PARININIHI KI WAITOTARA ANNUAL REPORT 2013 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 > protect and grow our assets for current and future generations > balance our commercial and cultural

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 Future Shareholder Wade Papuni (Ngati Mutunga) Tatiana Rhodes on Farm 13, Skeet Road (Te Atiawa) grand-mokopuna of Kuramai Tira Skipper.

He pikinga poupou e, ki roto o Taranaki

Ki reira au nei matakitaki iho

OUR KAUPAPA The ambition of our kaum ā tua 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

Kahu Ngaia (Te Atiawa) and Ben Rupapera (Ngāti Ruanui, Ngāruahine)

Tukutuku roimata e, tukutuku roimata e CONTENTS PARININIHI KI WAITOTARA INCORPORATION Chair’s Report

Chief Executive’s Report

Meet The Committee of Management

Performance at a glance

Meet The Staff

CONTENTS

Strategic Partnerships

Todd Energy

PKW Sharemilkers

PARININIHI KI WAITOTARA INCORPORATION ANNUAL FINANCIAL STATEMENTS 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

Chair’s Report

Scholarships and Grants

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 TRUST

Truly realising tino rangatiratanga requires us to take active management of our lands which remain our key asset.

He hōnore, he kōroria ki te Atua, maungārongo ki te whenua, he whakaaro pai ki ngā tangata katoa. Me tuku mihi atu ki ō tātou aituā maha kua hinga i te tau. Heoti anō, kawea mai ngā tini mate katoa kia mihia ki konei ki runga i ngā whetū tupu no ngā mātua tūpuna. Nō reira e te hungā wairua hāere, hāere, haere atū rā.

This remains an inter-generational goal which remains at the forefront of our minds as we consider different ways of achieving this objective.

PKW’s strategy is ambitious and requires patience and dedication to the long term. The strategy is premised on developing PKW in line with four key principles of active management, structure and Tātou te hunga ora, ngā uri mai capability, developing people, and Parininihi ki Waitotara e noho mai nei collaboration and we continue to i raro i te maru ō tō tātou nei maunga make progress in each of these key tapu tatū atu ra ki ngā rohe o te areas. motu taea noatia ki ngā whenua o te ao, tēnā koutou katoa.

CHAIR’S REPORT

CHAIR’S REPORT HINERANGI RAUMATI

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

.......................................... FINANCIAL SUMMARY

PKW generated total revenues of $20.4m from our leasing portfolio, active farming operations, lobster quota and processing investment and commercial property investments for the year 1 July 2012 to 30 June 2013 and achieved an after tax profit of $15.8m for the 2012/13 financial year.

15.8 MILLION

NET PROFIT

AFTER TAX

This is a pleasing result in a challenging year and the Committee believes it has further built on PKW’s strong foundations and the Incorporation’s long term outlook remains very positive.

ACTIVE MANAGEMENT - TINO RANGATIRATANGA Active land management creates more benefit than passive land leasing. Truly realising tino rangatiratanga requires us to take active management of our lands which remain our key asset. For generations others managed our lands while we were limited to being passive landlords by the Māori Reserved Land Act. However, important changes to this legislation in 1997 allowed PKW to take the first steps into active farming through the acquisition of perpetual leases and entry into the dairy industry with 50/50 share milkers.

STRATEGY - RAUTAKI

Since 1997 PKW has acquired 55 leases and developed 14 dairy farms and 3 dairy support units. This has grown PKW into the largest supplier of milk to Fonterra in Taranaki and enabled PKW to provide more opportunities for shareholders and Taranaki Māori.

PKW’s strategic direction is to regain control of our ancestral land as a base for the commercial development of our Incorporation and to benefit our shareholders.

In 2010 PKW took active management a step further with the introduction of managed farms to PKW’s farming portfolio. Active management carries greater risk

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

Whakamana

On behalf of the Committee of Management I am proud to present PKW Incorporation’s annual report on performance for the year 1 July 2012 to 30 June 2013.

<< but provides greater reward and opportunity, particularly when milk prices are higher.

PKW’s investment policy acknowledges the fundamental importance of our whenua as our core business but also recognises It is pleasing to note that during the the need to diversify investments year in review PKW regained control to manage concentration risk and of a further 500 hectares of land improve overall financial return. through a combination of investment Sensible investment diversification and relationship management. PKW will become an area of greater focus has converted these passive leases for the Committee in the coming into a new 220ha dairy farm and 2 year. dairy support properties capable of carrying up to 600 cows.

........................................... STRUCTURE AND CAPACITY PKW must have the best structure and capacity to convert opportunity into results. Structure includes both the organisations we use to manage our business, but also the decision-making processes we use to determine the correct use of shareholder assets to generate future returns.

During 2012/13 PKW began pursuing a reorganisation of its farming business to a limited partnership structure called Parininihi ki Waitotara Farms Limited Partnership. This reorganisation took effect from 3 July 2013. This modern structure will provide greater efficiency and allow for more flexible land-based partnering opportunities. PKW already manages its lobster investment through a limited partnership structure with Ngāti Mutunga ki Wharekauri and the Iwi Collective Partnership. The principle of structure also relates to PKW’s decision making framework and during 2012/13 the Committee approved PKW’s Investment Policy and Kaupapa Evaluation Toolkit to provide a clear framework to assess future investment opportunities while ensuring our investment activities align to PKW’s core values.

.......................................... DEVELOPING PEOPLE

PKW understands it must develop leaders who care about our strategic direction and are capable of delivering it - now and into the future. In order to achieve this PKW has continued to provide support to PKW Trust for the strategic development of shareholder and Taranaki whānui in the form of individual educational grants and scholarships and community grants.

organisations for sustainable long term growth and 2012/13 represented a successful first year of our Port Nicholson Fisheries joint venture with Ngāti Mutunga ki Wharekauri and the Iwi Collective Partnership. PKW has further developed its relationship with Todd Energy in order to better understand the risks and opportunities involved in the oil and gas sector within the Taranaki region. Todd Energy is one of New Zealand’s most successful energy companies and has a significant presence within Taranaki. In 2012 Todd Energy subsidiary company Nova Energy opened a new power station on one of PKW’s lease blocks located in Tikorangi. As a result of this relationship PKW secured control of 220 hectares of high quality dairy support land at no cost to the Incorporation.

PKW also re-established discussions The year in review also saw the PKW with the West Coast Lessees Group develop relationships with Association which represents 199 Enviroschools and deliver ‘Keeping lessees. The Association remains a It Coastal’. key PKW stakeholder and it must be remembered that lessees account In addition to these activities PKW for a significant portion of the continues to provide governance development opportunities with our Incorporation’s annual income and realistically will continue to do so for Associate Directorship programme many years to come. and the Committee has benefited from the contribution of our current Associate Director Daniel Harrison.

In October 2012 Hon. Dr Pita Sharples became the first Minister PKW continues to invest in staff of Māori Affairs to visit Parininihi training and development. PKW’s ki Waitotara Incorporation and the active management strategy is Committee took the opportunity to bearing fruit in terms of enabling the press for positive change to the promotion of career pathways within Māori Reserved Land Act which the PKW group. continues the legacy of perpetual leases over PKW’s land.

.......................................... COLLABORATION Finally PKW values strategic relationships and seeks to collaborate with like-minded

Just as importantly during 2012 PKW assisted Ngāti Tū hapū to protect the significant wāhi tapū of KaupokŌnui. The site was in danger of potential damage through

the location of quarrying within the vicinity and PKW worked with a range of stakeholders including Ngāti Tū, the quarrying company and a PKW lessee to identify an alternative site which ensured the protection of this important site. This was a win-win situation for the parties involved which headed off a costly litigation process between the hapū and quarry company. We hope this example of collaboration demonstrates PKW’s desire to forge a new relationship with Ngāti Tū which has historically been dominated by the whenua rāhui over the 40 hectare Winks Road property. The Committee continue to seek a positive resolution to these issues which has now lasted for over 20 years.

.......................................... LOOKING AHEAD

towards diversifying into higher returning business areas. On behalf of the Committee of Management I would like to thank shareholders for their support over the past 12 months and we look forward to delivering further value in the coming year.

.......................................... CONCLUSION In conclusion I would like to acknowledge my fellow Committee

of Management members and our management team. As a group we remain united in our dedication to ensuring Parininihi ki Waitotara remains an organisation which shareholders can be proud of now and into the future.

Ngå mihi

CHAIRMAN’S REPORT

Hinerangi Raumati Chair

PKW must have the best structure and capacity to convert opportunity into results.

PKW has made positive strides towards growing shareholders wealth in recent years through increasing its level of active control over the whenua as well as taking a more active role in a higher returning investment such as lobster. The Committee remains committed to upholding its kaitiaki responsibilities and growing our shareholders active whenua portfolio while looking to take sensible steps

Whakamana

In 2014 PKW’s farming partnership intends competing for the 2014 Ahuwhenua Dairy Awards. This nationally recognised award has become even more prestigious since PKW won it for the first time in 2006 and is keenly contested by the many Māori dairy farming businesses throughout Aotearoa. The competition will be a significant test for PKW’s farming business.

12 CHIEF EXECUTIVE’S REPORT DION TUUTA

Tēnā Koutou

(FY11/12: $10.2m) generated

On behalf of PKW’s management team I am pleased to present this report on management activities for the 2012/13 financial year.

at a lower Fonterra $6.12 payout

PKW has achieved a $15.8 million net profit after tax for the FY12/13 year (FY11/12: $8.5 million). This pleasing profit position is made up of a combination of cash profit of $6.6m from operating activities and non-cash asset value growth of $8.9m as a result of the increase in the value of Fonterra shares following the implementation of Trading Among Farmers and fair value gain of our whenua tupuna.

.......................................... REVENUE Total group revenue for FY12/13 year was $21.3m representing a 5% increase on the previous year (FY11/12: $20.1m). This result has been made up of the following: •

Stable lease land rental of $6.4m (FY11/12: $6.5m);

•

Dairy revenue of $10.9m

from 2.66m kgs/ms production for FY12/13 (FY11/12: $6.40); •

A significant increase in revenue from lobster quota and processing to $3.2m (FY 11/12: $2.1m);

•

Other Investments (including Finistere Oceania, Commercial Property, and Lactanz) contributing $0.3m (FY11/12: $0.3m).

.......................................... GROUP EXPENSES Total group expenses of $12.4m represent a $2.6m increase on the previous year (FY11/12: $9.8m) The increase in expenses comprises increases in corporate costs and farm working expense costs. As foreshadowed at the 2012 AGM increased corporate costs of $3.5m (FY11/12: $2.5m) is accounted for by way of legal expenses and advisory incurred as a result of the work involved in restructuring PKW’s

corporate structure into the PKW Farms Limited Partnership. This one-off cost will reduce significantly moving forward but its results will deliver significant benefit to shareholders in the coming years in terms of greater tax efficiency within the group structure. Depreciation and leased land charges are higher than prior years due to increased investment of fixed assets and greater land utilisation. Depreciation expense of $1m represents a 43% increase on prior year (FY11/12: $0.7m) and standing charges of $0.5m represent a 100% increase on last year (FY11/12: $0.25m) Pleasingly PKW’s farm working expenses of $6.97m (FY11/12: $5.9m) were in line with budget expectation despite the worst drought in 70 years.

FINANCE EXPENSE Total PKW finance cost for FY12/13 was $2.3m (FY11/12: $1.9m). This increase in interest expense reflects an increase in borrowings to $40.6m as at 30 June 2013 to fund new investments.

