
19 minute read
ORGANISATIONAL PERFORMANCE
It has been a challenging period. The year has been marked by the ongoing constraints of the Covid-19 pandemic, combined with rising costs and challenging market conditions for some revenue items.
Honey sales were down and we faced logistical difficulties brought on by the pandemic, including the impact of illness among our own staff.
That said, we were cash-flow focused over the year, and this enabled the Incorporation to pay back more debt than planned.
Farming
A wet winter, dry summer and rising costs had a negative impact on the farm business. Some crops were late going in because of the wet winter. This was followed by a dry December, resulting in crop failures on some of the farms. Porina and grass grub continued to affect pasture, impacting upon production. Despite these challenges, total production was similar to previous years, with 90,289 lambs born (89,317 in 2020), steers being processed at 312kg CW/head (314kg in 2020) and works lambs being processed at 18.0kg (18.0kg in 2020).
Costs increased, particularly for fuel and fertiliser due to inflation and the war in Ukraine. As well as maintenance fertiliser, additional fertiliser was applied to replace that which was deferred over the previous two years.
The market for red meat recovered on the previous year and was the best in recent memory. The average steer price was $1885 per head ($1727/head the year before) and the average for all lambs sold was $137 per head ($122 the year prior). Processing was delayed particularly in April, May and June because of staff shortages at processing plants. Good, strong relationships with our processors helped get us through these difficulties.
• 2018
Lambs born - 94,336
Beef calves born - 3,464
Milk production (kg of milk solids) - 226,077
Honey production (kg Ātihau hives) - 22,979
• 2019
Lambs born - 95,418
Beef calves born - 3,584
Milk production (kg of milk solids) - 249,172
Honey production (kg Ātihau hives) - 40,302
• 2020
Lambs born - 88,568
Beef calves born - 3,606
Milk production (kg of milk solids) - 241,006
Honey production (kg Ātihau hives) - 74,041
• 2021
Lambs born - 89,317
Beef calves born - 3,396
Milk production (kg of milk solids) - 252,008
Honey production (kg Ātihau hives) - 87,993
• 2022
Lambs born - 90,289
Beef calves born - 3,280
Milk production (kg of milk solids) - 240,988
Honey production (kg Ātihau hives) - 103,254
(for more information please see the full online publication)
Business round-up
Intended to give shareholders a 'big picture' view of Ātihau business activities, the following summary provides key statistics, highlights and challenges of the year, and at-a-glance financial information for each of our business units.
Ohotu and Tohunga
• OVERVIEW
Lamb finishing went well, achieving 120 grams per day on a 100% pasture-based finishing regime, and the feedback from buyers was very positive about the quality and presentation of the stock on delivery. The benefit of building strong relationships was also made apparent with very little delay in meat processors taking our lambs, something other farmers experienced due to staff shortages at plants during the COVID-19 pandemic.
• KEY STATS
2,690 hectares / 2,400 effective hectares
5 staff across the two farms
26,082 lambs
2,540 steers finished
• FINANCIAL PERFORMANCE
$0.6 million surplus before finance costs and non-operating expenses
$232 surplus per hectare
• Revenue
Wool $48,008
Apiary Leases $125,562
Beef $1,748,140
Sheep $1,162,836
TOTAL $3.1m
• Expenses
Depreciation $146,267
Employee Costs $407,463
Operating $1,905,479
TOTAL $2.5m
(Please see full online publication pg.26 for corresponding graphs)

Te Pā
OVERVIEW
Lamb finishing went well, achieving 120 grams per day on a 100% pasture-based finishing regime, and the feedback from buyers was very positive about the quality and presentation of the stock on delivery. The benefit of building strong relationships was also made apparent with very little delay in meat processors taking our lambs, something other farmers experienced due to staff shortages at plants during the COVID-19 pandemic.
• KEY STATS
5,730 Hectares / 4,020 Effective hectares
6 Full time staff +2 first-year apprentices
16,500 Ewes
1,000 Cows
• FINANCIAL PERFORMANCE
$0.97 million surplus before finance costs and non-operating expenses
$169 Surplus per hectare
• Revenue
Wool $184,542
Apiary Leases $266,587
Beef $715,679
Sheep $3,108,062
TOTAL $4.3m
• EXPENSES
Depreciation $211,522
Employee Costs $506,583
Operating $2,588,726
TOTAL $3.3m
(Please see full online publication pg.27 for corresponding graphs)

