Annual Report 2012 by iStudios Multimedia Ltd

OUR STORY Our story has always been about land. Once upon a time it was only about the loss of land, the loss of control of our resources and denied opportunity. But now our story is one of success and growth. It is about an intergenerational business that is seeking to continue the journey to; our ancestral land > regain and grow our assets for > protect current and future generations our commercial and cultural > balance responsibilities

And importantly our story has evolved to be that of a business of innovative and sustainable farm management. This Annual Report is a celebration of our journey to date as we look to illustrate to our shareholders the stories behind the numbers.

Cover Kahurangi Pue (Ngﾄ》i Maru, Te Atiawa) Stella Lloyd-Strickland, 10 (Ngﾄ》i Te Whiti, Te Atiawa, Kuki Airani) with Kapene Phillips, 8 (Ngﾄ》i Moeahu, Taranaki) at Farm 6, Opua Road.

OUR KAUPAPA The ambition of our kaumatua to build Parininihi ki Waitotara into an organisation dedicated to fulfilling the aspirations of our ancestors is now being truly realised. We recognise we have a duty to manage our lands and assets not just for our generation but for those that follow us. OUR VISION He Whenua He Tangata He Oranga Land People Prosperity OUR MISSION Strengthening Our People Through Sustainable Business Excellence OUR VALUES We will conduct our business with professionalism, integrity, transparency and respect

89 year old Edwina Rarawa White (nee Eriwata) (Te Atiawa, Taranaki) with her youngest great grand mokopuna 3 month old Riria Bedwell.

CONTENTS PARININIHI KI WAITOTARA INCORPORATION Chair’s Report

Chief Executive’s Report

Performance at a Glance

Meet The Board

CONTENTS

Strategic Partnerships

Port Nicholson Fisheries

Fonterra

PARININIHI KI WAITOTARA TRUST Chair’s Report

Grants and Donations

2012 Scholarship Recipients Profiles

Contents

Auditor’s Report

Commitee’s Annual Report

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cashflows

Notes to the Financial Statements

PARININIHI KI WAITOTARA TRUST ANNUAL FINANCIAL STATEMENTS Auditor’s Report

Statement of Comprehensive Income

Statement of Financial Position

Notes to the Financial Statements

Parininihi ki Waitotara

PARININIHI KI WAITOTARA INCORPORATION ANNUAL FINANCIAL STATEMENTS

The newly acquired Tempsky Road lease before recent developments

He Whenua, He Tangata, He Oranga â&#x20AC;&#x201C; Land People Prosperity. PKWâ&#x20AC;&#x2122;s strategy is firmly grounded in regaining control of our whenua and maximising the opportunities control of the land brings for our shareholders and Taranaki whanui.

Change has come in the form of new members around the board table and new investment partners in one of our key business areas. Growth has come in the form of significant new business acquisitions and new staff joining our team to manage our growing active land portfolio. Although the global economic outlook remained subdued during FY11/12, PKW has withstood this situation well due to its long term investment approach and diverse portfolio of business interests.

.......................................... GOVERNANCE

Change came to the Committee table in October 2011 when former Chair Jamie Tuuta stepped down to take on the role of Māori Trustee. The Committee of Management thanks Jamie for his contribution to PKW and wishes him well in the future.

8.6

We welcomed Tokatumoana Walden to the Committee of Management at the 2011 Annual General Meeting. Toka has brought a diverse range of business and cultural skills to the Committee table and his lifetime of commitment to Taranaki Iwi and extensive business networks throughout the region are valuable additions to the Committee. Tokorangi Kapea and Taari Nicholas were both re-elected at the 2011 AGM and the Committee is pleased to have their continued contribution at the decision-making table.

It is appropriate to acknowledge that 2012 represents the 120th anniversary of the West Coast Settlement Reserves Act 1892. This archaic piece of legislation continues to loom large in the day to day business of PKW Incorporation as it underpins the perpetual leases which remain over 90% of PKW’s lands.

CHAIR’S REPORT

STRATEGY AND POLICY

In consideration of this the Committee again reviewed our progress against our strategy He Whenua, He Tangata, He Oranga – Land People Prosperity. PKW’s strategy is firmly grounded in regaining control of our whenua and maximising the opportunities control of the land brings for our shareholders and Taranaki whanui. As part of PKW’s commitment to extending active control over our whenua the year in review saw the Committee implement the first stage of PKW’s managed farms strategy. This active farming model involves PKW directly employing staff to run our farms and is a move away from our traditional 50/50 sharemilker approach. This involves additional cost and risk but also delivers additional reward. Our investment decision-making framework also achieved a significant milestone during FY11/12 with the Committee’s approval of a formal Investment Policy to assist our management team in consideration of the many investment opportunities which present themselves to the Incorporation. As part of this process maximum debt and distribution policies have been agreed ensuring that PKW’s debt to equity ratios are managed within acceptable risk tolerances while balancing shareholder expectation for an annual dividend distribution.

Whakamana

CHAIR’S REPORT HINERANGI RAUMATI

As the Chair of Parininihi ki Waitotara Incorporation (PKW) I am proud to report to shareholders on a positive year of change and growth for PKW and an end of year net profit after tax of $8.6 million (FY10/11: $12.6 million). Throughout the year we have grown PKW’s asset base, provided for shareholder dividend and strengthened PKW’s key decisionmaking policies and processes.

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.......................................... CONSTITUTIONAL CHANGE The Committee of Management’s commitment to improving transparency and accountability was demonstrated during FY11/12, when the Half Yearly Meeting of shareholders considered and passed resolutions amending the constitution regulations to set an annual cutoff date for nominations to the Committee of Management as at the last working day of August of every year. Shareholders also approved the option of postal posting.

experts and Rabobank’s world class agribusiness research continues to inform our agribusiness’ strategic decision-making. The Committee also began an important new business relationship with the Iwi Collective Partnership (“ICP”) and Ngāti Mutunga o Wharekauri Asset Holding Company to collectively grow our crayfish interests over the long term.

The ICP is the largest voluntary collective of Iwi involved in the fisheries sector and includes Ngā Rauru, Ngaiterangi, Ngāti Awa, Ngāti These changes allow our management Manawa, Ngāti Porou, Ngāti Ruanui, team sufficient time to compile Taranaki Iwi, Ngaitai, Te Rarawa, Ngāti transparent candidate profiles for Tuwharetoa, Whakatohea and Te shareholder information ahead of the Arawa. Ngāti Mutunga o Wharekauri Annual General Meeting and enables are based on the Chatham Islands informed shareholder decision-making and crayfishing forms a central part of at voting time. This is increasingly their core business. important as the total number of owners reached over 9,000 during PKW saw benefit in working with ICP FY11/12 as a result of continued and Ngāti Mutunga o Wharekauri who fragmentation of shares. shared our long term investment focus and common values. The Committee believes this partnership truly reflects PKW’s desire to partner with other RELATIONSHIPS like-minded Maori businesses for PKW’s relationship with Fonterra has collective benefit. grown significantly over the past three years as we have become more active Each of these relationships is important to PKW and adds significant participants in the cooperative. This developed a step further in November value to our organisation. Relationship 2011 when PKW Committee Member management remains a key focus for David MacLeod was elected to the your Committee moving forward. Board of Fonterra. PEOPLE DEVELOPMENT PKW continues to ensure it works As part of our strategic plan PKW closely with its key funding partner has committed itself to finding ways Rabobank, a Dutch Banking of using the whenua to empower cooperative and the world’s safest bank. The value of the our people through employment PKW-Rabobank relationship was opportunity. Through the whenua underscored in June 2012 when it is our expectation that PKW can Rabobank invited PKW Chief offer more meaningful economic Executive, Dion Tuuta to participate opportunity for our people than just an in the Rabobank Global Farmers annual dividend. Masterclass. This event gave PKW access to a global network of world This year PKW has set in place its leading farmers and agribusiness foundation for developing the next

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generation of PKW kaitiaki whenua and land managers by entering into relationship agreements with Enviroschools Taranaki and Taratahi Agricultural Training Centre. Through engagement with schools and kura kaupapa and supporting our tamariki and rangatahi to experience their whenua directly we hope to sow the seed of a lifelong connection with their whenua. By offering quality careers training in land-based industries we can truly fulfil our vision of He Whenua, He Tangata, He Oranga. In addition to these initiatives PKW has worked with Ravensdown to develop a 3-year university scholarship focused on land-based studies. This award amounts to $5,000 per annum and includes guaranteed holiday work and job placement at the successful conclusion of the student’s studies. The Committee is hopeful these early initiatives will encourage more of our whanau to consider the benefits of a career with PKW in land management and agribusiness.

.......................................... CONCLUSION

The work the Committee has undertaken over recent years has created a strong foundation for your Incorporation moving forward. Our balance sheet is strong and our various business interests help us to manage the risk of becoming isolated and dependent on a single revenue source. Our land-based businesses continue to perform strongly and our growth prospects remain extremely positive. Our lobster business is establishing itself well with new partners focused on long term growth and full participation in the lobster value chain.

Your Committee has improved the level and quality of communication with shareholders regarding Incorporation activities through the production of our refreshed Whenua Magazine. We hope that shareholders enjoy receiving this quarterly information resource which, along with our refreshed website, is becoming a key resource for keeping shareholders abreast of the range of activities that PKW is undertaking. Throughout all of our various activities your Committee remains mindful that shareholders expect quality business performance while managing costs and protecting our ancestral land interests. The lessons and learning from recent years continues to inform our decision making.

This year PKW has set in place its foundation for developing the next generation of PKW kaitiaki whenua and land managers by entering into relationship agreements with Enviroschools Taranaki and Taratahi Agricultural Training Centre.

CHAIRMAN’S REPORT

TARATAHI TRAINING

Looking forward the Committee will continue to focus efforts on consolidating our recent gains and focusing on ensuring our most recent investments’ performance delivers real shareholder value. In addition to this the Committee will continue evaluating opportunities to gain more control of our ancestral lands and grow our Taranaki-based business.

Noho ora mai ra

Whakamana

Hinerangi Raumati Chair

Duane Luke (Ngāti Ruanui/Ngā Ruahine), Ngawharau Apaapa (Ngaiterangi/Ngāti Ranginui) with Bruce Bailey

12 CHIEF EXECUTIVE’S REPORT DION TUUTA

After a number of years of refocus and consolidation FY11/12 saw Parininihi ki Waitotara Incorporation acquire its first new dairy unit in over 5 years, implement its managed farms strategy, establish its first calf rearing unit and acquire a further 8 tonnes of lobster quota.

This result has been driven by the following: • •

PKW has achieved an $8.6 million net profit after tax for the 2011/12 financial year (FY10/11: $12.6 million). While lower than the previous year’s result this was expected due to the • increased costs associated with the implementation of our managed farms strategy and the previous year’s final result benefiting from a significant oneoff exit from the Finistere investment combined with a higher FY10/11 Fonterra milk payout. •

Continued stable lease land rental Under the managed farms business of $6.4m; model the Incorporation incurs 100% Increased dairy revenue of of costs for farm inputs such as $10.3m (FY10/11: $9.7m) pasture development and fertiliser, as a result of increased milk fencing, supplementary feed, animal production and livestock valuation health costs and salaries and wages. in spite of Fonterra decreasing This also included a number of oneits milk payout from an opening off costs in the establishment of our forecast of $7.15 to a final $6.45 managed farms such as the DNA payout for FY11/12; mapping of PKW’s dairy herds which will ensure genetic traceability and 60% increase in crayfish revenue improve breeding into the future. to $2.1m (FY 10/11: $1.3m) arising from greater Chinese In addition to incurring the additional demand for lobster and a profit costs from pursuing the managed share arrangement with Port farms strategy the dairy industry as Nicholson Fisheries; and a whole faced an average 6% price Finistere Oceania achieving its third capital exit ($0.4m) from the successful sell down of one of its portfolio investments.

PKW management is pleased with the progress made over the past 12 months and confident that the changes and planning we have implemented over recent years have placed the Incorporation in a good GROUP EXPENSES position to capture value and grow the Total group expenses of $9.7m business for the long term. represent a $2.1m increase on the previous year (FY10/11: $7.6m – see note 7 of the financial statements). REVENUE As outlined above the vast majority of Total group revenue for FY11/12 this increase is accounted for by way year was $20.2m representing a of increased farm working expenses 10% increase on the previous year as a result of the first year transition to (FY10/11: $18.3m). variable and managed farms on PKW

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Farms 7, 11, 13 and 17. Total farm working expenses for the year were $6.3m (FY10/11: $4.3m)

increase for key farm inputs including fertiliser and supplementary feed. Employee benefits (wages and salaries) for PKW Incorporation increased by approximately $200,000 as a result of the recruitment of additional staffing to meet the Incorporation’s growing business demands. Total salaries and wages for the year were $0.8m (FY10/11: $0.6m) Other group costs such as auditor fees, depreciation, lease expenses, members fees and other expenses (including Finistere management fee, communication costs, legal costs and professional advisory) remained

Whakamana

CHIEF EXECUTIVE’S REPORT

<< static or decreased. Management is conscious that cost management and efficiency remains a key concern for shareholders. FINANCE EXPENSE Total PKW net finance cost for FY11/12 was $2.0m (FY10/11: $1.4m). This increase in interest expense reflects an increase in borrowings to $40.6m as at 30 June 2012. The increased borrowing funded the new dairy acquisition, calf rearing unit establishment costs and purchase of Port Nicholson Fisheries and quota.

.......................................... OPERATIONAL OVERVIEW WHENUA

PKW’s lease rentals remained stable during FY11/12 generating revenue of $6.4m underpinned by the continuing strong performance of the dairy sector which much of PKW’s land is used for. Despite this the Incorporation regained control of two small lease blocks as a result of rental payment defaults. One block has since been re-leased with the Incorporation reviewing options for the second block. FARMING PKW Farms Ltd has had an extremely busy year with key activities for the year including implementing our first managed farms systems, acquiring a new 220 ha dairy unit and establishing the Incorporation’s first dedicated livestock breeding unit.

economic farm surplus (EFS) per hectare. This strategy challenged established thinking within the wider Taranaki farming fraternity when first announced. However, PKW’s first year with managers has proved to be a positive one – albeit one which requires more resource to ensure our managers are supported appropriately. Management will continue to monitor implementation closely. In December 2012 PKW was pleased to appoint Dallas McLean as our third dairy manager following the acquisition of PKW’s newest dairy unit on Tempsky Road. NEW DAIRY UNIT PKW’s newest dairy unit comprises 220 hectares of some of the finest land within PKW’s total land portfolio and will be capable of carrying approximately 600 dairy cows. The farm borders Umutahi and Inuawai hapu of Nga Ruahine Iwi located close to both Kanihi and Aotearoa Marae. This $8 million dollar investment in land, new cowshed, plant and livestock represents PKW’s most significant single investment in over 5 years, and underscores PKW’s long term commitment to regaining control of its lands to benefit our shareholders and their whanau. Gary Fredrickson has been entrusted with the management of this new unit which is aiming to produce 190,000 kgs/ms in its first season.

MANAGED FARMS

Livestock Strategy

FY11/12 represented PKW Farms Ltd’s first steps into managed farms and we were proud to employ Robert Walden and Gary Fredrickson as our first dairy farm managers after two years research and consideration. Our managers and their teams have performed extremely well in their first year with both achieving well above per hectare district averages and our managed farms returning the highest

Growth of PKW’s farming portfolio remains a key goal for the Incorporation requiring not only land but also dairy cows to stock our operations. Throughout FY11/12 the Committee reviewed options for growing PKW’s livestock numbers and ultimately resolved to establish a pilot calf-rearing unit on Farm 13. Construction began on the pilot

shed in May 2012 and will begin full operation in the 2012/13 dairy season rearing 300 high quality calves under the management of Kathryn Kelly. Subject to successful operation of the pilot project the Committee will consider expanding this operation in the future giving our farming operation the potential to diversify its income streams further through livestock sales. MILK PRODUCTION PKW Farms Ltd surpassed the previous year’s record production level by achieving a staggering 2.558 million kilograms of milk solids (kgs/ ms) for the FY11/12 dairy season (FY10/11: 2.393 million kgs/ms) – its highest ever production result. This is worthy of celebration when we consider that Taranaki climatic conditions during FY11/12 ranged from snowfall at sea level and devastating weather bombs to some of the most prolific grass growing conditions in over a decade. Throughout it all PKW Farms Ltd’s staff and our sharemilking business partners have performed exceptionally and all team members’ efforts are greatly appreciated. After an opening forecast total milk price of $7.15-7.25 (before retentions) Fonterra’s final milk price ended at a range of $6.45-$6.55 per kgs/ms. This payment comprises two parts – the first being the farmgate milk price of $6.05 per kg of milk solids and the second being a share dividend of 4050 cents per share (before retentions). FAREWELL TO GARY AND DONNA MELLOW The end of the 2011/12 dairy season saw the departure of Gary and Donna Mellow from the PKW Farms Ltd sharemilking whanau. Gary and Donna worked with PKW for over 20 years and have moved on to their own farm. On behalf of the Incorporation I would like to thank them for their contribution to PKW’s development and wish them well for the future.

The 2011/12 financial year marks a significant step forward for PKW’s lobster investment with the acquisition of 8 tonnes of CRA3 and 4 quota and the acquisition of 33% of Port Nicholson Fisheries processing factory with new business partners the Iwi Collective Partnership and Ngāti Mutunga o Wharekauri Asset Holding Company. PKW’s investment for this acquisition totalled $5.25m.

the remaining investment and has recognised the value at $nil. This is a disappointing outcome for what began as a promising venture and underscores the wisdom of the Committee’s policy of seeking active investments where PKW is actively involved in the business. FINISTERE OCEANIA

On a more positive note the Finistere Oceania investment achieved its third exit with the sale of one of its portfolio companies for a return of $414,000. As a result of this investment PKW’s As noted at the half yearly meeting total quota ownership now stands at of shareholders the Committee approximately 52 tonnes and is a key of Management has extended its partner in a successful business with relationship with Finistere Partners to significant growth potential. PKW’s allow more time for Finistere to pursue long-time partner George Stavrinos the realisation of its remaining portfolio has remained a core part of the Port companies. This decision came after Nicholson Fisheries team in a strategic thorough review of the portfolio and management capacity and this discussion with Finistere Partners relationship will remain important for regarding the exit potential of the our future growth. remaining investments. As part of this extension Finistere has agreed to a 50% reduction in management costs. OTHER INVESTMENTS COMMERCIAL PROPERTY LACTANZ PKW’s three commercial properties situated in Miranda St Stratford, Queen In 2000 PKW participated in the LACTANZ-Scott River investment St Waitara and Powderham St New which focused on developing a Plymouth remain under management number of dairy farms in the Margaret with KCL Property Ltd. This modest River area of Western Australia. The commercial portfolio remains a small investment involved developing but stable investment providing an former cropping land into dairy farms average 6.5% return on assets for the using an irrigation-based system. year. PKW will continue to retain these The investment has experienced assets until such time as the market significant operational and financial provides better opportunities to realise difficulty and the Advisory Board value. managing the investment is presently PEOPLE DEVELOPMENT seeking potential purchasers.

