic challenges in the 2010–11 financial year, few foresaw the unprecedented economic situation that lay ahead.
Not only did New Zealanders continue to feel the lingering effects of the global economic crisis and our own economic recession, but we also endured some of our nation's greatest tragedies, with significant loss of life. As a result, New Zealand posted its worst-ever deficit in May this year, and the flow-on effects for our economy continue to be felt today.
There is, no doubt, more uncertainty and instability to come before we see a full economic recovery. How quickly and decisively New Zealand responds now will determine our nation's economic prosperity in the years ahead.
The same is true for NIWA. Like other businesses, we have not been immune to the unusually challenging economic environment, and we have had to respond accordingly. Despite the strong demand for NIWA's science based services, we forecast relatively static revenue this year. In reality, it dipped.
We were, however, incredibly fortunate to suffer only very minor damage and disruption to our Christchurch operations after the September and February earthquakes. Although more than half our Christchurch staff suffered damage to their homes, they showed considerable resilience and stoicism. Without their continued dedication to see the job done, our performance this year would certainly have been more significantly affected.
Our response to the challenging economic environment included tightly managing our costs, and carrying out an operational review to ensure our capabilities were aligned with the nation's science needs. This included making changes to our staffing levels, and streamlining our internal systems so our business operates more efficiently.
With this careful planning, and by responding with agility to the quickly changing economic environment, NIWA has continued to be a profitable and thriving business in 2010–11. Our final results show revenue of $117.9 million, with earnings before interest, tax, and depreciation (EBITDA) of $16.3 million and profit after tax of $1.3 million – a sound result, albeit lower than budgeted, given the tough operating environment.
At the same time, we are always looking for ways to improve what we do and meet the demand for our services, including upgrading our national environmental monitoring network and a $25 million refit of our largest research vessel, Tangaroa. The refit included the installation of a dynamic positioning (DP2) system – making Tangaroa an even more valuable New Zealand asset for ocean science, surveying, and exploration.
With continuing investment in essential technology, including purchasing the Southern Hemisphere's most powerful supercomputer, upgrading our finance and project management systems, and investing in new IT hardware and software, NIWA is well placed to provide science based services that will contribute to the prosperity of New Zealand in the years ahead.
Science is at the forefront of New Zealand's future
In his speech at the opening of the new Ministry of Science and Innovation (MSI), Dr Wayne Mapp said "creating a Ministry which spans both science and innovation shows the Government's intent to place science at the forefront of New Zealand's future."
At NIWA, we have long held the view that New Zealand's economic and environmental prosperity depends on robust, long-term research and applied science. The need for NIWA's skills and expertise has never been more evident than now.
The establishment of the new Ministry, along with other initiatives to better align the functions of the Crown Research Institutes with the needs of the sectors they serve, provide the foundation NIWA needs to make an even greater contribution to New Zealand's economic growth.
Contributing to New Zealand's economic recovery and growth
Right now, NIWA has more than 1000 science projects on the go through our National Science Centres. NIWA's science will continue to drive New Zealand's economic recovery and growth by:
- Identifying ways to make better use of our vast natural resources in a sustainable manner,
- Ensuring New Zealand is better prepared for extreme weather events and natural hazards,
- Seeking to maintain New Zealand's 'clean, green' image, through better management of our natural environment,
- Helping New Zealand contribute to important global environmental issues like the changing climate.
Making greater use of our natural resources
To boost New Zealand's economy, scientists at NIWA are looking at how we can get greater value from our natural resources, in a sustainable way. This year, that research has included quantifying valuable mineral deposits from submarine volcanoes in the Kermadec Arc, and determining how to best protect the unique biological communities of animals which thrive in that hot and chemically rich environment.
We also provide scientific advice to the Ministry of Fisheries on the sustainable harvest of more than 100 fish species, and in July we signed a contract with the Ministry of Fisheries to provide deepwater fisheries research services under the ten year deepwater plan.
