Research agency Scion forecast to go into debt
Rotorua-based Crown Research Institute Scion is at risk of going into debt by July next year, according to a new report submitted to Government.
The latest update to its Statement of Corporate Intent 2018-2023 said “reduced cash flows for 2019/20 have resulted in Scion forecasting to move into a net debt position during the 2019/20 year”.
Its budgeted revenue for the year starting July 1 was $51.1 million, down $7m (or 13.7 per cent) from last year’s forecast.
In a written statement to the Rotorua Daily Post, Scion chief executive Dr Julian Elder said the net debt forecast was $1.7m at June 30, 2020.
“The last time Scion had a net debt position was 2007 when Scion ended a sustained period of debt. We are forecasting this debt to only last for a short period.”
The Statement of Corporate Intent 2018-2023 also said Scion’s decreased revenues were “primarily associated with reduction in Endeavour Funding (Ministry of Business, Innovation and Employment funding for research) along with two significant commercial contracts”.
Elder said the funding roll-off was “a simple result of a number of large multiyear programmes coming to an end at the same time”.
“We continue to bid into the contestable funds that are available to us. It is a result of the uncertainty of which bids we will be successful with and how much funding that might come through these bids, plus our aspirational strategy for New Zealand, that leaves us with a level of uncertainty.
“We will get more clarity on these matters come October and will, therefore, be able to budget with more certainty.”
The corporate intent statement said Scion had been highlighting the upcoming funding roll-off for several years.
In response to the reduced cash flows, Scion is deferring developing facilities, such as its wood processing laboratories which are more than 50 years old, for at least 12 months.
Scion’s corporate intent statement said its nursery and forest protection laboratories also needed renewing and developing.
It said its scientific equipment needed ongoing investment “if we are to secure revenue, be financially sustainable and deliver research outcomes that meet the needs of stakeholders“.
This week, Minister of Forestry Shane Jones visited Scion in Rotorua to announce it would receive $422,500 for native tree research “to ensure that the seedlings, and the science behind the seedlings, gives us better durability”.
“So that not only is the vegetation likely to survive but its productivity is greater.”
The money was allocated from the One Billion Trees programme budget, which is part of $3 billion Provincial Growth Fund.
He reiterated the Government was “settled upon forestry as the key contribution to managing the costs of climate change and also to introduce better outcomes for biodiversity, and catchment management”.
Scion employs 321 full-time equivalent staff, 288 of whom are in Rotorua.
Another 31 are in Christchurch, as well as one each in Wellington and Dunedin.