Te Pūrongo o Te Rau Matomato - CEO Report Warwick Tauwhare-George

Tāiri te arohā, tāiri te kupu, tāiri ngā mate huhua o Aitū whakatina o Aitū whakatoka.

Ekena taumata, ruku hōhonu, tōia whāiti, torona whānui - koia tēnei ko te kupu whakawai e aratakina ana i te hekenga werawera, te māturuturu o te roimata me te mārō o te kauwae - kia aha ai? Kia kore ai e whati i te kawenga o tēnei kaupapa rangatira o tēnei kaupapa whakahirahira. E ū tonu ana ki runga i a tūranga hākoakoa ki runga i te tūranga paki ārohorohi o te tau mahi o te tau mātiritiri i te ora ē. Ka whanake ake kei mua, ka whanake ake ki pae tawhiti ē.

No reira tēnā koutou, tēnā koutou, tēnā koutou katoa.

As Te Rau Matomato / CEO of the Parininihi ki Waitōtara Incorporation, it is my privilege to present the annual report for the financial year ending 30 June 2022.

The past year has seen us go from a full pandemic lockdown, to finding ways to continue our lives despite the risks of contracting COVID-19 to where we stand now, in a new normal where challenge and opportunity present themselves in equal measure.

The impact COVID-19 has had on our investments, and the business overall, should not be underestimated. Navigating the stormy waters has tested our decision-making, our ability to respond to those curveballs that were thrown our way and our resilience as a team and a business, as we continued to work towards our vision of He Tāngata, He Whenua, He Oranga – growing and sustaining our people through prosperity.

The determination and dedication of our kaimahi during this time to continue with their mahi, while remaining aligned to our cultural tikanga and kaupapa, has been outstanding. Our management teams have been efficient and effective, implementing cost control strategies and streamlining the business, while those out on the ground have kept their focus amidst a rapidly changing world, and put those plans into action. The contribution they made to the balance sheet has been considerable and I wish to acknowledge their efforts.

We are very pleased to be able to report a strong operating performance for the PKW Group this financial year.

Our values of Manaakitanga, Kaitiakitanga, Whakapono, Kotahitanga and Whanaungatanga serve us well as we continue to strive towards a successfully diversified and sustainable Taranaki Māori owned and operated business providing meaningful opportunity for our people.

Above: PKW Executive Leadership Team including former CFO Joe Hanita (2nd from left).

FINANCIAL REPORT

The PKW Group has returned a net profit after tax of $6.1m, with the key drivers behind this result being;

• a strong blended milk price of $8.60/kgMS (2021: $7.00/kgMS). This blended price is reached through our hedging approach, which mitigates the risk of widely fluctuating milk prices, and

• the clear focus on operational efficiency while performing in a pandemic economic landscape that affected all our active and passive investments.

Our total comprehensive income for 21/22 was $1.23m, which when compared to the 20/21 figure of $52.04m, clearly demonstrates the impact the volatile land valuation process can have on our profit and loss position each year. In the 20/21 annual report we saw an extensive lift in land value of $24.3m; this year that value has dropped by $8.5m. The real value of our tupuna whenua, however, does not lie in a monetary figure, but in the way we manage and care for it to deliver our vision of He Tāngata, He Whenua, He Oranga.

The strongly aligned business culture and extremely positive attitude to health and safety we have seen this year is a clear indication of the elevated approach to work we have seen across our Farms investments which has been key in the delivery of this result.

A recent health and safety report completed by a certified external auditor highlighted the gains we have made in the space since we started our journey to become leaders in safety for our people three years ago. Our people are our most important asset and ensuring their safety and wellbeing so they can go home to their whānau happy each day is something we should all be proud of.

This strong performance means we were able to deliver on our strategy of delivering sustainable, steady incremental dividend growth with this year’s dividend distribution lifting to $1.95 (20/21 $1.75) and includes a further payout of $0.45, which should be regarded as a oneoff economic bonus that reflects the gains we have made.