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PKW originally invested $1 million into this project but realised approximately $500,000 of capital gains in 2008. The FY10/11 financial statements reflected a 50% write down in the value of the remainder of this investment due to uncertainty about the investment. Due to the continuing uncertainty surrounding this legacy investment management is no longer confident that PKW will recoup value from

The growth in PKW’s various business interests is requiring greater management oversight in order to capture the increasing opportunities which are being made available to the Incorporation. This growth is a positive sign for PKW and its shareholders but we are mindful that this cost must result in benefit to the Incorporation. In the coming year management intends reviewing

current staffing capacity and structure to ensure the Incorporation has the capacity to meet its operational requirements while delivering greater shareholder value. Over the past 4 years PKW has grown from a predominantly outsourced operation with two farm employees to a 100% internally managed organisation with 23 full time employees and 36 full time equivalent positions on contract.

CHIEF EXECUTIVE’S REPORT

CRAYFISH

PKW remains committed to offering opportunity to qualified and experienced PKW shareholders interested in pursuing careers in the agribusiness industry and succession remains a key issue for the Incorporation moving forward. Our first steps towards addressing this have been established with a number of new relationships being established with educational providers Enviro-Schools and Taratahi to help train the next generation of PKW land managers and leaders.

.......................................... CONCLUSION

PKW’s future growth prospects are very strong. We have grown our internal management capacity well over the past 12 months and put in place clear guiding policies to assist our decision-making moving forward. We are currently piloting projects which we believe will deliver the Incorporation and its shareholders significant value over the coming years and place PKW in a very strong position to grow its business interests while regaining control of its ancestral lands and offering opportunity to its owners.

Mauriora Dion Tuuta Chief Executive

Whakamana

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GROUP PERFORMANCE AT A GLANCE

FINANCIAL PERFORMANCE NET PROFIT AFTER TAX AND OTHER ITEMS

$8,578 M

FINANCIAL POSITION

FOUR YEAR CONSOLIDATED PERFORMANCE TO 2011/12

2008/09 2009/10 2010/2011 2011/12

($ 000S)

($ 000S) ($ 000S)

Financial Performance Revenue

12,299 13,828

Operating Expenses

(6,986) (6,537) (7,566) (9,679)

Finance cost

(3,243) (1,601) (1,426) (1,988)

Net Gains/(Losses) From Investments

(2,473) 1,950 1,097 1,131

18,317 20,168

Share of Profit From Joint Venture

401 805 470 0

Net Profit Before Tax and Other Items

(2) 8,445 10,892 9,632

Tax (Expense) / benefit

(6) (2,325)

Profit from Continuing Operations

(8) 6,120 12,564 8,578

1,672 (1,054)

GROUP ASSETS BY BUSINESS

EQUITY $166.55M IN 2011 INCREASE IN EQUITY OF $7.1M TO -

$173.62 M

3% PKW INVESTMENTS 1% PKW TRUST

56% PKW WHENUA

35%

PKW FARMS

5% PKW FISH

PARININIHI KI WAITOTARA EXPENSES

Accounting Fees Auditor Fees

($ 000s)

272

103

55 74 55 55

Bank Fees

169 14 35 4

Communication Costs

120 112 118 91

Contractor Costs

240

Depreciation

699 700 679 660

Director Fees

88 45 22 20

Salaries & Wages Facility Costs Finistere Costs Farm Operating Expenses Grants

243

221 313 578 765 53

3,463 3,282 4,316 6,344 239

137

Insurance

52 82 102 132

Lease Expense

Legal Fees

133 173 412 173

Management Fee Finistere

454 406 383 310

Meeting Costs Committee Member Fees Miscellaneous Costs Other Professional Fees Rent Review Fees

32 26 23 22 134 157 178 186 47 84 57 149 299 163 138 278 0

167

SeaFic Levies

45 43 48 64

Travel & Accommodation

76 68 76 93

Treasury

30 30 30 30

GROUP PERFORMANCE AT A GLANCE

2009 2010 2011 2012

$6,987 $6,537 $7,566 $9,679

Whakamana

TERM LIABILITIES $0 - $100,000,000 2008/09 2009/10 2010/11

$37,696 $32,912 $37,149 $43,162

2011/12

TOTAL ASSETS $110,000,000 - $250,000,000 $202,334

2008/09

$204,072

2009/10

$210,152

2010/11

$224,117

2011/12

TOTAL LIABILITIES $0 - $100,000,000 2008/09

$47,341

2009/10

$47,644

2010/11 2011/12

$43,605 $50,499

Whakamana

GROUP PERFORMANCE AT A GLANCE

Taane Tamehana, 22 Months (Te Atiawa)

20 MEET THE BOARD TWO THOUSAND & TWELVE

HINERANGI RAUMATI

TAARINGAROA NICHOLAS

Elected in 2006

Elected in 2008

TOKORANGI KAPEA

HINERANGI EDWARDS

BEV GIBSON

Elected in 2005

Elected in 2007

Elected in 2009

DAVID MACLEOD

TOKA WALDEN

DANIEL HARRISON

Elected in 2010

Elected in 2011

Appointed in 2010

ENTITY POSITION Public Trust Board Member Te Ohu Kaimoana Portfolio Management Ltd Director Te Ohu Kaimoana Director Te Wananga o Aotearoa Director of Operations Ngamiro Health Trust Chairman

TOKORANGI KAPEA

Chair Audit and Risk Committee, Director PKW Farms Ltd and member of PKW Trust. ENTITY POSITION Ngati Ruanui Holdings Ltd Director Parininihi ki Waitotara Incorporation Shareholder & Committee Member Wellington Tenths Shareholder Te Awanui Huka Pak Ltd Director Seeka Kiwifruit Industries Ltd Director Southern Pastures Ltd Director Miraka Milk Ltd Director Tarit Holdings Ltd Director

HINERANGI EDWARDS

Chair PKW Investments Ltd, Director PKW Farms Ltd, member of Audit and Risk Committee and PKW Trust.

Chair PKW Trust Director, Director PKW Farms Ltd and member of Human Resources Committee.

ENTITY POSITION Tuia Group Ltd Director Tuia Legal Partner Office of Treaty Settlements Consultant Tuia Slipstream Ltd Director Taranaki Aquagardens Ltd Director Tuia Investments Ltd Director Ngati Apa Development Limited Director Tuia Trading Ltd Director Ora Solutions Ltd Director Port Nicholson Fisheries Ltd Director

ENTITY POSITION Aatea Consultants Ltd (t/a Aatea Solutions) Director Newlook Clinic South Taranaki Ltd Director/Shareholder NZ Group Investments Ltd Director/Shareholder Western Institute of Technology Taranaki Council Member R and R Edwards Whanau Trust Trustee MÄ ori Translation.Co.NZ Ltd Director Western Institute of Technology Taranaki Appoint Advisory - Board Member Taratahi Advisory Board Member

BEV GIBSON Director PKW Farms Ltd, member of Audit and Risk Committee, Human Resources Committee and PKW Trust. ENTITY POSITION Quality Visions Ltd Managing Director Beauty Treats Ltd Director Robinson Whanau Trust Trustee Mahia Mai a Whai Tara Trust Chairman National Kaitiaki Group Convenor Amiria Rangi Education Trust Trustee

21 COMMITTEE OF MANAGEMENT

Elected Chair in 2011. Chair PKW Farms Ltd and member of Human Resources Committee and PKW Trust.

TAARINGAROA NICHOLAS

DAVID MACLEOD Director PKW Farms Ltd, Chair Human Resources Committee and member of PKW Trust. ENTITY POSITION AJ Greaves Electrical Ltd Owner/Managing Director Taranaki Regional Council Chairman Property Portfolio Investments Ltd Director Local Government New Zealand (LGNZ) National Councillor LGNZ - Regional Affairs Committee Deputy Chairman Port Taranaki Ltd Director Fonterra Director

Whakamana

HINERANGI RAUMATI

TOKATUMOANA WALDEN Director PKW Farms Ltd, member of Audit and Risk Committee and PKW Trust. ENTITY POSITION Toka Limited Director R N Horo Estate Trustee Te Korimako o Taranaki Charitable Trust Trustee Taranaki MÄ ori Trust Board Trustee Taranaki Iwi Trust Chairman

DANIEL HARRISON Appointed Associate Director in January 2012. ENTITY POSITION Parihaka Management Trust Trustee AUT School of Tourism and Hospitallity Advisory Group member

Native Rata at Puketi

SUBSIDIARY COMPANIES

COMMITTEE Hinerangi Raumati (Chair) Taaringaroa Nicholas Tokorangi Kapea Hinerangi Edwards Bev Gibson David Macleod Tokatumoana Walden

PKW FARMS LTD Hinerangi Raumati (Chair) Hinerangi Edwards Bev Gibson Tokorangi Kapea David MacLeod Tokatumoana Walden Taaringaroa Nicholas Philip Luscombe (Independent Director)

ASSOCIATE DIRECTOR Daniel Harrison (Appointed January 2012) SECRETARY / CEO Dion Tuuta

PKW INVESTMENTS LTD Tokorangi Kapea Dion Tuuta

23 COMMITTEE OF MANAGEMENT

COMMITTEE OF MANAGEMENT

TARANAKI AQUA GARDENS LTD Tokorangi Kapea

PKW COMMITTEES

PKW TRUST SHAREHOLDER REPRESENTATIVE Darryn Ratana HUMAN RESOURCES COMMITTEE David Macleod (Chair) Hinerangi Raumati Hinerangi Edwards Bev Gibson PKW AUDIT AND RISK COMMITTEE Taaringaroa Nicholas (Chair) Bev Gibson Tokatumoana Walden Tokorangi Kapea

JOINT VENTURE COMPANIES PORT NICHOLSON FISHERIES LTD 2012 GENERAL PARTNER Dion Tuuta (Chair) Tokorangi Kapea RETAIL DEVELOPMENT OPERATIONS PTY LTD (IN RECEIVERSHIP) Spencer Carr Tokorangi Kapea Arama Kukutai BARRON PROPERTIES PTY LTD (IN RECEIVERSHIP) Spencer Carr Tokorangi Kapea Arama Kukutai PKW LIMITED LIABILITY PARTNERSHIP (IN RECEIVERSHIP) Spencer Carr Tokorangi Kapea Arama Kukutai

Whakamana

PKW TRUST Hinerangi Edwards (Chair) Bev Gibson Tokorangi Kapea David Macleod Taaringaroa Nicholas Hinerangi Raumati Tokatumoana Walden

24 MEET THE MANAGERS SHANE MILES

Farms Supervisor Shane Miles joined PKW in early 2011 as the PKW Farms Supervisor. He holds a Bachelor of Applied Science Majoring in Agriculture, and has also completed the Advanced Sustainable Nutrient Management Courses, both were attained through Massey University. Shane is a member of a farming family from Okato in Coastal Taranaki and prior to joining PKW spent a number of years involved in a technical nutrient management role as the Key Accounts Manager for a fertiliser company in the Lower North Island. He is married to Rebecca. DION TUUTA

Chief Executive Officer Dion Tuuta (Ngﾄ》i Mutunga and Ngﾄ》i Tama) originally joined PKW in February 2008 as the General Manager of Finance and Administration. He was appointed PKW Chief Executive Officer in October 2011. Dion grew up in Taranaki and began his professional career as a historian for the Waitangi Tribunal after gaining a Masters Degree in History from Massey University. Dion subsequently moved into senior policy and communication roles in Wellington before returning to Taranaki in 2007 as the General Manager for Te Runanga o Ngﾄ》i Mutunga. Dion also holds a number of governance roles including being Chair of Port Nicholson Fisheries, a Trustee of WOMAD New Zealand Charitable Trust and a Trustee of Urenui Marae. He is married to Rose and they have three children.

DION MAAKA

Financial Controller Dion Maaka (NgÄ Ruahine) is a Chartered Accountant who graduated with a Bachelor of Business Studies majoring in Accounting from Massey University before beginning his professional career with New Plymouth Accounting Firm Stratagem. Born and raised in Eltham, Dion was appointed the PKW Financial Controller in March 2009 after returning from 10 years working overseas for multi-national companies such as GlaxoSmithKline and AT&T. Dion held senior financial management roles in London, Melbourne and Dublin before returning to Taranaki in 2009 with his wife Claire and their two young children. He is currently competing post-graduate studies in agricommerce. RANALD GORDON

General Manager Land Assets Ranald Gordon joined PKW as the General Manger of Land Assets in October 2010 but has had a relationship with PKW since 1988 as an outsourced contractor carrying out farm consultancy and valuation advice. From 2005 to 2010 he was contracted from Staples as the General Manager of PKW Farms Ltd. Ranald is a registered valuer, farm management consultant, licensed real estate agent and qualified arbitrator. He graduated from Lincoln University in 1974 before taking up roles in Rural Banking and Finance, Valuation, Farm Management Consultancy, Property Management and Arbitration. Ranald initially became involved with PKW over the 1990 rent review. Ranald is married to Robyn and they have 3 adult children, Kate, Cameron and William and 2 grandchildren Georgiana and Henry.

60 PERCENT INCREASED CRAYFISH REVENUE

52 TONNES

TOTAL OWNERSHIP OF LOBSTER

PORT NICHOLSON FISHERIES PKW HAS FACILITATED A JOINT VENTURE WITH OVER 15 IWI INTERESTS UNDER THE UMBRELLA OF PORT NICHOLSON FISHERIES (PNF), A FULL VALUE CHAIN LOBSTER OPERATION THAT LEASES QUOTA, FISHES AND PROCESSES THE LOBSTER FOR THE CHINESE EXPORT MARKET. In April 2012 PKW, along with new business partners – the Iwi Collective Partnership (ICP) and Ngāti Mutunga o Wharekauri Asset Holding Company – acquired Port Nicholson Fisheries from PKW’s long-standing business partner George Stavrinos. PKW also acquired an additional 8 tonnes of CRA3 and CRA4 quota as part of the purchase taking its total quota ownership to 52 tonnes. The new PNF relationship and investment had its inception in a

project initiated by the Māori Economic Development Taskforce called Koura Inc. This project brought together all major Māori quota owners to test whether there was an appetite for a collective approach to exporting Māoriowned lobster. While the larger Koura Inc project did not eventuate, PKW, ICP and Ngāti Mutunga saw value in working together to gain a stronger collective position throughout the full lobster value chain. Through the developing relationship with PKW, Ngāti Mutunga and ICP agreed to lease their respective ACE packages to PNF for the 2011/12 fishing season while reviewing their future growth and development options. In late 2011 George Stavrinos indicated a desire to exit PNF and invited PKW and our new partners to make an offer to acquire the company. PKW entered into a Memorandum of Understanding with Ngāti Mutunga and ICP to establish a collective vehicle to bring together new relationships, new skills and new

quota and this became the basis of PKW’s newest business relationship. The PNF collective is committed to growing its business sensibly over the long term and is an excellent example of Māori business co-investing to participate in the full value chain for mutual long term benefit.

STRATEGIC PARTNERSHIPS

Pakihi

Port Nicholson Fisheries Operations Manager Shamoun Ishow

Maru Samuels (ICP) Tom McClurg (Ngﾄ》i Mutunga o Wharekauri) Toko Kapea and Dion Tuuta (PKW) directors of Port Nicholson Fisheries. Absent Robin Paige (Ngﾄ》i Mutunga) and Mark Ngata (ICP)

BY PKW FARMS LAST SEASON

FONTERRA THE RELATIONSHIP BETWEEN PKW INCORPORATION AND FONTERRA HAS GONE FROM STRENGTH TO STRENGTH OVER THE LAST THREE YEARS BUILT ON THE SIMILARITIES BETWEEN NEW ZEALAND’S LARGEST DAIRY COOPERATIVE AND THE INTERGENERATIONAL NATURE OF PKW INCORPORATION. FONTERRA IS PROUD TO HAVE PKW AS THE LARGEST SHAREHOLDER AND SUPPLIER OF MILK IN TARANAKI, WITH A RECORD 2.5 MILLION KG OF MILKSOLIDS BEING PROCESSED FROM PKW’S FARMS LAST SEASON. PKW use the Fonterra facility at Whareroa Hawera on occasions for Board meetings and this recently included a site tour. Senior Area Manager Paul Radich notes that hosting PKW on site is a great way of acknowledging the relationship between the two organisations. “Fonterra is

PKW’s cooperative, so our house is literally your house too.” The last of these Fonterra hosted Board meetings was on 25 June 2012 following the Fonterra Special Meeting to consider Trading Amongst Farmers where all PKW Committee members were in attendance. Fonterra is regularly represented at special PKW events such as the recent blessing of the new dairy farm on Little Tempsky Road in Okaiawa. On the communication front, there is a close relationship with local Area Managers for sharemilkers on operational matters, and Paul Radich manages the relationship and communication between CEO Dion Tuuta, Financial Controller Dion Maaka and Land Assets Manager Ranald Gordon. Fonterra has also offered top-level support on legislative matters on land issues with central government, particularly in relation to PKW’s consideration of the Māori Reserved Lands Act.

Strategically the Committee of Management has taken a much more active interest in the cooperative’s performance acknowledging that Fonterra’s business performance has a significant impact on PKW’s business performance. PKW Board Member David MacLeod was recently appointed by Fonterra shareholders onto the Fonterra Board, thus strengthening the PKW-Fonterra bond. PKW’s farms are seen by the Fonterra team as models of best practice, with high standards set on health and safety, people management, animal welfare, and milk quality, with the farms being regular recipients of grade free and gold grade free awards. With the recent emphasis on high standards of environmental stewardship, Fonterra will be looking to PKW for leadership with their proven performance and focus on kaitiakitanga.

STRATEGIC PARTNERSHIPS

Pakihi

Paul Radich - Fonterra Senior Area Manager, North Taranaki with PKW CEO Dion Tuuta

.......................................... CHAIR’S REPORT HINERANGI EDWARDS

REVENUE AND EXPENSES PKW Trust generates its income from investments in New Zealand Government bonds and interest charged against a loan to Parininihi ki Waitotara Incorporation. PKW Trust also receives funds from PKW Incorporation in the form of an annual grant distribution subject to the Incorporation’s business performance. During 2011/12 PKW Trust generated total income of $331,752 (2010/11 $314,000).

From this income PKW Trust made total grant allocations of $138,451 (2010/11 $99,000) supporting a range of individuals and community groups in their various aspirations. Total funding allocated represented a 39% increase in support offered to the shareholder community on the previous year and was underpinned On behalf of the trustees of the by improving financial performance Parininihi ki Waitotara Trust I am of PKW Incorporation and improved pleased to present our report on activities for the 2011/12 financial year. returns from both PKW’s government bond and interest. PKW Trust was established in 1983 As always PKW Trust appreciates the to support the educational and financial support it receives from PKW community development aspirations Incorporation and thanks shareholders of Māori within the Taranaki region with for their foresighted decision to special regard for the shareholders of establish the Trust 29 years ago to PKW Incorporation. The establishment support the wider social aspirations of the Trust represented a farsighted of shareholder whanau and the wider decision by PKW Incorporation Taranaki Māori community. shareholders and was an act of generosity which continues to benefit our people today. EDUCATION GRANTS Over the past 29 years the Trust has The Trust has again continued with been steadfast in its commitment its mission of supporting educational to providing quality support to excellence and achievement amongst shareholders and more recently the shareholders whanau and Taranaki wider Taranaki Māori community whanui in accordance with our which the vast majority of PKW’s educational funding policy set in 2010. shareholders affiliate to. The year in review has very much continued this Applications for education are legacy. received all year round with

..........................................

applications closing on 31 March of each year with Trustee decisions on educational awards being made at the Trust’s April meeting. We continue to work on the efficient processing of applications while maintaining timely communication with applicants. In accordance with our policy PKW Trust provides a set number of scholarships and educational grants per year reflecting the Trust’s focus on promoting and rewarding excellence. The year in review represents the second year of PKW Trust’s multi-year scholarship programme. During 2011/12 the Trust awarded 1 additional Charles Bailey Scholarship to Nikau Hindin, 4 additional postgraduate scholarships to James Berry, Brendan Laurence, Levi Rona and Matariki Williams, and 7 new undergraduate scholarships to Lisa Fairclough, Ruawai Laura Hamilton, Wiremu McFater, Rongomai Smith, Moerangi Tamati, Ashleigh Wilsonvan Duin and Merryn Wilsonvan Duin. During 2011/12 PKW Trust made the following educational funding distributions: •

2 Charles Bailey Scholarships totalling $10,000 per annum;

•

6 Post-graduate Scholarships totalling $18,000 per annum; and

•

10 Under-graduate Scholarships totalling $20,000 per annum.

•

70 tertiary education grants totalling $32,500.00; and

•

10 NCEA school grants totalling $576.90

All PKW scholars are expected to perform at a high level of academic excellence to retain their multi-year awards and are also expected to report back to PKW Trust and Trust beneficiaries on progress with their studies and how they might contribute

back to the wider PKW and Taranaki whanau. Trustees and beneficiaries were extremely pleased to receive progress reports from Dennis Ngawhare, Max O’Brien and Tere Rei at the 2011 AGM and Jemaima O’Brien, Campbell Hooker, and Lewin Husband at the 2012 Half Yearly Meeting of Shareholders.