Tawanui
OVERVIEW
A good lambing percentage of 145% was achieved across both two-year-old (two tooth) and mixed age (MA) ewes, an excellent result for the team. Trials to reduce nutrient and sediment loss were carried out (in partnership with PGG Wrightson) involving the planting of companion crops alongside winter brassicas – this will hopefully deliver improved environmental outcomes. Manager Steve Tapa underwent major surgery – we are pleased to report he is recovering well.
• KEY STATS
2,360 Hectares / 1,750 Effective hectares
3 Staff
9,000 Ewes
400 Cows
• FINANCIAL PERFORMANCE
$0.8 million surplus before finance costs and non-operating expenses
$346 Surplus per hectare
• REVENUE
Wool $138,095
Apiary Leases $249,795
Beef $249,795
Sheep $1,650,571
TOTAL $2.4m
• EXPENSES
Depreciation $137,981
Employee Costs $299,695
Operating $1,129,887
TOTAL $1.6m
(Please see full online publication pg.28 for corresponding graphs)

Ohorea
OVERVIEW
Reduced overall stock numbers, enabling more proactive management across the entire flock, saw better than normal growth rates for lambs and increased scanning results for ewes. Poor weather delayed the sowing of some fodder crops, which then subsequently failed, requiring a re-sowing. This was disappointing. Team-wise, there were staff shortages throughout the year, which proved to be a challenge when completing the work schedule. Overdue renovations to staff housing were completed, bringing a couple of houses up to a more modern standard of living.
• KEY STATS
5,630 Hectares / 4,072 Effective hectares
7 Staff
15,500 Ewes
950 Cows
• FINANCIAL PERFORMANCE
$1.3 million surplus before finance costs and non-operating expenses
$255 Surplus per hectare
• Revenue
Wool $174,047
Apiary Leases $448,254
Beef $498,724
Sheep $2,582,296
TOTAL $3.7m
• Expenses
Depreciation $158,015
Employee costs $503,605
Operating $1,705,342
TOTAL $2.4m
(Please see full online publication pg.29 for corresponding graphs)

Te Paenga
OVERVIEW
Improved growth rates due to the more focused management of one-year-old (two tooth) ewes delivered improved in-lamb scanning rates - a real result for the team. The overall appearance of the farm was also improved with a tidy up around the woolshed and homesteads, and the planting of poplars.
KEY STATS
3,500 Hectares / 2,770 Effective hectares
5 Staff
10,500 Ewes
700 Cows
• FINANCIAL PERFORMANCE
$0.5 million surplus before finance costs and non-operating expenses
$255 Surplus per hectare
• Revenue
Wool $60,917
Apiary Leases $513,706
Beef $467,315
Sheep $1,178,183
TOTAL $2.2m
• Expenses
Depreciation $75,938
Employee Costs $367,641
Operating $1,275,344
(Please see full online publication pg.30 for corresponding graphs)

Papahaua
OVERVIEW
The decision to increase the monitoring of one-year-old (two tooth) ewes enabled improved short- and long-term management decisions to be made. While porina grub significantly impacted pasture availability during spring, the overall amount of pasture was increased by 40 hectares after a controlled burn of scrub on the better hill country in the middle of the farm. Ease of calving for first-time heifers will be a focus area going forward.
• KEY STATS
6,280 Hectares / 2,500 Effective hectares
5 Staff
8,500 Ewes
8,500 Ewes
480 Cows
• FINANCIAL PERFORMANCE
$0.45 million surplus before finance costs and non-operating expenses
$72 Surplus per hectare
• Revenue
Wool $79,879
Apiary Leases $1,024,439
Sheep $1,004,901
Beef $273,553
TOTAL $2.4m
• Expenses
Depreciation $166,423
Employee costs $374,687
Operating $1,390,050
TOTAL $1.9m
(Please see full online publication pg.31 for corresponding graphs)

