INDEX. Introduction. Own Result. Comparative Figures for Each District. Explanation of Key Financial Ratios used in the Farm Survey

FARM SURVEY 2013

INDEX Introduction Own Result Comparative Figures for Each District Explanation of Key Financial Ratios used in the Farm Survey Interpretation of Farm Survey Results and the Farming Business Farm Statistics The Business of Farming Tax Facts, Budget Snapshot and ACC 2013

5 June 2013 69 Tarbert Street PO Box 267 Alexandra 9340 Tel: 03 440 0100 Fax: 03 448 6329 enquiries@iclca.co.nz www.iclca.co.nz Introduction To The Farm Survey This year is our 28th Farm Survey of farm income and expenditure, calculated on a stock unit and per hectare basis. The objective of this survey is to highlight the financial and on-farm performance levels being achieved by other farmers within your farm class. To do this the figure used for comparison purposes is the farm surplus per stock unit. This is derived after deducting farm working expenses per stock unit from total farm income per stock unit. This effectively means that debt servicing, lease costs, plant replacement, tax and drawings do not influence the comparison. We would point out that all figures are based on total opening stock units (TSU), unless stated otherwise. For example, wool sales and sheep sales have been stated per opening sheep stock unit (SSU), and cattle sales are calculated on a per opening cattle stock unit (CSU). This year s survey is compiled on a GST exclusive basis. The return on assets is calculated by valuing land and buildings at $700/opening stock unit. The return on assets is the return on total assets as if a manager was employed. This is calculated by taking the farm surplus, deducting an allowance for wages of employing a manager, deducting depreciation and dividing this by the total opening value of land, buildings, stock and plant and farm related shares. We have changed some graphs and added a new graph to the farm survey this year. We have included a graph on the return on assets from the farming operations and a return on investment from land ownership and this is graphed for the last 8 years. The combined annual return is 10% per annum. We trust that this Farm Survey will provide you with a useful tool in your endeavours to achieve more profitable results from your farm business. Once again, we would appreciate any comments to assist us with providing more meaningful information in the future. Yours sincerely ICL Limited George Collier Janette Matheson Cam Dykes Simon Wearing Blair Pedofsky Director Director Director Director Director

Otago Flat Otago Flat 2012 2011 Average Average Average Average Top 20% Top 20% Area: (Hectares) 709 675 517 688 Opening Sheep Stock Units (SSU) 3,780 3,191 3,017 2,944 Opening Cattle Stock Units (CSU) 523 556 292 543 Total Opening Stock Units (TSU) 4,581 3,955 3,332 3,807 Stocking Rate / Per Hectare 6.5 5.9 6.4 5.5 Income Sheep Gross Profit/SSU 140.73 119.84 120.88 94.70 Wool Sales /SSU 29.75 26.52 17.90 17.18 Cattle Gross Profit/CSU 147.77 96.76 103.34 81.52 Deer Gross Profit/DSU 120.37 123.75 0.00 40.86 Crop/Grazing Profit/CGSU 145.08 139.61 145.11 107.71 Total Gross Profit 161.56 134.07 135.56 106.32 Plus Sundry Farm Income/ SU 7.67 5.46 6.29 3.98 Total Gross Income/ SU 169.23 139.53 141.85 110.31 Total Gross Income/ Hectare 1,099 820 908 607 Farm Expenses Wages 1.11 2.18 0.76 2.47 Shearing Costs 9.46 7.93 6.12 6.23 Contract Work & Plant Hire 5.94 4.65 5.25 3.63 Weed and Pest Control 2.54 1.71 1.24 1.64 Fertiliser 11.39 8.76 7.55 6.98 Seeds 2.30 1.77 1.92 1.96 Feed, Haymaking & Grazing 7.28 6.55 3.86 5.40 Animal Health & Breeding 5.40 5.26 6.15 4.47 Power 1.55 1.27 1.22 1.22 Freight 2.16 2.51 1.51 1.85 General Farm Expenses 1.35 1.57 1.02 0.92 Property R & M 5.79 5.67 2.95 4.04 Fencing 1.38 3.06 2.10 2.32 Vehicle and Fuel 8.17 7.80 8.42 7.83 Insurance 3.00 2.34 1.95 2.07 ACC Levies 0.18 0.98 0.93 0.57 Rates 1.42 1.84 1.49 1.64 Water Rates 1.50 1.26 1.39 1.25 General Admin & Phone 3.00 3.49 3.53 3.41 Total Farm Working Expenses/SU 73.30 69.27 58.92 58.80 Total Farm Working Expenses/Ha 476 409 377 323 Farm Surplus / (Deficit)/SU 95.93 70.25 82.94 51.51 Farm Surplus / (Deficit)/Hectare 623 411 531 284 Debt Servicing/SU Interest Paid 10.85 15.24 13.75 15.96 Pastoral Lease Costs 0.00 0.08 0.00 0.08 Lease Costs 0.50 1.33 1.78 1.83 Total Debt Servicing 11.32 16.64 15.53 17.87 Surplus after Debt Servicing/SU 84.61 53.61 67.41 33.63 Personal Expenses Personal Drawings 20.63 18.54 19.70 15.74 Personal Allowance 2.03 2.10 3.91 2.46 Life Insurance 0.79 1.30 1.15 1.36 Taxation 5.50 6.93 2.83 2.24 Funds Introduced (0.88) (4.39) (3.78) (6.73) Total Personal Expenses 28.06 23.66 23.82 15.08 Total Net Capital Expenditure 26.42 16.18 7.94 9.44 Business Result 30.13 13.78 35.65 9.12

Otago Flat Otago Flat Other Useful Indicators Return on Total Farm Assets 9.0% 6.7% 8.9% 4.4% Total Farm Working Expenses as a % of Gross Farm Income 43% 49% 41% 56% Debt Servicing (Interest & Lease Costs) as a % of Gross Income 7% 12% 11% 17% Magic Index 50% 62% 53% 78% Closing Debt per Stock Unit $176 $207 $163 $216 Total Closing Equity $3,422,389 $2,903,393 $1,684,330 $1,970,624 Closing Equity as a % of Assets 80% 77% 77% 68% Taxable Income pre family distributions $324,925 $190,964 $177,957 $97,160 Personal Drawings as % of Taxable Income 29% 39% 33% 62% Taxable Inc. as % of Gross Farm Income 43% 35% 42% 27% Plant Efficiency Ratio (GFI/BV of Plant) 4.1 6.2 9.1 5.5 Production Figures 2012 2011 Average Average Average Average Top 20% Top 20% Total Wool Kilos Sold 25,270 18,602 17,110 15,209, Net Average Price Per Kilo $4.41 $4.74 $3.36 $3.51 Wool Weight (KG/SSU) 6.77 5.63 5.40 4.78 Net Average Price Per Lamb $124.47 $115.95 $118.41 $105.69 Net Average Price per Hogget $147.66 $140.27 $128.77 $95.62 Net Average Price per Ewe $131.41 $114.48 $97.52 $97.88 Sheep Deaths or Missing (% opening sheep) 4.9% 7.7% 9.0% 8.0% Lambing % (Assuming 2th & Older Ewes have been Mated) 146% 135% 136% 122% Net Averge Price per Calf $710 $659 $617 $492 Net Averge Price per Heifer $1,106 $1,000 $867 $772 Net Averge Price per Steer $1,132 $1,119 $1,031 $961 Net Averge Price per Cow $895 $857 $0 $754 Cattle Deaths or Missing (% opening cattle) 2.9% 3.6% 1.8% 5.0% Calving % (Assuming all breeding Cows have been mated) 96% 85% 96% 78% Net Average Price per Hind $0 $0 $0 $251 Net Average Price per Fawn $353 $408 $0 $234 Net Average Price per Stag $378 $0 $0 $540 Deer Deaths or Missing (% opening deer) 0.3% 2.0% 0.0% 4.2% Fawning % (assuming yearlings mated) 98% 94% 0% 59%

