Te Pūrongo o Te Rau Toi Ariki - Chairperson Report Dion Tuuta

Ka mate rū kaihoro, ka ora rū kai whakatonu!

Rārangi maunga tū te ao tū te pō. Rārangi tāngata ngaro noa, ngaro noa. Tauārai o te pō, ko Matariki i te Takurua āio., ko ngā pōkai kura me ngā matakūrae i whakangaro atu rā ki Wainukumemeha ē. Tītoko ko te ao mārama, ko te tangi o te wharauroa ko te tangi o te kawekaweā, ko te aroaro mahana tērā e taka mai ai ko te āhurutanga o te tau e - kōia!

Kia tōmairangitia e au te kupu o raurangi, te oha o te rau toi ariki, te rau whārangi o te ora. kia whakamoea e au te tau i pahemo, te tau whakataritari te tau o te mate urutā ki roto i te whare o Hineruakimoe. Nei rā ko te puipuiaki e tangi īereere ana ki uta ki tai, kia whāriki kau ake i te takapou kōrero, i te takapou wānanga, i te takapou taonga o Parininihi ki Waitōtara. No reira e kai o mata ki tēnei purutanga mouri i manawa hikitia ai e te ringa, i whakahōkai ai i te waewae, i hīnana ai i te tukemata.

Rire rire hau, pai mārire.

On behalf of Te Rau Rengarenga o Parininihi ki Waitōtara, the Parininihi ki Waitōtara Incorporation Committee of Management, it is my honour and privilege to present the annual report for the financial year beginning 1 July 2021 and ending June 30, 2022. It has been a year of significant change and new ventures for your Incorporation while dealing with the challenges of the second COVID-19 lockdown.

In December we farewelled Hinerangi Raumati, after 15 years of service to the Committee of Management, with ten of those years as chair. We also farewelled Bev Gibson and David MacLeod, who provided leadership for our Incorporation and our shareholder whānau for 20 years, collectively.

At the 2021 hui ā-tau we welcomed three new Board members to assume the responsibilities of governing the legacy left to us by our tūpuna, Anne-Marie Broughton, Liana Poutu and Tama Potaka. Anne-Marie, Liana and Tama are well-known within the PKW shareholder whānau and bring excellent skills and longstanding personal connections and networks which will strengthen our Incorporation.

Above: Ōkahu Inuawai (me ētehi atu) whānau, PKW and suppliers undertaking the Whakatō Mauri and Tāinga Kawa ceremony at Koetuku and Waitokorau Farms (Miraka Hipi Farm).

Anne-Marie, Liana and Tama have already made a great contribution to our mahi, and we are looking forward to continuing our journey with them over the next year.

Together we have been taking advantage of our new perspectives by reviewing our strategic plan and interrogating our thinking and vision to ensure that the values and pathways we are following still serve us well. In an everchanging economic and social climate, ensuring the relevance and effectiveness of our strategic approach is essential to be sure we are carrying out our responsibilities fully.

As a board we are very much aware of the scale of these responsibilities. Parininihi ki Waitōtara is a significant business that needs to deliver the performance expected by our shareholders in a way that recognises our values as a collective whānau.

The diverse opinions and constructive debate around the Board table are an essential part of ensuring we provide the clear, effective, and strong governance the Incorporation requires and our whānau deserve. We have made great progress this year, and I would like to acknowledge and thank my fellow Committee members for their support, integrity and contribution in all we undertake.

INVESTMENTS

A key focus for the Board and our management team this year has been the launch of our Miraka Hipi – Sheep Milk venture. The strategic decision to make this exciting foray into sheep milk production was made after considering the ever-evolving regulatory landscape, the impact of climate change and our responsibility as kaitiaki of our collective whenua for future generations.

Finding sustainable alternative land uses which build on our existing capabilities, deliver a sustainable return on investment, and provide opportunities to our whānau is not an easy task – there is much to consider, to evaluate and to understand.

Sheep Dairy is a growing industry with consumer demand for ovine (sheep) milk products outstripping that of bovine (cow) offshore and our domestic market looks to be following this trend. The high nutritional content of sheep’s milk means it has potential in many different areas, such as infant and aged nutrition, care of the sick and sports performance.

The reduced environmental impact sheep dairying has on our whenua, and the alternate land use opportunity it brings also align closely with our strategic approach.

The venture also provides us the opportunity to form and strengthen our relationships and connections with Taranaki iwi, as our growth plan calls for more sheep dairy units and potentially a production hub here in the region. The connections needed to make this happen have already been seen with the involvement of Ngāruahine hapū Ōkahu Inuawai (me ētehi atu), of Aotearoa Pā, in the sourcing and placing of the mouri stones at each of the two new farms, and the gifting of their names Koetuku and Waitokorau.

