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Chairman’s Report
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The directors of Ngāti Awa Group Holdings Limited and Ngāti Awa Asset Holdings Limited (together jointly referred to in this report as the “Commercial Group” or “Group”) are pleased to be able to report to you on their activities and results for the financial year ended June 2019.
Three pou have underpinned our work this year these being: the adoption of a “Letter of Expectation” with our shareholder, Te Runanga o Ngāti Awa (“TRONA”); a review and refresh of the Group’s Strategic Plan; and, the appointment of a new Chief Executive, Ms Tracey Hook (Te Āti Haunui-aPāpārangi and Ngā Wairiki) who takes up the role in November 2019.
The Letter of Expectation is a formal (but not constitutional) tool that provides an opportunity for our Shareholder (TRONA) to set out its expectations of the Group for the coming year. It also provides the opportunity for the Group to consider TRONA’s expectations as it develops its annual plan.
In the first quarter of the financial year and as signalled in last year’s report, your directors, senior management of both the Commercial Group and TRONA, and a number of Representatives participated in a review of the Group’s Strategic Plan. While some of the existing strategies were revalidated additional objectives were introduced to ensure strong alignment with the strategic direction of TRONA as outlined in Te Ara Poutama o Ngāti Awa. These included objectives relating to optimising business and employment opportunities for our Ngāti Awa people. We comment more on this later in this report and also on the change in senior management.
While the outcome for the financial year ended 30 June 2019 is down on the exceptional results achieved last year, a solid performance has nonetheless been realised with an operating surplus of $2.1 million.
The total return on assets over the latest 5 year rolling period has fallen to 6.4% from a level of 6.7% for a similar period finishing June 2018.
The biggest contributor to this fall has been the dairy farming operations, in particular Tumurau Farm. Within the farming portfolio the significant operational deficit attributable to Tumurau has been partially offset by achieving an operational surplus on Ngakauroa Farm and a close to breakeven result
on the Ngāti Awa Farm. Given this asset class is the biggest component of the Group’s total portfolio your directors and management continue to work diligently to improve the returns from our farming operations and have already taken steps to reduce operational costs and improve efficiencies.
In respect of other asset classes, and setting aside fair value movements (revaluations), your directors can report income returns (cash) from the financial assets portfolio, forest leases, fisheries and investment properties were either on par or slightly below last year’s performance. Given the prevailing macro-economic conditions your directors believe this to be a satisfactory outcome.
Across the total investment portfolio the most significant positive cash contributor has been horticulture which provided an increased income return of 7%. This is an outstanding result and we can report that an even greater contribution is anticipated for the current financial year.
There has been substantial improvement in the performance of the Whakaari White Island Tours business during the reporting period such that, on a financial basis, we achieved a small profit on this investment. In April we took delivery of our new vessel, Te Puia Whakaari, and it is pleasing to be able to report that it has been performing up to expectations. This includes the ability to sail more days in a month because of its weather tolerance capability being greater than the existing fleet. As the remaining fleet reaches the end of its useful life we propose standardising the fleet on the Te Puia Whakaari model. This will drive a number of efficiencies within the business not the least being one stock of spare parts.
In line with our commitment to Te Ara Poutama Ngāti Awa to provide employment opportunities for our people, we are pleased to report that at year’s end 25% of the staff employed within the Whakaari White Island Tours business are Ngāti Awa. This represents a significant improvement having come from a base of 5% at the time of purchase. A continuing focus will be placed on offering such employment opportunities across all our activities.
We place a high priority on ensuring all our employees, contractors and visitors return home safely every day. This priority saw our Whakaari White Island Tours and wider management team receive the “Safe365 2018 Safest Place to Work Award” for Small Business (50 staff and below). Our management team and staff continue to be rewarded for their diligence with the Ngāti Awa Farm, Ngakauroa Farm and Whakaari White Island Tours (for a second time) all being nominated as finalists for this year’s Awards.
In a further commitment to Te Ara Poutama Ngāti Awa we have worked alongside TRONA and the Whakatāne District Council in progressing the wider “Whakatāne Regeneration Programme”. A key component of this work programme is the development of the Tourism Hub which is centred on the refurbishment of the Army Hall. While this is an exciting opportunity it is dependent on receiving support from the Provincial Growth Fund. At the time of writing we are awaiting the outcome of our funding application.
In our 2016/17 report we advised the creation of the Associated Director “cadetship” programme to enable our rangatahi to gain exposure to, and experience in, governance. It is pleasing to be able to report our two “inaugural” Associates Natalie Coates (Te Pahipoto) and Hone Paul (Ngāti Pukeko) have not only developed into outstanding future leaders but also made significant contributions to the board’s deliberations. As their terms conclude this year the board has agreed to continue what it considers a very worthwhile project and will be in a position to announce the new Associates at the AGM.
Director Peter Drummond’s term of appointment terminates at the AGM and the board records its warm appreciation for the outstanding contribution he has made during his time with us. Peter joined the Board following a substantive board refresh in 2014. As an independent and very experienced director Peter, has been able to bring not only a wealth of business acumen to our deliberations but has also been a voice of reason and maturity. The board takes this opportunity to record its sincere thanks for the outstanding contribution he has made.
During the reporting year our Chief Executive Officer, Geoff Hamilton, resigned. Geoff joined us following the 2014 refresh. The Board takes this opportunity to acknowledge his leadership in resolving a number of outstanding and challenging financial issues confronting the organisation at the time of his appointment and wishes him well for his future.
With Geoff’s departure an extra burden has been placed on our Chief Financial Officer and the rest of the management team to ensure the business of the Group continued unabated. The Board takes this opportunity to record its genuine indebtedness to Peter Thomas and the team for their achievements in ensuring all workstreams continued without interruption.
On behalf of the Board I take this opportunity to thank Ngāti Awa for the support they have provided in entrusting the directors with the guardianship of its commercial assets. You can be assured it is a responsibility we take seriously.
