Oracle-owned boatbuilder has had two government grants

Oracle-owned boatbuilder has had two government grants in three years

By Fiona Rotherham

April 23 (BusinessDesk) - Core Builders Composites, the Warkworth-based company owned by Team New Zealand’s arch-rival Oracle Racing, has had two taxpayer subsidies in the past three years.

The most recent was a growth grant from Callaghan Innovation in August last year for an undisclosed sum. Core Builders' financial accounts filed with the Companies Office show it also received a $435,631 grant from New Zealand Trade and Enterprise in 2012.

The Warkworth company built the boats for Oracle’s 2013 defence of the America's Cup and also sub-contracted a number of New Zealand companies to help build the AC45 boats which were used for the primary series of races which took place globally.

The most recent financial accounts filed for the company, for the year ending Dec. 31, 2013, show it received no "other income" in 2013 beyond its $7.8 million revenue, but it had a NZTE grant in 2012 to assist the installation and operating costs of a large dimension milling machine purchased and put into operation the year before. The accounts show it also made a $1 million loss that year.

That grant is repayable to the government if the machine is removed from New Zealand before the end of 2016 or if Core Builders denies access to the machine by another company under reasonable commercial rates, terms, and conditions until that date.

Core Composites said in a statement this afternoon that it had not received a growth grant of $17.25 million as earlier reported. It said the latest grant started in July 2013 and to date it had received just over $250,000. "Our forecast R&D claim is far less than the capped amount of $5 million a year under the three-year grant.

The company said as has been widely reported, it had to go through a painful restructure at the end of the last America's Cup cycle.

"This is not uncommon in the marine industry where much of the work is project based. Subsequent to that we were able to regain a foothold in the market by diversifying into Architectural, Industrial products as well as finding new export customers for our bespoke marine appendages. In this way we have rebuilt our work force. Since July 2014 we have added 26 members of staff," the statement said.

The company’s website lists under the heading recent projects helping manufacture a light weight carbon shell for a solar car in April 2013 and engineering a 1.2 metre disco ball.

When asked how it was spending the grant money, the company said that was proprietary, but in a global sense it was investing in high value, high tech manufacturing in New Zealand that would ensure it remains at the cutting edge through innovation and development.

"We are investing to attract diverse prototyping projects in markets beyond marine and racing yachts to create a more sustainable business beyond this current America's Cup cycle. We are investing in developing techniques and products that will enable other innovative New Zealand Companies with the uptake of composites and digital manufacturing by making these more cost effective options. Such innovative New Zealand projects include the Auckland SkyPath, which we have been fortunate enough to be involved with the design phase and we hope to be a part of the construction (along with other innovative NZ Composite Manufacturers) should it receive Resource Consent."

The company’s website lists under the heading recent projects helping manufacture a light weight carbon shell for a solar car in April 2013 and engineering a 1.2 metre disco ball.

Labour’s sports and recreation spokesperson Trevor Mallard said Kiwis would be horrified to know they are backing a Team Oracle subsidiary owned by US billionaire Larry Ellison.

“National’s current research and development system picks winners. It is ironic that in this case they are picking an off shore-owned competitor of Team New Zealand to be the winner,” Mallard said.

The grant to the Oracle-owned company contrasts with the Government’s decision made earlier this week not to commit any more Government funding to Team New Zealand.

National ended the former R&D tax credits system that operated under Labour, which Mallard said was fairer than picking winners.

“This is yet another example of questionable grants from this organisation. It follows Callaghan’s dubious decisions to fund Chatham Rock Phosphate and Trends Publishing,” Mallard said.

The three-year Callaghan Innovation growth grants enable qualifying companies to claim 20 percent of their research and development expenditure, capped at $5 million a year. To qualify, companies have to commit to at least $300,000 and spend at least 1.5 percent of its revenue on R&D in New Zealand.

So far 152 companies have been granted a total of $356 million under the scheme. Earlier this week Callaghan Innovation terminated one of the grants for the first time, saying Trends Publishing International had breached the terms of its funding agreement by being unable to show the amounts claimed against its $382,911.97 grant were for eligible R&D.

Trends Publishing chairman and publisher David Johnson has called the decision “fundamentally unjust” and that he was seeking advice on Callaghan’s request for repayment of the grant.

(BusinessDesk)

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