New Zealand Social Infrastructure Fund Limited. Annual Report. Bendigo Healthcare Accommodation. Melbourne Convention & Exhibition Centre

Transcription

1 New Zeaand Socia Infrastructure Fund Limited Mebourne Convention & Exhibition Centre Hobsonvie Secondary Schoo Bendigo Heathcare Accommodation Annua Report For the year ended 31 March 2014

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3 Contents Report to sharehoders 2 Directors report 9 Statement of comprehensive income 10 Statement of changes in equity 10 Statement of financia position 11 Statement of cash fows 12 Notes to the financia statements 13 Independent auditor s report 27 Corporate governance & structure 28 NZSIF Board 29 Committees 31 Directory 32

4 New Zeaand Socia Infrastructure Fund Limited Report to sharehoders 16 Juy 2014 Dear Sharehoder I am peased to present New Zeaand Socia Infrastructure Fund Limited's (NZSIF) annua report for the year ended 31 March The report incudes our audited financia statements for that period. Highights of this report incude: NZSIF produced a profit for the period of $758,498 (2013: $710,861), a return on sharehoder funds of 6.48% (2013: 5.53%). NZSIF's earnings were negativey impacted by ower distributions received from the PIP Fund with earnings generated by the Mebourne Convention & Exhibition Centre being affected by the strong NZ doar and Austraian non-resident withhoding tax deducted, but benefited from strong revauation gains from a our investments. Net asset backing at 31 March 2014 was 41.1 cents per share (cps). Distributions NZSIF made two distributions during the financia period. Gross dividends of 0.79 cps on 19 Juy 2013 and 0.48 cps on 6 December The Board has approved a fina dividend reating to 2014 cash fows of 0.62 cps to be paid to sharehoders before the end of Juy Hobsonvie Schoos The primary schoo was competed and opened January The secondary schoo was competed and opened mid-february The PIP Fund invested equity of $10 miion, of which NZSIF's share was $2.25 miion. Bendigo Heathcare Group Accommodation Faciity We announced this investment in Apri This heathcare workers' accommodation faciity is based in Bendigo, Victoria, Austraia. Stage 1 was successfuy deivered to the hospita in October 2013, with Stage 2 competed in February 2014 (three months eary). The tota equity investment for the PIP Fund was A$8.7 miion, equivaent to approximatey NZ$10.8 miion. NZSIF has invested NZ$2.3 miion. Mebourne Convention & Exhibition Centre (MCEC) The MCEC investment has performed we producing soid cash fows, and showed an increase in vauation at 31 March 2014, despite the strong NZ doar impacting on the vauation. Auckand Prison In Apri 2014 the Corrections Department announced that Next Step Partners a PIP Fund consortium was shortisted to deveop a proposa for designing, buiding, financing and maintaining a new maximum security faciity at Auckand Prison. Whie the Government is yet to make a fina commitment, we are expecting to fund investment cas from ate 2014, which wi be returned by the Government with interest, if no fina commitment is made. The NZSIF Board is encouraged by the investment progress and prospects in addition to those noted above. Background Limited Partnership and Capita NZSIF invests as a Limited Partner in the Pubic Infrastructure Partners LP Fund (PIP Fund). The PIP Fund is an institutiona fund estabished by Morrison & Co, structured as a imited iabiity partnership, to invest in pubic-private partnerships (PPPs) that deiver socia infrastructure assets such as schoos, hospitas, accommodation faciities and oca government faciities to the community. The fina cose for the PIP Fund was 31 December The PIP Fund has nine imited partners with capita commitments of $176.5 miion. NZSIF has a 23% interest in the PIP Fund and is the second argest investor, behind the New Zeaand Superannuation Fund. As at 31 March 2014 the imited partners have contributed cose to 40% of their committed capita to the PIP Fund. Investment Portfoio Hobsonvie Schoos In Apri 2012 Learning Infrastructure Partners (LIP, a PIP Fund consortium) entered into a contract with the Government to provide New Zeaand's first pubic private partnership (PPP) for the design, construction, finance and maintenance of Auckand's Hobsonvie Point primary and secondary schoos, for the next 25 years. The primary schoo was competed and opened January The secondary schoo was competed and opened mid-february The PIP Fund invested equity of $10 miion, of which NZSIF's share was $2.25 miion. Westpac Bank provided the senior debt. The PIP Fund owns 97.5% of LIP, whie Hawkins Construction has a 2.5% equity interest. 2

5 Annua Report - For the year ended 31 March 2014 Primary Schoo - Hobsonvie Point Schoo, West Auckand Bendigo Heathcare Group Accommodation Faciity Hobsonvie Secondary Schoo 30 year property ease with infation inked cash fow; There is no occupancy risk; and A PIP Fund entity owns the and, and retains ownership of the and and buidings at the end of the ease. BHCG empoys 3,000 staff, has a A$300 miion budget and is currenty buiding a new A$600 miion hospita. Construction of the new hospita began in 2013 and is due for competion by the end of The tota equity investment in the accommodation faciity was A$8.7 miion, equivaent to approximatey NZ$10.8 miion. NZSIF's share of this investment was NZ$2.3 miion. The first distributions from Hobsonvie Schoos are expected to be made by the PIP Fund after the June 2014 quarter, and to be refected in future NZSIF dividends. Bendigo Heathcare Group Accommodation Faciity (Bendigo, Victoria, Austraia) We announced this investment on 18 Apri This is a doctors and nurses residentia faciity based in Bendigo, Victoria, Austraia. The Bendigo faciity comprises 96 one bedroom and 24 two bedroom residentia apartment units for doctors and nurses working in the Bendigo Hospita. The accommodation faciity was fuy competed in March Investment factors incude: The Bendigo Heathcare Group (BHCG) is the tenant. BHCG is a pubic heath provider for the State of Victoria under the Heath Services Act 1988; We expect to see the Bendigo distributions to the PIP Fund commencing after the June 2014 quarter, and be refected in future NZSIF dividends. The Mebourne Convention and Exhibition Centre The Mebourne Convention and Exhibition Centre (MCEC) was the first PIP Fund investment, competed in The MCEC investment represents 22% of the PIP Fund's committed capita. The MCEC is a substantia deveopment with property, pant and equipment assets of approximatey A$826 miion (MCE Trust Annua Report June 2013) and ong-term funding in pace. The MCEC investment is an estabished operationa PPP asset. NZSIF's net investment cost was NZ$9 miion. The MCEC was a NZ$40 miion equity investment for the PIP Fund. The MCEC is regarded as an idea investment, with the underying revenue streams being based on avaiabiity of the faciity, and not demand or patronage driven. 3