Southland West Otago Southland West Otago 2012 2011 Average Average Average Average Top 20% Top 20% Area: (Hectares) 590 517 674 541 Opening Sheep Stock Units (SSU) 4,742 4,696 6,257 4,677 Opening Cattle Stock Units (CSU) 549 568 508 691 Total Opening Stock Units (TSU) 5,878 5,547 6,921 5,847 Stocking Rate / Per Hectare 10.0 10.7 10.3 10.8 Income Sheep Gross Profit/SSU 121.15 110.54 129.58 110.90 Wool Sales /SSU 22.74 20.70 23.73 20.17 Cattle Gross Profit/CSU 91.31 115.48 92.62 94.94 Deer Gross Profit/DSU 99.27 99.27 0.00 0.00 Crop/Grazing Profit/CGSU 145.05 144.95 195.84 127.48 Total Gross Profit 132.11 126.17 152.41 127.36 Plus Sundry Farm Income/ SU 11.18 5.46 0.91 2.85 Total Gross Income/ SU 143.29 131.63 153.33 130.21 Total Gross Income/ Hectare 1,433 1,408 1,579 1,406 Farm Expenses Wages 6.65 9.24 7.68 8.23 Shearing costs 4.61 6.46 7.82 7.79 Contract Work & Plant Hire 0.60 4.29 0.77 3.56 Weed and Pest Control 0.94 1.38 1.53 1.62 Fertiliser 13.64 15.64 12.05 11.54 Seeds 1.09 1.44 1.89 1.68 Feed, Haymaking & Grazing 4.20 2.71 3.43 3.25 Animal Health & Breeding 4.60 5.15 5.25 4.51 Power 0.43 0.61 0.48 0.57 Freight 0.27 1.17 1.50 1.56 General Farm 1.40 1.02 0.78 0.87 Property R & M 3.71 6.50 3.12 5.10 Fencing 1.82 3.01 2.99 3.61 Vehicle and Fuel 6.22 7.52 5.37 6.57 Insurance 1.60 1.65 0.93 1.37 ACC Levies 0.49 0.71 0.87 0.57 Rates 2.11 2.27 1.73 2.10 Water Rates 0.00 0.09 0.00 0.06 General Admin & Phone 3.22 3.53 2.40 3.45 Total Farm Working Expenses/SU 57.57 74.39 59.67 66.72 Total Farm Working Expenses/Ha 576 796 615 720 Farm Surplus / (Deficit)/SU 85.72 57.24 93.65 63.49 Farm Surplus / (Deficit)/Hectare 857 612 964 686 Debt Servicing/SU Interest Paid 15.08 16.50 21.95 19.56 Pastoral Lease Costs 0.00 0.00 0.00 0.00 Lease Costs 2.00 0.85 0.00 0.32 Total Debt Servicing 17.08 17.35 21.95 19.88 Surplus after Debt Servicing/SU 68.64 39.89 71.70 43.62 Personal Expenses Personal Drawings 12.51 12.84 11.66 11.77 Personal Allowance 2.68 2.27 0.98 1.44 Life Insurance 1.07 0.90 0.47 0.65 Taxation 22.52 12.14 11.94 3.63 Funds Introduced (5.49) (3.68) 0.00 (1.64) Total Personal Expenses 33.29 24.46 25.05 15.85 Total Net Capital Expenditure 20.00 15.47 4.60 5.28 Total Gross Cash Expenditure 127.94 131.67 111.28 107.73 Business Result 15.35 (0.04) 42.05 22.48

Southland West Otago Southland West Otago Other Useful Indicators Return on Total Farm Assets 9.2% 5.5% 12.1% 7.0% Total Farm Working Expenses as a % of Gross Farm Income 40% 59% 39% 53% Debt Servicing (Interest & Lease Costs) as a % of Gross Income 12% 13% 14% 16% Magic Index 52% 72% 53% 68% Closing Debt per Stock Unit $175 $238 $286 $268 Total Closing Equity $3,936,213 $3,398,673 $3,461,903 $2,710,746 Closing Equity as a % of Assets 80% 73% 59% 62% Taxable Income pre family distributions $333,246 $179,231 $470,638 $217,555 Personal Drawings as % of Taxable Income 20% 29% 17% 31% Taxable Income as % of Gross Farm Income 41% 26% 43% 28% Plant Efficiency Ratio (GFI/BV of Plant) 4.9 4.8 8.0 6.4 Production Figures 2012 2011 Average Average Average Average Top 20% Top 20% Total Wool Kilos Sold 32,185 23,303 37,980 23,736 Net Average Price Per Kilo $4.34 $4.31 $3.79 $4.06 Wool Weight (KG/SSU) 5.27 4.83 6.22 4.98 Net Average Price per Lamb $130.91 $113.68 $114.78 $109.88 Net Average Price per Hogget $0.00 $118.34 $0.00 $99.55 Net Average Price per Ewe $111.02 $118.48 $106.76 $101.81 Sheep Deaths or Missing (% opening sheep) 6.3% 7.1% 6.5% 6.1% Lambing % (assuming 2th & Older Ewes have been Mated) 140% 133% 148% 133% Net Averge Price per Calf $550 $732 $521 $576 Net Averge Price per Heifer $906 $1,046 $689 $928 Net Averge Price per Steer $1,022 $1,027 $960 $1,095 Net Averge Price per Cow $824 $797 $755 $812 Cattle Deaths or Missing (% opening cattle) 5.7% 8.3% 4.8% 3.7% Calving % (Assuming all breeding Cows have been mated) 98% 97% 98% 104% Net Average Price per Hind $320 $315 $0 $0 Net Average Price per Fawn $272 $268 $0 $0 Net Average Price per Stag $392 $385 $0 $0 Deer Deaths or Missing (% opening deer) 0.4% 0.4% 0.0% 0.0% Fawning % (assuming yearlings mated) 98% 98$ 0% 0%