$2.973M 2011 ASSETS

$3.163M 2012 ASSETS

The timing of PKW Trust’s annual general meeting often coincides with university exams meaning that this can be a difficult requirement for some of our scholars to achieve. Trustees are keen to ensure that our reporting requirements do not negatively impact on our scholars studies and will review ways in which our scholars account to PKW’s beneficiaries for the support they generously make available.

.......................................... COMMUNITY GRANTS

PKW TRUST CHAIR’S REPORT

$211,000 2012 REVENUE

$193,000 2011 REVENUE

The Trust was pleased to approve 14 community grant applications during 2011/12 (FY10/11: 6 applications) which included the following kaupapa: Ramanui School

•

Taranaki Māori Sports Awards

•

Taranaki Tu Mai Festival Trust

•

Waipapa Marae Trust

•

Manukorihi Intermediate School

•

Te Kura Kaupapa Māori o Ngāti Ruanui

•

Te Reo o Taranaki Trust

•

Ngārongo Marae

•

Potaka Marae

•

Taranaki Māori Teachers Ass

•

Opunake High School

•

Pariroa Marae Trust

•

Taranaki Art Awards

•

Tangahoe Tribal Trust Urupa Fencing

$99,000

2011 GRANTS PAID

$139,000 2012 GRANTS PAID

$17,000

2012 ADMIN EXPENSES

$25,000

2011 ADMIN EXPENSES

Awhina

•

.......................................... SPORTING AND CULTURAL GRANTS The Trust continued to support beneficiaries achieving sporting excellence at the national and international levels. During 2011/12 the Trust provided a total of $4,500 in funding assistance to 9 promising sportspeople including Heneti Davis, Meikura Williams, Leila Blackburn, Roimata Blackburn, Liam Whareaitu, Kayla Williams, Kayla Manuirirangi, Te Akonga Pihama and Te Rei Bigham-Dudley. Our sportspeople are extremely appreciative of the support provided by PKW Trust as exemplified by 16 year old Te Rei Dudley-Bigham who provided an inspirational presentation on his sporting achievements and development as part of the 2012 Half Yearly Meeting at Taiporohenui marae. We wish Te Rei and all of our aspiring sportspeople well in their future endeavours.

.......................................... LOOKING FORWARD

PKW Trust administration is presently conducted through the PKW Office with education grant applications being processed online with a closing date set for 31 March of each year. During FY11/12 the Trust’s administration was primarily undertaken by PKW Registrar Nedina Hohaia and PKW CEO Dion Tuuta. The increasing demand on Trust assistance has required further consideration of the most appropriate way of delivering Trust services. The Trust remains committed to its core service offering of supporting the educational aspirations of shareholders and Taranaki whanui but is exploring ways in which this might be expanded upon with additional resourcing. Looking ahead the Trust expects to increase its offerings to shareholders and the wider Taranaki Māori community through working

closer with PKW Incorporation and other key Taranaki stakeholders such as educational providers and other charitable organisations. As part of this we expect to appoint a dedicated full time manager to lead the future development of the Trust’s strategic direction and operational activities. We believe this step, coinciding with PKW Trust’s 30th anniversary, is a necessary building block to making the Trust a more active part of the PKW-group and therefore able to make more meaningful progress to growing interconnectivity between our scholars and the Trust for longer term benefit.

.......................................... GOVERNANCE

.......................................... CONCLUSION As Trustees we are conscious of the increasing demand for Trust support. As PKW Incorporation’s business success and profile increases, so too has demand for PKW Trust assistance increased. Trustees are continually considering ways in which this assistance can be improved and built upon. Trustees are united in our desire to provide assistance which empowers beneficiaries and the Taranaki Māori community to become more selfsustaining and empowered rather than just focusing on stop-start short term funding grants. As we enter the Trust’s 30th anniversary year the Trustees of Parininihi ki Waitotara Trust remain committed to seeding Taranaki potential for the benefit of Taranaki whanui and the wider PKW whanau so that we all might achieve our goals and grow stronger together.

The Trust was pleased to welcome Darryn Ratana as the new ‘shareholder representative’ who was elected at the 2011 Annual General Meeting following the retirement of Te Aroha Hohaia. The Trustees are extremely appreciative of Te Aroha’s contribution as shareholder Hinerangi Edwards representative on the Trust over the Chair past three years and wish her every success in her work towards achieving her PhD.

Nga mihi

Te Aroha’s commitment to improving community outcomes combined with her focus on individual excellence were hallmarks of her time as shareholder representative which came to be reflected throughout the Trust’s vision and mission of Seeding Taranaki Potential – Building Success. Darryn Ratana (Ngā Rauru Kitahi) comes to the Trust with significant governance experience as a member of Te Kāhui o Rauru. Darryn’s time with the Trust to date has demonstrated his strong commitment to developing closer working relationships with Iwi and we look forward to his contribution to the Trust’s ongoing development.

Leila Blackburn (Ngāti Ruanui) NZ Under 15’s Basketball Representative

Awhina

PKW TRUST CHAIR’S REPORT

TE RIPOATA-Ā-TAU 2011-2012 HE RIPOATA NĀ TE TIAMANA O TE TARATI O PARINĪNIHI KI WAITŌTARA Ka nui taku tīkoakoa i a au ko te māngai mo ngā katiaki o Parinīnihi ki Waitōtara e taea ana e au te māhora atu i te ripoata mo te tau pūtea 2011/12. I tatū ai te tarati o Parinīnihi ki Waitōtara i te tau 1983 hei tautoko ake i te hapori me hō rātou moemoeā kia whanake ai te mātauranga me te hapori anō ki roto it e rohe o Taranaki, ā, kei reira te tautoko mā te hunga o te kōporeihana o Parinīnihi ki Waitōtara. He mea tohu ko te tatūtanga o te tarati it e tirohanga roa o ngā kaipupuru hea, ka mutu, i puta mai tēnei taonga it e whakaaro manaaki a ngā kaipupuru hea o te kōporeihana o Parinīnihi ki Waitōtara, ā, kei te whai hua tonuhia tēnei taonga i tēnei rā. Mai i ngā tau e rua tekau mā iwa kua hipa ake nei kua mārō te tū o te tarati ki te manaaki i ngā kaipupuru hea, ā, i ngā tata nei kua hora te manaaki ki te hapori Māori whānui tonu, ka mutu, he tokopae tonu ngā kaipupuru hea e whai pānga ana ki a rātou. E mou tonu ana te tarati ki tēnei wairua manaaki.

.......................................... TE MANA KĀWANATANGA

E mihi ana te tarati ki a Darryn Ratana me tana kuhunga mai hei māngai mā te hunga pupuru hea i pōtitia ai it e hui-ā-tau 2011 i muri mai i te wehenga o Te Aroha Hohaia. Kei te tino mihi atu te tarati ki a Te Aroha mōna i whakapau kaha nei hei māngai mo te tarati i roto i nga tau e toru kua pahemo ake nei, ā kei te ngākau arohā tonu ki a Arohā i a ia e mahi ana i tana tohu kairangi. Nā te kaha o Te Arohā ki te whanake haere i ngā hua mā te hapori ki ōna pūmanawa ake i waitohua nuitia ai i te wā ki a ia hei māngai mā ngā kaipupuru hea e whakaaata ana i te pae tawhiti e

whāia ana e te tarati arā, ko te onokia atu i te purapura o te mana tangata kia pūāwai ai.

hapori whānui o te rohe o Taranaki.

I tae mai a Darryn Ratana (Ngā Rauru Kītahi) ki te tarati me ōna pūmanawa mana kāwanatanga i pūāwai mai hei mema o Te Kāhui o Rauru. Ma i te wā i piri mai ai a Darryn ki te tarati nei kua kitea i tōna kaha whakaū i a ia ki te mahi tahi me te Iwi, ā, ka nui tō mātou kaikā kia kite atu i tōna āwhina i te whanaketanga o te tarati.

Ngā Karahipi Mātauranga

.......................................... Ngā Tahua Pūtea me ngā Nama E tupu ake ai ngā pūtea i ngā mahi haumi o te Tarati o Parinīnihi ki Waitōtara ki ngā pūtea nama a te Kāwanatanga me ngā initarete i whiua reretia ki te pūtea tārewa ki te Kōporeihana o Parinīnihi ki Waitōtara. Ia tau, ia tau ka whiwhi pūtea te tarati mai i te Kōporeihana o Parinīnihi ki Waitōtara ā, ko te momo pūtea i whakawhiwhia ai ko tētehi karahipi-ā-tau, ā, kei runga i te kaha o ngā mahi pākihi e taea ai tēnei. I tēnei tau 2011/12 i whakatupuria ai e te tarati te tahua pūtea: $331,752 (2010/11 $314,000). Mai i tēnei pūtea i tohaina ai e te tarati o Parinīnihi ki Waitōtara ngā karahipi e eke ana ki te $138,451 (2010/11 $99,000), ka mutu, i kaha tautokona ai i te tini o ngā rōpū me ngā tāngata takitahi me hō rātou moemoeā. Ko te tōpū tahua pūtea i tohaina kei te tohua i te pikitanga o te tautoko ki te hapori pupuru hea mai i te tau kua pahure ake nei me te pakari o ngā mahi whai pūtea o te kōporeihana me te piki o ngā hua i ahu mai i ngā moni hua o ngā pūtea nama kāwanatanga me ngā initarete. E kore rawa e mutu te mihi a te Tarati ki ngā pūtea tautoko i whakawhiwhia ai e te Kōporeihana o Parinīnihi ki Waitōtara me ngā kaipupuru hea i whai wāhi ai ki te whakatū i te Tarati i ngā tau e rua tekau mā iwa kua pahure ake nei, ā, kei te tutuki i te moemoeā kia manaaki i te

.......................................... Kāore anō i mutu noa te kaupapa nui a te Tarati kia tautoko ake i ngā taumata huarewa mō te mātauranga hei whaiwhatanga ake mā ngā whānau kaipupuru hea me Taranaki whānui e hāngai tonu nei ki ngā kaupapa here mātauranga i whakaritea ai i te tau 2010. Ia tau ia tau ka tae mai ngā tono karahipi, ā, ka kati atu te wā tono i te 31 o Maehe ia tau, ia tau, ā, ka whakatauria e ngā kaitiaki ko ēhea o ngā karahipi ka tohua i te hui ki te marama o Apereira. Kei te rite tonu kē tā matou kaha ki te whakahaere i tēnei, ā, kei te tūwhera tonu te kuaha ki ngā kaitono ki te hiahia kōrero mai rātou ki a mātou. Ko tō mātou whakaū i hō mātou kaupapa here e pā ana ki ngā karahipi me ngā karaati mātauranga i ia tau i ia tau e whakaata ana i te tirohanga kia whakatairangahia i te toi o ngā mahi o tēnā me tēnā. Kei te tohua te tau nei i te tau tuarua e whai wāhi ana te Tarati ki te tuku i te tini o ngā karahipi mo te hōtaka karahipi.a te Tarati. I te tau 2011/12 i whakawhiwhia ai e te Tarati tētehi anō karahipi o Charlie Bailey ki a Nikau Hindin, e whā ngā karahipi taumata paerua ki a James Berry, Brendan Laurence, Levi Rona me Matarik Williams me nga karahipi hou o te taumata paetahi ki a Lisa Fairclough, Ruawai Laura Hamilton, Wiremu McFater, Rongomai Smith, Moerangi Tamati, Ashleigh Wilsonvan Duin me Merryn Wilsonvan Duin. I te tau 2011/2012 i tohaina ai e te Tarati hēnei tahua pūtea. •

2 Charles Bailey Scholarships totalling $10,000 per annum;

•

6 Post-graduate Scholarships totalling $18,000 per annum; and

10 Under-graduate Scholarships totalling $20,000 per annum.

•

70 tertiary education grants totalling $32,500.00; and

•

10 NCEA school grants totalling $576.90

Me eke rawa ko ngā tohunga ki tētehi taumata huarewa kia mou ai i a rātou hā rātou karahipi, ka mutu, ka riro mā rātou e whakahoki korero mai ki te tarati me ngā kaiwhiwhi o te Tarati e pēhea ana ngā mahi whai i te mātauranga, ā, ka pēhea tō rātou tautoko i a Parininihi ki Waitōtara whānui me te whānau o Taranaki. Kātahi te harikoa o ngā kaitiaki me ngā kaiwhiwhi o te Tarati kia whakawhiwhia i ngā ripoata o Dennis Ngawhare, Max O’Brien and Tere Rei ki te hui-ā-tau, me te tae mai o Jemaima O’Brien, Campbell Hooker, and Lewin Husband i te hui tuatahi o te tau me ngā kaipupuru hea o 2012. E āhua tukituki ana te hui-ā-tau ki ngā whakamātautau o te whare wānanga, no kona i āhua uaua ai mā ētehi tohunga ki te whakatutuki. Kei te kaha hiahia te Tarati kia kaua rawa ngā mahi ripoata e pā kinohia ki ngā mahi whai i te mātauranga mā ngā tauira, ka mutu, ka arotakengia i ētehi huarahi e āhei ai ngā tauira ki te whakahoki korero mai ki a ngā kaitiaki o Parinīnihi ki Waitōtara i ngākau marae ki a rātou.

Ka nui te whakamihi a te hunga kaitākaro ki te Tarati o Parinīnihi ki Waitōtara e whakatauirahia nei e te tamaiti 16 noa iho te pakeke a Te Rei Dudley-Bigham i whakamīharotia ai te hunga whakarongo mo ana mahi hākinakina i te hai tuatahi o te tau ki te marae o Taiporohēnui. Ka nui tō mātou tautoko i a Te Rei me nga kaitākaro huhua e tūmanakotia ana kia eke hoki ko rātou.

.......................................... NGĀ KARĀTI HAPORI Tekau mā wha ngā tono karāti i whakaaehia e te Tarati i tēnei tau 2011/12 e whai ana hoki i ēnei kaupapa: •

Ramanui School

•

Taranaki Māori Sports Awards

•

Taranaki Tu Mai Festival Trust

•

Waipapa Marae Trust

•

Manukorihi Intermediate School

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Te Kura Kaupapa Māori o Ngāti Ruanui

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Te Reo o Taranaki Trust

•

Ngārongo Marae

•

Potaka Marae

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Taranaki Māori Teachers Ass

•

Opunake High School

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Pariroa Marae Trust

•

Taranaki Art Awards

•

Tangahoe Tribal Trust Urupa Fencing

.......................................... .......................................... NGĀ KARĀTI HĀKINAKINA ME NGĀ KARĀTI AHUREA

TE TIROHANGA WHAKAMUA

Kei te tautoko tonu ake te Tarati i ngā kaiwhiwhi i eke pānuku ki te taumataā-motu ki te taumata-ā-ao. I te tau 2011/12 i tohaina ai e te Tarati i ngā tahua pūtea ki ngā kaitākaro e Iwa, arā ko Heneti Davis, Meikura Williams, Leila Blackburn, Roimata Blackburn, Liam Whareaitu, Kayla Williams, Kayla Manuirirangi, Te Akonga Pihama raua ko Te Rei Bigham-Dudley.

I tēnei wā kei roto i te tari o Parinīnihi ki Waitōtara ngā mahi o te tari, ā, ka whakahaerehia ngā tono ki runga i te ipurangi kia tae rā anō ki te 31 o Maehe ia tau ia tau. I te tau pūtea mō 2011/12 i whakahaerehia ai ngā mahi tari e te kairēhita a Nedina Hohaia me te Tumu whakarae o Parinīnihi ki Waitōtara a Dion Tuuta. Nā te kaha hiahia o ētehi ki ngā mahi whakaratonga o te Tarati

kei te kaha wānangahia e Te Tarati me pēhea e tika ai hāna mahi. Kei te ū tonu te Tarati ki ana mahi ake, otirā ko te tautoko ake i ngā āwhero o ngā kaipupuru hea me Taranaki whānui, heoi kei te rapu tonu i ētehi huarahi e taea ai te whakarahi ake ngā rauemi. E taea ai ko tēnei mā roto mai i te kaha mahi tahi o te Tarati me Kōporeihana me ētehi rōpū manaaki i te Iwi. Ko tētehi wahanga o tēnei ko te hiahia kia tohua i tētehi kaiwhakahaere tūranga pūmou hei arataki i te haere o te Tarati ki roto anō i hōna rautaki me ngā mahi whakapakari i ngā ringaringa me ngā waewae o te Tarati. E whakapono ana mātou ka haere ngātahi ēnei rautaki me te huritau toru tekau hei āwhina ki te whakatupu i te noho tahi o te Tarati me te Kōporeihana kia āta tūhonotia ai ki ngā tohunga me te Tarati kia whai hua ai tēnei mo ake tonu.

.......................................... WHAKAKAPI.

He mōhio nō mātou ko ngā kaitiaki kei te piki te hiahia a te Iwi mo ngā whakaratonga a te Tarati. Ka piki ana te nui o ngā mahi pākihi a te Kōporeihana ka pēra hoki te te tupu o te hiahia ki te Tarati E kore rawa e mutu te whakaarohia e ngā kaitiaki me pēhea e taea ai te manaaki i a rātou. Kei te kotahi te whakaaro a ngā kaitiaki kia manaakihiam kia whakamanahia ngā kaiwhiwhi me te hapori whānui o Taranaki kia taea ai e rātou te tiaki anō i a rātou e pai noa ake ai i te toha karahipi noa iho I a mātou e kuhu nei ki te huritau toru tekau kei te ū tonu ngā kaitiaki kia pūāwai mai ngā uki o Taranaki ki runga i te tikanga e kotahi ai te hoe o te whānau whānui o Parinīnihi ki Waitōtara me Taranaki whānui.

Nga mihi Hinerangi Edwards Tiamana.