6 New Zeaand Socia Infrastructure Fund Limited Mebourne Convention & Exhibition Centre Key information on the MCEC: Mebourne Convention Centre, a 5,000 seat ha, meeting and banquet rooms, six-star Green Star rated buiding. Mebourne Exhibition Centre, a pre-existing 2 30,000m faciity adjacent to the Mebourne Convention Centre. The oder exhibition centre assets are due to be upgraded at the expense of the State of Victoria rather than as a PPP variation. The concession runs for 25 years from January 2009 to 2034, with the State of Victoria as counter-party. In February 2012 Caisse de dépôt et pacement du Québec (Caisse), a eading Canadian fund manager and Penary Group reached an agreement for Caisse to invest in five pubic-private partnership (PPP) projects in Austraia, incuding the Mebourne Convention and Exhibition Centre. This resuted in a return of capita by the PIP Fund to the imited partners, incuding NZSIF. This return of capita, equivaent to 2.8 cps was passed through to NZSIF sharehoders in two tranches in May and Juy During the financia period to 31 March 2014 the MCEC investment performed to expectations producing strong cash fows, with no revenue deductions for equity investors; a satisfying outcome. Generay when faced with revenue deductions (for disruption in any of the faciities' services) these deductions are passed through to the operations management company, Brookfied Mutipex. Chart 1 beow shows the NZSIF investment mix as at 31 March As we as the investments made the chart shows capita returned and the proportion of capita remaining to be caed. Investment Opportunities There are a number of investment opportunities over the next 12 months in both New Zeaand and Austraia. New Zeaand opportunities: Auckand Prison Paremoremo Prison Rebuid - In Apri 2014 the Corrections Department announced that Next Step Partners a PIP Fund consortium was shortisted to deveop a proposa for designing, buiding, financing and maintaining a new maximum security faciity at Auckand Prison. (no custodia services). Chart 1 - NZSIF Investment Mix as at 31 March % 63.1% 5.6% 5.8% MCEC Hobsonvie Schoos Bendigo Heathcare Accommodation Capita Returned 2.9% Unaocated Capita 4

7 Annua Report - For the year ended 31 March 2014 New Zeaand Grouped Schoos (Christchurch, Auckand, Queenstown/Wakatipu, Hamiton) for which an Expression of Interest was odged by a PIP Fund consortium in Apri Auckand Pathway Project a harbour bridge cyce ane a decision from Counci is ikey this quarter. Roads of Nationa Significance - Puhoi- Warkworth currenty ooking at consortium partners. The PIP Fund consortium 'Positive Connection' was one of two consortia shortisted for the bidding phase of the Transmission Guy roading P P P tender but unfortunatey was unsuccessfu with its bid in December Austraian opportunities: The main opportunity for the PIP Fund in Austraia is the Woongong University Student Accommodation. This is essentiay an existing accommodation faciity that is being monetised. A Request for Proposa has recenty been submitted. Opportunities mentioned in earier sharehoder reports, incuding the Roya Adeaide Hospita and the East-West Link in Mebourne, are not progressing. Dividends paid For the 2014 financia period NZSIF made two distributions totaing 1.27 cps (2013: 1.52 cps). This incuded gross dividends of 0.79 cps on 19 Juy 2013 (reating to 2013 cash fows) and 0.48 cps on 6 December The gross dividend yied on net investor capita for the financia year ended 31 March 2014 wi therefore be 2.81% (based on PIP Fund cash fows generated in the period which incudes the 0.62 cps to be paid Juy 2014). Projected dividend payments for 2015 are estimated to be in the range of 1.95 cps to 2.25 cps based on current investments and known cash fows (incuding expected distributions commencing from Hobsonvie Schoos and Bendigo) and woud represent a 5.74% gross yied on net 39.2 cps caed to date. The forecasts above incude distributions from Hobsonvie Schoos and Bendigo, both expected to begin after the June 2014 quarter. Chart 2 beow provides a snapshot of the dividends and respective yieds paid from 2012 and the projected dividends for Investment Timeine The PIP Fund investment period commenced 30 October 2009 and runs unti 29 October 2015, uness extended by approva of the Advisory Committee (see Committees page 31). With the competion of the Bendigo and Hobsonvie Schoo investments the PIP Fund has caed cose to 40% of its committed capita. Success with a further two to three investments, scae dependent, woud push our invested capita towards the investment commitment imit and inside the target investment timeine of October Distributions Dividend approved for payment The Board has approved a dividend of 0.62 cps and the aim is to pay this to sharehoders before the end of Juy This wi be a cash payment ess tax at sharehoder prescribed tax rates. There are no imputation credits avaiabe to attach to this distribution as the income is sourced entirey from the PIP Fund investment in the MCEC. cps Chart 2 - NZSIF Dividend Yieds cps 3.37% 1.52 cps 5.53% 1.10 cps 2.81% 2.25 cps 5.74% 1.95 cps 4.97% Projection 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% Note: 2012 gross dividend yied on 30 cps capita base; 2013 gross yied on a 27.2 cps average capita base; 2014 gross yied on an a 39.2 cps average capita base; 2015 gross yied on a 39.2 cps average capita base 0 5

8 New Zeaand Socia Infrastructure Fund Limited Chart 3 - NZSIF Cas & Capita Returns c capita return May and June c ca cps c on appication c ca Proj. 10c ca c ca Note: NZSIF shares are $1 shares paid to 42 cps with 58 cps remaining uncaed NZSIF Capita Position and Cas Sharehoders have to date contributed $17.2 miion (42 cps) in capita to NZSIF and received capita returns of $1.15 miion (2.8 cps), resuting in a net 39.2 cps invested. The timing of the next ca wi depend on the success of the bid for the Auckand Prison PPP. If the bid is successfu we woud expect to ca a further 10 cps in September/October We have shown this next ca as a projection ony in Chart 3. The net asset backing as at 31 March 2014 was 41.1 cps. Chart 3 shows a capita contributions from inception and capita returned, pus a ca projection. PIP Fund Investment Vauation As there is no quoted market price for the PIP Fund, vauation techniques must be utiised to determine the fair vaue of the PIP Fund, which may require an aggregation of vauations of the PIP Fund's investments. The vauation techniques utiised can incude 'the price of recent acquisitions', 'market based earnings mutipes' or 'discounted cash fows'. As at 31 March 2014 the vauation method used by the PIP Fund to vaue its operating project investments, (Mebourne Convention & Exhibition Centre, Bendigo Heathcare Group and Hobsonvie Schoos) was the discounted cash fow method. Other net assets were vaued at current market vaue. The PIP Fund empoys third party experts to vaue the Fund's investments annuay. The vauation is cacuated at each 31 March baance date. NZSIF Investment Vauation & Returns NZSIF poicy is to carry investments at fair vaue with subsequent movements in fair vaue recognised through profit or oss. NZSIF's investment in the PIP Fund at 31 March 2014 was vaued at $16.1 miion (2013: $11.3 miion), which incuded an increase in fair vaue of $2.1 miion, but this was partiay off-set by a negative foreign exchange movement of $1.6 miion on the MCEC investment due to the strength of the NZ doar. NZSIF paid $4.2 miion in PIP Fund cas of which $3.1 miion was invested in Bendigo and Hobsonvie Schoos. 6