Merino High Country Merino High Country 2012 2011 Average Average Average Average Top 20% Top 20% Area: (Hectares) 3,867 5,353 8,639 5,457 Opening Sheep Stock Units (SSU) 6,144 6,476 7,557 6,385 Opening Cattle Stock Units (CSU) 597 1,136 456 960 Total Opening Stock Units (TSU) 6,867 7,879 8,013 7,665 Stocking Rate / Per Hectare 1.8 1.5 0.9 1.4 Income Sheep Gross Profit/SSU 75.69 52.75 53.11 41.68 Wool Sales /SSU 67.49 63.13 65.59 48.16 Cattle Gross Profit/CSU 72.40 62.55 40.22 56.39 Deer Gross Profit/DSU 0.00 110.64 0.00 0.00 Crop/Grazing Profit/CGSU 145.00 145.07 0.00 0.00 Total Gross Profit 122.25 104.22 114.88 87.44 Plus Sundry Farm Income/ SU 5.36 2.35 2.60 2.06 Total Gross Income/ SU 143.72 110.28 117.48 89.50 Total Gross Income/ Hectare 259 165 106 125 Farm Expenses Wages 3.92 5.08 4.44 4.97 Shearing Costs 9.13 9.68 10.45 8.58 Contract Work & Plant Hire 3.66 3.12 4.25 2.85 Weed and Pest Control 2.45 3.20 1.43 2.92 Fertiliser 6.95 6.78 4.94 5.44 Seeds 1.23 1.30 1.60 1.26 Feed, Haymaking & Grazing 4.14 4.73 4.66 4.73 Animal Health & Breeding 4.64 4.37 3.86 4.35 Power 1.28 1.14 1.13 0.96 Freight 0.92 1.17 1.63 1.19 General Farm Expenses 0.86 1.08 0.79 0.97 Property R & M 5.73 4.18 3.43 3.15 Fencing 2.52 1.53 1.26 1.24 Vehicle and Fuel 4.37 5.41 5.65 5.43 Insurance 1.34 1.47 1.60 1.50 ACC Levies 0.69 0.56 0.40 0.32 Rates 1.54 1.39 1.49 1.39 Water Rates 0.21 0.35 0.37 0.38 General Admin & Phone 3.24 3.37 3.03 2.98 Total Farm Working Expenses/SU 57.95 58.35 55.71 53.37 Total Farm Working Expenses/Ha 104 88 50 75 Farm Surplus / (Deficit)/SU 85.77 51.93 61.77 36.12 Farm Surplus / (Deficit)/Hectare 155 77 56 50 Debt Servicing/SU Interest Paid 14.76 10.63 21.40 14.10 Pastoral Lease Costs 0.00 0.34 0.88 0.40 Lease Costs 1.52 1.60 1.04 1.00 Total Debt Servicing 16.27 12.57 23.32 15.49 Surplus after Debt Servicing/SU 69.49 39.35 38.45 20.63 Personal Expenses Personal Drawings 10.76 9.74 9.10 8.62 Personal Allowance 1.84 1.61 1.40 1.36 Life Insurance 0.75 0.86 0.57 0.95 Taxation 9.08 4.41 4.51 1.83 Funds Introduced (1.46) (1.23) (2.41) (1.33) Total Personal Expenses 17.30 12.93 13.17 11.43 Total Net Capital Expenditure 10.78 7.82 7.87 7.08 Total Gross Cash Expenditure 102.31 91,67 100.07 87.37 Business Result 41.41 18.61 17.41 2.13

Merino High Country Merino High Country Other Useful Indicators Return on Total Farm Assets 10.9% 5.8% 6.1% 2.8% Total Farm Working Expenses as a % of Gross Farm Income 40% 54% 47% 60% Debt Servicing (Interest & Lease Costs) as a % of Gross Income 14% 13% 22% 18% Magic Index 53% 66% 69% 79% Closing Debt per Stock Unit $182 $138 $149 $164 Total Closing Equity $4,973,674 $3,308,901 $4,599,281 $4,181,999 Closing Equity as a % of Assets 79% 84% 80% 77% Taxable Income pre family distributions $414,194 $244,569 $63,867 $68,902 Personal Drawings as % of Taxable Income 15% 32% 32% 64% Taxable Income as % of Gross Farm Income 42% 30% 31% 18% Plant Efficiency Ratio (GFI/BV of Plant) 6.0 6.7 4.8 5.9 Production Figures 2012 2011 Average Average Average Average Top 20% Top 20% Total Wool Kilos Sold 33,782 31,943 36,449 27,767 Net Average Price Per Kilo $12.51 $12.46 $13.72 $10.95 Wool Weight (KG/SSU) 5.52 5.08 5.21 4.48 Net Average Price per Lamb $113.92 $104.26 $100.08 $96.83 Net Average Price per Hogget $144.46 $131.05 $90.98 $89.91 Net Average Price per Ewe $79.09 $81.41 $89.88 $81.06 Sheep Deaths or Missing (% opening sheep) 5.4% 7.2% 5.0% 6.6% Lambing % (Assuming 2th & Older Ewes have been Mated) 95% 80% 84% 78% Net Averge Price per Calf $391 $502 $604 $519 Net Averge Price per Heifer $997 $963 $918 $884 Net Averge Price per Steer $963 $1,126 $1,027 $954 Net Averge Price per Cow $715 $761 $744 $791 Cattle Deaths or Missing (% opening cattle) 2.1% 4.9% 3.5% 3.7% Calving % (Assuming all breeding Cows have been mated) 91% 90% 81% 91% Net Average Price per Hind $0 $418 $0 $0 Net Average Price per Fawn $0 $0 $0 $0 Net Average Price per Stag $0 $0 $0 $0 Deer Deaths or Missing (% opening deer) 0.0% 3.7% 0.0% 0.0% Fawning % (assuming yearlings mated) 0% 85% 0% 0%

