Ā Tātau Whakatutukitanga - Our Financial Performance

Overall results & distributions

This year the Āti Hau Group has returned a net loss after tax of $5.7 million (2023: $6.7 million loss). The Group has contributed to a shareholder net equity position of $277.5 million, down $15.5 million from $293 million last year. An operating loss of $1.3 million was also reported this year (2023: $1.9 million loss).

The Board has recommended a dividend distribution of $0.28 per share dividend and a $250,000 distribution to Te Āti Hau Trust.

Revenue

This year revenue was $20.9 million compared to $21.9m million in 2023, a decrease of $1 million.

Livestock revenue of $12.7 million was $2.9 million lower than last year. Although stock performed well, returns have been low because of poor prices. Lamb and beef sales were also behind last year because good farm conditions allowed more animals to be wintered, allowing additional weight to be added. We delivered record milk production to achieve sales of $2 million consistent with last year’s returns because of lower Fonterra milk prices this year.

Apiary revenue of $3.5 million was consistent with last year. We achieved record production and record sales with only 143 tonnes of mature honey remaining in store (or one and a half years’ production).

Honey was sold at 20% below last year’s book value resulting in a $1 million loss; this reflects the tough times being experienced in the bee keeping industry.

We recognised a gain from the sale of emission trading units of $1.0 million (2023: $1.6 million loss on sale). Carbon credits valued at $3 million were sold during the year to fund capital improvements on the whenua as well as borrowings repayment and distributions.

Expenses and finance costs

We delivered our work programme through operating expenditure of $22.2 million compared to $23.8 million in 2023, a savings of $1.6 million.

Despite ongoing inflationary pressures there have been continuous efforts to find efficiencies in a range of categories. Farm, apiary and forestry expenses of $10.1 million were $1.3 million lower than the prior year. We didn’t harvest any logs during the year resulting in $0.5 million positive variance on last year. We also saved $1 million in shearing and cropping expenditure.

Employee expenses of $6.7 million were $0.4 million higher due to inflation. Repairs and maintenance, governance and shareholder expenses, donations and distributions, and other expenses of $5.3 million were $0.8 million lower than last year.

Finance costs increased by $0.4 million to $2.5 million due to higher interest rates, however, our average cost of funds remained slightly below 6%.

Operating revaluations

We recognised operating losses of $1.7 million (2023: $3.2 million revaluation losses) mainly due to changes in the value of livestock and hives. Lower commodity pricing has been a key challenge this year, affecting both revenue and asset values.

Ā TĀTAU RAWA - Our Assets

Property, plant and equipment decreased $17.6 million from $277.1 million to $259.5 million this year mainly due to an independent impairment review of the fair value of our rural land and buildings.

The rural property market in the 2023/24 season has essentially followed the commodity prices which have been quite varied and have fluctuated strongly. The main influences have been the demand (for some, the lack of) for product, and cost structures staying stubbornly high (mainly interest rates, inputs, compliance). This has led to a more subdued real estate market.

We delivered our capital works programme with additions of $1.7 million. This spend was lower than we had planned for farm development, environmental works, staff housing and vehicle replacements.

Despite lower and fluctuating commodity prices for farming, apiary and forestry, there has been continuous efforts to deliver efficiencies across the Āti Hau Group. We remain steadfast in the efforts required to return to a profitable position given the challenging economic circumstances.

Biological assets including sheep, cattle, hive and forestry assets were valued independently at $31.6 million compared to $32.7 million last year. In addition, we are carrying less inventory of $6.4 million (2023: $8.3 million) most of which relates to mature honey following a year of record sales.

Our investments in associates and joint ventures are valued at $10.7 million (2023: $11.4 million) comprising our investment in Te Hou Farms Limited Partnership (dairy) $8.6 million (2023: $9.9 million) and our investment in the Papahau Forest Partnership $2.1 million (2023: $1.5 million). During the year Te Hou Farms incurred losses from trading and other comprehensive income.

New Zealand Emission Trading Scheme units of 304,793 (2023: 208,303 units) were valued at $15.4 million (2023: $8.7 million), this figure includes an allocation of units received after the balance date valued of $7.7 million and a revaluation gain of $1.8 million due to improved pricing compared to last year. In addition, we have disclosed a contingent asset of $4.9 million which represents the market value of units relating to our emissions return for the 2023/2024 year which has yet to be submitted to central Government.

Ā TĀTAU PŪTEA - Our Capital

Shareholder funds (equity)

Total shareholder funds (equity) is $277.5 million compared to $293 million in the previous year. The change in net asset values can be attributed primarily to the devaluation of our land and buildings offset by increases in the value of intangible assets as noted above.

Borrowings

We have a term debt facility of $37.8 million, of which $34.3 million was drawn down as at 30 June

Assets pledged as security for our borrowings include land, buildings and livestock. The value of our inventories, biological and carbon assets exceeds total debt by $12.6 million which means our whenua is protected.

HE WHĀKINGA TĀPIRI - Other Disclosures

Taxation

An income tax expense of $0.2 million from current and deferred tax has been recognised (2023: $0.5 million income tax loss). We anticipate paying provisional tax next year, having utilised our available tax losses from previous years.