Awhina

•

PKW TRUST CHAIR’S REPORT

NGĀ KAIWHIWHI TAUTOKO GRANTS AND DONATIONS

CHARLES BAILEY Nikau Hindin Dennis Ngawhare POSTGRADUATE James Berry Brendan Laurence Jemaima O’Brien Acushla O’Carroll Levi Rona Matariki Williams UNDERGRADUATE Lisa Fairclough Campbell Hooker Lewin Husband Laura Ruawai-Hamilton Wiremu MacFater Max O’Brien Rongomai Smith Moerangi Tamati Ashleigh Wilsonvan Duin Merryn Wilsonvan Duin TERTIARY Ruiha Anderson Isaac Bennett Rachel Bennett Tihirangi Brightwell Jamie Broadmore Marama Broughton Pristine Burke Matekitawhiti Carr Brook Chamberlain Oriwia Davis Lewis England Daniel Fake Kendyl Fake Danielle Gardiner Moana Gargiulo Heather Hansen Sarahlee Hansen Lawrence Hinton Keepa Hipango Charmaine Hoeta Roimata Hohaia Te Aroha Hohaia Myles Johnston Norton Kahu Tarikura Kapea

Moana Robertson (Tuwharetoa, Ngāti Maniapoto) under new walkway covering built at Ngārongo Marae

James Ayres Bryda Chamberlain Liam Chamberlain Javaana Karaitiana Sumer Karaitiana Kaylani Miller Kayla Williams Erana Tamati Jana Topia Perry West

37 GRANTS AND DONATIONS

NCEA

SPORTS GRANTS Te Rei Bigham-Dudley Heneti Davis Meikura Williams Leila Blackburn Roimata Blackburn Liam Whareaitu Kayla Williams Kayla Manuirirangi Te Akonga Pihama COMMUNITY GRANTS Ramanui School Taranaki Māori Sports Awards Taranaki Tu Mai Festival Trust Waipapa Marae Trust Manukorihi Intermediate School Te Kura Kaupapa Māori o Ngāti Ruanui Te Reo o Taranaki Trust Ngārongo Marae Potaka Marae Taranaki Māori Teachers Ass Opunake High School Pariroa Marae Trust Taranaki Art Awards Tangahoe Tribal Trust Urupa Fencing

Awhina

Aaron Karena Bryce Kihirini Maria Knowles Jennifer Loper Scott Loper Jordon Luke Peggy Luke-Ngaheke Hoani MacFater Ben Manu Kathryn Nicholas Baylee Niwa Aroha Nuku Vincent Nuku Deidre Otene Pua Moe Awa Phillips Elijah Pue Geraldine Pullen Fredrick Ratana Karamea Ratana Maia Ratana Jesse Reading Manupiri Rikihana Nopera Rikihana Justice Roma SannaMaree Rongonui Ani Ruwhiu Hannah Schrader Sam Short Shane Taiwhati Nita Takiari Aroha Taurima Te Waikapoata Tamati Moana Lyn Te Whata Ria Waikerepuru Mitchell Waiwiri Kelsey Waitere Mariah Wakefield Miaana Walden Brittany Walsh Shayl Weston Raquel Whale Andrew White Ereti Williams Neisha Wilson Te Wehi Wright

2012 SCHOLARSHIP RECIPIENT PROFILES JAMIE BERRY Ngāti Mahuta, Ngāti Maniapoto, Ngāti Ruanui, Te Iwi Morehu - Te Hāhi Rātana Kei aku nui, kei aku rahi tēnā koutou katoa e rāmemene mai nei i runga i te whakaaro kotahi. To our highly esteemed hosts compliments are extended to you all who have assembled here with one focus in mind. Parininihi ki Waitotara ngā mihi uruhau ki a koutou katoa. I am a motivated, adaptable and responsible mokopuna from the flowing ocean currents of Kawhia Moana, the majestic glow worm caves of Waitomo and the spiritual mountain of Taranaki. Each specific line of my taura whakapapa has shaped my life from birth to present. I am currently working for CYF Learning Capability and Development department as an advisor and senior trainer. My wife and I have endeavoured to pursue post graduate studies through Te Whare Wānanga o Awanuiārangi focusing on Masters of Indigenous studies. I believe this study will further entrench my foundation as tangata whēnua and will further support my ability to manaaki whānau, hapū and iwi towards transformative change from an indigenous standpoint. My whānau and I would like to thank you all for your support in this journey. Ngā mihi kia tatou katoa LISA FAIRCLOUGH My Name is Lisa Fairclough and I am currently studying Hotel Management at the Pacific International Hotel Management School in New Plymouth. I was born and grew up in New Plymouth, Attending Vogeltown Primary, Highlands Intermediate and then New Plymouth Girls’ High School. Whilst at Girls High I excelled in the Young

Enterprise Scheme winning two National Excellence awards, One for Excellence in Leadership and the Other For Excellence in Māori Business. I was also a National finalist for the Young Enterprise in action competition. I am now currently in my 2nd year of studying towards my degree in Applied Hospitability and Tourism Management. As part of this course we have two 6 month Industry Placements, one in our first year and one in the second. I’m currently living in Sydney carrying out my second industry placement at the Novotel Sydney on Darling Harbour. In the future I plan on returning to New Plymouth and becoming involved in the event management industry. NIKAU HINDIN Kia ora, Ko Nikau toku ingoa. I go to the University of Auckland. I am in my second year of a conjoint Bachelors of Fine Arts and Bachelor of Arts in Māori Studies and Film TV Media Studies. I also work as a freelance photographer and run a blog called fashionphotos.co.nz. I love studying Māori Studies and this is my main source of inspiration for art making. I would like to utilise my creativity and get involved with the media. My ultimate goal would be to change the way Māori are represented in the media. I have applied to do an exchange next year at the University of Hawaii, Manoa. I am really interested in our pacific cousins and other indigenous cultures. I am looking forward to exploring traditional Hawaiian art making practices and culture. WIREMU MACFATER My name is Wiremu MacFater and I am a 5th Year Medical student currently on the rural medical programme with Northland DHB called Pukawakawa. I have spent a majority of the year at Whangarei hospital cycling through the various different specialties. I have also spent a bit of time working in the Far North community of Kaitaia where I have been getting some great experience working in rural GP settings and rural hospital medicine. It has also been great to work under a Māori GP who is very passionate about his work.

RONGOMAI SMITH

Kia ora

Tēnā tātou,

Ko Levi Rona tōku ingoa. Nō Waitara ahau. Nō ngā iwi o Te Āti-awa me Taranaki. I am in my sixth and final year of my studies at the University of Otago. I graduated last year with a BSc (Chemistry) and a BA (Māori Studies). Last year I was accepted into the Master of Planning programme where I learned about the theories, practices and processes pertinent to the planning discipline. This year I am currently completing my thesis relating to Māori participation in freshwater management in Taranaki. After residing in Dunedin for the past six years I wanted to frame a research problem in order to reengage and maintain a connection with my iwi, hapū and whānau. Such a research project will also help benefit them and the wider Taranaki region.

Ko Rongomai Smith tōku nei ingoa. He uri tēnei nō Taranaki, o te whānau Ruakere, Ngā Mahanga-ā-Tairi, Pūniho Pā. I tipu ake au i Porirua, ā, i haere au ki te kura tuarua o Porirua. Mohoa nei, e noho ana au ki waengapū i te tāone o Te Whanganui-ā-Tara ki te taha o tāku tau. Kei te haere au ki te whare wānanga o Wikitōria, arā ko Victoria University. Kei taku tau tuarua au i taku tohu paetahi. E rua aku kaupapa matua, ko te reo Māori tētahi me te mātauranga Māori. Āmuri ake i taku tohu, kei te haere au ki Tūranga ki te whakaako i tētahi kura, ne i ko te tūmanako, āmuri ake ka hoki mai au ki taku tūrangawaewae, ki te ako i te reo o Taranaki, ā, ki te tū hei kaiako hoki. Ko tētahi atu o ōku manako nei, ki te noho ki waenganui i ngā hāpori katahi ka taungatia au e koutou. Nō reira nei rā te mihi.

LAURA RUAWAI-HAMILTON

Kia ora, my name is Moerangi Tamati and I am currently in my first year of my medical degree. I am studying as a post-graduate student - I graduated with my nursing degree in 2010, and worked last year in Taranaki Base Hospital as a postnatal nurse. While I absolutely enjoyed my time studying and working as a registered nurse, I want to go further in the medical field, especially from a Māori perspective. Becoming a Māori doctor will hopefully allow me to have more influence on Māori health issues at both ends of the spectrum, that is, not only direct interaction with Māori patients but also implementing targeted health strategies for Māori. I would ultimately like to work in women’s health (obstetrics and gynaecology) or become a general practitioner.

My name is Laura RuawaiHamilton from Ngā Rauru and Ngāti Ruanui (Aperahama and Broughton whanau). I am currently completing my 5th of 6 years of Medical school at the University of Auckland. During the last few years our study is entirely clinically based which is both challenging and interesting. We are rotated through a variety of specialties which show us variation and different forms of medicine. I enjoy what I do and am grateful for the continuing support I receive from PKW. It is a great help while I am studying. Next year I am moving to Rotorua to complete my final year, I am looking forward to being within a smaller centre with a greater population of Māori patients to work with. I am also looking forward to the great lakes and outdoor lifestyle that Rotorua has to offer. Again I would like to extend my thanks to the trust for the support. And I hope I have made iwi members and shareholders proud through my achievements, which are largely due to the tautoko of you all. Mihi nui ano, Laura Ruawai-Hamilton

MOERANGI TAMATI

MATARIKI WILLIAMS Kia ora my name is Matariki Williams. This year I began my Masters in Museums and Heritage Studies at Victoria University in Wellington. As part of this Masters programme I undertook a five-week placement working alongside a Taonga Māori Curator at Te Papa Tongarewa. The scholarship I received from PKW enabled me to pay

Awhina

Kia Ora,

GRANTS AND DONATIONS

LEVI RONA

for my daughter to be in childcare fulltime during this period. The alternative to this would have been to spread the placement over a longer period, affecting timelines for other university projects. In this respect the scholarship was invaluable, and assisted in my completing a successful and fulfilling placement that lead to the building of many professional relationships. ASHLEIGH WILSON-VAN DUIN Kia ora e te whanau whanui Ko Taranaki te maunga Ko Waiaua te awa Ko Kurahaupo te waka Ko Taranaki, Te Atiawa ratou ko Ngāti Ruanui nga iwi Ko Ngāti Kahumate te hapū Ko Orimupiko te marae Ko Valerie Roach toku kuia Ko Ashleigh Wilson-van Duin ahau. I am a second year student at the University of Otago studying towards a Bachelor of Science double majoring in Zoology and Genetics. My major area of interest is within the protection of Aotearoa by improving both environmental sustainability and animal biodiversity. As such, I wish to work in an area which involves the conservation of the native species of Aotearoa. There are currently many work opportunities within scientific research organisations which involve partnerships and collaboration with iwi in order to achieve common goals for the benefit of Aotearoa. This is what I aim to achieve and hope to be able to work with iwi in order to protect the unique biota and environs that we have here in Aotearoa. MERRYN WILSON-VAN DUIN Kia ora e te whanau whanui Ko Taranaki te maunga Ko Waiaua te awa Ko Kurahaupo te waka Ko Taranaki, Te Atiawa ratou ko Ngāti Ruanui nga iwi Ko Ngāti Kahumate te hapū Ko Orimupiko te marae Ko Valerie Roach toku kuia Ko Merryn Wilson-van Duin ahau. I am currently in my 5th year at the University of Otago, in which I graduated in May with a Bachelor of Physical

Education majoring in Exercise Science and Exercise Prescription. Through my Physical Education degree I was lucky enough to have the opportunity to work in an exercise prescription setting, working one on one with clients with green prescription referral, and also in the Beyond Pink Programme which involves physical activity with women who have experienced living with breast cancer. This year I was successful in gaining a place in second year medicine and surgery in Dunedin which I will complete in 2016. BRENDAN ARIKI LAURENCE From an early age I have always possessed an inherent curiosity. I always remember a story my mother tells me about a young Ariki staring at a beautiful fish tank. At first he looked from the front, then the back, then the left and right, and above and below, before triumphantly sitting down, a satisfied look of understanding filling the young boys face. This fascination with how things work, with how things fit together, and how things are made, has lead me down the pathway to Architecture. The complexity involved with the design of a building is a challenge I can’t turn away from. Architecture is the culmination of fantasy and reality, concepts and pragmatics, narrative and articulation. Architecture is the ultimate form of art, one that can be seen and interacted with, occupied and lived in, by generation after generation. Architecture is a legacy, one that sits lightly upon the earth.

PARININIHI KI WAITOTARA INCORPORATION FINANCIAL STATEMENTS for the year ended 30 June 2012

15 Intangible assets

Committee’s annual report

16 Interests in joint venture

17 Investments

FINANCIAL STATEMENTS Statement of comprehensive income

18 Investments in subsidiaries

Statement of financial position

19 Equity instruments

Statement of changes in equity

20 Investment properties

Statement of cash flows

21 Current liabilities - payables

22 Derivative financial instruments

Notes to the financial statements

1 Corporate information

23 Term liabilities

2 Summary of significant accounting policies

24 Deferred tax assets

3 Financial risk management

25 Share capital

4 Critical accounting estimates and judgements 65

26 Reserves and retained earnings

5 Revenue

27 Dividends

6 Other gains/(losses)

28 Contingencies

7 Expenses

29 Commitments

8 Finance income and expenses

30 Related party transactions

9 Income tax (expense)/benefit

31 Subsequent events

10 Māori authority credit account

32 Reconciliation of profit after income tax to

11 Discontinued operations

12 Current assets - Receivables

13 Biological assets

14 Property, plant and equipment

net cash inflow from operating activities

33 Statement of estimated current market value assets

Parininihi ki Waitotara Incorporation

Auditors’ report

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS - 30 JUNE 2012

Chartered Accountants

Independent Auditor's Report To the shareholders of Parininihi ki Waitotara Incorporation (the “Incorporation”) and its controlled entities (the “Group”) Report on the Financial Statements We have audited the financial statements of the Incorporation and Group on pages 46 to 85, which comprise the statement of financial position of the Incorporation and Group as at 30 June 2012, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. This report is made solely to the shareholders of the Incorporation and Group, as a body, in accordance with the Te Ture Whenua Maori Act 1993 and other relevant legislation and law. Our audit has been undertaken so that we might state to the shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Incorporation and the Incorporation’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Committee of Management’s Responsibility for the Financial Statements The Committee of Management are responsible for the preparation of the financial statements, in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate, and for such internal control as the Committee of Management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). These auditing standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected, depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the entity’s preparation of the financial statements that give a true and fair view of the matters to which they relate in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements. We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion. Other than in our capacity as auditor we have no relationship with, or interest in the Incorporation or the Group. Opinion In our opinion, the financial statements on pages 46 to 85: ►

comply with generally accepted accounting practice in New Zealand;

►

comply with International Financial Reporting Standards; and

►

give a true and fair view of the financial position of the Incorporation and Group as at 30 June 2012 and their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements In accordance with the Te Ture Whenua Maori Act 1993, we report that: ►

We have obtained all the information and explanations that we have required.

►

In our opinion proper accounting records have been kept by the Incorporation and Group as far as appears from our examination of those records.

Wellington 31 August 2012

2012 $’000 REVIEW OF OPERATION Net profit of the Group for the year ended 30 June 2012

8,578

Less provision for dividend

(1,205)

Add retained earnings as at 1 July 2011

137,535

Retained earnings as at 30 June 2012

144,908

FINANCIAL STATEMENTS

COMMITTEE’S ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2012

It is not proposed to make any transfer to reserves. THE STATE OF THE GROUP’S AFFAIRS AT 30 JUNE 2012 WAS: Assets totalled

224,117

THESE WERE FINANCED BY: Shareholder’s equity

173,618

Liabilities

50,499

Total equity and liabilities

224,117

The financial report was authorised for issue and signed on behalf of the Committee, dated 31 August 2012.

HINERANGI RAUMATI Chair 31 August 2012

TAARINGAROA NICHOLAS

Committee Member 31 August 2012

Parininihi ki Waitotara Incorporation

The business of the Incorporation is managing the interests of its Māori shareholders under the Te Ture Whenua Māori Act 1993. The nature of the Incorporation’s business has not changed during the year.

Includes sales mainly relating to milk proceeds, lease income received from our whenua and income from our crayfish. Includes gains on the fair value of our whenua

Includes costs mainly relating to farming operations and administration costs of PKW

Costs from our financier Rabobank

Our share of PKW Wakatu Ltd surplus for the year

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012 Group 2012 2011 Notes $’000 $’000

Parent 2012 2011 $’000 $’000

Revenue

20,168

18,317

8,662

8,667

Other gains

1,131

1,097

1,736

2,173

Expenses

(9,679)

(7,566)

(2,174)

(2,294)

Finance costs income/(expenses)

(1,988)

(1,426)

590

920

470

Profit before income tax

9,632

10,892

(1,054)

1,672

Profit from continuing operations

8,578

12,564

(1,003)

Share of profit from joint venture

Income tax (expense)/benefit

Loss from discontinued operations

8,814 9,466 (422)

2,093

8,392 11,559 -

(1,003)

Profit for the year 8,578 11,561

8,392 10,556

Cash flow hedges

26(a)

(366)

(295)

(366)

(295)

26(a)

(302)

(237)

(302)

(237)

Income tax relating to components of other comprehensive income

Other comprehensive income/expense for the year, net of tax

Total comprehensive income for the year, net of tax 8,276 11,324 8,090 10,319

For and on behalf of the Committee of Management these Financial Statements are authorised for issue on 31 August 2012.

HINERANGI RAUMATI Chair 31 August 2012

TAARINGAROA NICHOLAS

Committee Member 31 August 2012

* The above statement of comprehensive income should be read in conjunction with the accompanying notes.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

Group 2012 2011 Notes $’000 $’000

Parent 2012 2011 $’000 $’000

ASSETS Current assets Cash and cash equivalents 432 589 Trade and other receivables 12 2,565 2,435 Biological assets 13 6,530 3,336 Total current assets 9,527 6,360

329 466 470 52 - 799 518

Non-current assets Property, plant and equipment 14 42,194 Intangible assets 15 11,813 Investment in joint venture 16 1,201 Loan to joint venture 16 864 Investments 17,18,19 20,279 Investment properties - Unimproved lease land 20 135,242 Investment properties - Commercial 20 2,150 Deferred tax assets 24 847 Total non-current assets 214,590

Livestock owned by PKW

38,345 9,051 605 173 18,873

272 245 - 1,211 15 864 173 75,771 65,928

133,380

135,242 133,380

2,160 1,205 203,792

2,150 847 216,357

2,160 1,205 203,106

Total assets 224,117 210,152 217,156

203,624

LIABILITIES Current liabilities Trade and other payables 21 Current tax liabilities Derivative financial instruments 22 Total current liabilities

Money owed to PKW by our customers

Crayfish quota owned by PKW Investment in PNF (2011) Ltd, crayfish processor Money owed by PNF (2011) Ltd to PKW Includes shares in Fonterra Co-operative, NZ Government Bond and Finistere Venture Capital Fund

Accounting value of our whenua tupuna

4,099 (246) 652 4,505

3,610 310 619 4,539

2,719 2,445 (6) 652 619 3,365 3,064

Non-current liabilities Term liabilities 23 43,162 37,149 Derivative financial instruments 22 1,116 783 Deferred tax liabilities 24 1,716 1,134 Total non-current liabilities 45,994 39,066

43,162 37,149 1,116 783 307 307 44,585 38,239

Includes borrowings from Rabobank and Unclaimed dividends

Total liabilities

50,499

43,605

47,950

Net assets

173,618

166,547

Represents unrealised losses on interest rate hedges

41,303

169,206 162,321

EQUITY Share capital 25 5,549 5,549 5,549 5,549 Reserves 26,(a) 23,161 23,463 26,308 26,610 Retained earnings 26,(b) 144,908 137,535 137,349 130,162 Total equity 173,618 166,547 169,206 162,321 * The above statement of financial position should be read in conjunction with the accompanying notes.