Waipuna
OVERVIEW
Pasture management has been a real challenge for the team, with extensive porina grub damage, and the late and then unsuccessful sowing of new grasses impacting on the weaning weights of all stock. This also resulted in unwanted expenditure as pastures had to be resown and paddocks treated for porina. However, the opportunity to use subsidised environmental fencing to further subdivide large paddocks will make pasture management easier. The refurbishment of the cattle yards will enable increased monitoring of young stock, with the intention of delivering improved growth rates, and better calving results in first-calving heifers.
• KEY STATS
5,210 Hectares / 1,650 Effective hectares
3 Staff
6,000 Ewes
250 Cows
• FINANCIAL PERFORMANCE
$0.2 million deficit before finance costs and non-operating expenses. This deficit is primarily due to additional regrassing costs associated with establishment failures and porina damage.
$49 Deficit per hectare
• Revenue
Wool $58,136
Other $552,186
Sheep $527,885
Beef $140,539
TOTAL $1.3m
• Expenses
Depreciation $190,207
Employee Costs $279,768
Operating $1,063,352
TOTAL $1.5m
(Please see full online publication pg.32 for corresponding graphs)

Hapuawhenua
OVERVIEW
Despite the need to go to once-a-day milking during the summer months to save the herd having to walk in high temperatures, there was only a 4% drop in production (2021/22 240,988MSkg). This is pleasing when compared to the NZ industry, which experienced a larger drop in milk production. A contributing factor to this performance was the opportunity for improved pasture management, due to the completion of fencing and water reticulation upgrades. The team should be acknowledged for this result as they were under pressure for a significant part of the season due to two vacant positions that were challenging to fill. The construction of a new manager's house means accommodation is available on farm for the full team of six, which should help reduce staff shortfalls in the future.
• FINANCIAL PERFORMANCE
$0.8 million surplus before finance costs and non-operating expenses
$1,935 Surplus per hectare
• Revenue
Apiary Leases $71,969
Livestock Dairy $200,169
Milk $2,235,916
TOTAL $2.5m
• Expenses
Depreciation $90,739
Employee costs $404,814
Operating $1,209,688
TOTAL $1.7m
(Please see full online publication pg.33 for corresponding graphs)

Apiary
OVERVIEW
Our apiary team performed well despite the pressure to harvest honey and remove hives quickly before staff members were impacted by the COVID-19 virus. We also incurred higher helicopter costs in the key hive-moving window in early December, due to wet weather preventing ground-based access to mānuka sites. The business achieved record production of 103 tonnes of mānuka honey. We were also able to return approximately 40 tonnes of bush honey to hives as feed – a more natural and nutritious diet than supplementary feeding over winter and early spring.
Warmer than usual winter temperatures meant Varroa mites survived the season, also aided by uninterrupted brood production by our queens. This meant a higher level of management and miticides were required for some hives, particularly in the Whanganui area. Hive numbers grew to 3600 hives on the flow. The Organic hive operations was disestablished due to welfare concerns, specifically to do with Varroa mite, as it is much harder to treat using only organic methods. Work was done to build stronger relationships with some of our key partners; Manukora and Oha Honey.
• KEY STATS
Almost 3.600 hives on manuka flow
11 Staff across 3 apiary teams
• FINANCIAL PERFORMANCE
$1.9 million deficit before finance costs and non-operating expenses. The deficit is primarily due to a non-cash valuation adjustment reducing apiary revenue by $2.7 million.
(Please see full online publication pg.34 for corresponding graphs)

Te Hou joint venture
OVERVIEW
The size of the dairy farm was increased at Te hou with an underpass built and 60 hectares, previously used for drystock grazing, added into the dairy platform. Plans to build a larger, more modern dairy shed were completed, with building beginning during the 22/23 year. Once completed the dairy unit will increase to 1300 cows. Timber was also harvested from the property with 22ha milled and seven replanted.
• KEY STATS
1225 Hectares
1,100 Dairy cows
700 Beef cattle