Hill Country Hill Country 2012 2011 Average Average Average Average Top 20% Top 20% Area: (Hectares) 2,934 4,885 2,871 4,693 Opening Sheep Stock Units (SSU) 5,752 7,678 4,202 7,393 Opening Cattle Stock Units (CSU) 1,487 3,028 1,690 2,918 Total Opening Stock Units (TSU) 7,326 11,614 7,712 11,122 Stocking Rate / Per Hectare 2.5 2.4 2.7 2.4 Income Total Stock Purchases 0.00 0.00 Sheep Gross Profit/SSU 120.66 95.30 115.26 89.04 Wool Sales /SSU 31.31 29.15 24.57 21.86 Cattle Gross Profit/CSU 77.04 67.58 57.95 61.37 Deer Gross Profit/DSU 87.40 99.48 69.44 68.96 Crop/Grazing Profit/CGSU 144.24 145.17 0.00 0.00 Total Gross Profit 136.66 109.43 124.44 99.19 Plus Sundry Farm Income/ SU 3.67 2.91 2.74 2.97 Total Gross Income/ SU 140.33 112.34 127.17 102.16 Total Gross Income/ Hectare 351 270 343 245 Farm Expenses Wages 2.35 5.37 1.31 5.13 Shearing Costs 8.27 8.05 6.72 6.97 Contract Work & Plant Hire 2.45 2.49 2.04 2.24 Weed and Pest Control 3.35 3.06 3.12 2.34 Fertiliser 10.32 9.51 9.18 9.02 Seeds 1.96 1.84 1.33 1.87 Feed, Haymaking & Grazing 3.59 3.78 6.99 4.92 Animal Health & Breeding 4.58 4.66 4.29 3.97 Power 1.06 0.93 0.85 0.95 Freight 1.86 1.47 1.59 1.32 General Farm Expenses 1.11 1.15 0.98 1.05 Property R & M 3.31 3.77 4.09 3.43 Fencing 0.75 1.99 0.90 1.55 Vehicle and Fuel 5.29 5.52 5.43 5.01 Insurance 1.61 1.42 1.31 1.33 ACC Levies 0.82 0.54 0.60 0.46 Rates 1.69 1.45 1.73 1.36 Water Rates 0.50 0.35 0.24 0.30 General Admin & Phone 2.32 2.20 2.42 2.37 Total Farm Working Expenses/SU 55.43 57.18 53.28 53.72 Total Farm Working Expenses/Ha 139 137 144 129 Farm Surplus / (Deficit)/SU 84.90 55.16 73.90 48.44 Farm Surplus / (Deficit)/Hectare 212 132 200 116 Debt Servicing/SU Interest Paid 5.55 9.19 2.99 9.07 Pastoral Lease Costs 0.20 0.12 0.00 0.11 Lease Costs 1.43 0.89 1.37 0.76 Total Debt Servicing 7.00 10.16 4.36 9.94 Surplus after Debt Servicing/SU 77.90 45.01 69.53 38.51 Personal Expenses Personal Drawings 13.28 6.69 13.14 9.10 Personal Allowance 1.30 1.24 2.63 1.60 Life Insurance 1.26 0.72 0.57 0.56 Taxation 15.74 6.99 11.36 4.50 Funds Introduced (0.17) (0.75) (2.17) (2.80) Total Personal Expenses 25.85 14.38 25.54 12.96 Total Net Capital Expenditure 12.55 8.77 8.85 7.48 Total Gross Cash Expenditure 100.83 90.49 92.04 84.30 Business Result 39.50 21.86 35.14 17.85

Hill Country Hill Country Other Useful Indicators Return on Total Farm Assets 10.0% 5.8% 8.0% 4.8% Total Farm Working Expenses as a % of Gross Farm Income 40% 52% 41% 54% Debt Servicing (Interest & Lease Costs) as a % of Gross Income 5% 10% 4% 10% Magic Index 45% 62% 45% 65% Closing Debt per Stock Unit $75 $118 $35 $121 Total Closing Equity $6,161,372 $9,230,233 $5,305,165 $6,712,091 Closing Equity as a % of Assets 92% 87$ 95% 83% Taxable Income pre family distributions $516,894 $369,833 $456,566 $283,503 Personal Drawings as % of Taxable Income 20% 25% 22% 29% Taxable Income as % of Gross Farm Income 51% 33% 48% 30% Plant Efficiency Ratio (GFI/BV of Plant) 5.9 6.6 5.5 5.3 Production Figures 2012 2011 Average Average Average Average Top 20% Top 20% Total Wool Kilos Sold 32,835 38,708 21,521 34,267 Net Average Price Per Kilo $5.50 $5.55 $4.35 $4.43 Wool Weight (KG/SSU) 5.62 5.09 5.21 4.68 Net Average Price per Lamb $112.92 $108.17 $109.30 $104.12 Net Average Price per Hogget $149.70 $144.69 $99.50 $97.67 Net Average Price per Ewe $112.39 $102.70 $114.28 $100.68 Sheep Deaths or Missing (% opening sheep) 5.1% 7.0% 5.6% 6.5% Lambing % (Assuming 2th & Older Ewes have been Mated) 137% 118% 130% 115% Net Averge Price per Calf $529 $544 $568 $542 Net Averge Price per Heifer $1,018 $973 $864 $802 Net Averge Price per Steer $1,154 $1,091 $1,109 $978 Net Averge Price per Cow $918 $830 $834 $735 Cattle Deaths or Missing (% opening cattle) 1.8% 3.4% 3.8% 4.3% Calving % (Assuming all breeding Cows have been mated) 94% 92% 92% 91% Net Average Price per Hind $0 $408 $433 $387 Net Average Price per Fawn $0 $353 $0 $350 Net Average Price per Stag $591 $0 $411 $0 Deer Deaths or Missing (% opening deer) 3.5% 4.8% 0.6% 4.0% Fawning % (assuming yearlings mated) 98% 91% 97% 83%

Explanation of Key Financial Ratios Used in the Farm Survey The following financial benchmarks are in no particular order. The benchmarks have been derived from the performance of the top 20% of clients. They indicate the key financial drivers which are leading to a very sound financial performance for these top 20% of farmers on an ongoing basis. There are top farmers who can go outside one of the financial benchmarks and still generate healthy financial performances on an ongoing basis however breaking two key benchmarks over a reasonable period, could severely challenge even the top farmers ongoing viability. The key point with ratios is to analyse them over a number of years to identify the trends. Key Financial Ratios Total Farm Working Expenses As A Percentage Of Gross Farm Income This is a measure of the amount of farm related expenses required to generate gross income (farm working expenses excludes interest, plant replacement and depreciation). The benchmark in this area is 50-55% of GFI, unless development expenditure is being undertaken. For example: Gross Farm Income/SU $150 $120 *Farm Working Expenses/SU $75 $60 Cash Farm Surplus/Stock Unit $75 $60 *Farming Working Expense to GFI = 50% Debt Servicing As A Percentage Of Gross Farm Income (Debt servicing represents interest and lease costs). The benchmark in this area is a maximum of 20% of gross farm income. A debt servicing percentage to GFI below 15% is really the benchmark required going forward, given lower interest rates, especially if farm working expenses to gross farm income are above 55%. Magic Index This is a combination of farm working expenses and debt servicing (including rental payments). Ideally this ratio would not exceed 75%. For farming business that has a gross income in excess of $800,000, then this ratio could be as high as 80%. The lower the ratio the better the magic in terms of profitability and cash farm surplus. The amount left after farm working expenses and debt servicing is required for personal drawings, taxation, plant replacement, life insurance and cash surplus or principal repayment Return On Total Farm Assets This is the interest that would be earned on the total farm assets if a manager was employed. This is calculated by taking the farm surplus after deducting farm working expenses, deducting an allowance for wages of employing a manager, ($30,000 to $100,000 depending on property size), deducting depreciation