9 Annua Report - For the year ended 31 March 2014 Chart 4 - NZSIF Return on Sharehoder Funds 8.0% 7.73% 6.48% 6.0% 5.53% 4.0% 2.0% 0.0% 0.00% The NZSIF sharehoder return on the starting capita position for the year was 6.48% compared with 5.53% in Chart 4 shows the return on opening sharehoder' funds from 2011 to NZSIF sharehoder returns from the various investments wi continue to increase over time, particuary as our costs are spread across a greater investment base. Cash fows are expected to increase during as distributions from the Bendigo and the Hobsonvie Schoos investments come on stream. Annua Financia Statements The audited annua financia statements covering the 12- month period to 31 March 2014 are provided in this annua report for your information. The financia period deivered another soid performance. NZSIF received dividend income of $520,370 from the PIP Fund (2013: $711,528). There was a sma amount of interest income, $20,520 pus a positive movement in the fair vaue of NZSIF's investment in the PIP Fund of $494,382 (after the impact of the strengthening NZ doar during the financia year). After expenses of $277,708 and tax, net income of $758,498 (2013: $710,861) was recorded. See Chart 5 for the past period comparisons. The current vaue of the NZSIF investment in the PIP Fund is $16,059,580 (2013: $11,343,102). Liabiities represent just 0.4% of NZSIF's equity. Capita and Net Asset Backing Issued capita is $15,649,239. Combined with retained earnings of $1,204,933 tota capita is $16,854,172 which represents net asset backing of 41.1 cps as at 31 March Dividends of $520,367 were paid, equivaent to 1.27 cps during the financia period. Chart 5 - NZSIF Net Income Comparison for Periods $1,000,000 $900,000 $921,888 $800,000 $700,000 $710,861 $758,498 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $45,

10 New Zeaand Socia Infrastructure Fund Limited NZSIF Annua Sharehoders Meeting The detais for our Annua Sharehoders Meeting are: Date: Monday, 18 August 2014 Time: a.m. Pace: Craigs Investment Partners Limited, Leve 32, Vero Centre, 48 Shortand Street, Auckand. RSVP: Contact Peter Laor on or emai by 11 August We extend an invitation to attend this meeting and ook forward to seeing you there. Outook The Manager of the PIP Fund and NZSIF Directors are encouraged by the investment progress and performance despite the significant negative impact the strengthening NZ doar had on the MCEC investment during the period. Now that the Hobsonvie Schoos and Bendigo investments have been competed an upift in cash fows and distributions is expected. The PIP Fund is paying reguar six monthy dividends which means NZSIF can continue to pass these cash fows through to our sharehoders six monthy. Any new investment made by the PIP Fund wi entai a ca being made on NZSIF to fund the investment. In turn we wi make a ca on NZSIF sharehoders. We wi keep you informed as investments are made by the PIP Fund through media reeases, via the NZSIF website or by writing directy to you. A sharehoder reports pus news updates are aways avaiabe to view on our website If you have any queries regarding your investment in NZSIF, pease discuss with your Investment Adviser or you may ca Peter Laor at NZSIF Management on On 16 May 2014 Nei Craig resigned as a director of New Zeaand Socia Infrastructure Fund Limited. I woud ike to sincerey thank Nei for his contribution as a director since inception of the Fund. I wecome David McCaum as a new director to the Fund. David is a Director, Investment Banking for Deutsche Craigs Limited (a Craigs Investment Partners subsidiary). Thank you for your continuing support of NZSIF. Yours sincerey NEW ZEALAND SOCIAL INFRASTRUCTURE FUND LIMITED The NZSIF Fund is focused on investing for yied. Yieds from the various investments wi continue to increase over time. There continue to be attractive investment prospects in both the New Zeaand and Austraian markets. The Manager is confident that the Fund wi be fuy committed by October Kim Eis Chairman 8

11 Annua Report - For the year ended 31 March 2014 Directors report For the 12 month period ended 31 March 2014 Directors hoding office during the year and their remuneration. Director Fees $ Date of appointment K Eis 46, Jan-10 I Fraser* 30, Jan-10 N Craig** ni 26-Jan-10 M Caird** ni 26-Jan-10 *GST excusive **Craigs Investment Partners Limited directors waived their NZSIF directors' fees for the entire financia period. Entries recorded in the interests register The entries shown in the tabe beow were recorded in the interest register of the Company during the year. Directors' sharehodings (incuding reevant interests) and deaings in NZSIF for the period to 31 March Origina Shares Change in hodings subscribed for for the period K Eis 150, ,000* N Craig 100,000 ni M Caird 100,000 ni *acquired at market June 2013 Director Director 25 June June

12 New Zeaand Socia Infrastructure Fund Limited Statement of comprehensive income For the year ended 31 March 2014 Note $ $ Dividend income 520, ,528 Interest income 20,520 73,898 Movement in fair vaue of investment in PIP Fund 5 494, ,249 Tota investment income 1,035, ,675 Administrative expenses 3 (277,708) (262,840) Profit/(Loss) before tax 757, ,835 Income tax benefit/(expense) Profit for the year 758, ,861 Other comprehensive income for the year - - Tota comprehensive income for the year 758, ,861 Statement of changes in equity For the year ended 31 March 2014 Share capita Retained earnings Tota equity Baance at 31 March ,729, ,802 11,696,041 Profit for the year - 758, ,498 Other comprehensive income Tota comprehensive income for the year - 758, ,498 Capita issued 4,920,000-4,920,000 Dividends paid - (520,367) (520,367) Baance at 31 March ,649,239 1,204,933 16,854,172 Share capita Retained earnings Tota equity Baance at 31 March ,878, ,467 12,846,163 Profit for the year - 710, ,861 Other comprehensive income Tota comprehensive income for the year - 710, ,861 Redemption of capita (1,149,457) - (1,149,457) Dividends paid - (711,526) (711,526) Baance at 31 March ,729, ,802 11,696,041 10