Money owed to our suppliers

The net worth of PKW Incorporation as measured in the Group Financial Statements

STATEMENT OF CHANGES IN EQUITY FOR THE THE YEAR ENDED 30 JUNE 2012 Attributable to equity holders of the Incorporation Cash Flow Share Capital Hedge Retained Total Capital Reserve Reserve Earnings Equity Group Notes $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2010

5,549

24,591

(891)

127,179

156,428

Profit or loss for the year Cash flow hedges, net of tax 26,(a) Total comprehensive income

- - -

- (237) (237)

11,561 - 11,561

11,561 (237) 11,324

Dividends provided 27 Total transactions with owners Balance as at 30 June 2011

- - 5,549

- - 24,591

- - (1,128)

(1,205) (1,205) 137,535

(1,205) (1,205) 166,547

Balance as at 1 July 2011

5,549

24,591

(1,128)

137,535

166,547

Profit or loss for the year Cash flow hedges, net of tax Total comprehensive income

- - -

- (302) (302)

8,578 - 8,578

8,578 (302) 8,276

Dividends provided Total transactions with owners Balance as at 30 June 2012

- - 5,549

- - 24,591

- - (1,430)

(1,205) (1,205) 144,908

(1,205) (1,205) 173,618

Balance at 1 July 2010

5,549

27,738

(891)

120,811

153,207

Profit for the year Cash flow hedges, net of tax 26,(a) Total comprehensive income

- - -

- (237) (237)

10,556 - 10,556

10,556 (237) 10,319

Dividends provided 27 Total transactions with owners Balance as at 30 June 2011

- - 5,549

- - 27,738

- - (1,128)

(1,205) (1,205) 130,162

(1,205) (1,205) 162,321

Balance at 1 July 2011

5,549

27,738

(1,128)

130,162

162,321

Profit for the year Cash flow hedges, net of tax Total comprehensive income

- - -

- (302) (302)

8,392 - 8,392

8,392 (302) 8,090

Dividends provided Total transactions with owners Balance as at 30 June 2012

- - 5,549

- - 27,738

- - (1,430)

(1,205) (1,205) 137,349

(1,205) (1,205) 169,206

Parent

* The above statement of changes in equity should be read in conjunction with the accompanying notes.

Group Parent

Notes

2012 $’000

2011 $’000

Cash flows from operating activities Receipts from customers Interest received Income tax paid Payments to suppliers Payments to employees Interest paid GST paid Net cash inflow from operating activities 32

22,284 171 (3,378) (11,268) (765) (2,159) 2,009 6,895

19,691 117 - (7,209) (565) (1,729) - 10,305

8,859 9,117 (58) 15 (1,255) (1,448) (3,161) (536) (434) (2,257) (1,812) 192 3,497 3,725

Cash flows from investing activities Payments for property, plant and equipment Payments for investment Investment in joint venture Advances to joint venture Payments for biological assets Payments for intangible assets Payments for UCIS settlement Capitalised interest Proceeds from sale of investments Advances from joint venture Advances from subsidiaries Sale of joint venture Net cash outflow from investing activities

(5,878) (2,170) (1,201) (864) - (3,176) - (46) 363 113 - 395 (12,465)

(2,211) (1,395) - - (2,194) - (10,211) (38) 959 796 - - (14,294)

(73) (110) (807) (1,224) (1,196) (864) - - - (10,211) - 384 959 444 796 (6,935) 2,061 - (9,047) (7,729)

Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Dividends paid Net cash inflow from financing activities

17,514 (11,801) (300) 5,413

16,670 (12,570) (68) 4,032

17,514 16,670 (11,801) (12,570) (300) (68) 5,413 4,032

(157) 589 432

43 546 589

(137) 28 466 438 329 466

Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at end of year

* The above statement of cashflow should be read in conjunction with the accompanying notes.

2012 $’000

2011 $’000

Parininihi ki Waitotara Incorporation

Statement of Cash flows shows where cash has been paid and received. The statement shown is split in three parts; Operational activities, Investing activities and financing activities.

NOTES TO THE FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS FOR THE THE YEAR ENDED 30 JUNE 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

.......................................... 1 CORPORATE INFORMATION

Parininihi ki Waitotara Incorporation (the Parent) is registered under the Te Ture Whenua Maori Act 1993 and was incorporated in New Zealand. The Parent and its subsidiaries are included in the Parininihi ki Waitotara Incorporation Group (PKW Incorporation or the Group). The main business activities of the Group are land and property management, farming and fisheries interests.

.......................................... 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements include separate financial statements for PKW Incorporation as an individual entity and the consolidated entity consisting of PKW Incorporation and its subsidiaries. (a) Basis of preparation The Group financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand and Section 276 of Te Ture Whenua Maori Act 1993. The Group financial statements have been prepared on an historical cost basis except for biological assets, certain investments, investment properties and derivative financial instruments which have been measured at fair value.

The information is presented in New Zealand dollars and all values are rounded to the nearest thousand. Compliance with IFRS

new and amended New Zealand equivalents to International Financial Reporting Standards, (NZ IFRS) and interpretations as at 1 July 2011.

• The separate and consolidated financial statements of PKW Incorporation comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit oriented entities. The financial statements comply with International Financial Reporting Standards (IFRS). Entities reporting The consolidated financial statements for the Group include PKW Incorporation and its subsidiaries. The financial statements for the Parent are for PKW Incorporation as a separate legal entity. Critical accounting estimates The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4. (b) New accounting standards and interpretations Changes in Accounting Policy and Disclosure The accounting policies adopted are consistent with those of the previous financial year except as follows. The Group has adopted the following

Amendments to NZ IFRSs arising from the Annual Improvements Project (2010) [NZ IFRS 1, 7, NZ IAS 1] Emphasises the interaction between quantitative and qualitative NZ IFRS 7 disclosures and the nature and extent of risks associated with financial instruments. Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. Provides guidance to illustrate how to apply disclosure principles in NZ IAS 34 for significant events and transactions.

•

NZ IAS 24 Related Party Disclosures (Revised 2009)

The revised NZ IAS 24 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including: (a) The definition now identifies a subsidiary and an associate with the same investor as related parties of each other (b) Entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other (c) The definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence

•

over a third party, the second and third entities are related to each other. The amendment explicitly adds disclosure requirements for commitments (including executory contracts) with related parties. FRS-44 New Zealand additional disclosures

The adoption of the above amendments resulted in changes to accounting policies but had no significant impact on the financial position or performance of the Group.

•

Accounting standards, amendments and interpretations to existing standards that are not yet effective NZ IFRS Standards and interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the annual reporting period ending 30 June 2012, are outlined below.

FRS-44 New Zealand Additional Disclosures is a consequence of the joint Trans-Tasman Convergence project of the Australian Accounting Standards • Board (AASB) and Financial Reporting Standards Board (FRSB). This standard relocates New Zealand specific disclosures from other standards to one place and revises disclosures in the following areas: (a) Compliance with NZ IFRS (b) The statutory basis or reporting framework for financial statements (c) Audit fees (d) Imputation credits (e) Reconciliation of net operating cash flow to profit/(loss).

•

Harmonisation Amendments

Amendments to NZ IFRS to Harmonise with IFRS and Australian Accounting Standards: (a) Remove the disclosures which have been relocated to FRS 44 (b) Harmonise audit fee disclosure requirements in NZ IAS 1 with AASB 101 (c) Harmonise imputation/franking credits’ disclosure requirements in NZ IAS 12 with AASB 101 (d) Introduction of the option to use the indirect method of reporting cash flows in NZ IAS 7 (e) Introduce an accounting policy choice to use the cost model for investment property under NZ IAS 40 (f) Remove the requirement to use an independent valuer and the related disclosure requirements currently in NZ IAS 16 and NZ IAS

NZ IAS 12 Amendments to NZ IAS 12 Income Taxes — Deferred Tax: Recovery of Underlying Assets (applicable date of standard 1 January 2012, effective for Group from 1 July 2012). These amendments update NZ IAS 12 to include: •

•

The amendments incorporate NZ SIC-21 Income Taxes — Recovery

This Standard requires entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss in subsequent periods (reclassification adjustments).

•

NZ IAS 27 Separate Financial Statements (effective from 1 January 2013, effective for Group 1 July 2013).

NZ IAS 27 Separate Financial Statements (as amended in 2011) removes the accounting and disclosure requirements for consolidated financial statements, as a result of the issue of NZ IFRS 10 Consolidated Financial Statements and NZ IFRS 12 Disclosures of Interests in Other Entities, which establish new consolidation and disclosure standards.

A rebuttable presumption that deferred tax on investment property measured using the fair value model in NZ IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through • sale. A requirement that deferred tax on non-depreciable assets, measured using the revaluation model in NZ IAS 16, should always be measured on a sale basis.

NZ IAS 1 Amendments to NZ IAS 1 Presentation of Financial Statements — Presentation of Other Comprehensive Income (effective from 1 July 2012, effective for Group 1 July 2012).

NZ IAS 27 (as amended in 2011) contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. NZ IAS 28 Investments in Associates and Joint Ventures (effective from 1 January 2013, effective for Group 1 July 2013). NZ IAS 28 Investment in Associates and Joint Ventures (as amended in 2011) supersedes NZ IAS 28 Investments in Associates (2004), as a result of the issue of NZ IFRS 11 Joint Arrangements

51 NOTES TO THE FINANCIAL STATEMENTS

of Revalued Non-Depreciable Assets into NZ IAS 12 for nondepreciable assets measured using the revaluation model in NZ IAS 16 Property, Plant and Equipment.

40 (g) Remove some NZ-specific disclosures.

Parininihi ki Waitotara Incorporation

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

•

NZ IFRS 7 Amendments to NZ IFRS 7 Financial Instruments: Disclosures — Offsetting Financial Assets and Financial Liabilities (effective from 1 January 2013, for Group effective 1 July 2013).

These amendments to NZ IFRS 7 remove the requirement for the restatement of comparative period financial statements upon initial application of the classification and measurement requirements of NZ IFRS 9. Instead, the amendments introduce additional disclosures on transition from the classification and measurement requirements of NZ IAS 39 Financial Instruments: Recognition and Measurement to those of NZ IFRS 9.

arrangement is dependent on the nature of the rights and

if they choose to restate the

obligations arising from the

comparative figures for the effect

arrangement. Joint operations that

of applying NZ IFRS 9. •

give the venturers a right to the underlying assets and obligations

NZ IFRS 10 Consolidated

themselves are accounted for by

Financial Statements (effective

recognising the share of those

from 1 January 2013, effective for

assets and obligations. Joint

Group 1 July 2013).

ventures that give the venturers

NZ IFRS 10 establishes a new

a right to the net assets are

control model. It replaces parts

accounted for using the equity

of NZ IAS 27 Consolidated and

method. This may result in a

Separate Financial Statements

change in the accounting for joint

dealing with the accounting for consolidated financial statements and SIC-12 Consolidation

arrangements. •

Interests in Other Entities

The new control model broadens

effective for Group 1 July 2013).

considered to control another

(effective from 1 January 2013,

interests in subsidiaries, joint

for applying the model to specific

arrangements, associates

situations, including when acting

and structure entities. New

as a manager may give control,

disclosurers have been

the impact of potential voting

introduced about the judgement

rights and when holding less than

made by management to

a majority voting rights may give

determine whether control

control. This could lead to more entities being consolidated.

exists, and to require

NZ IFRS 11 Joint Arrangements

joint arrangements, associates

summaried information about

(effective from 1 January 2013,

and structured entities and

effective for Group 1 July 2013).

NZ IFRS 12 includeds all disclosures relating to an entity’s

entity and includes new guidance

•

NZ IFRS 12 Disclosure of

Special Purpose Entities. the situations when an entity is

These amendments introduce disclosures, which provide users with information that is useful in evaluating the effect or potential effect of netting arrangements on an entity’s financial position. NZ IFRS 7 Amendments to NZ IFRS 7 Financial Instruments: Disclosures — Transition Disclosures (effective from 1 January 2013, effective for Group 1 July 2013).

Instead, accounting for a joint

9 from 2013 onwards, these disclosures are required even

and NZ IFRS 12 Disclosure of Interests in Other Entities. NZ IAS 28 (as amended in 2011) prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. Disclosure requirements relating to these investments are now contained in the NZ IFRS 12.

For entities adopting NZ IFRS

subsidiaries with non-controlling interests.

NZ IFRS 11 replaces NZ IAS 31 Interest in Joint Ventures and SIC-13 Jointly-controlled Entities

•

Measurement (effective from 1

- Non-monetary Contributions by

January 2013, effective for Group

Ventures. NZ IFRS 11 uses the principle of control in NZ IFRS 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition NZ IFRS 11

NZ IFRS 13 Fair Value

1 July 2013).

NZ IFRS 13 establishes a single source of guidance under NZ IFRS for determining the fair value of assets and liabilities. NZ IFRS

removes the option to account for

13 does not change when an

jointly controlled entities (JCEs)

entity is required to use fair value,

using proportionate consolidation.

but rather, provide guidance

on how to determine fair value

•

under NZ IFRS when fair value

being determined for the relevant

NZ IFRS 13 also expands the

of financial liabilities and the ability to use the fair value option

in accordance with NZ IAS 12 Income Taxes. •

January 2014, effective for Group

legally enforceable right to set-off” and also clarify the application of the NZ IAS 32 offsetting criteria to settlement systems (such as central clearing house systems)

•

classified as amortised cost or fair value. Financial assets can only be classified as amortised cost if (a) the contractual cash flows from the instrument represent principal and interest and (b) the entity’s purpose for holding the instrument is to collect the contractual cash flows;

income (OCI); •

held for trading to recognise fair

If this approach creates or

value changes through other

enlarges an accounting mismatch

comprehensive income with

in the profit or loss, the effect of

no impairment testing and no

the changes in credit risk is also

recycling through profit or loss on

presented in profit or loss. •

NZ IFRS 9 (2009) Financial

derecognition; •

Instruments (effective from 1

no longer permitted unless

1 July 2015).

the entity’s business model for holding the asset changes; and

NZ IFRS 9 (2009) includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace NZ IAS 39.

Reclassifications between amortised cost and fair value

January 2015, effective for Group

An option for investments in equity instruments which are not

presented in profit or loss; and

Strict requirements to determine which financial assets can be

The change attributable to

The remaining change is

in financial assets;

presented in other comprehensive

Removal of the requirement to separate embedded derivatives

changes in credit risk are

These amendments clarify the meaning of “currently has a

•

follows:

1 July 2014).

fair value;

in fair value is accounted for as

Two categories for financial assets being amortised cost or

for financial liabilities, the change

Amendments to NZ IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (effective from 1

•

where the fair value option is used

32] (effective from 1 January

equity holders are accounted for

includes:

have been retained. However,

Amendments to NZ IFRSs arising from the Annual Improvements Project (20092011) [NZ IFRS 1, NZ IAS 1, 16,

arising from distributions to

the most significant of which

requirements for the classification

determined.

Clarifies that income taxes

accounting for financial assets,

Recognition and Measurement

assumptions on the fair value

The requirements for classifying

IAS 39 Financial Instruments:

the qualitative impact of those

NZ IAS 32

a number of changes to the

NZ IFRS 9 (2010) supersedes NZ

issued in 2009. The existing NZ

about the assumptions made and

The revised Standard introduces

were added to NZ IFRS 9 as

value. This included information

2013).

the requirements of NZ IAS 39.

and measuring financial liabilities

assets or liabilities carried at fair

2013, effective for Group 1 July

of financial assets compared with

NZ IFRS 9 (2010) Financial

IFRS 9 (2009).

disclosure requirements for all

•

classification and measurement

1 July 2015).

assets.

simultaneous.

January 2015, effective for Group

IFRS. Application of this guidance may result in different fair values

and simplify the approach for

Instruments (effective from 1

is required or permitted by NZ

These requirements improve

NOTES TO THE FINANCIAL STATEMENTS

mechanisms that are not

•

Changes to the accounting and additional disclosures for equity instruments classified as fair value through other comprehensive income.

Parininihi ki Waitotara Incorporation

which apply gross settlement

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Parent and the results of all subsidiaries as at and for the period ended 30 June each year (the Group). Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and

Unrealised losses are also eliminated

acquisition movements are adjusted

unless the transaction provides

against the carrying amount of the

evidence of the impairment of the

investment. Dividends receivable

asset transferred.

from joint ventures are recognised

Investments in subsidiaries held by the Parent are accounted for at cost in the seperate financial statements of

whether a Group controls another entity. The financial statements of the subsidiaries, except for Taranaki Aqua Gardens Limited which has a 31 March balance date, are prepared for the same reporting period as the Parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries which form part of the Group are consolidated from the date on which control is transferred to the Group.

of comprehensive income as a component of other income.

the Parent entity less any impairment

When the Group’s share of losses

charges.

in an associate equals or exceeds

(ii) Joint ventures - Jointly controlled entities The Group’s investment joint ventures are accounted for using the equity method of accounting in the

its interest in the joint venture, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint

consolidated financial statements and

venture.

at cost in the parent.

(d) Foreign currency translation

effect of potential voting rights that are Under the equity method, investments currently exercisable or convertible in joint ventures are carried in the are considered when assessing

in the parent entity’s statement

consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. Goodwill relating to a joint venture is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary

(i) Functional and presentation currency Both the functional and presentation currency of PKW Incorporated and its New Zealand subsidiaries is New Zealand dollars ($). Australian subsidiaries functional currency is Australian dollars. (ii) Transactions and balances

to recognise any impairment loss

Transactions in foreign currencies

with respect to the Group’s net

are initially recorded in the functional

investment in joint ventures. Goodwill

currency by applying the exchange

included in the carrying amount of the

rates ruling at the date of the

investment in joint venture is not tested transactions. Monetary assets and separately; rather the entire carrying

liabilities denominated in foreign

amount of the investment is tested

currencies are retranslated at the rate

for impairment as a single asset. If

of exchange ruling at the reporting

impairment is recognised, the amount

date.

is not allocated to the goodwill of the joint venture.

Non-monetary items that are measured in terms of historical cost in

The Group’s share of its joint venture

a foreign currency are translated using

post-acquisition profits or losses is

the exchange rate as at the date of the

recognised in profit or loss, and its

initial transaction. Non-monetary items

share of postacquisition movement

measured at fair value in a foreign

and unrealised gains on transactions

in other comprehensive income is

currency are translated using the

between Group companies are

recognised in other comprehensive

exchange rates at the date when the

eliminated.

income. The cumulative post-

fair value was determined.

They are de-consolidated from the date that control ceases. Intercompany transactions, balances

from 1 July 2004. The income tax rate

The fair value of financial instruments

applicable from the date of election is

traded in active markets (such

17.5%.

as publicly traded derivatives,

(e) Income tax

Distributions to Incorporation

to the Statement of Comprehensive Income includes both the current year’s provision and the income tax effect of: •

Taxable temporary differences, expect those arising from initial recognition of goodwill and other

•

members are no longer deductible for tax purposes. Any distribution of post 1 July 2004 reserves will include Mãori Authority Credits of up to 17.5% of the gross taxable amount in the hands of members. Any distribution of pre 1 July 2004 reserves is tax free in the hands of members.

assets that are not depreciated;

(f) Goods and Services Tax (GST)

and

The profit and loss component of

Deductible temporary differences

the Statement of Comprehensive

to the extent that it is probable that they will be utilised. Temporary differences arising from transactions, other than business combinations, affecting neither accounting nor taxable profit are

Income has been prepared so that all

differences; and •

They are not expected to reverse in the foreseeable future.