Whakamana

CHIEF EXECUTIVE’S REPORT

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

managed farms strategy. This pilot was designed to improve the OPERATIONAL OVERVIEW cash returns PKW receives from dairy farming while also improving WHENUA the opportunities for employment for qualified members of the PKW PKW’s lease rentals remained stable shareholder whanau. during FY12/13 generating revenue of $6.4m (2012: $6.4m). TEMPSKY ROAD DAIRY UNIT During FY12/13 the Incorporation regained control of 3 lease blocks in line with PKW’s goal to regain control of its whenua.

FARMING The FY12/13 dairy season was dominated by what many regard as the most significant drought Aotearoa has faced in the past 7080 years and when we consider the magnitude of this drought PKW’s farming operations have performed well. MILK PRODUCTION PKW Farms Ltd began the FY12/13 season budgeting to produce 2.7 million kilograms of milk solids (kgs/ ms) and achieved a final result of 2.66m kgs/ms (FY11/12: 2.5m kgs/ ms). This is a great result when we consider the impact of drought and is more satisfying when we consider this result was achieved within financial budget. This result is testament to the dedication of our farming staff and our share milking business partners and their hard work is greatly appreciated. MANAGED FARMS FY12/13 represented PKW Farms Ltd’s second year of its pilot

PKW’s 220 hectare Tempsky Road dairy unit was formally opened 11 July 2012 with a formal blessing by Umutahi and Inuawai hapū of Ngāruahine Iwi. The unit set a target of 190,000 kgs/ms in its first season. The conversion involved a significant amount of land contouring and regressing which, combined with the severe drought, made for a challenging year. Despite these challenges the farm produced an outstanding 208,000kgs/ms under the leadership of Farm Manager Gary Fredrickson who has since moved on to owning his own farm. Gary and his wife Sandra had been long-serving members of the PKW farming whānau after first beginning as 50/50 sharemilkers. PKW thanks them for their hard work and wishes them all the best for the future on their own farm.

LIVESTOCK STRATEGY PKW’s pilot calf rearing operation began full operation in the 2012/13 dairy season under the management of Kathryn Kelly rearing 300 calves. This pilot proved successful enough to prompt the establishment of a second, larger calf rearing unit on Little Tempsky Road capable of producing a further 450 calves.

The value generated from the growth in these animals will be reflected in the future and provides PKW with potential additional income streams and the potential to trade in livestock when prices are optimum or grow our own herd numbers to stock new farms in line with our intention to bring more land under PKW’s control. PKW’s livestock strategy was bolstered in FY12/13 with a further 420 hectares of grazing land in Waverley and Tikorangi. Control of approximately 220 hectares of this land was acquired at no cost through PKW’s relationship with Todd Energy.

.......................................... LOBSTER FY12/13 represented the first year of Port Nicholson Fisheries Limited Partnership’s operation and will be remembered as one of the more difficult in recent history with a sudden and significant market correction occurring 3 months after the acquisition of the business. This correction was brought about by the cessation of Hong Kong as the principle importation port and subsequent opening up of Shanghai and Guangzhou as new import channels. Despite these significant challenges, the partnership posted a first year profit of approximately $1.6m. PKW’s share of the processing returns, combined with its quota lease returns contributed a total of $3.2m to PKW’s total cash profit highlighting that this remains a valuable asset for shareholders.

FINISTERE OCEANIA The Finistere Oceania venture capital fund did not achieve any asset sales during FY12/13 but returned $0.05m as the result of a milestone payment from a previous sale process. PKW’s relationship with this venture capital fund originally began in 2005 contractual relationship comes to an end in April 2014. The partnership may be extended for a further 12 months in order to manage out the remaining protfolio assets. COMMERCIAL PROPERTY PKW’s three commercial properties situated in Miranda Street Stratford, Queen Street Waitara and Powderham Street New Plymouth remain under management with KCL Property Ltd. This modest commercial portfolio remains a small but stable investment providing an average 6.5% return on assets for the year. PKW will continue to retain these assets until such time as the market provides better opportunities to realise value. During the year in review PKW has invested in improving and upgrading the facilities within the Powderham Street property.

.......................................... PEOPLE DEVELOPMENT During FY12/13 the PKW management team underwent a reorganisation to drive the strategic growth of PKW’s core

and developing businesses. Shane Miles was appointed as PKW’s Dairy Operations Manager with responsibility for managing the entirety of PKW’s key dairy farming business. Ranald Gordon was appointed as PKW’s Asset Manager with a key responsibility for delivering the best value possible from PKW’s leased land portfolio. Dion Maaka was appointed as General Manager Corporate Services with responsibility for providing key financial and administrative services to the PKW group management team. PKW also welcomed new team members Allie Hemara-Wahanui as our Community Development Manager and Andrew Gibson as the Drystock Operations Manager. These new positions highlight the growth in PKW’s business over the past 12 months and promise to add further benefit to the Incorporation moving forward.

The growth in PKW’s staffing is reflective of the growth of its business interests and the need to properly manage these investments. As a team we are mindful of the investment shareholders make into the PKW team and are committed to delivering shareholder value for that investment.

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

CHIEF EXECUTIVE’S REPORT

OTHER INVESTMENTS

CONCLUSION PKW’s management team continues to work hard towards achieving the goals set out in PKW’s guiding strategic plan He Whenua, He Tangata, He Oranga – Land, People, Prosperity and remains committed to representing PKW’s interests in the best way possible.

Mauriora Dion Tuuta Chief Executive

Within PKW’s farming business we have welcomed new farm managers, Tristin Horo and Matt Brittain and their team members. We also welcomed drystock manager Chris Patterson who took over responsibility for managing PKW’s Tikorangi dairy support block in June as part of PKW’s growing dairy support land portfolio. Former variable order dairy farmer Ben Rupapera joined PKW as a dairy support manager with responsibility for PKW’s new Waverley grazing unit. PKW is pleased to be able to maintain Ben’s experience and skillset within the group for our collective benefit.

Whakamana

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

Hinerangi Edwards

Mahia atu e te iwi e, nga rawe a tauiwi TWO THOUSAND & THIRTEEN

Back from left: Dion Tuuta, Chief Exectuive, Daniel Harrison, Associate Director, Tokorangi Kapea Centre from left: David MacLeod, Tokatumoana Walden, Taaringaroa Nicholas Front:

17 GROUP PERFORMANCE AT A GLANCE

MEET THE COMMITTEE OF MANAGEMENT

Whakamana

Bev Gibson, Hinerangi Raumati, Chair

COMMITTEE OF MANAGEMENT

PKW COMMITTEES

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

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

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

SUBSIDIARY COMPANIES PKW FARMS LTD Hinerangi Raumati (Chair) Hinerangi Edwards Bev Gibson Tokorangi Kapea David MacLeod Taaringaroa Nicholas Tokatumoana Walden Philip Luscombe (Independent Director) PKW INVESTMENTS LTD Dion Tuuta taranaki aqua gardens ltd Tokorangi Kapea

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

JOINT VENTURE COMPANIES port nicholson fisheries general partner LTD 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

ENTITY position Aotearoa Fisheries Ltd Director Te Ohu Kaimoana Portfolio Director Management Ltd Te Ohu Kaimoana Trust Ltd Director Te Wananga o Aotearoa Executive Director of Operations

Director PKW Farms Ltd, member of Human Resources Committee and Chair PKW Trust. ENTITY position Aatea Consultants Ltd Director (t/a Aatea Solutions) Agri Women’s Development Trust Trustee Funding Information Service (FIS) Member Funding Information Service (FIS) Chair Māori Strategy Committee Māori Translation.Co.NZ Ltd Director NZ Group Investments Ltd Director/Shareholder R & R Edwards Whanau Trust Trustee

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

Trustee

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

TOKORANGI KAPEA Chair PKW Investments Ltd, Director PKW Farms Ltd, member of Audit and Risk Committee and PKW Trust. ENTITY position Bathurst Resources (NZ) Limited Director Ngāti Apa Development Limited Director Ora Solutions Ltd Director Port Nicholson Fisheries Ltd Director Taranaki Aquagardens Ltd Director Tuia Group Ltd Director Tuia Investments Ltd Director Tuia Legal Partner Tuia Slipstream Ltd Director Tuia Trading Ltd Director

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

ENTITY position AJ Greaves Electrical Ltd Owner/Managing DANIEL HARRISON Director Fonterra Director Appointed Associate Director in January 2012. Local Government National Councillor New Zealand (LGNZ) ENTITY position LGNZ Regional Affairs Committee Deputy Chair AUT School of Tourism Member Port Taranaki Ltd Director and Hospitallity Advisory Group Property Portfolio Investments Ltd Director NZ China Council Advisory Board Member Taranaki Regional Council Chairman Parihaka Management Trust Trustee

Whakamana

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

19 GROUP PERFORMANCE AT A GLANCE

HINERANGI EDWARDS

HINERANGI RAUMATI

TAARINGAROA NICHOLAS

PHILIP LUSCOMBE Independent Director, PKW Farms Ltd

Director PKW Farms Ltd, Chair Audit and Risk Committee and member of PKW Trust. ENTITY position Direct Capital IV Member Advisory Committee Miraka Ltd Director Ngﾄ》i Ruanui Holdings Director Company Ltd Ngﾄ》i Ruanui Holdings Operating Director Company Ltd PKW Farms Ltd Director Parininihi ki Waitotara Incorporation Shareholder & Committee Member Pirirakau Trust Trustee Southern Pastures (NZ) Ltd Director Southern Pastures Founders Ltd Director/Shareholder Southern Pastures Director/Shareholder Management Ltd TARIT Holdings Ltd Director Te Awanui Huka Pak Ltd Director Winterbourne Trustee Ltd Director/Shareholder

GOVERNANCE Member

Committee of Management Attended Possible

ENTITY position Allied Farmers Limited Director Allied Farmers Rural Ltd Director Allied Nationwide Finance Ltd Director Argyll Farms Ltd Chair Hendham Farm Co Director Hinemoa Farms Ltd Chair Kingfisher Escape Limited Director Koki South Farms Limited; Director sharemilking agreement with PKW Farms Mairangi Investments Ltd Director Massey, Lincoln & Agricultural Trustee Industry Trust NZ Farmers Livestock Ltd Director Ocean Ohope Limited Director Par Farms Ltd Director Pharm Trust Ltd Trustee Philip Lucsombe Partnership Partner Te Rua o Te Moko Ltd Chair

Audit and Risk

PKW Farms Ltd

A tttended Possible Attended Possible

PKW Trust A ttended

Possible

5 6 2 12 5 6 2 12 Hinerangi Raumati 5 6 2 12 5 6 2 12 Hinerangi Edwards 5 6 2 12 5 6 2 12 Bev Gibson 5 6 2 12 5 6 2 12 Tokorangi Kapea 5 6 2 12 4 5 2 9 David MacLeod 5 6 2 12 5 6 2 12 Taaringaroa Nicholas 5 6 2 12 4 5 2 6 Tokatumoana Walden 5 6 2 12 4 6 1 10 Daniel Harrison 6 5 Philip Luscombe 5 4 Darryn Ratana

AT A GLANCE

FINANCIAL PERFORMANCE NET PROFIT AFTER TAX AND OTHER ITEMS Up $7.243 M from 2012 to:

$15.821 M

FOUR YEAR CONSOLIDATED PERFORMANCE TO 2012/13

2009/10

2010/11 2011/2012 2012/13

($ 000S)

($ 000s)

($ 000s) ($ 000s)

Financial Performance Revenue

13,828 18,317 20,168 20,415

Operating Expenses

(6,537)

Finance cost

(1,601) (1,426) (1,988) (2,223)

Net Gains/(Losses) From Investments

Share of Profit From Joint Venture

Net Profit Before Tax and Other Items

Tax expense Profit from Continuing Operations

1,950

(7,566)

(9,679) (12,527)

1,097

805 470

8,445 10,892

COMMITTEE OF MANAGEMENT

GROUP PERFORMANCE

1,131 10,219 0 792

9,632 16,675

(2,325) 1,672 (1,054) (854) 6,120 12,564

8,578 15,821

FINANCIAL POSITION EQUITY $173.61M IN 2012 INCREASE IN EQUITY OF $15.24 M TO -

Whakamana

$188.85 M

GROUP ASSETS BY BUSINESS 0% - 100%

PKW FARMS

35%

2012

33%

2013

2012

PKW FISH 7%

2013

PKW INVESTMENTS

2012

2013

2012

PKW TRUST

2013

2012

56%

PKW WHENUA

2013

57%

33%

PKW FARMS

57% PKW WHENUA

7% PKW FISH 3% PKW INVESTMENTS 1% PKW TRUST

Otira me wehi kei ngaro nga tikanga

TERM LIABILITIES $0 - $100,000,000

$32,912

2009/10

$37,149

2010/11

$43,162

2011/12

$43,950

COMMITTEE OF MANAGEMENT

2012/13

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

$204,072

2009/10

$210,152

2010/11

$224,117

2011/12

$239,611

2012/13

TOTAL LIABILITIES $0 - $100,000,000

$43,605

2009/10 2010/11

$50,499

2011/12

$50,761

2012/13

Whakamana

$47,644

MEET THE STAFF

Front Row : Allie Hemara-Wahanui, Community Development Manager; Rob Walden, Farm Manager; Kathryn Kelly, Farm Manager/Calf Rearer; Caroline Waiwiri, Executive Assistant; Nicky Clement, Financial Accountant; Bev Anaru, Finance Assistant; Poppy Tremayne, Administration Assistant; Lyn Rupapera, Farm Manager; Derek Cruickshank, Farm Manager/Calf Rearer; Ray Boulton, Farm Manager; Andrew Gibson, Drystock Operations Manager; Ben Rupapera, Farm Manager; Chris Patterson, Farm Manager; Tama Eynon, Dairy Assistant.

A nga tauheke e, a nga tauheke e 25

Back Row : Craig Hemara-Wahanui, Fencing-Hand; Dion Tuuta, CEO; Dion Maaka, General Manager Corporate Services; Shane Miles, Dairy Operations Manager; David Wilson, Farm Fencer; John Harold, Farm Manager; Kahu Ngaia, General Farm Maintenance; Irene Cruickshank, Farm Manager/Calf Rearer; Ranald Gordon, Assets Manager; Carl Hartigan, Dairy Assistant; Matt Brittain, Farm Manager; James Waipuka, Dairy Assistant; James Phillips, Dairy Assistant; Tristin Horo, Farm Manager. Absent: Nedina Hohaia, Registrar.

Established Positive Relationship

Todd Energy LOCAL COMMITMENT PROVIDES FOUNDATION FOR FUTURE As two companies with a commitment to Taranaki and to New Zealand, Todd Energy and PKW share common ground. Todd Energy Chief Executive Paul Moore says that as the companies’ association grows he expects there will be further opportunities to work together.

“Todd Energy values PKW’s perspective on a range of issues, including Māori, environmental management and community aspirations. We want to keep these conversations alive and where possible to identify opportunities that will bring benefits to PKW, to the Taranaki community and to us,” says Paul. Todd Energy’s association with PKW is multi-faceted and it appreciates PKW’s support as a neighbour and landowner. Todd Energy has undertaken seismic testing on four properties administered

by PKW, the company has wellsites and the McKee Production Station adjacent to PKW land, and sister company, Nova Energy, leases land from PKW for its McKee Power Plant. Paul highlights shared principles as a feature of the relationship. “Todd Energy’s principles are around valuing our people, caring for the environment and community, maintaining high standards of conduct and creating value. We know from our association with PKW that these principles are important to them too.”

No reira e te iwi e kia kaha, kia mou tonu

McKee Production Station, Otaraoa Road, Waitara

Paul says that when there are opportunities to meet Todd Energyâ&#x20AC;&#x2122;s

business objectives and mitigate and manage the impacts of its activities on its neighbours, the company takes them. The new Taranaki drilling school is another example. Due to open its doors in the New Year, the initiative was spearheaded by Todd Energy and is being delivered by the Petroleum Skills Association in partnership with the Western Institute of Technology at Taranaki. Nonetheless Todd will continue to be involved with the project and will be looking to PKW to explore how the programme can be further developed to reach potential students.

The range of initiatives the companies might collaborate on in the future includes environmental engineering, which is scheduled for further discussion. â&#x20AC;&#x153;When we look at potential partners we look for complementary skills, interests and values. I believe we have some alignment with PKW on these and look forward to growing our association and relationship over time,â&#x20AC;? Paul says.

Pakihi

Todd Energy also outlines community investment, sustainable operations and making Taranaki an even greater place to live as important. Underscoring its commitment to the region and growing its business in Taranaki, Todd Energy has recently invested in building its own drilling rig. The new Bentec Model Euro Rig 450t represents a total investment of $42 million and will deliver a quieter, highly automated and purpose-built rig more suitable to a rural operating environment.

Supported Development of

PKW FARMS PKW Sharemilkers One of the key foundations of PKW’s farming success has been partnerships with special people who love what they do. Some of these special people are our 50/50 and variable order sharemilkers who form a key part of PKW’s dairy farming business. Paul and Clare Bishop, Trent and Pip Olliver, Bryce and Amanda Savage, Robert and Joanne van der Fits, Paul and Michelle McLeod, Dale and Phillippa Corrigan, Linn and Diane Wineera, Ross and Shelley Clark, Dallas and Marie McLean, Roger and Philip Luscombe and Colin Foley. These are not names that many shareholders may be overly familiar with but they are an integral part of PKW’s farming success. Farming is a tough business which requires a special breed of person who possesses a love of the land and an ability to work with the various challenges that Papatuanuku throws our way. While most people are still asleep in their beds these hard working and dedicated teams of people are already busy working in milking sheds on PKW’s

Left Side From the Top: Paul and Clare Bishiop

Dale and Phillippa Corrigan Trent and Pip Olliver Paul and Michelle McLeod

Kei riro kei ngaro mo te ake tonu atu

farms harvesting the milk from their dairy herds. The sharemilking partnership is a long established model within the NZ dairy industry where land owners such as PKW provide the land and sharemilkers provide animals and labour. Income and costs involved in milk production are divided on a 50/50 or proportionate basis.

STRATEGIC PARTNERSHIPS

PKWâ&#x20AC;&#x2122;s sharemilkers are among the best farmers Aotearoa has to offer exemplified by their regular participation in events such as sharemilker of the year competitions and continual high performance when compared with industry benchmarks. As the dairy industry inevitably changes PKW expects the sharemilking model, and the opportunity it provides, to remain a key feature of its business model to encourage and attract high performing people into the PKW whanau. PKW values its relationships with our sharemilking partners and pays tribute to them for their outstanding performance during the difficult 2012/13 dairy season.

Right Side From the Top: Ross and Shelley Clark

Linn and Diane Wineera Bryce and Amanda Savage

Absent: Colin Foley, Roger and Philip Luscombe and Robert and Joanne van der Fits.

Pakihi

Dallas and Marie McLean

GRANTS AND DONATIONS

PARININIHI KI WAITOTARA

INCORPORATION FINANCIAL STATEMENTS

Awhina

for the year ended 30 June 2013

Aue taukiri e, Aue taukiri e

13 Quota assets

Committeeâ&#x20AC;&#x2122;s annual report

14 Equity accounted investments

15 Investments

FINANCIAL STATEMENTS Statement of comprehensive income

16 Investments in subsidiaries

Statement of financial position

17 Equity investments

Statement of changes in equity

18 Investment properties

Statement of cash flows

19 Current liabilities - payables

20 Derivative financial instruments

Notes to the financial statements

1 Corporate information

21 Term liabilities

2 Summary of significant accounting policies

22 Net deferred tax assets/(liabilities)

3 Financial risk management 45

23 Share capital

4 Critical accounting estimates and judgements

24 Reserves and retained earnings

5 Revenue

25 Dividends

6 Other gains / (losses)

26 Contingencies

7 Expenses

27 Commitments

8 Finance income and expenses

28 Related party transactions

9 Income tax (expense)/benefit

29 Subsequent events

10 Current assets - receivables

30 Statement of estimated currrent market values 64

11 Biological assets

12 Property, plant and equipment

Parininihi ki Waitotara Incorporation

Auditorsâ&#x20AC;&#x2122; report

FINANCIAL STATEMENTS

41 33

FINANCIAL STATEMENTS - 30 JUNE 2013

Chartered Accountants

34 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 35 to 64, which comprise the statement of financial position of the Incorporation and Group as at 30 June 2013, 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 is 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 35 to 64: ►

comply with generally accepted accounting practice in New Zealand; and

►

give a true and fair view of the financial position of the Incorporation and Group as at 30 June 2013 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 13 September 2013

A member firm of Ernst & Young Global Limited

2013 $’000 REVIEW OF OPERATION Net profit of the Group for the year ended 30 June 2013

15,821

Less provision for dividend

(1,326)

Add retained earnings as at 1 July 2012

144,908

Retained earnings as at 30 June 2013

159,403

FINANCIAL STATEMENTS

COMMITTEE’S ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2013

It is not proposed to make any transfer to reserves. THE STATE OF THE GROUP’S AFFAIRS AT 30 JUNE 2013 WAS: 239,604

Assets totalled THESE WERE FINANCED BY: Shareholder’s equity

188,850

Liabilities

50,754 239,604

Total equity and liabilities

The financial report was authorised for issue and signed on behalf of the Committee, dated 13 September 2013. For and on behalf of the Committee of Management.

HINERANGI RAUMATI Chair 13 September 2013

TAARINGAROA NICHOLAS

Chair Audit and Risk Committee 13 September 2013

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.