13 Annua Report - For the year ended 31 March 2014 Statement of financia position As at 31 March 2014 Note $ $ Assets Investment in PIP fund 5 16,059,580 11,343,102 Tota non current assets 16,059,580 11,343,102 Cash and cash equivaents 9 774, ,062 Receivabes and prepayments 7 77,073 25,334 Taxation receivabe 4 6,627 21,999 Tota current assets 858, ,395 Tota assets 16,918,162 11,758,497 Equity Issued capita 10 15,649,239 10,729,239 Retained earnings 1,204, ,802 Tota equity attributabe to equity hoders 16,854,172 11,696,041 Liabiities Trade and other payabes 8 63,990 62,456 Tota current iabiities 63,990 62,456 Tota iabiities 63,990 62,456 Tota equity and iabiities 16,918,162 11,758,497 For and on behaf of the Board Director Director 25 June June

14 New Zeaand Socia Infrastructure Fund Limited Statement of cash fows For the year ended 31 March 2014 Note $ $ Cash fows from operating activities Dividends received 520, ,528 Interest received 20,781 78,664 Interest paid (3,729) - Income tax refunds 22,115 57,051 Income taxes paid (5,809) (21,999) Cash paid to suppiers (272,445) (236,950) Net cash from operating activities , ,294 Cash fows from financing activities Ca monies received 4,868,000 - Redemption of capita - (1,149,457) Dividends paid (520,367) (711,526) Net cash from financing activities 4,347,633 (1,860,983) Cash fows from investing activities Proceeds from PIP fund 5-1,149,457 Investment in PIP fund 5 (4,222,096) (1,789,024) Net cash from investing activities (4,222,096) (639,567) Net movement in cash and cash equivaents 406,820 (1,912,256) Cash and cash equivaents at 31 March ,062 2,280,318 Cash and cash equivaents at 31 March , ,062 12

15 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 1. Genera Information (a) Reporting entity New Zeaand Socia Infrastructure Fund Limited (the Company ) is a company incorporated and domicied in New Zeaand. New Zeaand Socia Infrastructure Fund Limited is registered under the Companies Act 1993 and is an issuer and a reporting entity for the purposes of the Financia Reporting Act The financia statements of the Company are for the year ended 31 March The Company is primariy invoved in investing into pubic-private partnerships as a imited partner of the Pubic Infrastructure Partners Limited Partnership (the PIP Fund ). The financia statements were approved by the Directors on 25 June (b) Statement of compiance The financia statements have been prepared in accordance with New Zeaand Generay Accepted Accounting Practice ( NZ GAAP ). They compy with New Zeaand Equivaents to Internationa Financia Reporting Standards ( NZ IFRS ), and other appicabe Financia Reporting Standards, as appropriate for profit-oriented entities. They aso compy with Internationa Financia Reporting Standards ( IFRS ) and the requirements of the Financia Reporting Act 1993 and the Companies Act (c) Basis of measurement The financia statements are prepared on the historica cost basis except that the investment in the PIP Fund is stated at fair vaue. (See Note 2(a)) (d) Functiona and presentation currency The financia statements are presented in New Zeaand doars, which is the Company s functiona currency, and rounded to the nearest doar. (e) Use of estimates and judgements The preparation of financia statements in conformity with NZ IFRS requires management to make judgements, estimates and assumptions that affect the appication of poicies and reported amounts of assets and iabiities, income and expenses. The estimates and associated assumptions are based on historica experience and various other factors that are beieved to be reasonabe under the circumstances, the resuts of which form the basis of making the judgements about carrying vaues of assets and iabiities that are not readiy apparent from other sources. Actua resuts may differ from these estimates. The key area invoving the use of estimates and judgements is the investment in the PIP Fund (see Note 5). The estimates and underying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects ony that period, or in the period of the revision and future periods if the revision affects both current and future periods. 13

16 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 2. Significant accounting poicies The accounting poicies set out beow have been appied consistenty through a periods presented in these financia statements. (a) Investment in the PIP Fund The PIP Fund is a imited iabiity partnership, estabished under the Limited Partnerships Act The primary purpose of the PIP Fund is to make investments in socia infrastructure assets through Pubic Private Partnerships (PPPs). New Zeaand Socia Infrastructure Fund Limited invests in the PIP Fund as a imited partner. The Company s investment in the PIP Fund is cassified at fair vaue through profit or oss and presented as a non-current asset in the statement of financia position. The investment is stated at fair vaue, with any resutant change in fair vaue recognised in profit or oss. (b) Finance income and expense Interest income is recognised as it accrues, using the effective interest rate method. A finance expenses are recognised in the profit or oss using the effective interest method. (c) Cash and cash equivaents Cash and cash equivaents comprise cash baances and ca deposits with an origina maturity of 3 months or ess. (d) Impairment The carrying amounts of the Company s assets, other than investments in the PIP Fund (see accounting poicy (a)), and deferred tax assets (see accounting poicy (g)), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverabe amount is estimated based on the present vaue of estimated future cash fows, discounted at the origina effective interest rate. Impairment osses are recognised in profit or oss. An impairment oss is reversed in profit or oss if there has been a change in the estimates used to determine the recoverabe amount. (e) Share capita Share capita is cassified as equity if it is non-redeemabe and any dividends are discretionary, or is redeemabe but ony at the Company s option. (f) Other financia assets and iabiities Other financia assets and iabiities, incuding receivabes and payabes are carried at their amortised cost using the effective interest rate method. Their carrying vaue cosey approximates their fair vaue. 14

17 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 2. Significant accounting poicies (continued) (g) Income tax Income tax on the profit or oss for the year comprises current and deferred tax. Income tax is recognised in profit or oss except to the extent that it reates to items recognised directy in equity or in other comprehensive income. Current tax is the expected tax payabe on the taxabe income for the year, using tax rates enacted or substantiay enacted at the reporting date, and any adjustment to tax payabe in respect of previous years. Deferred tax is provided in respect of temporary differences between the carrying amounts of assets and iabiities for financia reporting purposes and the amounts used for taxation purposes. The foowing temporary differences are not provided for: the initia recognition of assets or iabiities that affect neither accounting nor taxabe profit, and differences reating to investments in subsidiaries to the extent that they wi probaby not reverse in the foreseeabe future. The amount of deferred tax provided is based on the expected manner of reaisation or settement of the carrying amount of assets and iabiities, using tax rates enacted or substantivey enacted at the reporting date. A deferred tax asset is recognised ony to the extent that it is probabe that future taxabe profits wi be avaiabe against which the asset can be utiised. (h) Goods and services tax (GST) A amounts are shown incusive of GST, as the Company is not registered for GST. (i) New standards and pronouncements reevant to the Company The Company has adopted the foowing new standard, with a date of appication of 1 Apri NZ IFRS 13 Fair Vaue Measurement This standard had had no materia impact on the discosures in the financia statements. A number of new or revised standards are not effective for the period ended 31 March 2014, and have not been appied in preparing these financia statements. Those that are appicabe to the Company are: NZ IFRS 9 Financia Instruments: Cassification and Measurement effective 1 January This standard simpifies how an entity shoud cassify and measure financia assets. The Company does not pan to eary adopt this standard and management does not beieve there wi be any materia changes as a resut of adopting this standard. There are a number of other standards and interpretations which are not yet effective and management consider they wi have no impact on the Company. 15