Forestry
OVERVIEW
Despite the very wet conditions making harvesting a real challenge, 27 hectares on Ohorea was milled, resulting in 22,904 tonnes of logs being sold. Planting preparation work was completed at Tawanui and at Waipuna, and the thinning and pruning of some existing trees was carried out. The business took advantage of a fixed domestic price opportunity to achieve good returns in a fluctuating market. Progress was made in submitting an application to register several areas of mānuka with the Emissions Trading Scheme (ETS).
• KEY STATS
475.3 Hectares at Papahaua joint venture
253 Hectares at Ohorea, Tawanui, Te Paenga and Waipuna
Taiao
OVERVIEW
A total of 14.5 hectares of mixed natives were planted, mainly on Ohotu and Tohunga. The timing of a follow-up release spray coincided with a lockdown period, and resulted in a delayed release, negatively impacting the survival rate of these plants. A further 5.7 km of riparian fencing was completed collectively on Te Pā, Papahaua and Waipuna.
14.5 Hectares of mixed natives were planted
5.7km of riparian fencing completed

Shareholder Engagement
OVERVIEW
Although the pandemic curtailed plans for annual review workshops and other shareholder engagement events, the Kei whea koe? roadshow in Ohakune was well-attended and several shareholder hunts were popular with uri. An increase in the number of kaumātua grants being distributed indicates that people are accessing the support they need for their wellbeing.
• KEY STATS
9,606 Shareholders
5,554 Missing shareholders
$2,938,005 Unclaimed dividends
People
OVERVIEW
PeopleManaaki of staff affected by the COVID-19 virus was a high priority, with all getting a medical kit and care package to help their recovery. A very low staff turnover at 19.1%, is very gratifying and we are pleased to be able to report that 40% of staff members are now uri. An external Health and Safety audit highlighted a number of areas where we could improve our health and safety systems. One of the recommendations was an audit of all farm bridges. Some require repairs and maintenance to be made safe and others complete replacement. This mahi will be a focus for us in the year ahead.
• KEY STATS
72 Staff
40% Uri
19.1% Turnover
• GOVERNANCE & CORPORATE FINANCIAL PERFORMANCE
$2 million deficit before finance costs and non-operating expenses.
• Revenue
Grants $108,000
Other $186,425
Land Rental $196,122
Forestry Revaluation $600,000
Log Production $667,998
TOTAL $1.8m
• Expenses
Awhiwhenua $288,153
Marketing $288,796
Governance $418,453
Te Ati Hau Trust $540,000
Shareholders $626,195
Corporate $1,659,170
TOTAL $3.8m
(Please see full online publication pg.37 for corresponding graphs)
Outlook - Key risks
HONEY
With a slump in demand due to Covid-19, and a large amount of honey sitting in storage, honey sales haven’t increased to match the increase in production we have experienced. The decline in demand relates to particular markets such as China, whose zero-Covid and lockdown strategy has meant one of the world’s biggest pre-pandemic consumers has not been buying the volumes it has in the past.
Risk management centres on maintaining the relationship with our current buyers and considering alternative sales channels, which may include joint-venture arrangements, while taking a more conservative approach to the valuation of honey moving forward.
The development of our apiary business has been paused during this period. Access to additional mānuka is being sub-contracted and an external beekeeper is placing hives on those parts. The apiary business will not grow until guaranteed markets are found for the honey.
We anticipate the recovery of the honey market to occur over the next few years, as Covid-19 becomes endemic across the world, economies return to normal and production in New Zealand reduces as hive numbers reduce and the market consolidates.
In the meantime, cash returns into the business continue to be gained from external beekeepers from Ngā Wairiki Ngāti Apa and Oha Honey (Ngāi Tahu), who have hives on whenua owned by Ātihau, and through the continued sale of honey to our partners Manukora.
PRICING
The level of uncertainty in the world means there is a good chance that market prices, for both income and expenditure items, will change between the time the budget was set (in June) and the time income and expenditure actually occur.
A close watch is being kept on pricing, with adjustments being made as required. Capital spend is being phased until there is more certainty around cash flows. For example, before confirming the next tranche of capital spend, we will wait until November when we have a better idea of pricing for lamb and honey sales for the full financial year.
LABOUR SHORTAGES
The impact of labour shortages is being felt not only in our business but also across the industry. The tight market includes farming, apiculture, and administration roles within the farming sector and also among our suppliers and partners, including vets, builders, consultants and the meat processing industry.
This affects our ability to deliver on some projects. We will continue to take a conservative approach to production to manage risk, lower the possibility of having a lot of animals in a dry summer, and reduce pressure on the business.
RESULTS FORECAST
Farm production is expected to increase, with 93,000 lambs and 3580 calves born due to ongoing improvements in farm infrastructure, improved soil fertility, and a decrease in pasture pests. The dairy farm is forecast to produce 255,000 kg MS, while total honey production is expected to increase to 110,000 kg as the team focuses solely on production rather than growth.
Total Revenue is expected to be $29.5 million, ahead of 2021 revenue because we are not expecting to repeat the write-down of honey values that occurred last year.
Total expenses are also expected to increase to $24.6 million due to inflationary pressures and interest costs to $2.0 million due to rising interest costs.
Ātihau-Whanganui Incorporation - Executive Leadership Team