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 Group 2013 2012 Notes $’000 $’000

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

Parent 2013 2012 $’000 $’000

Revenue

20,415

20,168

11,930

8,662

Other unrealised gains

10,219

1,131

6,011

1,736

Expenses

(12,528)

(9,679)

(2,957)

(2,174)

Finance costs income/(expenses)

(2,223)

(1,988)

(112)

590

792

Profit before income tax 16,675 9,632

14,872

8,814

Income tax (expense)/benefit

Share of profit from joint venture

(854)

1,054

(1,866)

(422)

Profit after income tax

15,821

8,578

13,006

8,392

737

(302)

737

(302)

Total comprehensive income for the year, net of tax 16,558 8,276 13,743

8,090

Cash flow hedges

24(a)

For and on behalf of the Committee of Management these Financial Statements were authorised for issue on 13 September 2013

HINERANGI RAUMATI Chair 13 September 2013

TAARINGAROA NICHOLAS Chair Audit and Risk Committee 13 September 2013

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

2013 Notes $’000

ASSETS Current assets Cash and cash equivalents Trade and other receivables 10 Biological assets 11 Total current assets Non-current assets Property, plant and equipment Quota assets Investment in joint venture Loan to joint venture Investments Investment properties - Unimproved lease land Investment properties - Commercial Deferred tax assets

Group

767 1,573 7,297 9,637

2012 $’000

Parent 2013 2012 $’000 $’000

432 2,555 6,530 9,517

701 329 137 470 - 838 799

FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013

Money owed to PKW by our customers Livestock owned by PKW

12 13 14 14 15,16,17

46,451 13,660 1,857 - 28,624

42,194 11,813 1,211 864 20,279

18 18 22

137,225 2,150 -

135,242 2,150 847

137,225 2,150 -

135,242 2,150 847

Total non-current assets

229,967

214,600

230,260

216,357

Total assets 239,604 224,117 231,098

217,156

LIABILITIES Current liabilities Trade and other payables 19 Current tax (payable/receivable) Derivative financial instruments 20 Total current liabilities

9,813 272 13,660 1,146 1,211 - 864 66,266 75,771

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

4,440 (393) 626 4,673

4,099 (246) 652 4,505

3,178 2,719 956 (6) 626 652 4,760 3,365

Non-current liabilities Term liabilities 21 43,950 Derivative financial instruments 20 249 Deferred tax liabilities 22 1,882 Total non-current liabilities 46,081

43,162 1,116 1,716 45,994

43,950 43,162 249 1,116 516 307 44,715 44,585

Total liabilities

50,754

50,499

49,475

Net assets

188,850

173,618

47,950

181,623 169,206

EQUITY Share capital 23 5,549 5,549 5,549 5,549 Reserves 24,(a) 23,898 23,161 27,045 26,308 Retained earnings 24,(b) 159,403 144,908 149,029 137,349 188,850 173,618 181,623 169,206 Total equity 188,850 173,618 181,623 169,206 The above statement of financial position should be read in conjunction with the accompanying notes.

Money owed to our suppliers

Includes borrowings from Rabobank and Unclaimed dividends unpaid

Represents unrealised losses on interest rate hedges

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

STATEMENT OF CHANGES IN EQUITY FOR THE THE YEAR ENDED 30 JUNE 2013 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 2011

5,549

24,591

(1,128)

137,535

166,547

Profit or loss for the year Cash flow hedges, net of tax 24(a) Total comprehensive income

- - -

- (302) (302)

8,578 - 8,578

8,578 (302) 8,276

Dividends provided 25 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 as at 1 July 2012

5,549

24,591

(1,430)

144,908

173,618

Profit or loss for the year Cash flow hedges, net of tax 24(a) Total comprehensive income

- - -

- 737 737

15,821 - 15,821

15,821 737 16,558

Dividends provided 25 Total transactions with owners Balance as at 30 June 2013

- - 5,549

- - 24,591

- - (693)

(1,326) (1,326) 159,403

(1,326) (1,326) 188,850

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 24(a) Total comprehensive income

- - -

- (302) (302)

8,392 - 8,392

8,392 (302) 8,090

Dividends provided 25 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

Balance at 1 July 2012

5,549

27,738

(1,430)

137,349

169,206

Profit for the year Cash flow hedges, net of tax 24 (a) Total comprehensive income

- - -

- 737 737

13,006 - 13,006

13,006 737 13,743

Dividends provided 25 Total transactions with owners Balance as at 30 June 2013

- - 5,549

- - 27,738

- - (693)

(1,326) (1,326) 149,029

(1,326) (1,326) 181,623

Parent

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

STATEMENT OF CASH FLOWS FOR THE THE YEAR ENDED 30 JUNE 2013 Group Parent

Notes

2013 $’000

2012 $’000

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

23,191 100 12 (11,755) (845) (2,323) (303) 8,077

22,294 171 (3,378) (11,314) (765) (2,159) 2,009 6,858

10,705 8,874 (13) (58) 152 (1,255) (2,057) (1,448) (576) (536) (2,411) (2,257) (1,146) 192 4,654 3,512

Cash flows from investing activities Payments for property, plant and equipment Payments for investment Investment in joint venture Advances to joint venture Payments for quota assets Dividends received Proceeds from sale of investments Advances repaid by joint venture Advances to Subsidiaries Associate disposal proceeds Net cash outflow from investing activities

(6,084) (187) - - (2,124) - 206 864 - - (7,325)

(5,878) (2,170) (1,211) (864) (3,176) - 363 113 - 395 (12,428)

(83) (73) (187) (807) - (1,211) - (864) - 81 125 384 864 444 (4,665) (6,935) - (3,865) (9,062)

Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Dividends paid 25 Net cash (outflow) / inflow from financing activities

12,275 (11,888) (804) (417)

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

12,275 17,514 (11,888) (11,801) (804) (300) (417) 5,413

335 432 767

(157) 589 432

372 (137) 329 466 701 329

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 cash flows should be read in conjunction with the accompanying notes.

2013 $’000

2012 $’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 FOR THE YEAR ENDED 30 JUNE 2013

.......................................... 1 CORPORATE INFROMATION

Parininihi ki Waitotara Incorporation (the Parent) is registered under the Te Ture Whenua Māori 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).

.......................................... 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 Māori 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. NZ IFRS - Reduced Disclosure Regime

The separate and consolidated financial statements of PKW Incorporation comply with New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime (“NZ IFRS RDR”) and other applicable Financial Reporting Standards, as appropriate for profit oriented entities. Early adoption of standards PKW has early adopted External Reporting Board Standard A1 “Accounting Standards Framework (For Profit Entities update) “XRB A1”). For the purpose of complying with NZ GAAP, PKW is eligible to apply Tier 2 For-Profit Accounting Standards (New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime (“NZ IFRS RDR”) on the basis that it does not make public accountability and is not a large for-profit public sector entity. PKW has elected to report in accordance with NZ IFRS RDR and has applied disclosure concessions. 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 3.

(b) New accounting standards and interpretations Changes in Accounting Policy and Disclosure The accounting policies adopted are consistent with those of the previous year except as follows. The Group has adopted the following new and amended Standards and interpretations as at 1 July 2012. •

External Reporting Board Standard A1 Accounting Standards Framework (For Profit entities update) (‘XRB A1’)

PKW has elected to early adopt XRB, A1 that establishes a for profit tier structure and outlines which suite of accounting standards entities in different tiers must follow. PKW is eligible to and has elected to report in accordance with Tier 2 For-Profit Accounting Standards (“NZ IFRS RDR”). In adoption of NZ IFRS RDR, PKW has taken advantage of a number of disclosure concessions. There were no other impacts on the current or prior year financial statements of transitioning to NZ IFRS RDR.

(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 effect of potential voting rights that are

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. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Investments in subsidiaries held by the Parent are accounted for at cost in the seperate financial statements of the Parent entity less any impairment charges. (ii) Joint ventures - Jointly controlled entities The Group’s investment in joint ventures are accounted for using the equity method of accounting in the consolidated financial statements and at cost in the parent. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost plus post-acquisition

The Group’s share of its joint venture post-acquisition profits or losses is recognised in profit or loss, and its share of postacquisition movement in other comprehensive income is recognised in other comprehensive income. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from joint ventures are recognised in the parent entity’s statement of comprehensive income as a component of other income. When the Group’s share of losses in an associate equals or exceeds 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 venture. (d) Foreign currency translation (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 Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

41 NOTES TO THE FINANCIAL STATEMENTS

currently exercisable or convertible are considered when assessing whether a Group controls another entity.

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 to recognise any impairment loss with respect to the Group’s net investment in joint ventures. Goodwill included in the carrying amount of the investment in joint venture is not tested separately; rather the entire carrying amount of the investment is tested for impairment as a single asset. If impairment is recognised, the amount is not allocated to the goodwill of the joint venture.

(e) Income tax The income tax expense charged 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 assets that are not depreciated; and

•

Deductible temporary differences 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 ignored. Deferred income tax is not recognised on temporary differences associated with investments in subsidiaries, joint ventures and associates because: •

The Parent entity is able to control the timing of the reversals of the differences; and

•

They are not expected to reverse in the foreseeable future.

Parininihi ki Waitotara Incorporation

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Dividend income is recognised when the right to receive payment is recognised.

Tax effect accounting is applied on a comprehensive basis to all temparay differences using the liability method.

(h) Fair value estimation

A deferred tax asset is only recognised to the extent that it is probable there will be future taxable profit to utilise temporary differences. Following the changes to subpart HI of the Income Tax Act 2004, an election was made to become a MĂŁori Authority, for tax purposes, with effect from 1 July 2004. The income tax rate applicable from the date of election was 19% and was reduced in the 2012 tax year to 17.5%. Distributions to Incorporation members are no longer deductible for tax purposes. Any distribution of post 1 July 2004 reserves will include MĂŁori 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. (f) Goods and Services Tax (GST) The profit and loss component of the Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the balance sheet are stated net of GST, with the exception of receivables and payables, which include GST invoiced. (g) Revenue recognition Sales of goods are recognised when they have been delivered and accepted by the customer. Rental income is recognised upon issue of invoices that are issued six 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.

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted 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 estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial 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 Comprehensive Income. Where an impairment loss subsequently reverses, the carrying amount of

the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased 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. (j) Trade and other receivables Trade and other receivables, which have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using effective interest method, less allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect. (k) Biological assets

(i) Valuation of livestock Livestock at balance date includes dairy cattle, beef cattle and sheep and they are valued at a fair value. Subsequent fair value changes are recognised in profit or loss. (l) Property, plant and equipment Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assetâ&#x20AC;&#x2122;s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their

Recognition and derecognition 7-66 years 12-35 years All regular purchases and sales 5-10 years of financial assets are recognised 4-10 years on trade date i.e., the date that the Group commits to purchase The assets’ residual values and useful the asset. Financial assets are lives are reviewed, and adjusted if derecognised when the right to appropriate, at each balance date. receive cashflows from the financial assets has expired or when the entity An asset’s carrying amount is written transfers substantially all the risks down immediately to its recoverable and rewards of the financial assets. If amount if the asset’s carrying the entity neither retains nor transfers amount is greater than its estimated substantially all of the risks and recoverable amount (note 2). rewards, it derecognises the assets if it has transferred control of the assets. Gains and losses on disposals are Buildings Leashold improvements Plant and machinery Furniture and fittings

determined by comparing proceeds with carrying amount. These are included in the Statements of Comprehensive Income. (m) Quota assets

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

This category has two sub categories: financial assets held for trading, and (i) Fishing quota those designated at fair value through The fishing quota is initially recognised profit or loss on initial recognition. A at cost. The quota is regarded financial asset is classified as held for as having an indefinite useful life trading if acquired principally for the because there is no foreseeable purpose of selling in the short term limit to the period over which they or if so designated by management. are expected to be useful. They are The policy of management is to subsequently not amortised, but designate a financial asset if there exists the possibility it will be sold tested annually for impairment. in the short term and the asset is (n) Investments and other financial subject to frequent changes in fair assets value. Derivatives are also categorised as held for trading unless they are The Group classifies its financial designated as hedges. Assets in this assets in the following categories: category are classified as current financial assets at fair value through assets if they are either held for profit or loss, loans and receivables, trading or are expected to be realised held-to-maturity investments, and within 12 months of the balance sheet available-for-sale financial assets. date. The classification depends on the purpose for which the assets were (ii) Loans and receivables acquired. Management determines the classification of its assets at Loans and receivables including loan initial recognition and re-evaluates notes are non-derivative financial this designation at every reporting assets with fixed or determinable date, but there are restrictions on payments that are not quoted in an reclassifying to other categories 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 non-current. (iii) Financial assets at cost Financial assets at cost cannot be prescribed a reliable fair value. (o) Investment properties Commercial investment property, which includes land and buildings that earn rental income or appreciate 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 in the period in which they arise.