Above: Ōkahu Inuawai (me ētehi atu) whānau and PKW kaimahi undertaking the Whakatō Mauri ceremony at Koetuku and Waitokorau Farms (Miraka Hipi Farm).

It was wonderful to see so many at the blessing of the new farm and buildings at Koetuku despite the torrential rain. The arrival of the first lambs, the first milking and the first tanker collection have all been significant milestones along the way.

PKW has also become an investor in SLC Ventures, which is a 50% shareholder in the Spring Sheep Milk Co, our partner in the Miraka Hipi venture. This strategic move gives us value chain exposure helping us to both protect and leverage our new business channel going forward.

PKW FARMS LP

PKW Farms LP has achieved a fantastic result for the year producing 2,968,000kgMS under challenging conditions presented by the pandemic lockdowns. The division’s focus on cost control and risk and margin management, combined with an improved milk price has contributed to PKW’s strong performance for the year.

As part of its drive to improve its strategic focus, PKW Farms LP divested Farm 6 on Opua Road to streamline the business, improve productivity and achieve the Incorporation’s expectations of meeting sustainable financial return.

The business has also continued working towards having minimal impact on the environment in its operations, with all farm units now having effective and efficient effluent management systems that ensure our streams, waterways and awa are protected.

On behalf of the Parininihi ki Waitōtara whānau I would like to acknowledge the Board of PKW Farms LP for their guidance of our farming business. In particular we acknowledge the enormous contribution of Richard Krogh, who has been Chair of the PKW Farms Board since 2019, as he steps down from his position for whānau reasons. We will miss his steady hand, clear decision-making and strong leadership and we wish him well. The process for appointing a successor is presently underway.

FINANCIAL PERFORMANCE

This year we have returned a net profit after tax of $6.1m (FY20/21 $42.8m), primarily due to downward movements in the fair value of Fonterra shares and unimproved land, which contributed to a shareholder net equity position of $315.4m. An excellent operating profit after tax of $11.75m was also reported, which led to a recommendation by the Board of a $1.95 per share dividend distribution and an additional special $0.45 per share dividend for a total shareholder payment of $2.40 per share.

FUTURE CHALLENGES

There are several challenges ahead we need to consider as the Parininihi ki Waitōtara whānau.

A key element of our kaupapa is the connection between PKW and its shareholders. Ongoing fragmentation of shares has potential to reduce the level of engagement we need with our owners to understand their thoughts and wishes and make appropriate and strategically aligned decisions.

As an organisation we need to find new ways to connect with those who have not been part of the PKW journey up until now, to help them understand their reason to connect with us.

The voices of our shareholders must be heard, the differing perspectives and viewpoints shared, so we can steer our collective waka in the right direction, in accordance with our collective values. Because of this I would urge all owners to participate in the bi-annual shareholder survey – more details available soon.

CLIMATE CHANGE RESPONSE

The Government’s regulatory response to the impacts of climate change will have significant impact on the way we run our businesses.

Our kaitiakitanga strategy and climate change strategies are key pieces of mahi that have been underway for some time to understand the coming changes and how best to mitigate risk to our businesses.

One area we are focusing on is a carbon mitigation strategy, with the aspiration to become a carbon neutral business. This will involve the assessment of all our investments to establish what needs to be done to offset our overall emissions output.

One of PKWs earliest joint ventures, the Mangaoapa Forestry Block, is now due for harvesting over the next few years and so offers the potential to be used for carbon banking going forward. There is much to learn and discuss in this area to ensure that any strategy is one that aligns with our values and vision and delivers a tangible response to this very real threat.

PORT NICHOLSON FISHERIES LTD

The global pandemic, while affecting all our operations, had a significant impact on Port Nicholson Fisheries Ltd, PKW’s live lobster export investment, with the Chinese market slow to recover from the shutdowns over the past two years.

This year, the 10th anniversary of the business, will see the export factory begin development of a new site more suited to the future plans of the business.

This move is being made in a joint venture with Moana New Zealand and signals an exciting milestone in the development of the business.

PNF is equally owned by PKW, Ngāti Mutunga ki Wharekauri and the Iwi Collective Partnership.

ACKNOWLEDGEMENTS

It would be remiss of me to sign off without acknowledging the dedication and mahi of our CEO, Warwick Tauwhare-George, and the entire executive management team, who bring such skill, knowledge, and insight to their roles each day. Thank you.

I also mihi to all of our kaimahi for their efforts during another difficult year. The challenges and demands have been considerable and all those who work for PKW, on our whenua, in our investments and on our behalf have responded with professionalism and determination to keep us moving forward. We hope that the year ahead will see us settle into this new normal.

Finally, I want to thank our shareholders for their on-going support to the PKW Committee of Management and I thank you for your engagement and care for your Incorporation.

Ngā mihi

Dion Tuuta

Chair of the Parininihi ki Waitōtara Incorporation Committee of Management