Tax effect accounting is applied on a comprehensive basis to all timing differences using the liability method. A deferred tax asset is only recognised to the extent that it is probable there will be future taxable

market price for financial liabilities is the current ask price. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is

to the Group for similar financial

include GST invoiced.

when they have been delivered and accepted by the customer. Rental income is recognised upon

The Parent entity is able to control issue of invoices that are issued six

the timing of the reversals of the

bid price; the appropriate quoted

of receivables and payables, which

Sales of goods are recognised

•

assets held by the Group is the current

GST. All items in the balance sheet are contractual cash flows at the current market interest rate that is available stated net of GST, with the exception

Deferred income tax is not recognised

ventures and associates because:

quoted market price used for financial

estimated by discounting the future

(g) Revenue recognition

with investments in subsidiaries, joint

prices at the balance sheet date. The

components are stated exclusive of

ignored.

on temporary differences associated

securities) is based on quoted market

months in advance. Milk proceeds are recognised in alignment with the processor Fonterra on a per dollar per kilogram basis. Interest income is recognised using the effective interest method. Dividend income is recognised when the right to receive payment is recognised.

instruments. (i) Impairment At each reporting date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. If the recoverable amount of a cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of

profit to utilise temporary differences.

(h) Fair value estimation

Comprehensive Income. Where

Following the changes to subpart

The fair value of financial assets and

reverses, the carrying amount of

HI of the Income Tax Act 2004, an

financial liabilities must be estimated

election was made to become a Mãori

for recognition and measurement or

Authority, for tax purposes, with effect

for disclosure purposes.

an impairment loss subsequently the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased

Parininihi ki Waitotara Incorporation

The income tax expense charged

and trading and available-for-sale

55 NOTES TO THE FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset. The reversal of an impairment loss is recognised immediately in income.

Subsequent costs are included in the

subsequently not amortised, but

asset’s carrying amount or recognised

tested annually for impairment.

as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the of the item can be measured reliably.

assets in the following categories:

All other repairs and maintenance are

financial assets at fair value through

charged to the profit or loss during

profit or loss, loans and receivables,

the financial period in which they are incurred.

Cash and cash equivalents includes

Land is not depreciated. Depreciation

cash on hand and short term deposits

on other assets is calculated using the

with an original maturity of three

straight line method to allocate their

months or less plus bank overdrafts.

cost or revalued amounts, net of their

Bank overdrafts are shown within

residual values, over their estimated

current liabilities in the Statement of

useful lives, as follows:

(k) Trade and other receivables Trade and other receivables, which have 30 day terms, are recognised

Buildings

7-66 years

Leashold improvements 12-35 years Plant and machinery

5-10 years

Furniture and fittings

4-10 years

measured at amortised cost

lives are reviewed, and adjusted if

using effective interest method,

appropriate, at each balance sheet

less allowance for impairment.

date.

impairment provision is recognised when there is objective evidence that the Group will not be able to collect. (l) Biological assets (i) Valuation of livestock

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 2). Gains and losses on disposals are determined by comparing proceeds

Livestock at balance date includes

with carrying amount. These are

dairy cattle, beef cattle and sheep

included in the Statements of

and they are valued at a fair value.

Comprehensive Income.

Subsequent fair value changes are

The classification depends on the purpose for which the assets were acquired. Management determines the classification of its assets at initial recognition and re-evaluates this designation at every reporting date, but there are restrictions on

The assets’ residual values and useful

reviewed on an ongoing basis. An

held-to-maturity investments, and available-for-sale financial assets.

initially at fair value and subsequently

Collectability of trade receivables is

assets

item will flow to the Group and the cost The Group classifies its financial

(j) Cash and cash equivalents

Financial Position.

(o) Investments and other financial

reclassifying to other categories when financial assets are recognised initially, they are measured at fair value, plus in the case of assets not at fair value through profit or loss, directly attributable transactions costs. Recognition and derecognition All regular purchases and sales of financial assets are recognised on trade date i.e., the date that the Group commits to purchase the asset. Financial assets are derecognised when the right to receive cashflows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the assets if

recognised in profit or loss.

(n) Intangible assets

(m) Property, plant and equipment

The fishing quota is initially recognised Subsequent measurement

Property, plant and equipment

at cost. The quota is regarded

is stated at historical cost less

as having an indefinite useful life

depreciation. Historical cost includes

because there is no foreseeable limit

(i) Fishing quota

it has transferred control of the assets.

(i) Financial assets at fair value through profit or loss

expenditure that is directly attributable to the period over which they are

This category has two sub categories:

to the acquisition of the items.

financial assets held for trading, and

expected to be useful. They are

profit or loss on initial recognition. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there

in value, are initially measured at cost and subsequently measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in the statements of comprehensive income

re-measured to fair value. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. The fair values of interest rate swaps are determined using a

in the period in which they arise.

valuation technique based on cash

The fair value of the unimproved

using current market interest rates.

leased land is calculated by using a discounted cash flow model. The

flows discounted to present value

Any gains or losses arising from changes in the fair value of

exists the possibility it will be sold

assumptions of the model are as

in the short term and the asset is

follows:

derivatives, except for those that

â&#x20AC;˘

Discount rate of 6.5%

directly to profit or loss for the year.

â&#x20AC;˘

Cash flows to increase at the rate

subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this

of inflation (2.4%) however is only

assets if they are either held for trading or are expected to be realised

rental reset periods determined

within 12 months of the balance sheet

(ii) Loans and receivables Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets except for those with maturities greater than 12 months after balance date, which are classified as

qualify as cash flow hedges are taken

Cash flow hedges are used when they

hedge the exposure to variability in uplifted every seven years into the cash flows that is attributable either cash flow periods in line with the to a particular risk associated with

category are classified as current

date.

by legislation; â&#x20AC;˘

The time horizon is thirty years.

(q) Trade and other payables Trade and other payables are carried at cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

a recognised asset or liability or to a forecast transaction. The Group currently has cash flow hedges attributable to payment of interest on borrowings. The effective proportion of the gain or loss on the hedging instrument is recognised in other comprehensive income, while the ineffective portion is recognised in profit or loss. The Group tests each of the designated cash flow hedges for effectiveness on a quarterly basis both retrospectively and prospectively using regression analysis. A minimum of 30 data points is used for regression analysis and if the testing falls within the 80:125 ranges, the

non-current.

(r) Derivatives

hedge is considered highly effective

(iii) Financial assets at cost

The Group uses derivative financial

cash flow hedge.

Financial assets at cost cannot be prescribed a reliable fair value.

instruments to hedge its risks associated with foreign currency, and interest rate fluctuations. Such

(p) Investment properties

derivative financial instruments are

Commercial investment property,

date on which a derivative contract

which includes land and buildings

57 NOTES TO THE FINANCIAL STATEMENTS

those designated at fair value through

that earn rental income or appreciate

initially recognised at fair value on the is entered into and are subsequently

and continues to be designated as a

At each balance date, the Group measures ineffectiveness using the dollar offset method. For foreign currency cash flow hedges if the risk is over-hedged, the ineffective portion is taken immediately to profit or loss.

Parininihi ki Waitotara Incorporation

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) For interest rate cash flow hedges, any ineffective portion is taken to other expenses in the statement of

the payment is expected to be less

financial statements in the period in

than 12 months, the provision is the

which the dividends are approved by

amount expected to be paid.

the Parent’s shareholders.

(v) Leases

..........................................

The determination of whether an

3 FINANCIAL RISK MANAGEMENT

comprehensive income.

arrangement is or contains a lease

If the hedging instrument expires

arrangement and requires an

or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to it being ineffective), amounts previously accumulated in reserves remain in reserve until the forecast

is based on the substance of the assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

The Group’s principal financial instruments comprise receivables, payables, term debt and overdrafts, investments, cash and short term deposits, and derivatives. The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and

transactions occurs.

(i) Group as a lessee

(s) Term liabilities

Operating lease payments are

Borrowings are initially recognised

recognised as an expense in the

unpredictability of financial markets

Statement of Comprehensive Income

and seeks to minimise potential

on a straight-line basis over the lease

adverse effects on the financial

term. Operating lease incentives

performance of the Group. The Group

are recognised as a liability when

uses derivative financial instruments

recieved and subsequently reduced

such as foreign exchange contracts

at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. All borrowing costs are recognised as an expense in the period they are

rental expense and reduction of the

certain risk exposures. Derivatives

liability.

are exclusively used for hedging

(ii) Group as a lessor Leases in which Group retains substantially all the risks and benefits

(t) Share capital

classified as operating leases. Initial

equity.

of ownership of the leased asset are direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset

(u) Employee benefits

and recognised as an expense over

(i) Wages and salaries, annual leave

rental income.

and sick leave The provision for employee entitlements is recognised as a liability in the Statement of Financial Position. These benefits include salaries, wages and annual leave. Where the

management program focuses on the

by allocating lease payments between and interest rate swaps to hedge

incurred.

Ordinary shares are classified as

liquidity risk. The Group’s overall risk

the lease term on the same basis as

(w) Dividends Provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date.

payment is expected to be longer than Dividend distribution to the Parent 12 months of balance date, the liability shareholders is recognised as a is recorded at its present value. Where liability in the Parent’s and the Group’s

purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, aging analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. The Board reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for identification and control of financial risks rests with the Committee of Management and Management team. The Committee of Management reviews and agrees policies for managing each of the risks identified below, including the setting

reflects the translation methodology

financing and hedging. Based on

undertaken by the Group.

these scenarios, the Group calculates

of limits for trading in derivatives,

(ii) Price risk

interest rate risk, and future cash flow forecast projections. (a) Market risk (i) Foreign exchange risk The Group has an investment denominated in USD $4.15m at 30 June 2012 (2011: $3.75m). This

The Group’s exposure to commodity and equity securities price risk is

The Group has exposure to unlisted

interestbearing positions. Based on

shares in Fonterra at 30 June 2012 $12.21m (2011: $10.82m). The value per share is $4.52 (2011: $4.52), if the share price was to increase

the USD increase or decrease by

investment value would increase or

1 cent against the NZD, profit and

decrease by $2.7m (2011: $2.39m).

The Group has a commitment denominated in USD of approximately $0.5m at 30 June 2012 (2011: $1.6m). This commitment is not hedged and should the USD increase or decrease by 1 cent against the NZD the NZD commitment would increase or decrease by $0.01m (2011: $0.02m) The sensitivity is based on the foreign currency purchases that are firm commitments, extending to May 2014.

rate shift is used for all currencies. The scenarios are run only for

or decrease by $1 per share the

decrease by $0.06m (2011: $0.05m).

For each simulation, the same interest

significant.

investment is not hedged and should

loss and equity would increase or

equity of a defined interest rate shift.

liabilities that represent the major the simulations performed, the impact on profit or loss and equity of a 100 basis-point shift would be a maximum increase of $0.4m (2011: $0.34m) or decrease of $0.4m (2011: $0.34m) respectively. The simulation is done

on a quarterly basis to verify that the An increase or decrease would impact maximum loss potential is within the directly on profit and equity to an limit given by the management. equal value of gain or loss.

Significant assumptions used in investment exposure sensitivity analysis include: •

Reasonably possible movements in share price or investment value based on a review of the last two year’s historical movements and economic forecaster’s expectations.

(iii) Cash flow and fair value interest

Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally the Group raises long term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under

Significant assumptions used in the

rate risk

foreign currency sensitivity analysis

The Group’s main interest rate risk

agrees with other parties to exchange,

arises from long-term borrowings.

at specified intervals (mainly

Borrowings issued at variable rates

quarterly), the difference between

include: •

Reasonably possible movements in foreign exchange rates were determined based on a review of the last two year’s historical movements and econmonic forecaster’s expectations.

The reasonably possible movements were calculated by taking the USD spot rate as at balance date, moving this spot rate by the reasonably

the interest rate swaps, the Group

expose the Group to cash flow interest fixed contract rates and floatingrate risk. Borrowings issued at fixed

rates expose the Group to fair value interest rate risk. An analysis by maturities is provided in (c) below and a summary of the terms and conditions is in note 23. The Group analyses its interest rate exposure on a dynamic basis. Various

possible movements and then re-

scenarios are simulated taking into

converting the USD into NZD with the

consideration refinancing, renewal

“new spot-rate”. This methodology

of existing positions, alternative

rate interest amounts calculated by reference to the agreed notional prinicpal amounts. Significant assumptions used in the interest rate sensitivity analysis include: •

Reasonably possible movements in interest rates were determined based on the Group’s relationship with its financiers, the level of debt as well as a review of the last

Parininihi ki Waitotara Incorporation

hedging cover of foreign currency and

the impact on profit and loss and

59 NOTES TO THE FINANCIAL STATEMENTS

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

two year’s historical movements and economic forecaster’s expectations;

•

The fair value sensitivity analysis

to repay financial liabilities as and

However, where the counterparty has

when they fall due. Prudent liquidity

a choice of when the amount is paid,

risk management implies maintaining

the liability is allocated to the earliest

sufficient cash and marketable

period in which the Group can be

securities, the availability of funding through an adequate amount of committed credit facilities and the

of derivatives has been based on

ability to close out market positions.

a reasonably possible movement

The Group manages liquidity risk by

of interest rates at balance date

continuously monitoring forecast and

by applying the change as a

actual cash flows and matching the

parallel shift in the forward curve;

maturity profiles of financial assets

The effect on equity is the effect on the cash flow hedge reserve.

(b) Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, investments, derivative financial instruments and the granting of financial guarantees. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of the financial assets (as outlined in each applicable note). The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s experience is bad debts has not been significant. (c) Liquidity risk Liquidity risk arises from the Group’s financial liabilities and the Group’s subsequent ability to meet obligations

and liabilities. Due to the dynamic nature of the underlying businesses, management aims at maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties. Maturities of financial liabilities The tables below analyse the Group’s and the parent entity’s financial liabilities, net and gross settled derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date.

required to pay. When the Group is committed to make amounts available in installments, each installment is allocated to the earliest period in which the Group is required to pay. The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of nonderivative financial instruments. Trade payables and other financial liabilities mainly originate from the financing of assets and working capital cost of the Group. Derivative financial liabilities Due to the unique characteristics and risks inherent to derivative instruments, the Group seperately monitors the liquidity risk arising from transacting in derivative instruments. The table below details the liquidity risk arising from the derivative

The amounts disclosed in the table

liabilities held by the Group at balance

where the cash flows have been

that are used to mitigate fluctuations

are the contractual undiscounted cash date. Net settled derivative liabilities comprise interest rate swap contracts flows, except for interest rate swaps estimated using forward interest rates applicable at the reporting date. Non derivative financial liabilities The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from recognised financial liabilities and financial guarantees as of 30 June 2012. For the other obligations the respective undiscounted cash flows for the respective upcoming financial years are presented. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.

in interest rate risk on the Group’s term debt.

Non-derivatives Trade creditors 1,750 Term liabilities - 1,750

- - -

- 43,162 43,162

1,750 43,162 44,912

Derivatives Derivative financial instruments 326 326

326 326

1,116 1,116

1,768 1,768

- - -

- 37,149 37,149

1,184 37,149 38,333

296 296

783 783

1,402 1,402

Group - At 30 June 2011 Non-derivatives Trade creditors 1,184 Term liabilities - 1,184 Derivatives Derivative financial instruments 323 323

61 NOTES TO THE FINANCIAL STATEMENTS

Less than 6 - 12 Greater Total 3 FINANCIAL RISK MANAGEMENT 6 Months Months Than 12 Contractual (CONTINUED) Months Cash Flows Group - At 30 June 2012 $’000 $’000 $’000 $’000

Non-derivatives

Trade creditors

212

Term liabilities

43,162

212

43,162

43,374

326

1,116

1,768

326

1,116

1,768

Derivatives

Derivative financial instruments

Parent - At 30 June 2011 Non-derivatives

Trade creditors

217

Term liabilities

37,149

217

37,149

37,366

323

296

783

1,402

323

296

783

1,402

Derivatives

Derivative financial instruments

Parininihi ki Waitotara Incorporation

Parent - At 30 June 2012

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

measurements by level of the following

as prices) or indirectly (that is,

fair value measurement hierarchy:

derived from prices) (level 2);

(d) Fair value risk

•

Effective 1 January 2009, the group adopted the amendment to NZ IFRS 7 for financial instruments that are measured in the Statement of Financial Position at fair value, this requires disclosure of fair value Group - At 30 June 2012

•

Quoted prices (unadjusted) in

Inputs for the asset or liability

active markets for identical assets

that are not based on observable

or liabilities (level 1);

market data (that is,unobservable

Inputs other than quoted prices

inputs) (level 3).

included within level 1 that are

The following table presents the Group’s

observable for the asset or

and Parent’s assets and liabilities that

liability, either directly (that is,

are measured at fair value.

Level 1 $’000

Level 2 $’000

Level 3 $’000

Total balance $’000

Assets Fonterra investment

- -

12,213 12,213

- -

12,213 12,213

Liabilities Interest rate swaps

- -

1,768 1,768

- -

1,768 1,768

Assets Fonterra investment

- -

10,819 10,819

- -

10,819 10,819

Liabilities Interest rate swaps

- -

1,402 1,402

- -

1,402 1,402

- -

1,768 1,768

- -

1,768 1,768

- -

1,402 1,402

- -

1,402 1,402

Group - At 30 June 2011

Parent - At 30 June 2012 Liabilities Interest rate swaps Parent - At 30 June 2011 Liabilities Interest rate swaps

The fair value of financial instruments

active if quoted prices are readily

agency, and those prices represent

traded in active markets is based on

and regularly available from an

actual and regularly occurring market

quoted market prices at the balance

exchange, dealer, broker, industry

transactions on an arm’s length basis.

sheet date. A market is regarded as

group, pricing service, or regulatory

The quoted market price

Group is the current bid price. These

Quoted market prices or dealer

quotes for similar instruments.

the use of observable market data where it is available and rely as little as possible on entity specific estimates.

instruments are included in level 1.