43 NOTES TO THE FINANCIAL STATEMENTS

residual values, over their estimated useful lives, as follows:

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.

The fair value of the unimproved leased land is calculated by using a discounted cash flow model. The assumptions of the model are as follows: •

Discount rate of 6.5%;

•

Cash flows to increase at the rate of inflation (2.4%) however is only uplifted every seven years into the cash flow periods in line with the rental reset periods determined by legislation; and

•

The time horizon is thirty years.

(p) 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.

Parininihi ki Waitotara Incorporation

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) Derivatives The Group uses derivative financial instruments to hedge its risks associated with foreign currency, and interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently 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 valuation technique based on cash flows discounted to present value using current market interest rates. Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges are taken directly to profit or loss for the year. Cash flow hedges are used when they hedge the exposure to variability in cash flows that is attributable either to a particular risk associated with 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 hedge is considered highly effective and continues to be designated as a cash flow hedge.

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. For interest rate cash flow hedges, any ineffective portion is taken to other expenses in the statement of comprehensive income. If the hedging instrument expires 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 transactions occurs. (r) Term liabilities Borrowings are initially recognised 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 incurred. (s) Share capital Ordinary shares are classified as equity. (t) Employee benefits (i) Wages and salaries, annual leave and sick leave

(u) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an 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. (i) Group as a lessee Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when recieved and subsequently reduced by allocating lease payments between rental expense and reduction of the liability. (ii) Group as a lessor Leases in which Group retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as rental income. (v) 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.

Dividend distribution to the Parent shareholders is recognised as a The provision for employee entitlements is recognised as a liability liability in the Parentâ&#x20AC;&#x2122;s and the Groupâ&#x20AC;&#x2122;s in the Statement of Financial Position. financial statements in the period in which the dividends are approved by These benefits include salaries, the Parentâ&#x20AC;&#x2122;s shareholders. wages and annual leave. Where the payment is expected to be longer than 12 months of balance date, the liability is recorded at its present value. Where the payment is expected to be less than 12 months, the provision is the amount expected to be paid.

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

Available For Sale Financial Assets $’000

Total $’000

At 30 June 2013 Investments Trade and other receivables Cash and cash equivalents

20,190 - - 20,190

1,479 1,395 767 3,641

6,955 - - 6,955

28,624 1,395 767 30,786

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

12,213 - - - 12,213

1,466 1,983 864 432 4,745

6,600 - - - 6,600

20,279 1,983 864 432 23,558

- - - -

- 134 701 835

6,603 - - 6,603

6,603 134 701 7,438

6,333

NOTES TO THE FINANCIAL STATEMENTS

3 FINANCIAL RISK MANAGEMENT

At 30 June 2013 Investments Trade and other receivables Cash and cash equivalents At 30 June 2012 Investments

Trade and other receivables

Net advance to joint venture

864

Cash and cash equivalents

329

1,245

6,333

7,578

Parininihi ki Waitotara Incorporation

Parent

3 FINANCIAL RISK MANAGEMENT (CONTINUED) Other (a) Financial instruments by category Financial (Continued) Liabilities Measured at Cash Flow Amortised Financial assets as per balance sheet Hedge Cost Total Group $’000 $’000 $’000 At 30 June 2013 Term liabilities Interest rate swaps Trade creditors

- 875 - 875

43,950 - 1,312 45,262

43,950 875 1,312 46,137

At 30 June 2012 Term liabilities Interest rate swaps Trade creditors

- 1,768 - 1,768

43,162 - 1,750 44,912

43,162 1,768 1,750 46,680

- 875 - 875

43,950 - 366 44,316

43,950 875 366 45,191

Parent At 30 June 2013 Term liabilities Interest rate swaps Trade creditors At 30 June 2012 Term liabilities

43,162

Interest rate swaps

1,768

Trade creditors

.......................................... 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates

its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be responsible under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not

212

1,768

43,374

45,142

readily apparent from other sources. Management has identified the 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

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

(b) Critical judgements in applying the entity’s accounting policies Recovery of deferred tax assets

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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised.

Unimproved lease land

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 unrecouped 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.

The Parent recognises unimproved lease land in its statement of financial position. The land is valued internally by management using a discounted cash flow model. The cash flow model applies assumptions of a post tax discount rate of 6.5%, 2.4% increment per year but cash flow effected at 7 year intervals and a 30 year time horizon. Impairment finistere investment Management rely on the management team of the Finistere investment to provide accurate and timely financial information to assess the performance of the investment. Impairment is tested as and when the individual stocks of Finistere pass through milestone liquidity positions. The stock is assessed as impaired when the entity does not pass to the next phase of liquidity. Impairment Scott River

Taxation

Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future.

Assumptions about the generation In the 2012 financial year Management of future taxable profits and repatriation of retained earnings have relied on the information of the depend on Management’s estimates governing body of Scott River which of future cash flows. These depend detailed that the fair value of the

on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgments and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statements of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statements of comprehensive income.

47 NOTES TO THE FINANCIAL STATEMENTS

position reported in future periods.

property, plant and equipment were substantially less than prior year $26m AUD. This position has not channged in the 2013 financial year. Based on this information management has maintained the impairment of this investment (2012: $0.5m).

Operating lease commitments - Group as a lessor The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains substantially all the significant risks and rewards of the ownership of these properties primarily as the lease does not transfer ownership of the asset at the end of the lease term. Thus the Group has classified the leases as operating leases.

Parininihi ki Waitotara Incorporation

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

5 REVENUE

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Rental income 6,599 Dairy proceeds 10,164 Fisheries lease income 2,387 Other income 1,265 20,415

6 OTHER GAINS / (LOSSES)

6,652 10,274 2,083 1,159 20,168

8,065 - 2,387 1,478 11,930

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Fair value gains on other financial assets at fair value through profit or loss 8,013 - - Reversal of prior year impairment of financial asset 32 - 32 Net gain on sale of available-for-sale financial assets 187 65 187 Fair value adjustment to investment property 1,983 1,852 1,983 Amalgamation of subsidiary - - 3,724 Impairment of available for sale financial assets - (500) - Impairment of joint venture advance - (274) - Foreign exchange loss 4 (12) 4 Dividend Income - - 81 10,219 1,131 6,011

7 EXPENSES

8,012 650 8,662

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

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Auditors’ remuneration 54 Depreciation 1,035 Employee benefits 845 Farm operating expenses 7,881 Lease expense 75 Members fees 222 Other expenses 2,411 Trade debtor impairment 5 12,528

55 660 765 6,344 77 206 1,572 - 9,679

54 47 576 - 72 192 2,011 5 2,957

55 46 536 72 175 1,290 2,174

8 FINANCE INCOME AND EXPENSES

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Finance costs Finance income Net finance costs

2,323 (100) 2,223

2,159 (171) 1,988

2,411 (2,299) 112

2,257 (2,847) (590)

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

(a) Income tax expense Current tax: Current tax on profits for the year 763 Adjustments in respect of prior years (123) Deferred tax expense / (benefit) 214 Total income tax expense 854 Profit from continuing operations before income tax expense 16,675 Tax at the New Zealand tax rate # 3,425 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Other permanent differences 259 Changes in fair value of livestock 72 Changes in fair value of investments (2,945) Over provided in prior years (123) Income not subject to tax 166 Income tax expense 854

50 (623) 1,627 1,054

1,773 (128) 221 1,866

(856) 1,278 422

9,632 1,781

14,872 2,603

8,814 1,543

40 (77) (125) (507) (58) 1,054

433 - (700) (128) (342) 1,866

31 (857) (295) 422

49 NOTES TO THE FINANCIAL STATEMENTS

9 INCOME TAX (EXPENSE)/BENEFIT

10 CURRENT ASSETS - RECEIVABLES

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Accounts receivable Provision for doubtful receivables

1,437 (42) 1,395

2,018 (35) 1,983

176 (42) 134

87 (35) 52

Prepayments 178 1,573

572 2,555

3 137

418 470

Parininihi ki Waitotara Incorporation

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

11 BIOLOGICAL ASSETS Group 2013 2012 $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

6,444 1,065 (480) 166 7,195

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

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

86 12 (19) 23 102 7,297

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

2013 2012 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 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.

1,107 491 694 386 2,681 2,448 38 40 - 4,520 3,365 473 392 - 5 870

155 417 6 578

11 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 other laws in New

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 against adverse climatic (eg: drought

that most of the Group’s agricultural 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

manages this risk through budgeting

and actively managing working capital from fluctuations in the price and sales requirements, as well as maintaining volume of livestock and dairy produce. credit facilities at levels sufficient to

and flooding) and environmental (eg:

meet working capital requirements.

12 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 2011 Cost Accumulated depreciation Net book value

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

At 30 June 2012 Cost Accumulated depreciation Net book value

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

Year ended 30 June 2013 Opening net book value Additions Disposals Depreciation charge Closing net book value

26,752 - - - 26,752

7,945 1,153 (71) (318) 8,709

2,218 1,160 (27) (428) 2,923

158 83 (46) (41) 154

5,121 3,042 (2) (248) 7,913

42,194 5,438 (146) (1,035) 46,451

At 30 June 2013 Cost Accumulated depreciation Net book value

Freehold Plant and Fixtures and Leasehold land Buildings equipment fittings improvements Total $’000 $’000 $’000 $’000 $’000 $’00

26,752 - 26,752

11,437 (2,728) 8,709

4,751 (1,828) 2,923

588 (434) 154

9,050 (1,137) 7,913

52,578 (6,127) 46,451

(a) Assets transfered from subsidiary In 2013 management has been able to clarify ownership of certain assets. This has resulted in a transfer of assets between the subsidiary and the Parent. This has been corrected and disclosed in the note below.

Parininihi ki Waitotara Incorporation

NOTES TO THE FINANCIAL STATEMENTS

strategies

12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Freehold land $’000

Freehold Fixtures and Leasehold buildings fittings improvements $’000 $’000 $’000

At 1 July 2011 Cost 56 92 Accumulated depreciation - (30) Net book value 56 62 At 30 June 2012 Opening net book value Accumulated depreciation Depreciation charge Closing net book value

56 - 56

92 (34) 58

Total $’000

479 (352) 127

- - -

627 (382) 245

551 (393) 158

- - -

699 (427) 272

Year ended 30 June 2013 Opening net book value 56 58 158 - 272 Assets transfered from subsidiary 7,307 2,997 - 45 10,349 Additions - - 83 - 83 Disposals - - (47) - (47) Accumulted depreciation on assets transfered from subsidiary - (790) - (5) (795) Depreciation charge - (7) (40) (2) (49) Closing net book value 7,363 2,258 154 38 9,813 At 30 June 2013 Cost 7,363 3,089 Accumulated depreciation - (831) Net book value 7,363 2,258

588 (434) 154

45 (7) 38

11,085 (1,272) 9,813

At 1 July 2011 Cost Accumulated amortisation and impairment Net book value

53 Total $’000

9,051 9,051

Year ended 30 June 2012 Cost Accumulated amortisation and impairment Closing net book value

11,813 11,813

Year ended 30 June 2013 Opening net book value Additions Closing net book value

11,813 1,847 13,660

At 30 June 2013 Cost Accumulated amortisation and impairment Net book value

13,660 13,660

NOTES TO THE FINANCIAL STATEMENTS

13 QUOTA ASSETS Group

Parent

At 30 June 2013 Cost Accumulated amortisation and impairment Net book value

13,660 13,660

There have been additions of $1.85m during the year (2012: $2.76m). There have been no disposals or impairment losses requiring recognition during the year. The fair value of the quota at 30 June 2013 is $29m (2012: $23m) as supplied by industry specialist Quota Management System Limited. During the year the quota was purchased by the Parent from its subsdiary ‘Taranaki Aqua Gardens Limited’ by way of an in specie distribution.