Andrew Beijeman - Chief Executive Officer

Debbie Hyland - Chief Financial Officer

Whetu Moataane - Tikanga & Brand Manager

Siwan Shaw - Business Manager Farming

Dan Adams - Business Manager Apiary
Financial Performance
For the year ended 30 June 2022, Ātihau-Whanganui Incorporation has generated a net surplus of $1.4 million, which is below our 2021 net surplus of $3.5 million. Total equity has increased by $12.2 million, from $219.7 million up to $231.9 million. Ātihau-Whanganui Incorporation has achieved a net surplus before finance costs, revaluations, and tax of $1.4 million (2021: $3.5 million). Net profit after income tax (NPAT) is $1.0 million compared with $5.3 million in the year prior.
In June 2021, the Board approved its Budget 2021/2022 in an unprecedented environment due to the ongoing impacts of the Covid-19 pandemic on New Zealand and the global economy. Compared to the prior year, Ātihau projected an increase in both operating revenue and expenditure of around $2.0 million and a budgeted surplus of $1.8 million.
Pricing and production were conservatively forecasted at levels similar to those achieved in 2020/21, while recognising further possible upside in both price and production. Farm expenditure was budgeted to increase by $1.8 million, mainly due to an increase in maintenance fertiliser, some of which was planned to be caught up from the previous two years of deferrals.
For the year ended 30 June 2022, Ātihau has delivered a solid result during a challenging period. Revenue during the year was $24.5 million compared to $23.4 million in 2021, this is an increase of $1.1 million. Apiary revenue of $3.8 million was lower than the prior year by $1.8 million, mainly due to a noncash adjustment to the value of the year’s harvest, and honey on hand to account for the slow-moving nature of the market. This reduction more than offset increases in the sale of livestock, which increased by $1.3 million to $15.6 million. Other income from forestry logs harvested and forestry revaluations was $1.3 million, an increase of $1.1 million compared to 2020/21.
We delivered our work programme through operating expenditure of $23.1 million compared to $19.9 million in 2020/21, an increase of $3.2 million. Farm expenses of $11 million were $3.5 million higher than the prior year; fertiliser, cropping and pastures, and vehicle running costs have increased mainly due to rising inflation and constraints caused by the war in Ukraine.
We delivered our capital works programme with capital expenditure of $2.8 million, compared to a capital budget of $2.3 million. The priorities included resumptions, farm development, and environmental works including the planting of natives under the One Billion Trees programme, and staff housing.
Total equity increased $12.2 million, from $219.7 million to $231.9 million. Emissions trading units held as at 30 June 2022 were revalued, resulting in a $15 million increase in the value of assets.
We have a total term debt facility of $38.4 million, of which $37.5 million (2021: $38.8m) was drawn down as at 30 June 2022, and a seasonal facility of $7.5 million, which was fully repaid at the end of the year. The value of our stock and biological assets, which is used as security, exceeds total debt by nearly $7 million. Importantly, $1.4 million of debt was repaid during the year as a result of our strong focus on organisational agility and efficiency.
• Total Revenue $24.5m (2021: $23m)
• Total Equity $231.9m (2021: $219m)
• Net Surplus $1.4m (2021: $3.4m) *before finance costs and non-operating revaluation
(Please see full online publication pg.40 'For the Year Ended 30 June 2022' graphs)