of plant and machinery and dividing this figure by the estimated value of the total assets employed re land, buildings, stock and plant and farm related shares. All land and buildings, including leased land, was estimated to have a value of $700/stock unit (1 July 2011). Stock and plant were taken at opening book value. Gross Farm Income To Book Value Of Plant & Machinery Assets This ratio measures the amount of capital tied up in plant and machinery at year end, compared to the gross income generated. This ratio for sustainable profitability and efficiency needs to be for: Hill Country Sheep & Beef 4.5 plus Downlands/Flat Sheep & Beef 4.0 plus Cropping 2.75 plus The benchmark in this area should be in excess of two. Where the ratio is below two, or even up to three, we find it means that either there is insufficient gross farm income or there is an over capitalisation of plant and machinery on the property. Sometimes it is a combination of the two, and sooner or later it will mean that too much of the gross and net income is tied up in plant replacement. For those farmers with ratios below two, it maybe important to consider that even though good vehicles and plant are the engine room of New Zealand agriculture, you need to have a handle on the true annual costs of vehicle and plant depreciation and replacement, and the relativity these costs have to your gross farm income and your cost of production. To get a feel for the true annual cost to maintain plant and machinery at the same basic quality and productive capacity at years end, as it was at the beginning of the year, then a farming business should multiply the book value of their vehicles and plant by 15% to 17.5%. Another way of measuring the ratio is to look at the depreciation charge of vehicles compared to gross income. A depreciation charge above 8% of gross income would tend to indicate either there is insufficient gross farm income or there is an over-capitalisation of plant and machinery. Key Production Ratios Lambing, Calving & Fawning Percentage Calculations The lambing percentage for ewes is calculated on the basis of lambs sold and retained, divided by total ewes wintered. If two-tooth ewes are not mated this would therefore, reduce the lambing percentage and if ewe hoggets are mated, this would increase the lambing percentage. Calving percentage for cows is calculated on the basis of calves sold and retained, divided by cows wintered. If rising two year heifers are mated this would increase the calving percentage. Fawning percentage for hinds is calculated on the basis of all hinds wintered including the rising two year (yearling) hinds. Crop Grazing Income Where crop and grazing income is part of the farming system, we have included crop units to give a per crop unit measure of income. This also ensures other measures based on total stock units are more accurate.

Interpretation of Farm Survey Results The following are some observations of the results from the 2012 Accounting Farm Survey. We have combined all the farm surveys to come up with an overall average result. Income is the highest ever recorded, $120.99/su, compared to $103.3/su last year (+17%). Farm working expenses continued to increase from $56.29/su to $62.52/su, (+11%). Farm surplus before debt servicing increased from $47.08/su to $58.48/su (+24%). The average debt loading per stock unit reduced to $160. For the average 7,800 stock unit property, debt loading is $1,248,000. Debt loading for the top 20% of properties is noticeably lower at $144/su. The magic index for the top 20% of farmers is 50% and the average is 64%, both well inside the magic index benchmark of 75% (combination of debt servicing and farm expenses combined), to gross farm income. Average Average Difference Top 20% Farm Performance Top 20% Gross Farm Income/Stock Unit $149.45 $120.99 + $28.46 Farm Working Expenses/Stock Unit $61.23 $62.52 - $1.29 ------------ ------------ ------------ Farm Surplus/Stock Unit $88.22 $58.47 + $29.75 Farm Surplus For Average 7,800 SU Property $688,000 $456,000 + $232,000 ------------ ------------ ------------ Final Business Result $274,000 $129,000 + $145,000 Debt Loading & Ratios Return On Total Assets 9.9% 6% + 3.9% Debt Loading Per Starting Stock Unit $144 $160 - $16 Debt & Lease Servicing To GFI% 9% 12% - 3% Farm Working Expenses to GFI% 41% 52% - 11% Magic Index ------------ ------------ ------------ (Debt Servicing & FWE/GFI%) 50% 64% - 14% ------------ ------------ ------------ The 2012 year was a stand out year. Characteristics Of Top Quartile Farmers Earn more per stock unit from higher production levels (over 20% more) and high value for most classes of livestock and wool sold. Spend the same or less per stock unit and therefore have much better efficiencies of production. Debt servicing and debt loading is lower per stock unit. Once again top quartile farmers are rapidly repaying debt and some are now debt free. Achieve a farm surplus 50% higher than the average, (before debt servicing). The final business result after all income and expenses is over twice the average. Capital expenditure has been higher and this is reflected in a higher investment in plant and machinery relative to Gross Income.

FARM STATISTICS 2013

Debt Servicing & Farm Working Expenses as % of total Gross Farm Income 100% 80% 60% 40% 20% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-20% Debt Servicing Farm working expenses Surplus after FWE & Debt Servicing

Business Results 2001-2012 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 -$200,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross Income Farm Surplus Surplus After Debt Servicing Business Result

Assets, Equity and Debt 2001-2012 1000 900 800 700 600 $/SU 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Assets Equity Debt

Lambing % and Lamb Prices 1993-2012 140.00 120.00 100.00 80.00 60.00 40.00 20.00-1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Net Average Price per Lamb Lambing Percentage Achieved

ROI & Increase in Land Value 35 16.0 30 14.0 25 12.0 10.0 20 8.0 % Increase 15 6.0 10 4.0 5 2.0 0 2005 2006 2007 2008 2009 2010 2011 2012-2005 2006 2007 2008 2009 2010 2011 2012 Increase in Land value Return on Investment

Wool Price 1993-2012 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00-1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Avg Net Price per Kilo of Wool

The Business of Farming The 2012/2013 season has been a mixed bag with late but good Spring growth, a drier Summer and much lower sheep meat and crossbred wool returns. The fine wool industry has some stability with an offering of wool and meat contracts. With the lower volume of lambs expected this coming season, supply will be tight and sheep meat returns should improve. The dairy industry seems to be going from strength to strength. Irrigation Nutrient Caps & the National Fresh Water Standards The regulations associated with irrigation and fresh water management are changing rapidly. The Government s policy around National Fresh Water Standards is now being delivered through Regional Council plans nationally. The significance of this is reflected in the recent Otago Regional Council Plan change 6a. This plan change limits water run-off (including irrigation) and places limits on nutrient leaching. The implications to irrigated farming systems are significant. With little ability for water run-off, most wild flood and some border dyke irrigation will have to be converted to spray irrigation. The cap on nutrient leaching will effectively impose a production cap limiting the amount and type of fertilizer able to be applied, and may in some cases limit the type of farming system able to be undertaken. In addition to this, irrigation mining rights will come to an end in 2021 and irrigation consents will need to be applied for, which will require efficient methods of water application (generally spray irrigation). The combined effects of the National Fresh Water Standards and mining privileges coming to an end in 2021 will result in large scale changes to many existing irrigation systems on farm. To justify a change to more efficient irrigation systems, (generally spray irrigation) will in most cases require significant capital expenditure and increased on-going irrigation costs (pumping etc). To justify the extra capital investment and on-going costs will require in some situations a more intensive farming system or a change in land use. The implications for many Central Otago irrigated farming systems will be very significant. Return on Farm Operating Business, Return on Land Investment 1. Farming businesses are made of up two different businesses - the farming operating business, and the land ownership business. 2. The land ownership business is a hidden return and is reflected in capital gains over time. The returns from the land ownership business over time can often be higher than the return from the farming business. 3. We have graphed the returns generated from the farm operating business compared to the land ownership business for the last 8 years and added this into our statistics. This has leapt up over the last couple of years to around 6%, but on average has been 2% per annum. 4. The average return for the farm operating business has been 2%/annum. 5. The average return for the land ownership business has been 8%/annum. 6. The combined average return from the farm operating business and the land ownership business has been 10% for the last 8 years.