18 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 3. Administrative expenses Note Management fees , ,783 Directors fees 13 76,000 76,000 Insurance 26,450 25,905 Auditor s remuneration (see beow) 30,653 25,944 Other administrative expenses 27,640 16, , ,840 Auditor s remuneration to KPMG comprises: Review of interim financia statements 8,332 8,447 Audit of year end financia statements current year 17,854 16,905 Audit of year end financia statements previous year Tax advice 3,876-30,653 25, Income tax expense/(benefit) Income tax expense/(benefit) in statement of comprehensive income (934) (26) Reconciiation of effective tax rate Note Profit before tax 757, ,835 Income tax expense at 28% tax rate 212, ,034 Tax exempt income (284,131) (251,938) Prior period adjustment (116) (26) Tax oss not recognised 6-52,904 Share of income from underying partnerships 503,279 - Share of tax credits from underying partnerships (49,243) - Recognition of previousy unrecognised tax osses 6 (382,841) - Tota income tax expense/(benefit) (934) (26) Taxation payabe/(receivabe) Note RWT receivabe (6,627) (21,999) (6,627) (21,999) 16

19 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 5. Investment in PIP Fund The Company currenty has one investment, which is in the Pubic Infrastructure Partners LP (PIP Fund). The Company s fair vauation of its share of the PIP fund as at 31 March 2014 is $16,059,580 (2013: $11,343,102) which is recorded in the statement of financia position. The movement against the previous vauation is shown as a fair vaue movement through profit or oss increase of $494,382 (2013: $188,249). The foowing tabe is a reconciiation of the opening baance to the cosing baance for fair vaue measurement of the Investment in the PIP Fund: Investments Opening baance 11,343,102 10,515,286 Tota gains/(osses) recognised in profit or oss: - Fair vaue adjustments 2,063, ,236 - Foreign exchange movement (1,569,430) (140,987) 494, ,249 Capita distributions received - (1,149,457) Purchase of investments 4,222,096 1,789,024 Cosing baance 16,059,580 11,343,102 The purchase of investments reates to five capita cas made by the PIP Fund totaing $4,222,096, of which $871,955 was for a further investment in the Bendigo Heathcare Group accommodation faciity, $2,248,725 reated to the acquisition by the PIP Fund of the Hobsonvie Schoos, with the baance of $1,101,416 for PIP working capita. Tota gains or osses incuded in profit or oss for the year in the above tabe are presented in profit or oss as foows: Investments Tota gains/(osses) incuded in profit or oss for the year 494, ,249 Tota gains/(osses) for the year incuded in profit or oss for assets hed at the end of the reporting period 494, ,249 17

20 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 5. Investment in PIP Fund (continued) Key estimates and judgements Company poicy is to carry investments at fair vaue with subsequent movements in fair vaue recognised through profit or oss. As there is no quoted market price for the PIP Fund, the Company has adopted as fair vaue its proportiona share of the net assets attributabe to partners of the PIP Fund from the PIP Fund audited financia statements as at 31 March The PIP Fund itsef has made three investments as at 31 March Vauation techniques have been utiised by the PIP Fund in its audited financia statements to determine the fair vaue of the PIP Fund project investments. The vauation techniques utiised can incude 'the price of recent acquisition', 'market based earnings mutipes' or 'discounted cash fows'. The Genera Partner of the PIP Fund arranges vauations of the project investments as at the end of the reporting period by an independent vauation expert. The PIP Fund is subject to a performance fee which is payabe to the manager if certain conditions are met. The PIP fund has discosed this as a contingent iabiity in its 31 March 2014 financia statements. This contingency at a PIP Fund eve has the potentia to reduce the Company's investment in the PIP Fund if/when recognised, however based on eary estimates the Directors do not consider it materia to the 31 March 2014 financia statements. As at 31 March 2014 the vauation method used by the PIP Fund to vaue its operating project investments, (Mebourne Convention & Exhibition Centre, Bendigo Heathcare Group and Learning Infrastructure Partners LP) was the discounted cash fow method, which is appropriate for vauing a series of future cash fows to equity. Last year the PIP Fund's investment in Learning Infrastructure Partners LP (LIP LP) (Hobsonvie Schoos project) was under construction at baance date and the fair vaue was determined to be ni by the Directors. The other assets of the PIP Fund are primariy cash and cash equivaents. Their carrying vaue is considered to be fair vaue and the Company have taken up their share of the carrying vaue of these other assets. 18

21 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 6. Unrecognised deferred tax assets and iabiities Deferred tax assets have not been recognised in respect of the foowing items: Note Opening baance 763, ,150 Tax osses from underying Partnerships not yet recognised - 555,502 Utiisation of unrecognised tax osses 4 (382,841) - Tax oss not recognised 4-52,904 Cosing baance 31 March , ,556 Tax osses in New Zeaand do not expire, subject to sharehoder continuity rues being met. Deferred tax assets have not been recognised in respect of these items because it is uncertain when and to what extent future taxabe profit wi be avaiabe against which the Company can utiise the benefit. The gross amount of tax osses not recognised at 31 March 2014 is $1,359,696 (2013: $2,726,985). 7. Receivabes and prepayments Receivabes 52, Prepayments 25,073 25,073 77,073 25, Trade and other payabes Trade payabes Accruas 44,303 43,355 Reated party payabes 19,562 19,000 63,990 62, Cash and cash equivaents Note Ca deposits: Westpac Short Term Loan Faciity ANZ Bank New Zeaand Limited ANZ Bank New Zeaand Limited via CIP Cash Management Nominees Limited ,367 74,452 Short-term deposits - ANZ Bank New Zeaand Limited - 293,338 Cash and cash equivaents in the statement of cash fows 774, ,062 Ca deposits are hed with ANZ Bank New Zeaand Limited via CIP Cash Management Nominees Limited (see Note 13). The weighted average interest rate on ca deposits was 2.82% (2013: 2.58%). No Short-term deposits were hed directy with ANZ Bank New Zeaand Limited during the year however in 2013 the weighted average was 3.79%. 19

