Wana te tī - Discipline, resilience & strong recovery

Stringent planning, discipline and better than expected economic recovery from the 2020 COVID-19 crisis have delivered strong financial results for the year just ended.

In its Annual Report to be released next month, Parininihi ki Waitōtara will report a profit of $50m for the 2021 financial year – but rautitikura / shareholders are being cautioned that such results are an anomaly in the current economic climate.

“It has been a great year,” Te Raumāhorahora / Chief Financial Officer Joe Hanita says, “But is it repeatable in these uncertain times?”

Of the annual profit, $15m is attributable to operating profits and cash generated, allowing Parininihi ki Waitōtara to pay an increased dividend per share of $1.75, up 20 cents on last year’s dividend of $1.55.

The remaining $35m is due to an increase in the value of underlying assets and is therefore not distributable.

Parininihi ki Waitōtara battened down the hatches when the country was disrupted by the Coronavirus outbreak, setting a consolidation budget for the year focused on protecting revenue, disciplined cost control and strong cashflow management.

“We were in lockdown in March and April last year when we were writing our budget and setting the tone and focus for operations in the 2021 financial year. The aim, despite the uncertainty, was to focus on priority business as usual.

“As well as protecting our income streams, the budget prioritised managing costs and consolidating spending. Ultimately, the income generated and received and how much we spent determined our cashflow. Last year more than ever, cashflow was king.”

The team also kept an eye on the future, putting in place measures to support resilience, recovery and plans for growth.

Two joint venture businesses in particular were impacted heavily by the pandemic: Ngāmotu Hotels, which owns Novotel New Plymouth, and live lobster exporter Port Nicholson Fisheries.

“Our farming business and commercial properties were not significantly impacted, but the hotel closed during the lockdown period and lobster sales dried up. The focus shifted to supporting those businesses to recover – and they did,” Joe said.

A careful planning exercise focused on preparations for resuming a growth mindset when the time was right again to take up new acquisitions and investments.

“There were no solid commitments made but it was important to prepare for the future,” Joe said.

The second part of the growth agenda when setting the 2020/21 budget projection was to protect the dividend to rautitikura/shareholders, to at least ensure any payment compared to the previous year (2019/20) could be maintained.

Following the strong operating results for the 2021 financial year, the Board is pleased to be able to increase the proposed dividend payment to assist whānau through the ongoing economic uncertainty. Parininihi ki Waitōtara is proposing to pay out just over $2m in dividends.

“Increasing the dividend is a signal of the strength of the business and its growth. As we perform to a higher level it gives more opportunity to deliver greater benefits to whānau,” says Joe.

“We had a really strong operating financial performance for the year. Our active businesses – the farming business, property interests, head office and support services – all performed well financially.

“Fonterra had a strong year, milk prices were good and we were able to exceed milk production targets. Our joint venture interests Ngāmotu Hotels and Port Nicholson Fisheries exceeded expectations. They recovered strongly and performed well against the conservative numbers in our budget, producing good cash flows.

“Overall, it is a strong business performance driven by the dedicated focus for the year.”

The Annual Report will also show significant capital growth in the asset base.

“The value of the assets we own went up significantly during the year, reflecting a very positive market,” Joe says. “Capital growth was strongest for our investment property, whenua in our active businesses and livestock values. These are all non-cash value increases, meaning they can’t be realised or turned into cash without sale and therefore do not affect proposed dividends to our rautitikura / shareholders.”