If all significant inputs required to fair

The fair value of financial instruments

the instrument is included in level 2.

that are not traded in an active market

•

value an instrument are observable,

•

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

is determined by using valuation

Specific valuation techniques used to

techniques.

value financial instruments include:

Assets at Fair Value (e) Financial instruments by category Cashflow Through Loans and Hedge Profit or Loss Receivables Financial assets as per balance sheet $’000 $’000 $’000

Available For Sale Financial Assets $’000

Total $’000

At 30 June 2012 Investments Interest rate swaps Trade and other receivables Net advance to joint venture Cash and cash equivalents

- 1,768 - - - 1,768

12,213 - - - - 12,213

1,466 - 1,983 864 432 4,745

6,600 - - - - 6,600

20,279 1,768 1,983 864 432 25,326

At 30 June 2011 Investments Interest rate swaps Trade and other receivables Net advance to joint venture Cash and cash equivalents

- 1,402 - - - 1,402

10,819 - - - - 10,819

1,420 - 2,256 173 589 4,438

6,634 - - - - 6,634

18,873 1,402 2,256 173 589 23,293

- 1,768 - - - 1,768

- - - - - -

- - 52 864 329 1,245

6,333 - - - - 6,333

6,333 1,768 52 864 329 9,346

Parent At 30 June 2012 Investments Interest rate swaps Trade and other receivables Net advance to joint venture Cash and cash equivalents At 30 June 2011 Investments

6,429

1,402

Trade and other receivables

Net advance to joint venture

173

466

1,402

674

6,429

8,505

Interest rate swaps

Cash and cash equivalents

NOTES TO THE FINANCIAL STATEMENTS

used for financial assets held by the

These valuation techniques maximise

Parininihi ki Waitotara Incorporation

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED) Other (e) Financial instruments by category Financial (Continued) Liabilities Measured at Amortised Cost Total Financial liabilities as per balance sheet $â&#x20AC;&#x2122;000 $â&#x20AC;&#x2122;000 Group At 30 June 2012 Term liabilities Trade creditors

43,162 1,750 44,912

At 30 June 2011 Term liabilities Trade creditors

37,149 1,184 38,333

At 30 June 2012 Term liabilities Trade creditors

43,162 212 43,374

At 30 June 2011 Term liabilities Trade creditors

37,149 217 37,366

Parent

The preparation of the financial

lease land in its statement of financial

statements requires management

The Parent recognises unimproved position. The land is valued internally

to make judgements, estimates and

by management using a discounted

assumptions that affect the reported

cash flow model. The cash flow model

amounts in the financial statements.

applies assumptions of a post tax

Management continually evaluates

discount rate of 6.5%, 2.4% increment

its judgements and estimates in

per year but cash flow effected at

relation to assets, liabilities, contingent 7 year intervals and a 30 year time horizon. liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience

Impairment finistere investment

and on other various factors it

Management rely on the management

believes to be responsible under the

team of the Finistere investment to

circumstances, the result of which

provide accurate and timely financial

form the basis of the carrying values

information to assess the performance

of assets and liabilities that are not

of the investment. Impairment is tested

readily apparent from other sources.

as and when the individual stocks

Management has identified the

liquidity positions. The stock is

following critical accounting policies for which significant judgments, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. (a) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a

of Finistere pass through milestone assessed as impaired when the entity does not pass to the next phase of liquidity.

the amount of deferred tax assets that can be recognised. Taxation The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangments considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the Statement of Financial Position. Deferred tax assets, including those arising from un-recouped tax losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax

Impairment Scott River

jurisdictions, are recognised unless

Management have relied on the

be controlled and are not expected to

information of the governing body of Scott River which detailed that the fair value of the property, plant and equipment were substantially less than prior year $26m AUD (2011: $28m). Based on this information management has impaired this

repatriation of retained earnings can occur in the foreseeable future. Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on Management’s estimates of future cash flows. These depend

investment by $0.5m (2011: $0.5m).

on estimates of future production

(b) Critical judgements in applying

costs, restoration costs, capital

the entity’s accounting policies Recovery of deferred tax assets

65 NOTES TO THE FINANCIAL STATEMENTS

Unimproved lease land

and sales volumes, operating expenditure, dividends and other capital management transactions. Judgements are also required

Deferred tax assets are recognised

about the application of income tax

for deductible temporary differences

legislation. These judgments and

as management considers that it is

significant risk of causing a material

assumptions are subject to risk and

probable that future taxable profits will

uncertainty, hence there is a possibility

adjustment to the carrying amounts

be available to utilise those temporary

that changes in circumstances will

of assets and liabilities within the next

differences. Significant management

alter expectations, which may impact

financial year are discussed below.

judgement is required to determine

the amount of deferred tax assets and

Parininihi ki Waitotara Incorporation

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

deferred tax liabilities recognised on

or charge to the statements of

Group has determined that it retains

the statements of financial position

comprehensive income.

substantially all the significant risks

and the amount of other tax losses and temporary differences not yet

Operating lease commitments -

recognised. In such circumstances,

Group as a lessor

some or all of the carrying amounts

and rewards of the ownership of these properties primarily as the lease does not transfer ownership of the asset at

The Group has entered into

the end of the lease term. Thus the

and liabilities may require adjustment,

commercial property leases on its

Group has classified the leases as

resulting in a corresponding credit

investment property portfolio. The

operating leases.

of recognised deferred tax assets

5 REVENUE

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Rental income 6,652 Dairy proceeds 10,274 Fisheries lease income 2,083 Other income 1,159 20,168

6 OTHER GAINS / (LOSSES)

8,012 - - 650 8,662

8,057 610 8,667

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Reversal of prior year joint venture advance impairment - Net gain on sale of available-for-sale financial assets 65 Fair value adjustment to investment property 1,852 Impairment of available for sale financial assets (500) Impairment of joint venture advance (274) Impairment of investment in joint venture - Foreign exchange loss (12) 1,131

7 EXPENSES

6,698 9,738 1,302 579 18,317

1,128 1,775 826 (1,049) (495) (1,076) (12) 1,097

- 65 1,852 (500) 331 - (12) 1,736

1,128 1,775 826 (1,049) (495) (12) 2,173

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Auditors’ remuneration 55 Depreciation 660 Employee benefits 765 Farm operating expenses 6,344 Lease expense 77 Members fees 206 Other expenses 1,572 9,679

55 679 565 4,316 75 201 1,675 7,566

55 46 536 - 72 175 1,290 2,174

55 58 434 65 168 1,514 2,294

Finance costs 2,159 Finance income (171) 1,988

9 INCOME TAX (EXPENSE)/BENEFIT

1,728 (302) 1,426

2,257 (2,847) (590)

1,812 (2,732) (920)

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

(a) Income tax expense Current tax: Current tax on profits for the year 50 Tax losses utilised 1,286 Adjustments in respect of prior years (623) Deferred tax expense / (benefit) 341 Total income tax expense 1,054

430 - (906) (1,196) (1,672)

- 1,286 (856) (8) 422

57 (906) (1,244) (2,093)

Amounts charged to other comprehensive income Net loss on revaluation of cash flow hedges Income tax expense

(57) (1,729)

(64) 358

(57) (2,150)

10,892 2,124

8,814 1,543

9,466 1,636

(1,878) 432 (87) (161) - - 430

- 30 - (294) (857) - 422

(1,788) 370 (161) 57

(64) 990

Profit from continuing operations before income tax expense 9,632 Tax at the New Zealand tax rate # 1,781 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Temporary differences - Other permanent differences 40 Changes in fair value of livestock (77) Changes in fair value of investments (125) Over provided in prior years (507) Income not subject to tax (58) Income tax expense 1,054

# PKW Incorporation (the parent) is taxed at the maori authority tax rate of 17.5% and PKW’s subsidiaries are taxed at the corporate tax rate of 28%.

67 NOTES TO THE FINANCIAL STATEMENTS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Parininihi ki Waitotara Incorporation

8 FINANCE INCOME AND EXPENSES

10 MĀORI AUTHORITY CREDIT ACCOUNT

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

The imputation credits available to the shareholders at balance date were: Through direct shareholding 1,381 Movements

1,375

1,381

1,375

1,378 - (3) 1,375

1,375 6 - 1,381

1,378 (3) 1,375

Māori authority credit account Balance 1 July Resident witholding tax deductions Tax payments, net of refunds Balance 30 June

1,375 6 - 1,381

11 DISCONTINUED OPERATIONS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Revenue Expenses Income tax expense Loss after income tax of discontinued operations

- - - -

- (1,003) - (1,003)

- - - -

(1,003) (1,003)

The Parent’s wholly owned subsidiaries investment in the development and construction of the Gabba Central property development Brisbane, Australia were placed in receivership on 30 October 2008 by its lender Uniting Church Investments Service (UCIS). The financial statements of the Australian subsidiaries represented by PKW Limited Liability Partnership (In Receivership), Barron Properties Pty Limited (In Receivership) and Retail Development Operations Pty Limited (In Receivership) have not been consolidated with the financial statements of the Parent. All certain liabilities related to those events have been recognised at 30 June 2012.

12 CURRENT ASSETS - RECEIVABLES

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Accounts receivable Provision for doubtful receivables

2,018 (35) 1,983

2,282 (26) 2,256

87 (35) 52

61 (26) 35

Prepayments 582 2,565

179 2,435

418 470

17 52

(a) Impaired receivables

The ageing of these receivables is as follows:

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

0-30 days 1,653 31-60 days 6 61-90 days 4 90+ days 44 1,707

1,953 2 - 28 1,983

39 - - 44 83

11 24 35

An impairment of $0.04m (2011: $0.03m) has been booked for specific debtors included within 90 days. Other balances within trade and other receivables do not contain impaired assets and are not passed due. It is expected that these other balances will be received when due.

NOTES TO THE FINANCIAL STATEMENTS

(i) An allowance has been made for impairment loss.

(b) Fair value and credit risk Due to the short-term nature of these receivables, their carrying value approximates their fair value.

Parininihi ki Waitotara Incorporation

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables mentioned above. The Group does not hold any collateral as security.

13 BIOLOGICAL ASSETS Group 2012 2011 $â&#x20AC;&#x2122;000 $â&#x20AC;&#x2122;000 Livestock Dairy cattle Balance at the beginning of the year Increase due to purchases Decreases due to sales Changes in fair value Balance at the end of the year

3,293 2,518 (191) 824 6,444

850 2,336 (85) 192 3,293

Balance at the beginning of the year Increase due to purchases Decreases due to sales Changes in fair value Balance at the end of the year Balance at the end of the year

44 71 (20) (9) 86 6,530

30 11 (51) 54 43 3,336

2012 2011 Units Units

Sheep

Quantity of dairy cattle on hand Rising 1 year heifers Rising 2 year heifers Cows Rising 1 year bulls Rising 2 year steers

491 386 2,448 40 - 3,365

255 382 1,384 31 2,052

155 417 - 6 578

23 316 4 3 346

Quantity of sheep on hand Ewe hoggets 5/6 year ewes Two tooth rams Breeding rams The Parent engages in sophisticated dairy farm management to preserve the value of stock. Biological assets of the Group comprise dairy cattle and sheep.

13 BIOLOGICAL ASSETS (CONTINUED)

disease) effects at a regional level.

Financing risk

(a) Financial risk management

The Group has environmental

The nature of livestock farming means

practices aimed at compliance with

Environmental and climatic risks

Zealand.

The Group is exposed to climatic

Commodity price risk

and other environmental risks. The Group’s geographic spread of farms allows a high degree of mitigation

revenue is received in the second half of the financial year, whereas financial expenses are incurred throughout the year. The Group

The Group is exposed to risks arising from fluctuations on the price and

against adverse climatic (eg: drought

sales volume of livestock and dairy

and flooding) and environmental (eg:

produce.

manages this risk through budgeting and actively managing working capital requirements, as well as maintaining credit facilities at levels sufficient to meet working capital requirements.

14 PROPERTY, PLANT AND EQUIPMENT

Freehold Plant and Fixtures and Leasehold land Buildings equipment fittings improvements Total $’000 $’000 $’000 $’000 $’000 $’000

At 1 July 2010 Cost Accumulated depreciation Net book amount

26,752 - 26,752

9,177 (1,880) 7,297

1,978 (1,074) 904

372 (301) 71

2,429 (622) 1,807

40,708 (3,877) 36,831

Year ended 30 June 2011 Opening net book amount Additions Depreciation charge Closing net book amount

26,752 - - 26,752

7,297 43 (325) 7,015

904 603 (169) 1,338

71 110 (54) 127

1,807 1,437 (131) 3,113

36,831 2,193 (679) 38,345

At 30 June 2011 Cost Accumulated depreciation Net book amount

26,752 - 26,752

9,221 (2,206) 7,015

2,581 (1,243) 1,338

482 (355) 127

3,866 (753) 3,113

42,902 (4,557) 38,345

Year ended 30 June 2012 Opening net book amount Additions Disposals Depreciation charge Closing net book amount

26,752 - - - 26,752

7,015 1,207 (36) (241) 7,945

1,338 1,131 (9) (242) 2,218

127 72 - (41) 158

3,113 2,166 (22) (136) 5,121

38,345 4,576 (67) (660) 42,194

At 30 June 2012 Cost Accumulated depreciation Net book amount

26,752 - 26,752

10,391 (2,446) 7,945

3,705 (1,487) 2,218

551 (393) 158

6,010 (889) 5,121

47,409 (5,215) 42,194

NOTES TO THE FINANCIAL STATEMENTS

environmental and other laws in New

that most of the Group’s agricultural

Parininihi ki Waitotara Incorporation

strategies

Freehold Freehold Fixtures and 14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Land Buildings Fittings Total $’000 $’000 $’000 $’000 At 1 July 2010 Cost 56 Accumulated depreciation - Net book amount 56

92 (24) 68

369 (299) 70

517 (323) 194

56 - - 56

68 - (6) 62

70 109 (52) 127

194 109 (58) 245

At 30 June 2011 Cost 56 Accumulated depreciation - Net book amount 56

92 (30) 62

479 (352) 127

627 (382) 245

Year ended 30 June 2012 Opening net book amount 56 Additions - Depreciation charge - Closing net book amount 56

62 - (4) 58

127 72 (41) 158

246 72 (46) 272

At 30 June 2012 Cost 56 Accumulated depreciation - Net book amount 56

92 (34) 58

551 (393) 158

699 (427) 272

Year ended 30 June 2011 Opening net book amount Additions Depreciation charge Closing net book amount

At 1 July 2010 Cost Accumulated amortisation and impairment

7,462 -

Year ended 30 June 2011 Opening net book amount Additions Closing net book amount

7,462 1,589 9,051

At 30 June 2011 Cost Accumulated amortisation and impairment

9,051 9,051

Year ended 30 June 2012 Opening net book amount Additions Closing net book amount

9,051 2,762 11,813

At 30 June 2012 Cost Accumulated amortisation and impairment

11,813 11,813

NOTES TO THE FINANCIAL STATEMENTS

15 INTANGIBLE ASSETS 73 Total Group $â&#x20AC;&#x2122;000

Parininihi ki Waitotara Incorporation

There have been additions of $2.76m during the year (2011: $1.6m). There have been no disposals or impairment losses requiring recognition during the year. The fair value of the quota at 30 June 2012 is $23m (2011: $19.7m) as supplied by industry specialist Quota Management System Limited.

16 INTERESTS IN JOINT VENTURE (a) Investments

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Investment in joint venture 1,201 Advances to joint venture 864 2,065

605 173 778

1,211 864 2,075

15 173 188

Group (b) Share of profits 2012 2011 $’000 $’000 Balance 1 July Share of profits after income tax Repayment Impairment Balance 30 June

605 - (395) (210) -

1,211 470 (1,076) 605

- - -

16,879 (15,940) 939

Current assets Non-current assets Total assets

(507) 3,940 3,433

4,596 3,881 8,477

Current liabilities Non-current liabilities Total liabilities Net assets

(223) - (223) 3,656

4,769 3,715 8,484 (7)

Advances to joint venture Net assets

864 4,520

1,218 1,211

Share of joint ventures net assets

1,201

605

(d) Advances to joint venture Balance 1 July Reversal of prior year impairment Quota transfer Lease income Repayments Advances Impairment Advances to joint venture at 31 March Impairment Repayments Advances to joint venture at 30 June

173 - - - (113) 864 (60) 864 - - 864

1,222 1,128 (1,589) 703 (246) 1,218 (495) (550) 173

(c) Summarised financial information The following tables illustrate summarised financial information relating to the Group’s investment in joint venture: Revenue Expenses Profit after tax

PKW Incorporation entered into a joint venture arrangement on the 19th April 2012 to purchase PNF (2011) Ltd a crayfish processing plant. Capital invested in this joint venture amounted to $1.2m which is proportionate to the other joint venture partners.

16 INTERESTS IN JOINT VENTURE (CONTINUED)

June 2012 are $0.86m (2011: $0.17m). PNF (2011) Ltd has a balance date of 31 March which is different to the Group’s balance date of 30 June. PKW Incorporation divested its interest in PKW Wakatu Limited at December 2011. PKW-Wakatu Limited has a balance date of 31 July which is different to the Group’s balance date of 30 June. 17 INVESTMENTS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Fonterra Co-operative Group Limited 12,213 Scott River - Finistere 6,322 New Zealand Government inflation indexed bond 1,466 7,788

10,819 500 5,831 1,420 7,751

- - 6,322 - 6,322

500 5,831 6,331

Advances to subsidiaries (note 18) - Other financial assets carried at cost 278 278 20,279

- 303 303 18,873

69,438 11 69,449 75,771

59,499 98 59,597 65,928

NOTES TO THE FINANCIAL STATEMENTS

The liabilities of the joint venture include advances from the Incorporation. Advances due from the joint venture as at 30

Finistere is an unlisted equity instrument that cannot be prescribed at fair value. The Finistere investment is recognised at a cost of $6.32m (2011: $5.83m) and is related to an investment of USD $3.75m (2011: USD $3.75m) that was unhedged at 30 June 2012. Fonterra Co-operative Group Limited is measured at fair value using independent valuation. The fair value is $12.21m (2011: $10.82m).

River investment is recognised at a carrying value of nil (2011: $0.5m). 18 INVESTMENTS IN SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2(c): Incorporated in Balance Date PKW Farms Limited Taranaki Aqua Gardens Limited JSP Limited PKW Investments Limited Retail Development Operations Pty Limited (In receivership) PKW Limited Liability Partnership (In receivership) Barron Properties Pty Limited (In receivership)

Equity Holding 2012 2011 % %

New Zealand New Zealand New Zealand New Zealand

30 June 31 March 31 March 30 June

100 100 100 100

Australia Australia Australia

30 June 30 June 30 June

100 100 100

Parininihi ki Waitotara Incorporation

Scott River is a unit trust investment based in Western Australia; this investment is carried at impaired cost. The Scott

18 INVESTMENTS IN SUBSIDIARIES (CONTINUED) PKW Farms Limited is in the business of farming. Taranaki Aqua Gardens Limited is in the business of fishing. JSP Limited is non-trading. PKW Investments Limited is non-trading. Retail Development Operations Pty Limited (in receivership) is in the business of property development. PKW Limited Liability Partnership (in receivership) is in the business of property development. Barron Properties Pty Limited (in receivership) is in the business of property development. Taranaki Aqua Gardens Limited and JSP Limited have different balance dates to the Parent entity because 31 March suits the nature of their business.

19 EQUITY INSTRUMENTS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Movements Balance 1 July 5,830 Add capital contributions 841 Deduct investments sold (349) Deduct investment impaired - 6,322 Finistere investment derecognised Proceeds from sale 414 Investment cost (349) Gain on sale 65

5,886 1,225 (731) (549) 5,831

5,830 841 (349) - 6,322

5,886 1,225 (731) (549) 5,831

2,506 (731) 1,775

414 (349) 65

2,506 (731) 1,775

The Group has an investment in a Venture Capital fund called “Finistere Oceania Fund”. The Finistere investment is valued at cost as the fair value cannot be determined as the fund invests in various start up companies. These start up companies are private companies and due to their nature are only revalued at different liquidity phases. None of these companies are listed with readily available fair value information. The majority of the fund’s investment are with start up ventures in the Medical Devices Industry. The Group relies on the management team of the Venture Capital fund to invest in companies that will provide the Group with a significant return on each investment. This return is realised when the start up companies are acquired by an investor. Impairment testing is based on entities within the portfolio meeting liquidity milestones. The carrying amount of the investment as at 30 June 2012 is $6.32m (2011: $5.83m). The table above shows the movement in the Finistere investment.