We are investigating how New Zealand can grow its renewable energy resources. We have made significant advances in aquaculture research. For example, we are using selective breeding and genomics – the study of gene sequences in DNA – to establish high-performance hapuku, kingfish, and paua broodstock to help New Zealand's aquaculture industry meet its $1 billion target by 2025.
Being better prepared for natural hazards
This year we need no reminders of how vulnerable we are to natural hazards. Science not only plays a crucial role in responding to hazards and disasters, but also helps us understand more about their causes, so we can be better prepared for the risks. After the 22 February Christchurch earthquake, NIWA ocean geologists were part of a rapid response effort, managed by the Natural Hazards Research Platform, to undertake a seismic survey in Pegasus Bay, off Banks Peninsula. The survey revealed a previously unknown offshore fault east of Kaiapoi. Combined with onshore geophysical studies by other organisations, this information will help the Government and regional council better understand the future seismic risk for Christchurch and its residents.
When the Chilean volcano Puyehue erupted in June, NIWA scientists were also able to help by providing additional information to aviation authorities about the ash cloud and how it might affect New Zealand's airspace.
Our new $12.7 million supercomputer has also improved our environmental forecasting capabilities, enabling us to work towards providing meteorological forecasts at ultrahigh resolution – down to areas as small as 1.5 square kilometres – out to 24 hours in advance, four times daily. Ensuring our environment is well managed New Zealand's clean, green image is a drawcard for tourism, and a key ingredient in marketing our produce overseas. We must rise to the challenge of developing the standards to retain our world ranking for environmental management.
This year the Government released two important policy statements to guide the day-to-day management of our coasts and freshwater resources – the New Zealand Coastal Policy Statement and the Freshwater Policy Statement.
NIWA's science is already making an important contribution in these areas. For example, this year we led a ground-breaking study that combined matauranga Maori with contemporary science to restore the Waikato River. We are also working with the Ministry for the Environment to develop New Zealand's first national-scale environmental monitoring network for our surface waters. Through NIWA's Maori Environmental Research Centre, Te Kuwaha, we are also developing easy-to-use toolkits to help iwi monitor changes in their rohe (region), and empower them to become more involved in resource management processes.
Helping New Zealand fulfil its international obligations
NIWA's science also enhances New Zealand's reputation as a world leader in science and research, helping to understand, and mitigate against, important global issues like climate change and variability.
This year marked the 50th anniversary of NIWA's atmospheric research station at Lauder, in Central Otago. Over the last five decades the research centre has built an international reputation for its work, specialising in measuring levels of chloroflurocarbons (CFC), ozone, ultraviolet (UV) light, and greenhouse gases with an extensive array of world class instruments. International climate experts describe Lauder's work as a vital cog in global climate research.
We are also helping New Zealand fulfil its international science obligations by providing information and scientific advice to international agencies like CCAMLR, the Commission for the Conservation of Antarctic Marine Living Resources, and making lead author contributions to the 5th IPCC Report on Climate Change.
The year ahead
It would be imprudent to suggest that the unusually tough economic conditions we faced in 2010–11 are now behind us, as a company or as a nation. We expect business conditions to remain unsettled over the coming year, and, as a result, we will need to continue to respond with agility, by looking for new ways to improve our efficiency and expand our revenue, and being cautious about our investments.
That said, the organisational changes we have made this year, along with our ongoing capital expenditure programme, means NIWA is in a great position to meet the future demand for our science based services. We owe it to our company, our customers, and New Zealand to ensure we maintain the right capabilities to meet the country's science and innovation needs in a cost-effective and competitive way.
I acknowledge that the last year has been an unsettling time for the NIWA team. But I am also very proud of the positive way our staff have responded to the changes. I thank everyone for their continued hard work and commitment to the company.
I also want to personally thank the NIWA Executive Team and the Board for their ongoing support and leadership, through the tough conditions we have faced this year. It has been challenging, but throughout we have proven, time and time again, what an important contribution NIWA is making to New Zealand's future prosperity as the country's leading natural resources and environmental science services provider. The following pages highlight just a few of our successes this year.
John Morgan
CEO
