Billionaire's Team NZ rival got two R&D grants but not $17.25m

UPDATED: Core Composites, a Warkworth company run by New Zealanders Tim Smyth and Mark Turner but owned by USA-based Oracle Racing, 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."

Callaghan Innovation said the misunderstanding over the figure needed clarifying. Companies approved for the three-year Callaghan Innovation growth grants can claim 20% 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. The $17.25 million refers to the maximum amount the company may claim over three years plus GST.

The company said it had 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.  

A 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.  

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.

Labour’s sports and recreation spokesmann 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,” Mr Mallard said.

National ended the former R&D tax credits system that operated under Labour, which Mr 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,” he said.

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

Earlier: A Warkworth boat building company owned by American billionaire Larry Ellison’s Oracle Racing America's Cup team has sailed into a $17.25 million New Zealand government grant.

Core Builders Composites, run by New Zealanders Tim Smyth and Mark Turner, is owned by USA-based Oracle Racing, which in 2013 dramatically came from 8-1 down to beat Team New Zealand 9-8 in the America’s Cup.

The government controversially ploughed $36 million into that campaign but last month Economic Development Minister Steven Joyce ruled out funding Team New Zealand if there was no qualifying series in Auckland.

This week, organisers confirmed the series will be hosted in Bermuda.

Now it emerges a three-year research and development grant from the Ministry of Business, Innovation and Employment will put wind in Oracle’s sails via its subsidiary Core Builders Composites.

The $17.25 million “growth grant” is for between July last year and June 2017.

MBIE’s website says there is no public statement available for the contract.

Core Builders Composites says it moved to New Zealand in 2010 to build the AC72 catamarans Oracle used in the last America’s Cup.

Companies Office documents show it made a $1.04 million loss for the year ended December 31, 2013, down from a $2.2 million profit the year earlier.

During 2013 it received $435,000 in government grants, through New Zealand Trade and Enterprise, to assist in meeting the costs of installing a large dimension milling machine.

It also received $6.5 million from parent company Oracle Racing, having been given $6 million the year before.

Oracle’s owner Larry Ellison is listed as the world’s fifth richest man, with an estimated worth of $US53.7 billion ($NZ70.8 billion). 

With reporting by BusinessDesk

BusinessDesk receives funding to help cover the commercialisation of innovation from Callaghan Innovation.