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Unimproved leased land Balance at beginning of year 133,380 Net gain in fair value 1,862 135,242 Commercial property Balance at beginning of year 2,160 Net gain/(loss) in fair value (10) 2,150 137,392

132,499 881 133,380

133,380 1,862 135,242

132,499 881 133,380

2,215 (55) 2,160 135,450

2,160 (10) 2,150 137,392

2,215 (55) 2,160 135,450

The Parent has used a discounted cash flow model to assess the fair value of the land. Refer to significant accounting estimates and assumptions for estimates and assumptions applied in calculating fair value. Commercial properties are carried at fair value, which have been determined based on valuations performed by Telfer

77 NOTES TO THE FINANCIAL STATEMENTS

20 INVESTMENT PROPERTIES

Young as at 30 June 2012. Telfer Young is an industry specialist in valuing these types of commercial properties in the Taranaki region. The fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arms length transaction at the date of valuation. In determining fair value, the expected net cash flows applicable to each property have been discounted to their present value using a market determined, risk adjusted, discount rate applicable to the respective asset. Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Trade creditors 1,750 Other payables 1,334 Provision for dividend 1,205 GST payable (190) 4,099

1,184 940 1,205 281 3,610

212 1,184 1,205 118 2,719

217 915 1,205 108 2,445

Fair value Due to the short term nature of these payables, their carrying value approximates their fair value. 22 DERIVATIVE FINANCIAL INSTRUMENTS Current liabilities Interest rate swaps - fair value hedges

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

652

619

652

619

Non-current liabilities Interest rate swaps - fair value hedges 1,116 1,768

783 1,402

1,116 1,768

783 1,402

Parininihi ki Waitotara Incorporation

21 CURRENT LIABILITIES - PAYABLES

22 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) Interest rate swap contracts - cash flow hedges Interest bearing loans of the Group currently bear a variable interest rate of 4.3%. In order to protect against rising interest rates the Group has entered into interest rate swap contracts under which it has a right to receive interest at fixed rates and to pay interest at fixed rates. Swaps in place cover approximately 49% (2011: 57%) of the principal outstanding. The fixed interest rates range between 5.85% to 5.99% (2011: 5.85% to 5.99%) and the variable rate between 1.37% to 1.62% above the 90 day bank bill rate, which at balance date was 2.50% (2011: 2.50%). The interest rate swaps require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates on which the interest is payable on the underlying debt. All swaps are matched directly against the appropriate loans and interest expense and as such are considered highly effective. They are settled on a net basis. The swaps are measured at fair value and all gains and losses attributable to the hedged risk are recognised in other comprehensive income. Interest expense is recognised in profit or loss. 23 TERM LIABILITIES

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Rabobank facility 40,613 Unclaimed dividends 2,549 43,162

34,900 2,249 37,149

40,613 2,549 43,162

34,900 2,249 37,149

The Parent utilises an interest only finance facility of $46 million (2011: $46 million) from Rabobank New Zealand Limited. This facility expires on 25 February 2024. The interest charge on the drawn facility is currently at a variable rate based on an agreed margin over the BKBM rate (daily interbank rate). At 30 June that rate approximated 4.24% per annum (2011: 4.5%). Loan fee on the undrawn amount of the facility is 0.25% per annum. The facility is secured by first mortgage over certain leasehold and freehold interest in property, a registered first security agreement over all present and subsequently acquired personal property with a priority sum of $60 million and unlimited guarantees from PKW Farms Limited, PKW Investments Limited and Taranaki Aqua Gardens Limited. Carrying value of financial assets pledged as collateral as at 30 June 2012 $69.45m (2011: $57.15m).

At 1 July 2010 Charged/(credited) to the statement of comprehensive income At 30 June 2011

(346)

(755)

(21)

(1,122)

39 (307)

(27) (782)

(23) (44)

1,200 1,200

5 5

1,194 72

(307)

(782)

(44)

1,200

- (307)

- (782)

(222) (266)

(365) 835

(354) (349)

(941) (869)

Investment Parent Properties

Tax Losses

Other

Total

(346)

1,200 1,200

5 5

1,244 898

1,200

898

(365) 835

7 12

(358) 540

At 1 July 2011 Charged/(credited) to the statement of comprehensive income At 30 June 2012

At 1 July 2010 (346) Charged/(credited) to the statement of comprehensive income 39 At 30 June 2011 (307) At 1 July 2011 (307) Charged/(credited) to the statement of comprehensive income - At 30 June 2012 (307)

Parininihi ki Waitotara Incorporation

Property, Investment Plant and Properties Equipment Livestock Tax Losses Other Total Group $’000 $’000 $’000 $’000 $’000 $’000

NOTES TO THE FINANCIAL STATEMENTS

24 DEFERRED TAX ASSETS

25 SHARE CAPITAL Group and Parent

Group/Parent Group/Parent 2012 2011 2012 2011 Shares Shares $’000 $’000

Share authorised, issued and fully paid 1,205,071

1,205,071

5,549

(a) Capital risk management The Group and the Parent entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Management are constantly reviewing the capital structure to take advantage of favourable costs of capital or high return on assets. Management monitor capital through the gearing ratio (net debt/total capital). The target for the Group’s gearing ratio is 40% as this is the covenant prescribed by Rabobank New Zealand Limited. The gearing ratios based on continuing operations at 30 June 2012 and 2011 were as follows:

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Total borrowings Less: cash and cash equivalents Net debt Total equity Total capital

50,499 (432) 50,067 173,618 223,685

43,605 (589) 43,016 166,547 209,563

47,950 (329) 47,621 169,206 216,827

41,303 (466) 40,837 162,321 203,158

Gearing ratio

22%

20%

22%

20%

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

(a) Reserves Capital reserve 24,591 Cash flow hedge reserve (1,430) 23,161

24,591 (1,128) 23,463

27,738 (1,430) 26,308

27,738 (1,128) 26,610

Movements: Capital reserve Balance 1 July Charge to other comprehensive income Balance 30 June

24,591 - 24,591

27,738 - 27,738

27,738 27,738

Cash flow hedge reserve Balance 1 July Charge to other comprehensive income Income tax on other comprehensive Balance 30 June

(1,128) (366) 64 (1,430)

(891) (295) 58 (1,128)

(1,128) (366) 64 (1,430)

(891) (295) 58 (1,128)

81 NOTES TO THE FINANCIAL STATEMENTS

26 RESERVES AND RETAINED EARNINGS

Capital reserve The capital reserve represents capital contributions that have been recognised and accounted for since establishment of the Incorporation. Cash flow hedge reserve This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

Movements in retained earnings were as follows: Balance 1 July Net profit for the year Dividends Balance 30 June

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000 137,535 8,578 (1,205) 144,908

127,179 11,561 (1,205) 137,535

130,162 8,392 (1,205) 137,349

120,811 10,556 (1,205) 130,162

27 DIVIDENDS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Declared and paid during the year: Dividend proposed 2012: $1 (2011: $1)

1,205

Parininihi ki Waitotara Incorporation

(b) Retained earnings

28 CONTINGENCIES (a) Contingent liabilities Gabba Central Property Development In 2010 an agreement was reached between United Church Investments Services (“UCIS”) and the Incorporation to settle any remaining liabilities in relation to the development for $7.5m AUD ($9.2m NZD). This provision was paid during the 2011 financial year. Due to certain conditions of the debt agreement there is an additional potential liability of $19.5m. The Incorporation obtained a legal opinion from Bell Gully to address the potential liability and its tax implications. The legal opinion advises that the Incorporation will never be required to settle the $19.5m liability as UCIS will never have the ability to demand repayment. Based on this advice management have not recognised a liability in the 30 June 2012 Statement of Financial Position. There were no contingent liabilities as at 30 June 2012.

29 COMMITMENTS (a) Capital commitments As at 30 June 2012 the Group was committed to spend USD $0.5m (NZD $0.62m) for an investment in a United States of America based venture capital fund (2011: USD4.6m (NZD6.3m). The Parent entered an agreement to purchase certain land for $1.4m (2011: $1.4m). The completion of this transaction is subject to rezoning consents. The Parent entered an arrangement to purchase shares in crayfish quota for $2.3m. The completion of this transaction is scheduled for September 2012. The subsidiary ‘PKW Farms Ltd’ entered an arrangement to purchase leasehold improvements of $3.7m. The completion of these transactions will be performed by 1 June 2014.

(b) Lease commitments: as lessee (i) Operating leases Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Within one year 80 Later than one year but not later than five years 139 Total minimum lease payments 219

65 180 245

65 139 204

65 180 245

29 COMMITMENTS (CONTINUED)

Gabba Central Property Development The Group has entered into commercial property leases on its investment property portfolio consisting of the Group’s surplus office. These non-cancellable leases have remaining terms of between two and three years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Future minimum rentals receivable under non-cancellable operating leases at 30 June are as follows:

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Later than one year and not later than five years 195 Later than five years 253 448

195 449 644

195 253 448

195 449 644

NOTES TO THE FINANCIAL STATEMENTS

30 RELATED PARTY TRANSACTIONS (a) Parent entities During the year, the Parent has charged interest at 6.56% (2011: 6.7%) on inter-entity loans that it has made to its wholly owned subsidiaries, PKW Farms Limited of $2.35m (2011: $2.1m). It has also charged PKW Farms Limited rental of $1.36m (2011: $1.36m) on the unimproved value of the land that it is leasing. These inter-entity transactions have been eliminated on consolidation. The Parent has charged a management fee to its wholly-owned subsidiaries PKW Farms Limited of $0.52m (2011: $0.47m) and Taranaki Aqua Gardens Limited $0.05m (2011: $0.08m). This charge represents the share of the Parents transactions have been eliminated on consolidation. The Parent has an equity interest in Port Nicholson Fisheries (2011) Limited. Taranaki Aqua Gardens Limited, a wholly owned subsidiary of the Parent, leased crayfish quota to Port Nicholson Fisheries (2011) Limited. The amount due to Taranaki Aqua Gardens Limited at 30 June 2012 was $9.1m (2011: $6.53m). The Parent has charged interest at 6.56% (2011: 6.7%) on the inter-entity loan that it has made to Taranaki Aqua Gardens Limited of $0.44m (2011: $0.45m). The current account due from PNF (2011) Limited at 30 June 2012 was $0.86m (2011: Nil). The Parent at December 2011 sold its interest in PKW Wakatu Limited. The current account due from PKW Wakatu Limited at 30 June 2012 was nil (2011: $0.17m). During the year, the PKW Trust has charged interest at 6.56% (2011: 6.7%) on inter-entity loans that is made to PKW Incorporation of $0.1m (2011: $0.09m). No related party debts have been written off or forgiven during the year and all transactions were conducted on an arms basis.

Parininihi ki Waitotara Incorporation

overhead costs that are attributable to the subsidiaries and is the first year this fee was charged. These inter-entity

30 RELATED PARTY TRANSACTIONS (CONTINUED) (b) Directors David MacLeod is a director and has a one share holding of PKW Farms Limited. David MacLeod is also a director of the Cooperative, Fonterra Co-operative Group Limited. PKW Farms Limited independent director Philip Luscombe is also a director of a major supplier Allied Farmers Limited. Taaringaroa Nicholas is a committee member and a shareholder of Parininihi ki Waitotara Incorporation. (c) Key management and personnel compensation Short term employee benefits (salaries) paid to key management personnel was $0.4m (2011: $0.37m). Committee Members and Directors remuneration and value of other benefits received from the Group for the year ended 30 June 2012 were: Director PKW Trust Honoraria Fees Daily fees Honoraria $’000 $’000 $’000 $’000 Gibson, Bev Nicholson, Claire Harrison, Daniel MacLeod, David Edwards, Hinerangi Raumati, Hinerangi Tuuta, Jamie Luscombe, Philip Nicholas, Taaringaroa Hohaia, Te Aroha Walden, Tokatumoana Kapea, Tokorangi Total

20 - - 20 20 43 17 - 22 - 10 20 172

- - - - - - - 20 - - - - 20

- 2 2 - - - - - - - - - 4

Total $’000

- - - - 10 - - - - - - - 10

20 2 2 20 30 43 17 20 22 10 20 206

In 2008 shareholders approved total Committee remuneration fees of $0.25m. In December 2010 the Committee of Management engaged PricewaterhouseCoopers to undertake an independent review of Committee remuneration. As a result of this review the Committee has approved a total remuneration approach to governance fees based on the following: •

Chairman $0.05m honorarium per annum.

•

Chair of Audit and Risk Committee $0.03m honorarium per annum.

•

Other Committee Members receive $0.02m honorarium per annum.

•

Chairperson of the PKW Trust receives $0.01m honorarium per annum.

•

Independent Directors of PKW subsidiaries receive Director’s fees of $0.02m per annum.

•

PKW Management appointed to subsidiary directorships do not receive Director’s fees.

(i) Other transactions and balances There was a loan receivable at 30 June 2011 from the PKW Wakatu joint venture of $0.17m which was repaid in 2012. There was a loan receivable at 30 June 2012 from the PNF (2011) Ltd joint venture of $0.86m. No related party balances were written off or forgiven during the year.

31 SUBSEQUENT EVENTS

Group Parent 2012 2011 2012 2011 $’000 $’000 $’000 $’000

Profit for the year

8,578

11,561

8,392

10,556

Add (Less) non cash items and non operating items: Depreciation Other income Discontinued actvities Gain on fair value of investments Reversal of prior year joint advance impairment Impairment on investments Derivative financial instrument Fair value adjustment to investment property Finance income Other income - management fees from subs Share of profits of joint venture Increase/(decrease) in deferred tax payable

660 (3,696) - - - 774 (366) (1,852) - - - 940

679 161 1,002 (1,775) (1,128) 2,619 (295) (826) - - (470) (1,193)

46 - - - - 500 - (1,852) (2,847) (592) - 358

58 (1,028) 1,002 (1,775) (1,128) 1,544 (826) (2,539) (549) (1,244)

Movements in working capital: Decrease (Increase) in trade receivables Increase (decrease) in trade creditors Increase (decrease) in other liabilities Increase in provision for income taxes payable Increase (decrease) in dividend payable Net cash inflow from operating activities

(130) 960 471 556 - 6,895

(599) 801 - (714) 482 10,305

(418) 274 (358) (6) - 3,497

1 77 (906) 482 3,725

Parininihi ki Waitotara Incorporation

32 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES

NOTES TO THE FINANCIAL STATEMENTS

The Group and the Parent have had no known significant events occur after balance date (2011: nil).

33 STATEMENT OF ESTIMATED CURRENT MARKET VALUE ASSETS as at 30 June 2012

AS REQUIRED BY SECTION 276 (4) (C) OF TE TURE WHENUA MAORI ACT 1993 30 June 2012 Group $â&#x20AC;&#x2122;000 Assets Current assets Investments Property, plant and equipment Investment properties Total assets Less liabilities Accounts payable and accruals Term loans Unclaimed dividends Total liabilities

432 98,353 272 137,392 236,449 3,853 40,613 2,549 47,015

Equity

189,434

Schedule of assets Investment properties Unimproved land value Powderham Street, New Plymouth Queen Street, Waitara Miranda Street, Stratford

135,242 1,200 450 400 137,392

Investments Finistere venture capital fund PKW Farms Limited PKW-Wakatu Limited Taranaki Aqua Gardens Limited - Quota Scott River partnership Mangaoapa Forest Partnership Government Inflation Indexed bond

6,322 64,400 2,065 23,000 500 1,100 1,466 98,353

PARININIHI KI WAITOTARA TRUST FINANCIAL STATEMENTS for the year ended 30 June 2012

Chartered Accountants

Independent Auditor’s Report To the beneficiaries of Parininihi ki Waitotara Charitable Trust (the “Trust”) Report on the Financial Statements We have audited the financial statements of the Trust on pages 89 to 92, which comprise the statement of financial position of the Trust as at 30 June 2012, statement of comprehensive income, and statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information. This report is made solely to the beneficiaries, as a body, in accordance with the trust deed. Our audit has been undertaken so that we might state to the beneficiaries those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust’s beneficiaries as a body, for our audit work, for this report, or for the opinions we have formed. Trustees’ Responsibility for the Financial Statements The trustees are responsible for the preparation and fair presentation of the financial statements, in accordance with generally accepted accounting practice in New Zealand, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). These auditing standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected, depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the Trust’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements. We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion. Other than in our capacity as auditor we have no relationship with, or interest in the Trust. Opinion In our opinion, the financial statements on pages 89 to 92: ►

comply with generally accepted accounting practice in New Zealand; and

►

present fairly, in all material respects, the financial position of the Trust as at 30 June 2012 and its financial performance for the year then ended.

Wellington 31 August 2012

Note

2012 $’000

2011 $’000

Grants Interest Income

121 211 332

121 193 314

Expenses (4) Grants (5) Expenses Net surplus and total comprehensive income

17 139 156 176

25 88 113 201

2,973 176 3,149

2,772 201 2,973

FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Balance at beginning of year Total comprehensive income for the year Balance at end of year

* The accompanying notes form part of these financial statements.

Parininihi ki Waitotara Trust

Statement of Movements in Equity

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

Note

2012 $’000

2011 $’000

ASSETS Current Assets Bank (3) Accounts receivable Total Current Assets

56 1,641 1,697

59 1,494 1,553

Non Current Assets Investments (2) Total Non-Current Assets

1,466 1,466

1,420 1,420

Total Assets

3,163

2,973

LIABILITIES Current Liabilities Accounts payable Total Current Liabilities NET ASSETS

14 14 3,149

2,973

EQUITY Trust capital Retained surplus TOTAL EQUITY

1,283 1,866 3,149

1,283 1,690 2,973

For and on behalf of the Trustees these financial statements are authorised for issue, dated 31 August 2012.

Trustee

* The accompanying notes form part of these financial statements.

Trustee

1. STATEMENT OF ACCOUNTING POLICIES Reporting Entity Parininihi ki Waitotara Trust is a Trust established by a trust deed dated 22 June 1983.

Changes in Accounting Policies There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.

.......................................... 2. INVESTMENTS

These financial statements have been prepared in accordance with generally New Zealand Government Indexed Bond accepted accounting practice.

2012 $’000

2011 $’000

1,466 1,420 1,466 1,420

Measurement Base The accounting principles recognised as appropriate for the measurement and reporting of financial performance and financial position on an historical cost basis are followed. Specific Accounting Policies The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied: •

Accounts receivable are stated at their estimated net realisable value.

•

The Trust is a charitable entity and is not liable for income tax.

•

Investments are stated at cost

•

The Trust is not registered for goods and services tax.

•

Website costs are stated at cost and will be amortised over 4 years.

The Trust qualifies for differential reporting as it is not publicly accountable and is not large as defined under the framework for differential reporting. The Trust has taken advantage of all available reporting exemptions.

3. BANK Westpac – general account Westpac – term deposit

4. EXPENSES Chairman’s Honorarium Administration costs Amortisation of website

5. GRANTS Marae Education and Sport Community Grants Approved but unpaid

2012 $’000

2011 $’000

1 6 55 53 56 59

2012 $’000

2011 $’000

10 7 - 17

10 14 1 25

2012 $’000

2011 $’000

42 82 17 - 139

20 73 6 (11) 88

Parininihi ki Waitotara Trust

..........................................

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

6. WEBSITE Cost Less Amortisation Book Value

2012 $’000

2011 $’000

3 3 -

7. RELATED PARTIES During the year the Trust received interest income from, and invested funds with, its parent entity Parininihi ki Waitotara Incorporation as follows: 2012 2011 $’000 $’000 Interest Income

The amounts outstanding with Parininihi ki Waitotara Incorporation at balance date were:

2012 $’000

2011 $’000

Accounts Receivable

1,641

1,494

Parininihi ki Waitotara Trust

NOTES TO THE FINANCIAL STATEMENTS

NOTES