22 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 10. Share capita Number of Number of preference shares ordinary shares On issue at 31 March ,985,054,296 41,000,000 Issued during the year - - On issue at 31 March ,985,054,296 41,000,000 Number of Number of preference shares ordinary shares On issue at 31 March ,100,000,000 41,000,000 Redeemed during the year (114,945,704) - On issue at 31 March ,985,054,296 41,000,000 Each $1.00 share comprises one ordinary voting share with a ni issue price, and 100 non-voting redeemabe preference shares in New Zeaand Socia Infrastructure Fund at $0.01 each (a staped security). The ordinary shares are party paid to $0.42 per share. During the year $0.12 per share was caed, resuting in $0.42 per share being paid-up. The remaining $0.58 per share is sti to be caed. This represents $17,220,000 in paid up capita with $23,780,000 of uncaed capita. During the previous year $1,149,457 ($0.028 per share) was returned to sharehoders. The hoders of the ordinary shares are entited to receive dividends as decared from time to time and are entited to one vote per share at meetings of the Company. A ordinary shares rank equay with regard to the Company s residua assets. During the year there were no capita returns paid to sharehoders (2013: $1,149,457). No preference shares were redeemed during the year (2013: 114,945,704). During the year two dividends were paid to sharehoders totaing $520,367 (2013: $711,526) or 1.27 cents per share. This amount was equa to dividends received from the PIP Fund. 20

23 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 11. Reconciiation of profit after taxation to the net cash fow from operating activities Profit/(Loss) for the year 758, ,861 Movement in fair vaue of PIP Fund Investment (494,382) (188,249) 264, ,612 Movement in Working Capita Change in receivabes and prepayments 260 4,220 Change in income tax receivabe/payabe 15,372 35,026 Change in trade payabes and accruas 1,535 26,436 17,167 65,682 Net cash fow from/(to) operating activities 281, , Financia risk management Introduction and overview The Company has exposure to the foowing risks from its use of financia instruments: equity price risk credit risk interest rate risk iquidity risk This note presents information about the Company s exposure to each of the above risks, the Company s objectives, poicies and processes for measuring and managing risk, and the Company s management of capita. The risk discosures have been prepared on the basis of the Company s direct investment in the PIP Fund and not on a ook through basis for investments hed by the PIP Fund. Consequenty the discosure of risk in the notes does not fuy represent the true risk profie of the Company. Equity price risk Through the Limited Partnership Agreement (LPA), the Company has poicies in pace to mitigate equity price risk, particuary in the investments made by the PIP Fund. This incudes detaied anaysis by the PIP Fund of a prospective Pubic Private Partnership (PPP) investments. These types of minority investment hodings are, by their nature, ess iquid and subject to greater price risk than isted securities. The Company s exposure to price risk is affected by the PIP Fund's exposure to foreign exchange and vauation of its underying investments. 21

24 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 12. Financia risk management (continued) Credit risk Exposure to credit risk arises in the norma course of the Company s business from its oans and receivabes and bank baances. The Company does not require coatera in respect of financia assets. At reporting date there were no significant concentrations of credit risk. The Company invests its surpus funds in ca and short-term deposits with ANZ Bank New Zeaand Limited via CIP Cash Management Nominees Limited and aso directy with ANZ Bank New Zeaand Limited. The credit rating of ANZ Bank New Zeaand Limited is AA-. The maximum exposure to credit risk is represented by the carrying amount of each financia asset, in the statement of financia position (see Note 9). Interest rate risk Exposure to interest rate risk arises in the norma course of the Company s business from bank accounts and short-term deposits. The Company earns interest on bank accounts and short-term deposits. Management invest excess funds in short-term deposits to maximise interest revenue whist ensuring funds are avaiabe if required. Effective interest rates and repricing The ony interest bearing financia assets in the Company are bank baances (refer Note 9). At the end of the reporting period the effective interest rate for bank baances is 3.20% (2013: 2.30%). Bank baances reprice daiy and short-term deposits reprice within 3 months. Interest rate risk repricing anaysis Note Tota Non interest 6 months bearing or ess 2014 Cash and cash equivaents 9 774, ,645 Tota 774, ,645 Note Tota Non interest 6 months bearing or ess 2013 Cash and cash equivaents 9 368, ,062 Tota 368, ,062 22

25 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 12. Financia risk management (continued) Sensitivity anaysis In managing interest rate risk the Company aims to reduce the impact of short-term fuctuations on the Company s earnings. Changes in interest rates wi have an impact on profit. At 31 March 2014 it is estimated that a genera increase of 1.00% in interest rates on its cash and cash equivaents woud increase the Company s profit before income tax by approximatey $5,372 (2013: $5,455) over a one-year period. Liquidity risk Liquidity risk represents the Company s abiity to meet its contractua obigations. The Company evauates its iquidity requirements on an ongoing basis, and maintains sufficient cash to meet a obigations. Investments in unisted equity securities are, by their nature, ess iquid. The iquidity risk associated with future cas made by the PIP Fund wi be mitigated by the abiity of the entity to ca the remaining $0.58 per share sti to be caed (See note 10). The Company has an overdraft faciity of $500,000 in pace to better manage iquidity risk. Capita management The Company s capita incudes share capita and retained earnings. The Company s poicy is to maintain its capita structure in terms of the prospectus and repay capita as investments are reaised. As discosed in note 10, $0.42 per share has been paid on the $1.00 share capita. The remaining $0.58 wi be caed as required in accordance with the terms of the origina prospectus. The Company has the power to borrow, if a ca has been approved by the Board, to the extent of the aggregate amount of that ca and for a term not exceeding 90 days after the date on which the ca is due. The Company is not subject to any externay imposed capita requirements. The Company s poicies in respect of capita management and aocation are reviewed reguary by the Board of Directors. There have been no materia changes in the Company s management of capita during the period. 23

26 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 12. Financia risk management (continued) Cassification and fair vaues 2014 Assets Note Designated at Loans and Other Tota Fair fair vaue receivabes amortised carrying vaue through profit cost amount or oss Investment in PIP Fund 5 16,059, ,059,580 16,059,580 Cash and cash equivaents - 774, , ,882 Receivabes - 52,000-52,000 52,000 Tota assets 16,059, ,882-16,886,462 16,886,462 Liabiities Trade and other payabes ,687 19,687 19,687 Tota iabiities ,687 19,687 19, Assets Note Designated at Loans and Other Tota Fair fair vaue receivabes amortised carrying vaue through profit cost amount or oss Investment in PIP Fund 5 11,343, ,343,102 11,343,102 Cash and cash equivaents - 368, , ,062 Receivabes Tota assets 11,343, ,323-11,711,425 11,711,425 Liabiities Trade and other payabes ,101 19,101 19,101 Tota iabiities ,101 19,101 19,101 24