Tax Facts Individual Basic Rates For Year Ended 31 March 2013 and 2014 Level Of Income $0 - $14,000 $14,001 - $48,000 $48,001 - $70,000 $70,001 and higher Annual Tax Rates 10.5% 17.5% 30% 33% Company - Resident and Non-Resident 28% Flat Rate Trust - On trustee s taxable income 33% - Beneficiaries taxed at own rates (excepting beneficiaries under 16 years are taxed at trustees tax rate of 33%). Provisional Tax, Use Of Money Interest & New Provisional Tax Payment Dates You should be aware that if this year s taxable income is expected to be greater than last year then you may be liable for use of money interest (at 8.4%) on the shortfall between the actual tax payable and the Provisional Tax paid. Remember that your Provisional Tax instalment can be revised at any time up to the third instalment date (28 July for those with a 30 June balance date). The Provisional Tax dates are the fifth, ninth and thirteenth month after balance date. For a 30 June balance date these dates are: 28 November, 28 March, 28 July. Income & Tax Thresholds For Use Of Money Interest Charges To Apply For Year Ended 31 March 2013 Individual Company Trust Income Threshold Level $ 179,030 $ 8,928 $ 7,575 Tax Payable $ 50,000 $ 2,500 $ 2,500 Late Payment Tax Penalties If tax is not paid on time (excluding provisional tax payments) the following apply: an initial late payment fee if one day late 1% if still unpaid 6 days later 4% for every month late 1% / month Student Loan & Allowances The overall interest rate on student loans is 6.4% for the 2012 and 2013 year. This is subject to a full or partial write-off depending on your earnings or student status. Student Loan Interest The overall interest rate on student loans is 6.4% for the 2012 and 2013 year. This is subject to a full or partial write-off depending on your earnings or student status. The late payment interest rate for 2013 is 7.89%. Student Loan & Allowance Changes From January 2013 Student allowances will not be available beyond the first four years of study. From 1 April 2013 The loan repayment rate (for borrowers earning over the repayment threshold) will increase from 10% to 12% of income. The voluntary repayment bonus (a 10% discount on voluntary payments) has been scrapped. From 1 April 2014 The definition of income for student loan repayment purposes will be broadened to include other types of income.

If you are going overseas you can apply for a one year repayment holiday for your student loan. You must apply before leaving or within 183 days of being overseas. You must also provide an alternative contact person in New Zealand. The parental income threshold for student allowances will remain frozen until 2016 and the Government will implement an information match system between IRD and New Zealand Customs Service to identify student loan borrowers in serious default. Changes are designed to ensure the longevity of our Student Loan Scheme and provide better value for New Zealanders. Student Allowance Entitlements Entitlements for the 2013/ 2014 Year for students who are single with no children Joint Parental Taxable Income (Not taking into account any tax losses brought forward) Full Entitlement Per Week (Net of Tax) For 18 & Over (Some 16-17 year olds are also entitled to this). At Home Away From Home $137.47 (Net) $171.84 (Net) Up To $55,027.96 For 24 Years & Over At Home Away From Home $164.96 (Net) $ 206.21 (Net) Abated Back To: Nil Entitlement - Living At Home $ 83,622 - Away From Home $ 90,771 Exceptions: (1) For each additional child studying aged 16-23, this increases by $7,000. (2) $3,400 if parents live in separate houses. Standard student weekly income limit (work while studying) is $208 gross/week. Any student income over this amount reduces the student allowance by an equivalent amount. Non-taxable allowance - accommodation benefit (up to $40/week - varies by region). Student allowance not available to post-graduate students. Student Allowance - Joint Parental Taxable Income Definition (Same taxable income calculation as used for Working For Families) Therefore, take taxable income and add back: (i) Any business losses, ie sole trader or partnership. (ii) Income held in a closely held company, ie profits that have been kept in the company where the parents are shareholders. Unfortunately the legislation refers to companies income as being the net income of the company for the companies accounting year. This does not mean taxable income, the losses brought forward would not come into the calculation. (iii) Trust income not distributed to beneficiaries where the parents are Settlors of the trust. The definition of Settlor includes anyone who transfers assets, income or money to the trust. (iv) Fringe benefits received, eg motor vehicles, life insurance. (v) PIE income. (vi) Income equalisation scheme deposits. (vii) Other payments received greater than $5k which are from any other person/entity and used for the students day to day living expenses. (viii) Amounts received from pensions and annuities although not always taxable income a number of these need to be added into the calculation if any were paid out during the year. The one that may be relevant is a life insurance policy or private superannuation fund paid out. (ix) Tax exempt income. Working for Families Tax Credits The family tax credit (previously called Family Support) is an entitlement to assistance based on your income levels and the number of children in your care. The full entitlement in the 2012/2013 year is: Eldest Dependent Child 16 & Over $ 5,303 Under 16 $ 4,822 Additional Children 16 & Over $ 4,748 13,14 or 15 $ 3,822 Under 13 $ 3,351 Abatement Threshold From $ 36,350