Parininihi ki Waitotara Incorporation

Year ended 30 June 2013 Opening net book value Additions Closing net book value

14 EQUITY ACCOUNTED INVESTMENTS (a) Joint venture

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Investment in joint venture 1,857 Advances to joint venture - 1,857

1,211 864 2,075

1,146 - 1,146

1,211 864 2,075

(i) Investment in joint venture Group 2013 2012 $’000 $’000 Balance 1 July Capital invested Capital refunded Share of profit after tax Dividend recived Balance 30 June

1,211 - (65) 792 (81) 1,857

1,211 1,211

(ii) Advances to joint venture Group 2013 2012 $’000 $’000 Balance 1 July Advances Repayments Balance 30 June

864 - (864) -

864 864

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.

(b) Associate

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Investment in joint venture - Advances to joint venture - -

- - -

(iii) Investment in associate Group 2013 2012 $’000 $’000 Balance 1 July Impairment Repayments Balance 30 June

- - - -

605 (210) (395) -

- - - -

173 (60) (113) -

(iv) Advances to associate Balance 1 July Impairment Repayments Balance 30 June

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Fonterra 20,190 Finistere 6,509 New Zealand Government inflation indexed bond 1,479 28,178

12,231 6,322 1,466 20,001

- 6,509 - 6,509

6,322 6,322

Advances to subsidiaries (note 16) - - 59,663 Other financial assets carried at cost 446 278 94 446 278 59,757

69,438 11 69,449

28,624

75,771

20,279

66,266

Finistere is an unlisted equity instrument that can not be prescribed a fair value. The Finistere investment is recognised at a cost of $6.5m (2012: $6.32m) and is related to an investment of USD $4.3m (2012: USD $3.75m) that was unhedged at 30 June 2013. Fonterra Co-operative Group Limited is measured at fair value using independent valuation. The fair value is $20.19m (2012: $12.21m). Scott River is a unit trust investment based in Western Australia; this investment is carried at impaired cost. The Scott River investment is recognised at a carrying value of $Nil (2012: $Nil).

Parininihi ki Waitotara Incorporation

15 INVESTMENTS

NOTES TO THE FINANCIAL STATEMENTS

14 EQUITY ACCOUNTED INVESTMENTS (CONTINUED)

16 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): Name of entity 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) Baron Properties Pty Limited (In receivership)

Equity Holding 2013 2012 % %

New Zealand New Zealand New Zealand New Zealand

30 June 31 March 31 March 30 June

100 100 100 100

100 00 100 100

Australia Australia Australia

30 June 30 June 30 June

100 100 100

PKW Farms Limited is in the business of farming. Taranaki Aqua Gardens Limited is in the business of owning quota. 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. Baron 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. In 2013 the Parent amalgamated Taranaki Aqua Gardens Limited. 17 EQUITY INVESTMENTS

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Movements Balance 1 July 6,322 Add capital contributions 187 Deduct investments sold - 6,509 Finistere investment derecognised Proceeds from sale 55 Investment cost - Gain on sale 55

5,830 841 (349) 6,322

6,322 187 - 6,509

5,830 841 (349) 6,322

414 (349) 65

55 - 55

414 (349) 65

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 2013 is $6.5m (2012: $6.32m). The table above shows the movement in the Finistere investment.

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Unimproved leased land Balance at beginning of year 135,242 Net gain in fair value 1,983 137,225 Commercial property Balance at beginning of year 2,150 Net gain/(loss) in fair value - 2,150 139,375

133,380 1,862 135,242

135,242 1,983 137,225

133,380 1,862 135,242

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

2,150 - 2,150 139,375

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

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 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.

Parininihi ki Waitotara Incorporation

18 INVESTMENT PROPERTIES

NOTES TO THE FINANCIAL STATEMENTS

17 EQUITY INVESTMENTS (CONTINUED)

19 CURRENT LIABILITIES - PAYABLES

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Trade creditors 1,312 Other payables 1,852 Provision for dividend 1,326 GST payable/(receivable) (50) 4,440

1,750 1,334 1,205 (190) 4,099

366 1,536 1,326 (50) 3,178

212 1,184 1,205 118 2,719

Fair value Due to the short term nature of these payables, their carrying value approximates their fair value.

20 DERIVATIVE FINANCIAL INSTRUMENTS Current liabilities Interest rate swaps

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

626

652

626

652

Non-current liabilities Interest rate swaps 249 875

1,116 1,768

249 875

1,116 1,768

Interest bearing loans of the Group currently bear a variable interest rate of 6.45%. 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 floating rates. Swaps in place cover approximately 49% (2012: 49%) of the principal outstanding. The fixed interest rates range between 5.85% to 5.99% (2012: 5.85% to 5.99%) and the variable rate which is 1.62% above the 90 day bank bill rate, which at balance date was 2.50% (2012: 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. 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.

21 TERM LIABILITIES

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Rabobank facility 41,000 Unclaimed dividends 2,950 43,950

40,613 2,549 43,162

41,000 2,950 43,950

40,613 2,549 43,162

21 TERM LIABILITIES (CONTINUED)

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 4.23% per annum (2012: 4.24%). 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 and PKW Investments Limited. Carrying value of financial assets pledged as collateral as at 30 June 2013 was $90.88m (2012: $69.45m).

22 NET DEFERRED TAX ASSETS/ (LIABILITIES) Property, Investment Plant and Properties Equipment Livestock Tax Losses Other Total Group $’000 $’000 $’000 $’000 $’000 $’000 At 1 July 2011 Credited to the statement of comprehensive income At 30 June 2012

At 1 July 2012 Charged/(credited) to the statement of comprehensive income At 30 June 2013

(307)

(782)

(44)

1,200

- (307)

- (782)

(222) (266)

(365) 835

(353) (348)

(940) (868)

(307)

(782)

(266)

835

(348)

(868)

(64) (371)

34 (748)

(138) (404)

(835) -

(11) (359)

(1,014) (1,882)

Parininihi ki Waitotara Incorporation

million from Rabobank New Zealand Limited. Both of these facilities expire on 20 February 2024. The interest charge on

NOTES TO THE FINANCIAL STATEMENTS

The Parent utilises both an interest only finance facility of $50 million (2012: $46 million) and an undrawn facility of $10

Property, Investment Plant and Parent Properties Tax Losses Other Equipment Total At 1 July 2011 Charged/(credited) to the statement of comprehensive income At 30 June 2012

(307)

1,200

898

- (307)

(365) 835

7 12

- -

(358) 540

835

540

(835) -

(5) 7

(152) (152)

(1,056) (516)

At 1 July 2012 (307) Charged/(credited) to the statement of comprehensive income (64) At 30 June 2013 (371)

23 SHARE CAPITAL Group and Parent

Group/Parent Group/Parent 2013 2012 2013 2012 Shares Shares $’000 $’000

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

24 RESERVES AND RETAINED EARNINGS

1,205,071

5,549

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

(a) Reserves Capital reserve 24,591 Cash flow hedge reserve (693) 23,898

24,591 (1,430) 23,161

27,738 (693) 27,045

27,738 (1,430) 26,308

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

24,591 - 24,591

27,738 - 24,738

27,738 27,738

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

(1,430) 737 (693)

(1,128) (302) (1,430)

(1,430) 737 (693)

(1,128) (302) (1,430)

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. (b) Retained earnings Movements in retained earnings were as follows: (a) Reserves Balance 1 July Net profit for the year Dividends Balance 30 June

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

144,908 15,821 (1,326) 159,403

137,535 8,578 (1,205) 144,908

137,349 13,006 (1,326) 149,029

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

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Declared and paid during the year: Dividend proposed 2013: $1.10 (2012: $1)

1,326

1,205

1,326

1,205

26 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 was paid during the 2011 financial year.

61 NOTES TO THE FINANCIAL STATEMENTS

25 DIVIDENDS

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 has not recognised a liability in the 30 June 2013 Statement of Financial Position. There were no contingent liabilities as at 30 June 2013.

27 COMMITMENTS (a) Capital commitments

During 2012, the Parent entered an agreement to purchase certain land for $1.4 million. The completion of this transaction is subject to rezoning consents. During 2012, the subsidiary PKW Farms Ltd entered an arrangment 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: Within one year Later than one year but not later than five years Total minimum lease payments

Group Parent 2013 2012 2013 2012 $’000 $’000 $’000 $’000 74 130 204

80 139 219

74 130 204

65 139 204

Parininihi ki Waitotara Incorporation

As at 30 June 2013 the Group was committed to spend USD $0.3 million (NZD $0.375 million) for an investment in a United States of America based venture capital fund (2012: USD $0.5 million (NZD $0.62 million).

27 COMMITMENTS (CONTINUED) (c) Lease commitments : as lessor 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 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Later than one year and not later than five years 195 Later than five years 544 739

195 253 448

195 544 739

195 253 448

28 RELATED PARTY TRANSACTIONS (a) Parent entity During the year, the Parent has charged interest at 5.92% (2012: 6.56%) on inter-entity loans that it has made to its wholly owned subsidiaries, PKW Farms Limited of $2.3m (2012: $2.35m). It has also charged PKW Farms Limited rental of $1.49m (2012: $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 $1.3m (2012: $0.52m) and Taranaki Aqua Gardens Limited $Nil (2012: $0.05m). This charge represents the share of the Parents overhead costs that are attributable to the subsidiaries and is the first year this fee was charged. These inter-entity 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 2013 was $Nil (2012: $9.1m). The Parent has charged interest at Nil% (2012:6.56%) on the inter-entity loan it made to Taranaki Aqua Gardens Limited of $Nil (2012: $0.44m). The current account due from PNF (2011) Limited at 30 June 2013 was $Nil (2012: $0.86m). During 2013 the PKW Trust has charged interest at 5.92% (2012: 6.56%) on inter-entity loans that it made to PKW Incorporation of $0.1m (2012: $0.1m). No related party debts have been written off or forgiven during the year and all transactions were conducted on an arms basis. During 2013 the Parent purchased the assets of its subsidiary Taranaki Aqua Gardens Limited by way of in specie distribution. The purchase price of $13.66m was paid by offsetting the intercompany debt owed by Taranaki Aqua Gardens to the Parent. (b) Directors David MacLeod is a director of the Co-operative, Fonterra Co-operative Group Limited. PKW Farms Limited independent director Philip Luscombe is also a director of a former supplier Allied Farmers Limited. Taaringaroa Nicholas is a committee member and a shareholder of Parininihi ki Waitotara Incorporation.