Overall, group expenditure was $22.05m (2021: $18.30m), reflective of the sharp rise in inflation we have experienced nationally in the latter part of the year.

PEOPLE

Three new directors were appointed to the Board at our last AGM - Anne-Marie Broughton, Liana Poutu and Tama Potaka. Their new perspectives and input, combined with the insights and acumen from existing directors, will open new opportunities to grow within the context of our commercial strategy, in alignment with our taiao, social and cultural obligations. The management team and I are looking forward to working with them in the coming year as their knowledge and awareness of the business deepens.

We farewelled our Chief Financial Officer Joe Hanita as he moved to be closer to, and work with his whānau at Wakatū Incorporation. It was a sad farewell for us as Joe has been a strong and instrumental member of the management team with his business acumen and vision, as well as being a truly fantastic human being.

Stepping into the role is Jahron Neha (Ngāti Maniapoto, Taranaki, Ngāpuhi) who brings with him strong commercial credentials and a positive approach to doing business. We have welcomed him into the team and have been enjoying his contribution so far.

INVESTMENTS

As the impact of the COVID-19 pandemic begins to fade on everyday life, we are starting to see the bounce-back in our Ngāmotu Hotels Partnership, as occupancy levels at the Novotel Ngāmotu start to steadily increase. The forecast for domestic tourism numbers in the forthcoming year is positive, as New Zealanders reconnect with whānau and friends with the easing of restrictions and continue to explore the newly discovered benefits of holidaying in their own backyard.

It has been two very tough years for the staff at the Novotel Ngāmotu, but they have responded to everything that has been thrown at them with resilience and professionalism. PKW and our iwi partners are also very proud of the fact that our retention of staff at the hotel, in an industry that typically experiences a very high churn rate as people leave roles after relatively short periods of time, is excellent. Also, the wellbeing of our staff is important to us, and PKW has adopted the living wage (in line with best practice) as a minimum remuneration practice for all our kaimahi.

Port Nicholson Fisheries Ltd, our kōura (Lobster) investment vehicle, continues to experience an uplift in performance as the Chinese market and supply chain dynamics recover after the significant impact of COVID-19. Despite the challenges when the pandemic first hit, PNF continues to be a jewel in the investment portfolio for PKW with its rate of return remaining extremely valuable to the business.

The development of a new processing plant for this partnership will extend the potential of the company, helping to bring it to the forefront of the industry.

The Tai Hekenga property portfolio remains a positive addition to PKW’s equity investments, returning consistent returns to the business. Tai Hekenga is a clear example of the long-term view we take in our decision-making, as it represents a sustainable, environmentally sound, and reliable investment for years to come.

Our new Miraka Hipi venture, is now up and running with lambs on the ground and milk in the vat. This has been a fantastic achievement for everyone involved given the stone laying ceremony was just a few short months ago in January.

The operations team has given this their full focus, and the support and knowledge from across the entire Farms entity has been instrumental to getting us to this point.

In four to five years the true commercial benefits of having this business venture within our investment portfolio will be apparent, with the taiao and jobscreation benefits already being experienced.

Above: First flock of lambs at Koetuku and Waitokorau Farms.

CONCLUSION

We are seeing a changing dynamic in Māoridom in the relationships between iwi, hapū and whānau as the economic strength of our people grows in the postsettlement economic environment. While this will bring with it opportunity to build relationships, maintaining our strategic focus and ensuring our decisions align with our tikanga and kaupapa as laid down by Te Ara Putanga will be important.

Finally, I need to acknowledge the contribution and support from our Board, the dedication and diligence of our outstanding Executive Leadership Team and the resilience and determination of our kaimahi as we all work together towards our goals.

And, of course, I thank our shareholders for their interest, engagement and manaaki as we continue to work on their behalf to deliver on the legacy and vision left to us by our tūpuna.

Ngā mihi

Warwick Tauwhare-George - Te Rau Matomato