27 Annua Report - For the year ended 31 March 2014 Notes to the financia statements 12. Financia risk management (continued) Fair vaue hierarchy The tabe beow anayses financia instruments carried at fair vaue, by vauation method. The different eves have been defined as foows: Leve 1: quoted prices (unadjusted) in active markets for identica assets or iabiities. Leve 2: inputs other than quoted prices incuded within Leve 1 that are observabe for the asset or iabiity, either directy (i.e., as prices) or indirecty (i.e., derived from prices). Leve 3: inputs for the asset or iabiity that are not based on observabe market data (unobservabe inputs). 31 March 2014 Leve 1 Leve 2 Leve 3 Tota Investment in PIP Fund ,059,580 16,059, March 2013 Leve 1 Leve 2 Leve 3 Tota Investment in PIP Fund ,343,102 11,343, Reated parties (a) Identity of reated parties The Company has a reated party reationship with Craigs Investment Partners Limited, which owns 100% of NZSIF Management Limited, the Manager of New Zeaand Socia Infrastructure Fund Limited, and CIP Cash Management Nominees Limited. During the year the foowing directors of the Company were aso directors of Craigs Investment Partners Limited: Nei John Craig * Michae John Caird During the year the foowing director of the Company was aso a director of CIP Cash Management Nominees Limited: Nei John Craig * *Nei John Craig resigned as a director of New Zeaand Socia Infrastructure Fund Limited on 16 May David McCaum was appointed as his repacement on the same date. 25

28 New Zeaand Socia Infrastructure Fund Limited Notes to the financia statements 13. Reated parties (continued) (b) Transactions with reated parties During the period, New Zeaand Socia Infrastructure Fund Limited entered into the foowing transactions with reated parties: Management fees paid to NZSIF Management Limited totaed $116,965 (2013: $118,783). Craigs Investment Partners Limited paid certain expenses of New Zeaand Socia Infrastructure Fund Limited. As at 31 March 2014, no baance remained owing to Craigs Investment Partners Limited (2013: Ni). An on-ca bank account is hed with ANZ Bank New Zeaand Limited via CIP Cash Management Nominees Limited, which is a 100% subsidiary of Craigs Investment Partners Limited. CIP Cash Management Nominees Limited act as an agent. The credit rating of ANZ Nationa Bank Limited is AA- according to Standard & Poors. At 31 March 2014 the baance hed was $774,367 (2013: $74,452) (see Note 9). The terms and conditions of the transactions with key management personne and their reated parties were no more favourabe than those avaiabe, or which might reasonaby be expected to be avaiabe, on simiar transactions to nonkey management personne reated entities on an arm s ength basis. (c) Transactions with key management personne Directors fees (tota remuneration) 76,000 76,000 The baance of directors fees owing at 31 March 2014 was $19,000 (2013: $19,000). Director s interests The foowing directors or their associated entities hed shares in New Zeaand Socia Infrastructure Fund Limited at 31 March 2014: Kimmitt Rowand Eis 150,000 shares Nei John Craig 100,000 shares Michae John Caird 100,000 shares 14. Commitments The Company has commitments of $25,266,880 to the PIP fund for further investments as at 31 March 2014, which wi be met from cash reserves and further cas of capita. The PIP Fund investment period runs to 29 October 2015 uness extended by the Advisory Committee. The Directors of the New Zeaand Socia Infrastructure Fund Limited are of the opinion that it is ikey that the PIP Fund wi be fuy committed by that date. 15. Subsequent events On 20th June 2014 the Company received a distribution of $255,394 from the PIP Fund. There were no other materia subsequent events for the Company. 26

29 Annua Report - For the year ended 31 March 2014 Independent auditor s report To the sharehoders of New Zeaand Socia Infrastructure Fund Limited Report on the financia statements We have audited the accompanying financia statements of New Zeaand Socia Infrastructure Fund Limited (''the company'') on pages 10 to 26. The financia statements comprise the statement of financia position as at 31 March 2014, the statements of comprehensive income, changes in equity and cash fows for the year then ended, and a summary of significant accounting poicies and other expanatory information. Directors' responsibiity for the financia statements The directors are responsibe for the preparation of financia statements in accordance with generay accepted accounting practice in New Zeaand and Internationa Financia Reporting Standards that give a true and fair view of the matters to which they reate, and for such interna contro as the directors determine is necessary to enabe the preparation of financia statements that are free from materia misstatement whether due to fraud or error. Auditor s responsibiity Our responsibiity is to express an opinion on these financia statements based on our audit. We conducted our audit in accordance with Internationa Standards on Auditing (New Zeaand). Those standards require that we compy with ethica requirements and pan and perform the audit to obtain reasonabe assurance about whether the financia statements are free from materia misstatement. An audit invoves performing procedures to obtain audit evidence about the amounts and discosures in the financia statements. The procedures seected depend on the auditor s judgement, incuding the assessment of the risks of materia misstatement of the financia statements, whether due to fraud or error. In making those risk assessments, the auditor considers interna contro reevant to the company s preparation of the financia statements that give a true and fair view of the matters to which they reate in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's interna contro. An audit aso incudes evauating the appropriateness of accounting poicies used and the reasonabeness of accounting estimates, as we as evauating the presentation of the financia statements. We beieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our firm has aso provided other services to the company in reation to taxation services. Subject to certain restrictions, partners and empoyees of our firm may aso dea with the company on norma terms within the ordinary course of trading activities of the business of the company. These matters have not impaired our independence as auditor of the company. The firm has no other reationship with, or interest in, the company. Opinion In our opinion the financia statements on pages 10 to 26: compy with generay accepted accounting practice in New Zeaand; compy with Internationa Financia Reporting Standards; and give a true and fair view of the financia position of the company as at 31 March 2014 and of its financia performance and cash fows for the year then ended. Report on other ega and reguatory requirements In accordance with the requirements of sections 16(1)(d) and 16(1)(e) of the Financia Reporting Act 1993, we report that: we have obtained a the information and expanations that we have required; and in our opinion, proper accounting records have been kept by New Zeaand Socia Infrastructure Fund Limited as far as appears from our examination of those records. 25 June 2014 KPMG Tauranga 27