28 RELATED PARTY TRANSACTIONS (CONTINUED)

Committee Members and Directors remuneration and value of other benefits received from the Group for the year ended 30 June 2013 were: Director PKW Trust Honoraria Fees Daily fees Honoraria Total $’000 $’000 $’000 $’000 $’000 Bev Gibson Daniel Harrison Darryn Ratana David MacLeod Hinerangi Edwards Hinerangi Raumati Philip Luscombe Taaringaroa Nicholas Tokatumoana Walden Tokorangi Kapea Total

20 - - 20 20 50 20 - 20 20 170

- - - - - - - 20 - 12 32

- 5 1 - - - - - - - 6

- - - - 10 - - - - - 10

20 5 1 20 30 50 20 20 20 32 218

NOTES TO THE FINANCIAL STATEMENTS

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 •

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 2012 from the PNF (2011) Ltd joint venture of $0.86m which was repaid during the course of the year. No related party balances were written off or forgiven during the year. 29 SUBSEQUENT EVENTS On the 3 July 2013 the Groups subsidiary PKW Farms Ltd was sold to PKW Farms LP. This corporate structure was effected for organisation efficiencies. (2012: None).

Parininihi ki Waitotara Incorporation

following:

30 STATEMENT OF ESTIMATED CURRENT MARKET VALUES as at 30 June 2013 REQUIRED BY SECTION 276 (4) (C) OF TE TURE WHENUA MĀORI ACT 1993 30 June 2013 AS Group $’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

9,637 101,728 46,451 139,375 297,191 4,440 41,000 2,950 48,390

Equity

248,801

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

137,225 1,320 430 400 139,375

Investments Finistere Venture Capital Fund PKW Farms Limited PKW-Wakatu Limited Taranaki Aqua Gardens Limited - Quota Mangaoapa Forest Partnership Government Inflation Indexed Bond

6,509 61,384 1,857 29,000 1,500 1,478 101,728

Tu mai Taranaki e tiketike mai ra tatou

Kuia Josie Hinewaito Bigham, Ngāruahine, Te Atiawa

Awhina

PKW TRUST CHAIR’S REPORT

66 CHAIR’S REPORT HINERANGI EDWARDS

Tēnei māua ko ngākau e mihi kia koutou ngā uri whakatupu, huri rauna i tō tātou tauheke maunga. Me tū tātou ngā mahuetanga o rātou mā, hei whakatutuki a ō rātou wawata. Kia kaha, kia māia, kia manawanui. It is a privilege to provide this report on the Trust’s activities for the 2012/13 financial year. It is even more special and fitting to reflect that the year in review represents PKW Trust’s 30th anniversary a significant milestone for any organisation.

$332,000 2012 INCOME

The Trust has made considerable progress this year by having a focus on both building partnerships and solid planning. We have also been aided considerably by additional capacity through the new Community Development Manager role.

.......................................... FINANCIAL OVERVIEW

$349,000 2013 INCOME

$3.163m 2012 ASSETS

$3.259m 2013 ASSETS

PKW Trust has generated a total income of $349k this financial year (FY11/12: $332k). From this income the PKW Trust made a total grant allocation of $209k (FY11/12: $139k) towards a range of individuals and community groups. The total funding represents a 50% increase in support offered from the previous year and was underpinned by an improved financial performance of PKW and returns from PKW’s government bond and interest. The PKW Trust continues to support Taranaki whānui on your behalf. Trustees appreciate the financial support from PKW Inc and its shareholders. Without the support and confidence of PKW shareholders it would be very

difficult for the Trust to operate. A number of Trust applicants comment that they appreciate the support of PKW shareholders, either by endorsing their application or encouraging them to apply. Ka nui te mihi kia koutou.

.......................................... EDUCATION GRANTS & SCHOLARSHIPS

PKW scholarships are awarded for a three year period and today the Trust farewells the remaining 2011 scholars. We also welcome the twelve 2013 scholarship recipients who are beginning their journey with us. We look forward to deepening our relationship with them in the coming years of their study. Educational excellence and achievement remains a key focus for the scholarships and during this year the Trust amended the Education and Scholarship Policy. Robust policies ensure we can demonstrate fairness and transparency to give confidence that we apply and review Trust policies appropriately. Our application process is also an area of continual improvement as we seek to understand how we can best encourage Taranaki descendants/ uri to apply and be successful in financing their studies. We also want to help ensure Taranaki not only gain academic leaders but also community and cultural leaders, for eample this year eight of the 12 scholarship recipients are conversant or fluent in te reo Māori. We see this as a significantly positive dimension of their ability to contribute to their whānau, hapū, iwi and wider communities.

Roto i te kawa tapu hapaia to mana

The Trust also awarded 58 Tertiary Grants and increased the grant award from $500 to $750 for fulltime students and $400 for part time students. This means PKW Trust supported every single applicant who correctly completed the application process. In summary during 2012/13 PKW Trust distributed $107k in education grants and scholarships: • 3 Charles Bailey Scholarships totalling $15k per annum; • 6 Postgraduate Scholarships totalling $18k per annum; •

16 Undergraduate Scholarships totalling $32k per annum;

•

58 Tertiary grants totalling $42k per annum.

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

Marae, te reo Māori and education (mātauranga Māori and te ao whānui) remain the priorities for a community grant. The Trust approved 14 community grants which is comparable to the previous

Projects supported this year include marae renovations, projects that celebrated Taranakitanga such as the Taranaki Māori Sports Awards, Taranaki Arts and Puanga Kaumātua events as well as language revitalisation projects delivered by Te Reo o Taranaki. The Trust considers these grants opportunities to partner with community groups. For example Te Reo o Taranaki is a recognised leader of language development and has several projects the Trust has supported. This will be hugely beneficial to Taranaki whānui in the retention of this regions dialect.

.......................................... SPORTS AND CULTURAL GRANTS PKW Trust continued to support beneficiaries who are achieving at an international level. During 2012/13 the Trust distributed $7,300 in funding assistance to 15 (FY 11/12: 9) talented individuals. Many of the athletes who received a grant competed in a 2013 Las Vegas Elite Basketball tournament in the United States. Like tertiary scholars, sport and cultural grant recipients are required to provide an activity report related to the funds received. This enables Trustees to see how the Trust’s help has contributed to recipients’ achieving their goals. Recent basketball grant recipient, 13 year old Marjorie Cashell (Ngāti Mutunga, Ngāti Tama) commented in her report:

.......................................... CONTRIBUTING FORWARD As a condition of their scholarship, all scholarship recipients are required to contribute forward and this usually occurs in the form of presentations at a shareholders meeting. Some scholars have contributed in other meaningful ways including writing articles for the Whenua magazine and helping out at other PKW events. Your Trust is attempting to create many more opportunities for that contribution, because in doing so, real relationships are created between scholars, communities and the PKW Trust.

PKW TRUST CHAIR’S REPORT

year. These grants are listed further in this report.

.......................................... STRATEGIC OPPORTUNITIES AND PARTNERSHIPS

The Trust had the opportunity to host two key events during the 2012/13 year. They were Keeping it Coastal, and He Whenua, He Tangata, He Oranga. Keeping it Coastal was an employment expo co-hosted with Opunake High School with the purpose of raising whānau awareness about employment and training pathways in Taranaki. The response from students and their community was fantastic and the Trust thanks Te Puni Kōkiri for their financial contribution to this event. We also thank the twentyplus stall holders who showed our whānau there are many exciting opportunities ‘around the maunga’.

The second event, He Whenua, He Tāngata, He Oranga, was co“If you’re ever given an opportunity, hosted with Taranaki Education take it! It may just be what you need Environmental Trust and focused to get yourself started” on raising the awareness of being

Awhina

For the 2012/13 year the Trust awarded one Charles Bailey Scholarship, two postgraduate scholarships and instead of the usual five undergraduate scholarships nine were awarded. The increased number of undergraduate scholarships is a result of a combination of previous scholarship awardees completing their studies and improvements to the Education and Grants Scholarship Policy. The recipients are listed further in this report.

environmentally sustainable amongst primary aged tamariki. Attracting over 100 tamariki from schools throughout Taranaki, the event took place at Puke Te Whiti (also known as Pukeiti Rhododendron Gardens). Puke Te Whiti is a very special place for Taranaki Māori and the land surrounding Puke Te Whiti is owned by PKW under long term lease by the Taranaki Regional Council. We hope to grow the relationship with the council to ensure access and opportunities to share knowledge about the whenua and rongoa Māori. For both events we partnered with local organisations. This ensured the events gained maximum participation from the community. Forward planning at a whānau level was the underlying component of these events on the premise that with a plan the chance of success increases. Potential strategic opportunities exist as more Taranaki iwi settle their teaty claims, and we anticipate more discussion around regional opportunities to arise.

As a former recipient of the Charles Bailey Scholarship I am personally thankful for the chance to contribute back to PKW as a member of the Committee of Management and Chairperson for the PKW Trust. This reflects the true value of PKW Trust’s investment into our people – the opportunity for them to contribute back to PKW and Taranaki whānui. PKW Trust and the Incorporation have been well served by this policy and looks forward to current and future generations of scholars continuing this tradition. It is an honour to contribute to the Trust’s current mahi in the hope of making tomorrow’s Taranaki even more thriving and full of opportunities for all mokopuna. It is you and future generations that we serve.

Noho ora mai i roto i nga manaakitanga o to tatou tupuna maunga a Taranaki. Hinerangi Edwards Tiamana.

As we reflect on the 30 years the Trust has operated we acknowledge Charles Bailey the inaugural Chair of the PKW Trust and the namesake of the Charles Bailey Scholarship. In doing so we cannot help but think of the many others who have contributed significantly to the PKW whanau and Taranaki whānui.

............................................ ............................................ 30th ANNIVERSARY OF THE PKW

From the many scholars and grant recipients to the marae and community groups we have had the privilege of supporting, Trustees thank you for being part of the Trust’s whakapapa. As we enter our fourth decade together we have earned the right to feel confident about the direction of the PKW Trust and optimistic about the future of Taranaki whānui.

TRUST

CONCLUSION

At this point in the report the Trust would like to thank all former Trustees who have served on the Trust over the past 30 years be they former Committee of Management members or our special shareholder representative Trustees. Since beginning operation in 1983 the Trust has distributed $1.7m in grants to over 2,000 individuals and community groups and each award holds a special place in the Trust’s history.

In conclusion I am humbled to Chair the Parininihi ki Waitotara Trust in its 30th year. When we look back at the contribution the Trust has made to the PKW whānau and Taranaki whānui over this time we cannot help but be awed by the vision and generosity of PKW shareholders who established the Trust as a vehicle for the empowerment of future generations through education. As a Trust we reaffirm our commitment to achieving their vision.