In-Work Tax Credit The in-work tax credit (previously called in-work payment) is available to eligible families that work a minimum number of hours each week and are not receiving an income-tested benefit. The hours are currently set at 20 for a single-parent family and 30 for a two parent household. It is also necessary to receive eligible income in the period, which essentially requires compensation to be received by the taxpayer. This will not cause problems for PAYE employees or self-employed people because there is a direct link between effort and income; however it is an important concept for shareholder-employees of a company as historically they may not have received income in poor performing years. Per Family (1-3 children) $ 3,120 Per additional child $ 780 Upper Level Of Combined Family Income Where Some Assistance Ceases Number of Children 1 2 3 4 Abatement Threshold From Abatement Rate Year Ended 31 March 2013 $74,000 $89,000 $104,000 $120,000 $36,550 25 cents/$1 Year Ended 31 March 2014 $73,724 $89,493 $105,262 $124,702 $36,350 20 cents/$1 Independent Earner Tax Credit The Independent Earner Tax Credit is aimed at middle income earners who do not get any State assistance which includes Working for Families (WFF) or superannuation. The rebate is $520/year and is available to those with incomes over $24,000 and under $48,000. From $44,000 the rebate reduces at the rate of 13 cents in the dollar, disappearing at $48,000. Community Services Card Entitlement As At 1 April 2012 As At 1 April 2013 You May Be Able To Get A Card If You Are Single - living with others Single - living alone Married, civil union or de facto couple - no children Family of 2 Family of 3 Family of 4 Family of 5 Family of 6 And Your Yearly Income (Before Tax) Is $ 24,894 or less $ 26,393 or less $ 39,423 or less $ 47,597 or less $ 57,640 or less $ 65,627 or less $ 73,450 or less $ 82,193 or less For Families of more than 6, the limit goes up by $7,750 for each extra person. And Your Yearly Income (Before Tax) Is $ 25,046 or less $ 26,554 or less $ 39,664 or less $ 47,888 or less $ 57,992 or less $ 66,028 or less $ 73,899 or less $ 82,695 or less By family, we mean parents (including sole parents) and children living together. Once a child is aged 18 years, they cannot use your card any more, but they can apply for their own.

Contributions And Tax On KiwiSaver 1 On 1 April 2012 tax was introduced on the full minimum 2% employer contribution. Previously tax only applied to employer contribution above 2%. 2 On 30 June 2012 the member tax credit will be halved from the current dollar for dollar contribution by the Government, down to 50 cents. That means that the maximum member tax credit paid out by the Government will fall from $1,040 per annum to $521. 3 On 1 April 2013 employers will have their minimum contributions lifted from 2% to 3%. At the same time, workers will also be required to lift their minimum contributions from 2% to 3%. 4 The $1,000 kick start is unchanged. From 1 April 2013 kiwi savers will be able to evaluate and compare the performances of different funds. New disclosure rules will ensure fund managers transparently disclose their performance including returns, portfolio holdings and fees. It is unclear who will foot the bill for imposing such regulations we could see a rise in fees to compensate. The Government has also signalled a review of default provider arrangements to ensure fund managers operate in the best interest of the investors. 2013 Budget Snapshot ACC Big reductions in ACC levies are proposed but you will have to wait for one or two years before the reductions take effect. ACC levies are a significant cost for businesses and households so a drop of up to 40% will be a welcome relief. Currently ACC levies add another 1.7% to personal tax rates and are a substantial portion of annual motor vehicle registrations. The levies are scheduled to be cut by around $300 million in the 2014/15 year and $1.0 billion in 2015/16. Student Loans The Government is cracking down on Student Loan borrowing and has announced a number of changes: Eligibility for over 65 s has been removed If over 40, stricter limits will be put in force Those living overseas will face fixed repayment obligations and higher repayment thresholds Introduction of an information sharing agreement between Inland Revenue and Internal Affairs to collect contact details from passport applications. Taxation of Property Investments Inland Revenue will receive additional funding of $7.0 million a year so it can better pursue tax compliance in the area of property investments. This is expected to return about $45 million a year in additional tax revenue from property speculators who are not complying with their tax obligations. It is timely to remind people that where a person acquires land and/or buildings with the intention or purpose of disposing of that property then any profit derived from the disposal is taxable, even though New Zealand does not have a capital gains tax. Irrigation The Budget confirms $80 million in funding to facilitate the Crown s investments in regional water storage and irrigation infrastructure schemes in the 2013/14 year. This amount is likely to see a number of regional water storage proposals progress in the coming financial year. Further funding beyond the initial $80 million is proposed subject to finding the right partners to invest with the right irrigation schemes to achieve a more efficient and better water supply which will lead to improved agriculture and a richer NZ economy. Tax Relief for Black Hole Expenditure After many years of discussion, the Government has determined to provide tax deductions for various areas of black hole expenditure, i.e. costs that are currently not deductible. These include: Deductions for legal and administration costs in applying for patents or plant variety rights. Making certain fixed-life resource consents are depreciable for tax purposes. Allowing deductions for the costs of abandoned resource consents that haven t been lodged. Allow deductibility of the costs of annual general meetings.

2013 National Average Market Values For Livestock Types Of Livestock Class Of Livestock Average Market Values Per Head 2012 Values 2013 Values Change $ $ $ SHEEP Ewe Hoggets 119 78-41.00 Ram & Wether Hoggets 101 69-32.00 Two-Tooth Ewes 191 121-70.00 M/A Ewes (Rising 3 & 4 Yr) 166 102-64.00 Rising 5 Year & Older Ewes 138 82-56.00 Mixed-Age Wethers 78 63-15.00 Breeding Rams 305 273-32.00 BEEF CATTLE Rising 1 Yr Heifers 558 456-102 Rising 2 Yr Heifers 807 724-83.00 Mixed-Age Cows 1025 872-153.00 Rising 1 Yr Steers & Bulls 665 546-119.00 Rising 2 Yr Steers & Bulls 921 837-84.00 Rising 3 Yr & Older St & Bulls 1100 1048-52.00 Breeding Bulls 1992 2098 + 106.00 DEER Rising 1 Yr Hinds 243 188-55.00 Red Deer Rising 2 Yr Hinds 413 369-44.00 Mixed-Age Hinds 455 416-39.00 Rising 1 Yr Stags 276 235-41.00 Rising 2 Yr & Older Stags (n/b) 497 414-83.00 Breeding Stags 1464 1298-166.00 Wapiti, elk & rltd Rising 1 Yr Hinds 286 227-59.00 Rising 2 Yr Hinds 469 409-60.00 Mixed-Age Hinds 506 585 + 79.00 Rising 1 Yr Stags 323 286-37.00 Rising 2 Yr & Older Stags (n/b) 540 464-76.00 Breeding Stags 1447 1492 + 45.00 DAIRY CATTLE Rising 1 Year Heifers 1234 892-342.00 Friesian & Related Rising 2 Year Heifers 1806 1560-246.00 Mixed Aged Cows 2155 1873-282.00 Rising 1 Year Steers 521 442-79.00 Rising 2 Year Steers 822 736-86.00 Rising 3 Year Steers & Bulls 1077 1007-70.00 Breeding Bulls 1526 1337-189.00 Jersey & Other Rising 1 Year Heifers 955 668-289.00 Rising 2 Year Heifers 1620 1343-277.00 Mixed Aged Cows 1923 1627-296.00 Rising 1 Year Steers 412 342-70.00 Rising 2 Year Steers 662 597-65.00 Breeding Bulls 1198 1091-107.00 National Standard Costs For Specified Livestock Determination Types Of Livestock Class Of Livestock National Standard Cost 2012 2013 Change $ $ $ SHEEP Rising 1 Yr 28.30 34.70 + 6.40 Rising 2 Yr 19.80 22.60 + 2.80 DAIRY CATTLE Purchased Bobby Calves 186.70 171.40-15.30 Rising 1 Yr 473.30 487.60 + 14.30 Rising 2 Yr 93.80 119.20 + 25.40 BEEF CATTLE Rising 1 Yr 302.10 339.20 + 37.10 Rising 2 Yr 166.70 190.10 + 23.40 Rising 3 Yr Male - Non Breeding 166.70 190.10 + 23.40 DEER Rising 1 Yr 109.80 114.80 + 5.00 Rising 2 Yr 52.80 56.50 + 3.70