30 New Zeaand Socia Infrastructure Fund Limited Corporate governance & structure Structure NZSIF was estabished to provide the New Zeaand pubic with an opportunity to invest in the PIP Fund and thereby gain an exposure to New Zeaand and Austraian Socia Infrastructure PPP Assets. NZSIF is a imited partner in the PIP Fund, as shown beow: Manager NZSIF Management (CIP) Manager Morrison & Co PIP Limited New Zeaand Socia Infrastructure Fund Mebourne Conventions & Exhibition Centre (Austraia) New Zeaand Super Fund 22.95% 56.66% 19.29% 1.1% Pubic Infrastructure Partners Limited Partnership Fund (PIP Fund) 49.9% 97.5% 100% Hobsonvie Schoo PPP (New Zeaand) Other institutiona investors Bendigo (Austraia) in the form of dividends and returns of capita from the underying socia infrastructure assets. Dividends wi be paid to hoders of shares (with imputation credits, where avaiabe) and capita wi be returned via redemption of the redeemabe preference shares. Governance NZSIF wi retain a separate Board to ensure best practice corporate governance and that the interests of sharehoders are represented. Directors can be appointed by sharehoder ordinary resoution or by the Board to fi a vacancy. Any NZSIF director can be removed b y o r d i n a r y s h a r e h o d e r Morrison & Co Group Future Investments resoution. Craigs Investment Partners Limited whie it continues to hod a of the issued shares in the Manager, is entited to appoint up to one-haf of the directors of the Company. Directors are provided with reguar reporting. Directors receive detaied reports ahead o f e a c h q u a r t e r y b o a r d meeting. The investment manager presents to the Board each quarter. Each share hed by investors of NZSIF is a staped security and consists of 1 ordinary voting share (ni issue price) and 100 non-voting redeemabe preference shares of one cent each. NZSIF has 41 miion shares on issue at an issue price of $1.00 per share. Ordinary shares hed by investors in NZSIF confer norma voting rights. The redeemabe preference shares confer no voting rights. As a Limited Partner, NZSIF is required to make capita contributions to the PIP Fund, as caed by the Genera Partner. When such capita cas are made, we then make cas on NZSIF sharehoders up to the fuy paid vaue of the shares. NZSIF wi receive a pro-rata share of the income and capita returns from investments made by the PIP Fund. Where Investments by the PIP Fund are structured through a imited partnership, NZSIF wi receive distributions comprising gross income and aso returns of capita from the underying investments. Tax wi be paid by NZSIF and income distributed to investors through imputed dividends (where imputation credits are avaiabe) and capita wi be returned via redemption of the redeemabe preference shares. Where Investments by the PIP Fund are structured through a company, NZSIF wi receive distributions The Board wi report on the performance of NZSIF s PIP Fund investment to sharehoders semi-annuay. In addition, the Board wi review the capita adequacy of NZSIF, be responsibe for sharehoder reporting and set annua sharehoder meetings for NZSIF. Investment Management The investment management services for the PIP Fund are undertaken by the Investment Manager, Morrison & Co PIP Limited. Accordingy, other than rights provided to Limited Partners through representation on the Advisory Committee, neither NZSIF nor the NZSIF Management wi have contro over the investment management decisions associated with the PIP Fund. Administration NZSIF has engaged NZSIF Management Limited as the Administration Manager, to provide day-to-day administrative and management services, such as investment of unaocated or surpus cash, investor reations, the preparation of interim and annua reports and other sharehoder services that may be required from time to time. The Administration Manager is a whoy owned subsidiary of Craigs Investment Partners Limited. 28

31 Annua Report - For the year ended 31 March 2014 NZSIF Board The Board comprises four directors, incuding two independent directors, one of whom is Chairman, and two from Craigs Investment Partners. The Board is responsibe for monitoring NZSIF s investment in the PIP Fund, the reporting obigations of NZSIF, and monitoring the Administration Manager s performance. Chairman and Independent Director Kimmitt Rowand Eis BCA (Hons), BE (Hons) Kim is a widey experienced Chief Executive best known for his 13 years at the hem of Waste Management NZ Ltd, cuminating in the company's sae in His earier CEO appointments, dating back to 1978, covered a number of market sectors incuding heath, manufacturing, distribution, transport, property, agricuture and fashion. Kim is currenty a Director of FSF Management Company, Freightways, Port of Tauranga, Moa Group, Baance Agri-Nutrients, Envirowaste Services and Tasman Tanning. He aso a member of the Wanganui Coegiate Schoo Board of Trustees. Independent Director Ian Aexander Nichoson Fraser BE (Hons), Dist FIPENZ. Ian is a Distinguished Feow of the Institution of Professiona Engineers. He is a former Executive Director of Beca Group Ltd, and a former Managing Director of Beca Carter Hoings and Ferner Limited. He has a broad engineering background across the industria, eectricity, civi infrastructure and institutiona and commercia buiding sectors. Ian is currenty a Director and Deputy Chair of Transpower NZ Ltd. He is currenty Chair of the University of Canterbury Earthquake Engineering Centre. Ian is a former Director of Stevenson Group Ltd and a former Director and Deputy Chair of Mighty River Power Ltd, a former Trustee Board member of Weington and Weesey Coeges and a former Board member and President of the Association of Consuting Engineers of New Zeaand. 29

32 New Zeaand Socia Infrastructure Fund Limited Director Nei John Craig BAgCom Nei is the founding principa and Chair of Craigs Investment Partners, a company he has been instrumenta in buiding from a sma regionay-based share broking business in Whakatane to its current position as a eading fu service NZX Participant Firm. Nei has a broad experience in stock exchange istings, capita raisings and corporate activity for a wide range of companies. Nei is a Director of Pohutukawa Private Equity Limited and Pohutukawa Private Equity II Limited, as we as being Chair of NZX Listed Comvita Limited, Chair of Enterprise Anges Inc. and a Director of a number of privatey hed companies. Nei resigned as a director of New Zeaand Socia Infrastructure Fund Limited on 16 May David McCaum was appointed as his repacement on the same date. Director Michae John Caird BCom, LLB Mike has been a Director of Craigs Investment Partners since Mike s career in financia markets incudes 4 years as Head of Debt Capita Markets for Craigs Investment Partners, 11 years with ABN AMRO, during which he was Head of Acquisition and Leveraged Finance for Austraia and New Zeaand and Head of Goba Markets New Zeaand, Brierey Investments Limited for 10 years and Ernst & Young for four years. Mike has previousy been a Director of Hospita Car Parking Limited, McConne Property Limited, Mangawhai Deveopment Hodings Limited, AsiaPower Limited and Aetna Heath (New Zeaand) Limited. During his time at ABN AMRO, Mike was invoved in acquiring the Auckand District Heath Board car-parking concession and the Mangawhai township wastewater design, buid, finance, and operating concession, two eary PPP stye projects in New Zeaand. Mike is a director of the AMN Limited private group of companies invoved in gass services, Just Pants Ltd, Signa Corporation Ltd, and the two Pohutukawa Private Equity funds. 30