$139,000 2012 GRANTS PAID

$209,000

2013 GRANTS PAID

Torotika ki a Rangi e

Charles Bailey

Recipient

Year

Qualification

Shareholder Support

Corey Barnard

2013

Bachelor of Science

Mary Barnard

Nikau Hindin

2012

Bachelor Arts, Fine Arts

Robert Harris

Dennis Ngawhare 2011 PhD Toetoe Cunningham Postgraduate

Recipient

Year

Qualification

PKW TRUST CHAIR’S REPORT

NGĀ KAIWHIWHI TAUTOKO SCHOLARSHIPS AND GRANTS

Shareholder Support

Mary Jones 2013 Masters in Business Pamela Reo Administration Brendan Laurence

2012

Masters in Architecture

Maraea Tito

Jemaima O’Brien

2011

Masters in Psychology

Jemaima O’Brien

Acushla O’Carroll 2011 PhD Christine O’Carroll Aroha Rauhihi 2013 Graduate Diploma in Ray Edwards Teaching Matariki Williams 2012 Masters in Museum & Sharon Williams Heritage Studies Undergraduate

Recipient

Year

Qualification

Shareholder Support

Ngareka Bensemann

2013

Bachelor of Dental Surgery

David MacLeod

Marama Broughton 2013 Bachelor of Commerce and Administration

Margaret Broughton

Lisa Fairclough

Maire-nui Biss

2012

Diploma Hotel Management

Keepa Hipango 2013 Bachelor of Law, Bachelor Sarah MacFater of Arts Campbell Hooker 2013

Bachelor of Health Science (Physiotherapy)

Gloria Kerehoma

Lena Kemp

Bachelor of Graphic Design

Jan Bezems

2013

Wiremu MacFater 2012 Bachelor of Medicine, Sarah MacFater Bachelor of Surgery Bachelor of Art and Design (3D Te Uraura Nganeko Animation and Visual Effects)

Ashlee-Rose 2013 Bachelor of Law Rapana Bell

Jennifer Rapana

Issac Robinson 2013 Bachelor of Management Studies

Ihaka Robinson

Laura Ruawai-Hamilton 2012 Bachelor of Medicine, Te Kotahitanga Rauwai- Bachelor of Surgery Whānau Trust Rongomai Smith

2012

Bachelor Arts (Māori)

Wirapa Ruakere

Awhina

Daniel Nganeko 2013

Moerangi Tamati 2012 Bachelor of Medicine, Aroaro Tamati Bachelor of Surgery Miaana Walden 2013 Bachelor of Law, Roberta Walden Bachelor of Arts Ashleigh Wilsonvan Duin 2012

Bachelor of Science

Valerie Wilson

Merryn Wilsonvan Duin 2012 Bachelor of Medicine, Valerie Wilson Bachelor of Surgery PKW-Ravensdown Scholar

Recipient

Year

Te Reimana Marumaru

2012

Qualification

Shareholder Support

Bachelor of Commerce Hamish Rangihaeata (Agriculture)

Tertiary GRANTS

Recipient

Qualification

Shareholder Support

Turuturu Bidois

Diploma in Culinary Arts

Emily Bidios

Te Wai Bishop

Bachelor of Nursing

Thomas Bishop

Christopher Blain

Certificate in Process Operations (Oil and Gas)

Doreen Blain

Thomas Buchanan

Bachelor of Law

Leo Buchanan

Karen Butler

Diploma in Enrolled Nursing

Morehu Butler

Josie Church Graduate Certificate in Jim Takiari Health Science Chloe Davy

Bachelor of Commerce

Patricia Amor-Davy

Ashley Ede

Bachelor of Commerce

Moutere Love Whﾄ］au Trust

Daniel Fake Bachelor of Sport & Graham and Monica King Exercise Science Whﾄ］au Trust Kendyl Fake Bachelor of Business Studies Graham and Monica King Whﾄ］au Trust Michael Fitzpatrick

Bachelor of Commerce

Marama Lyall Waitoa

Daniel Garland

Bachelor of Design (Honours)

Esther Garland

Luke Garland

Bachelor of Arts

Esther Garland

Karamea Graham-Ratana

Diploma in Contemporary Music Meteria Ratana

Maia Graham-Ratana

Rumaki Reo

Meteria Ratana

Heather Hansen

Bachelor of Nursing

Aroha Woller

Sarahlee Hansen

Bachelor of Arts

Aroha Woller

Aroha Harris

Bachelor of Business Studies

Christine Priest

Emma Hau

Bachelor of Commerce

Kenneth Hau

Corrie Hawe

Bachelor of Business Studies

John Hawe

Heston Hawe Master of Computer Graphic Design Te Awhina Heke-Gemmell

Rosemary Jakeman

Certificate in Travel Tourism and Te Owai Nuku-Gemmell Business and Certificate in Travel

Torotika ki a Rangi e Recipient

Qualification

Shareholder Support

Beaudene Hita

Bachelor of Māori Visual Arts

Valerie Wilson

Mereana Hooker

Bachelor of Arts

Gloria Kerehoma

Talia Horo Advanced Certificate in Travel, Samual Horo Tourism and Business, and, Certificate in Conference and Events Planning Rochell Hurst Certificate in University Rosemary Jakeman Preparation Hine Janaway Davis

Bachelor of Education

GRANTS AND DONATIONS

Tertiary GRANTS (CONTINUED)

Donald Davis

Tarikura Kapea Diploma in Stage and Screen Arts

Coleen Hall

Maria Knowles

Bachelor of Accountancy

Maria Knowles

Jarden Lacey-Brooks

Foundation Studies Certificate

Marylinda Brooks

Hoani MacFater Bachelor of Medicine, Sarah Williams Bachelor of Surgery Alice Miles Bachelor of Education Brian Healey (Early Childhood) Lana Miles Bachelor of Management Studies

Brian Healey

Natalie Miles Bachelor of Science, Brian Healey Bachelor of Arts Rachel Miles

Certificate in Music

Brian Healey

Aroha Nuku

Bachelor of Social Work

Monty Nuku

Anton O’Carroll

Bachelor of Arts (Māori, Christine O’Carroll Resource Management)

Dwayne O’Carroll

Bachelor of Māori Visual Arts

Christine O’Carroll

Tere Rei Bachelor of Commerce, Tere Rei Bachelor of Science Kiri Rika Heke Certificate in Foundation Eliza Ruby Rika-Heke Education Sanna-Maree Rongonui Bachelor of Business Studies

David Rongonui

Kaira Rongonui-Love

Diploma in Reo Māori

Peter Love

Lara Ruakere

Diploma in Māori Art (Weaving) Lara Ruakere

Sam Short

Bachelor of Building Science

Benjamin Snooks

Bachelor of Architectural Studies Charlie Snooks

Warren Stephens

Diploma of Forestry Management Susan Stephens

Dianne Roka Short

Shane Taiwhati

Certificate in Light Fabrication

Desmond Taiwhati

Nita Takiari

Bachelor of Teaching

Jim Takiari

Eden Tapuke

Certificate in Tertiary Teaching

Maikara Tapuke

Colin Todd Diploma in Applied Business Lavina Raupita Whānau Trust

Awhina

Marama Taiwhati PhD Desmond Taiwhati

Joshua Walden Postgraduate Diploma in Roberta Walden Teaching George Wheatley Certificate in Computer Networking

Mereaina Kirkwood

Shayl Weston

Certificate in Hospitality

Ripai Thomson

Raquel Whale

Bachelor of Accountancy

Pakinga Kawakawa

Adrienne Wharehinga

Bachelor of Nursing

Nohomairangi Swainson

Lian Wharepouri

Bachelor of Nursing

Jack Wharepouri

Dylan Wilsonvan Duin

Bachelor of Science

Valerie Wilson

Sport

Shareholder Support

SPORTS GRANTS

Recipient

Sharn Ashford Softball Patricia Ratana Grant Barriball

Waka Ama

Colin Barriball

Leila Blackburn Basketball Matiu Blackburn Roimata Blackburn

Basketball

Matiu Blackburn

Marjorie Cashell

Basketball

Ann Marie Barber

Simone Cook Basketball Rua Ratahi Haimona Hiroti

Rugby League

Enid Hohaia

Iritana Hohaia Basketball Russell Hohaia Victoria Hohaia

Synchronized Swimming

Raymond Hohaia

Eva Langton Basketball Rex Langton Alexandra Tahau Basketball Robyn Davey Johnathan Tahau

Basketball

Robyn Davey

Ella Toa Inline Hockey Gemma Toa Liam Whareaitu Volleyball Te Awahuri Te Utupoto Whānau Trust Terrell Wichman Basketball Marlene Horton COMMUNITY GRANTS

Kaumātua Kaunihera o Ngāruahine Charitable Trust Mawhitiwhiti-Kanihi Pa Ngā Pekanga Te Kohanga Reo Ngāti Manuhiakai 9 Trust Puke Ariki Land Trust Taranaki Māori Sports Awards Taranaki Arts Awards Te Oha o Ngā Pahake ki Ngamotu Te Reo o Taranaki Tiaki te Mauri o Parininihi Trust

NOTES TO THE FINANCIAL STATEMENTS

PARININIHI KI WAITOTARA

TRUST

FINANCIAL STATEMENTS Parininihi ki Waitotara Incorporation

for the year ended 30 June 2013

Chartered Accountants

74 Independent Auditor’s Report To the beneficiaries of Parininihi ki Waitotara Trust (the “Trust”) Report on the Financial Statements We have audited the financial statements of the Trust on pages 75 to 78, which comprise the statement of financial position of the Trust as at 30 June 2013, statement of comprehensive income, and statement of movements 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 75 to 78: ►

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 2013 and its financial performance for the year then ended.

Wellington 13 September 2013

A member firm of Ernst & Young Global Limited

Note

2013 $’000

2012 $’000

NOTES TO THE FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

Grants 133 121 Interest 216 211 Income 349 332 Expenses (4) Grants (5) Expenses Net surplus and total comprehensive income

81 209 290 59

17 139 156 176

3,149 59 3,208

2,973 176 3,149

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 2013

Note

2013 $’000

2012 $’000

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

60 1,720 1,780

56 1,641 1,697

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

1,479 1,479

1,466 1,466

Total Assets

3,259

3,163

LIABILITIES Current Liabilities Accounts payable Total Current Liabilities

51 51

14 14

EQUITY Trust capital Retained surplus TOTAL EQUITY

1,283 1,925 3,208

1,283 1,866 3,149

For and on behalf of the Trustees these financial statements were authorised for issue, dated 13 September 2013.

HINERANGI EDWARDS Chair PKW Trust 13 September 2013

The accompanying notes form part of these financial statements.

TAARINGAROA NICHOLAS Chair Audit & Risk Committee 13 September 2013

........................................................................................................................................ POLICIES Reporting Entity Parininihi ki Waitõtara Trust is a Trust established by a trust deed dated 22 June 1983.

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.

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.

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

These financial statements have been prepared in accordance with generally 2. INVESTMENTS accepted accounting practice. 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

2013 $’000

2012 $’000

New Zealand Government Indexed Bond

1,479 1,466 1,479 1,466

3. BANK

2013 $’000

Westpac – general account Westpac – term deposit

4. EXPENSES Chairman’s Honorarium* Administration costs

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

2012 $’000

2 1 58 55 60 56

2013 $’000

2012 $’000

10 71 81

10 7 17

2013 $’000

2012 $’000

22 120 54 13 209

42 82 17 139

Parininihi ki Waitotara Trust

1. STATEMENT OF ACCOUNTING

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

6. WEBSITE Cost Less Amortisation Book Value

2013 $’000

2012 $’000

3 3 -

7. RELATED PARTIES During the year the Trust received interest income from, and invested funds with, its parent entity Parininihi ki Waitõtara Incorporation as follows: 2013 2012 $’000 $’000 Interest Income

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

2013 $’000

2012 $’000

Accounts Receivable

1,720 1,641

NOTES

PARININIHI KI WAITOTARA INCORPORATION Taranaki House | 109 Devon Street West Corner Devon/Robe Streets New Plymouth | New Zealand PO Box 241 | New Plymouth 4340