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Te pūrongo o te rau matomato
Ceo Report - Aisha Ross
Tākina mai ko te kawa!
Ko te kawa nā wai?
Ko te kawa nā Tītokowaru
Ko te kawa hau tapu o Parau kau o Tū kau
Ka iri te kawa kei runga! Ka iri te kawa kia rautāpatu te kawa ora
Ka iri te kawa kei runga kia tupu matomato te kawa!
Ka mau te kawa, ka hau te kawa, ka ea te kawa!
Heke mai te kawa ora!
E i ē ko te hotu o hotu mātiketike, ko te hotu o hotu mārangaranga
Ko te hotu o taku manawaora!
Ko tō manwaora, ko tōku manawaora!
Tūturu ō whiti whakamoua kia tina
Tina! Haumi e, Tāiki e
Nōku te māringanui ki te whakatakoto i te Pūrongo ā-Tau mō te Kōporeihana o Parininihi ki Waitōtara mō te tau i mutu i te 30 o Pipiri, 2024, hei Rau Matomato.
I am pleased to present the Parininihi ki Waitōtara Incorporation Te Rau Aroha Annual Report for the year ending 30 June 2024, serving as Te Rau Matomato/CEO now for a full financial year.
As we review the year, I’m reminded of the aspirational kōrero from our pāhake in the late 1960s,
‘Have confidence in ourselves, control our assets, build up its value by good management and pass on something that will be of practical benefit to our tamariki, something of which they can be proud, something that will be a living memorial to those of our present generation.’
As you read this report, you will get a sense that this kōrero is as relevant today as it was then. It is a touchstone that provides guidance and inspiration that strengthens our kaupapa, positions ourselves for a sustainable future, and builds on our collective legacy.
The year has been one of strategic significance as we progress a path of transformation for growth.
The world is changing as is the economic environment, coupled with specific environmental challenges, these factors have impacted financially and operationally. However, our strong foundations and approach to risk management and investment have enabled us to take control of what’s possible and navigate the challenges and choppy waters.
The need to adapt is essential to ensure we are fit for purpose, able to respond to challenges and realise new opportunities into the future. Te Rau Rengarenga / Committee of Management supported by Te Rau Manawanui / Management completed a full strategic review and approved the refreshed strategy He Rautaki 2033 – He Papa, He Tupu, He Ora, and other core strategic documents.
I would like to mihi to our whānaunga Tama Potaka and Claire Nicholson for their dedication and mahi over the past years as they retired during the year, and welcome both Toka Walden and Serena Fiso to Te Rau Rengarenga/ Committee of Management. These changes reflect your ongoing expectations of strong governance and leadership that ensures effective decision-making, guidance, and clear direction.
This report outlines the key operational highlights and developments that have shaped our transition this past year.
HE TĀNGATA
Our kaimahi are the internal heartbeat of our organisation. Kaimahi engagement and fostering of a culture founded in our values and legacy remains a key focus. New and existing initiatives aimed at ensuring kaimahi feel valued, informed, and connected to our kaupapa included Te Rau Mihiata, Business Intelligence sessions, Kaitiaki hui, Social Club events, Kurataiao Taranaki conference, PKW Whānau Day and Farms conference.
A critical need to focus on cost management and organisational efficiency led to the redesign of the Finance and Investment and Miraka Hipi teams, together with a focus on internal cost prioritisation and measures as we experience rising costs, interest rate pressure, and global market impacts.
We had a number of kaimahi move on to new professional opportunities within the year. I would like to acknowledge and mihi particularly to both Tonga Karena and Kirsty Riddell for their considerable mahi and meaningful contributions during their time with us.
HE WHENUA
The ongoing commitment to nurturing and developing our relationships with hapū is a key priority. Our Taiao team has regular engagement with hāpu across Taranaki and provide useful data and information and sharing of their mahi on the whenua and awa.
We have made progress in building productive relationships, particularly with Puketapu, Ngāti Tu and Ngāti Manuhiakai, Kānihi-Umutahi, and Hāpotiki. These relationships are critical as we explore opportunities for collaboration and mutual benefit.
Our commitment to the protection and enhancement of wāhi tapu sites across the whenua portfolio has also been a key focus this year. A collaborative approach is taken by our Taiao and Property teams who have been leading this critical work to ensure that our cultural heritage is preserved, respected and enhanced in all activities.
HE ORANGA FINANCIAL PERFORMANCE
As set out in the Chair’s report, a devaluation exercise has seen the PKW Group record a net loss after tax of $9.9m (2023: $1.0m loss), with total comprehensive loss recorded of $18.8m (2023: $2.2m loss). The annual swings in the valuation of our whenua continue to obscure our financial performance results every year.