Accident Compensation Corporation Employees Earner Levy is included in PAYE deductions. Employers pay the employer levy for employees. Shareholders and self employed add all levies together, ie $4.81/$100 earning in 2011/12. Levies for Farmers 2012/2013 2013/2014 Earner Levy (Cover non-work accident) Employer Levy (Cover work accident) Residual Health & Safety (GST Excl) Levies/$100 Of Earnings $ 1.47 $ 2.56 $ 0.43 $ 0.005 (GST Excl) Levies/$100 Of Earnings $ 1.47 $ 2.56 $ 0.43 $ 0.005 ACC Changes Experience rating starts from 1 April 2011. The levy that each business pays for their cover, may in part be determined by their particular workplace claims history. How It Works - Two Methods - No Claims Discount Or Experience Rating Programme 1 Pay less than $10,000 in levies annually - no claims discount programme. No Claims Discount Programme for those paying levies of less than $10,000 annually. 10% no-claims discount provided no employee was paid weekly compensation and there were no fatal claims. One to 70 weekly compensation days paid, there will be no change to your levy. More than 70 weekly compensation days paid, or any fatal claims, there will be a 10% loading. 2 Pay more than $10,000 in levies annually - experience rating programme. (For further information contact your accountant or ACC). 10% ACC Discount ACC s safety discount is still available as well as the experience rating. The discount applies to the work levy for the agriculture sector. To receive this you need to attend a relevant safety course by Farm Safe (www.farmsafe.co.nz - 0800-545-747) or Assure Quality (www.assurequality.com - 0508-001-122). CoverPlus Extra ACC is now promoting CoverPlus Extra (CPX) as an alternative to the normal compulsory ACC cover. They have been offering a more flexible system with regards to the ACC cover you require. This is an opportunity to reconsider your ACC options, which may enable you to achieve some of the following. Reduce unnecessary ACC cover with consequent savings in ACC Levies. Raise the level of ACC cover where taxable earnings are at an artificially low level. Fix a level of ACC cover without having to establish loss of earnings from your farm. Provide ACC cover in the first year of a new business. Return to work on reduced hours but still able to receive ACC payments. We can help arrange ACC CoverPlus Extra and discuss with you the best arrangement for your circumstances. Income Protection Insurance Private insurance options are also available. Some income protection policies are designed specifically for farmers. They provide regular income to you should you suffer a sickness or injury that prevents you from working. There may be other benefits which take care of those unforeseen extras including hospitalisation, rehabilitation and getting home from overseas. Other benefits under this type of policy can include: Partial Disability Benefit Recurring Disability Benefit Hospitalisation/Nursing Care Benefit Rehabilitation Expenses Benefit Vocational Training Benefit Specified Sicknesses Benefit Death Benefit Homecoming Costs Benefit Where private insurance is used there is the option to consider having a stand down period where no payments are received for a certain period of time, eg 4 weeks, or 8 weeks or 12 weeks. By having a stand down period this has a huge effect on reducing the private income protection insurance premium. In the event of an accident ACC payments can be made in the event of death to the deceased dependents children if they are 16 years of age or under. This could be reduced with private insurance. Options To Consider For Eliminating ACC Or Significantly Reducing ACC Charges ACC is charged on wages, shareholder salaries, directors fees and self employed income, (not including interest and dividends). Income from a business can be paid via interest payments on current account advances rather than as wages or salary, and therefore, no ACC charges are due. Please note that if you choose to have income via interest or dividends rather than wages or salary, then you will not be entitled to any income related compensation. Companies can declare dividends which do not attract ACC charges. Another alternative to consider where a shareholder salary is being paid, is to apply for ACC CoverPlus Extra at a prescribed level, or alternatively for the minimum level ($21,732) and then arrange for a top up from private insurance cover (designed specifically for farmers), which may be able to cover both accident and sickness work related compensation. Using the correct ACC code is important in determining the ACC Levy that will be charged. For example, if the duties of the shareholder/employee include less than 5% farming activities and 95% plus of administration activities, then the administration code can be used.

Blair Pedofsky Chartered Accountant, BCom Blair assists a range of small to medium-sized businesses and says there are many untapped opportunities in the region. With ever-advancing business technology location is no longer a barrier to successful business. It is about working smarter and enjoying the lifestyle that Central Otago has to offer. After many years on school boards and local committees, his focus is now on lowering his golf handicap, socialising and enjoying the great outdoors. George Collier Chartered Accountant, BCom(Ag) George is an agribusiness specialist with particular interest in succession planning, business growth and governance. I m passionate about business growth and performance and like helping clients to achieve both. He is a member of the Regional Advisory Group for the Institute of Chartered Accountants and coaches junior cricket. In the little spare time available he enjoys exploring the outdoors on foot, bike and by boat. Janette Matheson Chartered Accountant, B.B.S. Janette enjoys dealing with people involved in interesting business ventures. I like to see how I can add value and provide complementary skills. Her professional expertise includes business restructuring, succession planning and trust administration, and benchmarking. Cam Dykes Chartered Accountant, B.Com(Ag) Cam works with a range of farming and commercial clients throughout Otago and also assists with business start-ups. I really enjoy dealing with the rural community, they are smart down to earth business people. Out of work involvements include the Dunstan High School Board of Trustees and the management and coaching of primary school rugby and cricket. Simon Wearing Chartered Accountant, BCom(Acc) Simon provides a range of specialist expertise including business appraisals, tax planning and succession planning, across a range of industries. Being entrusted to advise people with their business and assisting them achieve their business and personal goals is a real privilege. He applies his professional expertise in the local community as a trustee of Community House Trust; Friends of Dunstan Hospital treasurer and Terrace School Board of Trustees chairman. Associate: Rob Roy B.Com., C.A. Consultant: Bill Cooney B.Com., C.A., T.E.P. Alexandra Office: 69 Tarbert Street PO Box 267 Alexandra 9340 Central Otago Tel: (03) 440 0100 Fax: (03) 448 6329 enquiries@iclca.co.nz Ranfurly Office: 11 Charlemont Street Ranfurly, Central Otago Tel: (03) 444 9158 enquiries@iclca.co.nz www.iclca.co.nz Disclaimer: The contents of this farm survey are not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. Reproduction of any material contained within this survey is prohibited without the written permission of the authors.