Group expenditure was in line with expectations at $28m (2023: $26m). The rise in costs were due primarily to two significant on-farm challenges. The first challenge being drought-like weather conditions that needed to be carefully navigated through during the second half of the year, and addressing a significant animal health event within our Miraka Hipi flock.
On the global market scene and amidst ongoing uncertainty, commodity prices held relatively firm. However, the China market, a key export market for many of PKW’s investment interests, began to show signs of weakness through the second half of the year.
On the domestic front, interest rates remained high in an attempt to bring inflation under control. The intended impact of slowing down the local economy has been felt across a broad range of sectors as we saw businesses and families alike tighten their discretionary spending.
These factors have impacted our Papatupu (investment portfolio) in different ways, as set out in the detailed financial reports.
Despite the dry weather challenges on farm, PKW Farms LP recorded a respectable net profit result of $1.2m for the year. The milk payout this year fell to a blended price of $8.11kgMS (2023: $8.59kgMS). A portion of milk production volumes is hedged every year as protection from potential market shocks that may trigger a crash in the farmgate milk price. The average hedged price for this year was $8.52kgMS.
PKW Miraka Hipi LP recorded a net loss result of $1.4m. Although a year of losses were expected for this start-up operation, the result was exacerbated by an unforeseen animal health event.
Investment in SLC Ventures LP was a strategic decision to expand our Miraka Hipi interests beyond the farm-gate by holding an indirect equity interest in Spring Sheep, a business that collects our milk, manufactures, and exports to market. Spring Sheep has had a challenging 12 months, caused by a significant decline in demand for Ingredients in China. However in June 2024, Spring Sheep achieved SAMR accreditation to export self-labelled infant formula directly into the China market. This opportunity will allow Spring Sheep to progress the plan to diversify away from its reliance on the Ingredients market and utilise an alternative sales channel into China.
Port Nicholson Fisheries (PNF) posted a respectable result for the year, driven by strong market prices for kōura in China for most of the year, and favourable foreign exchange rates. However, market demand for kōura significantly softened in the final quarter, signalling upcoming challenges for next year.
Ngāmotu Hotels had a challenging year on the back of a slump in demand for accommodation from both business and leisure categories. This highlights how sensitive our Hotel investment is to the domestic market and how an expected fall in interest rates during the next financial year would be welcomed.
Harvest of the Mangaoapa Woodlot is underway, as we convert a long-held growth investment into cash. A fixed price harvest agreement is in place that provides PKW with certainty of returns in a volatile market. This fixed price approach has so far protected PKW from the declining China log market.
INVESTMENT FOCUS
Our investment strategy has been centered on balancing our portfolio. Reviewing asset performance and asset concentration, particularly within PKW Farms, we have broadened our focus to include food and fibre production opportunities, with an emphasis on emissions reduction and enhancing revenue.
In line with our strategy to diversify land use, we purchased back a leasehold property in December 2023 for horticultural or renewable energy development. While this initiative is still in the early stages, it represents a key component of our long-term strategy to explore sustainable and profitable alternatives in addition to our dairy farming investment.
This year marked the commencement of the harvest at Mangaoapa Forest, located northeast of Stratford in Ngāti Maru rohe. This milestone represents the first year of the forest's harvest cycle, contributing to our longterm investment strategy.
The second year of production at Miraka Hipi has been challenging, due to an animal health issue that affected both production levels and overall performance. Although these issues have been resolved, they underscore the importance of robust risk management practices and having diversity within our investment portfolio.
FOCUS FOR THE YEAR AHEAD
As we look to the year ahead, our strategic focus is the ongoing mahi in strengthening our organisation in respect of structure, expertise, and resourcing, in readiness for the future.
We turn to advancing the early stages of several key investment opportunities in Renewable Energy, Tapuirau property development, and exploring alternative land use and emissions reduction opportunities within PKW Farms.
Early planning is underway for the PKW 50th anniversary in 2026, which will be a significant milestone in our history and legacy. Additionally, we will tautoko Te Matatini ki Te Kāhui Maunga in Ngāmotu in February 2025, reflecting our commitment to cultural pride, identity, and celebration.
ACKNOWLEDGEMENTS
In conclusion, I would like to extend my deepest gratitude to Te Rau Rengarenga / Committee of Management, Management and Kaimahi, and Partners for their dedication, commitment and mahi throughout the year.
I also wish to thank our Rau Titikura/Shareholder whānau for their continued tautoko and belief in our people. Together, we will continue to build on our shared legacy, upholding the values that guide us and ensuring a sustainable future – He Tāngata, He Whenua, He Oranga..
Ngā tini manaaki,
Aisha Ross
Te Rau Matomato / Chief Executive Officer Parininihi ki Waitōtara Incorporation
