Morena. Good morning, everyone. I'm Sarah Brown, Independent Director and Chair of the Audit Committee of PGG Wrightson Limited. I'll be chairing this meeting on behalf of our Chair, Joo Hai Lee. I'd like to welcome you to our 2022 annual shareholders' meeting. This is the first occasion PGG Wrightson has had a hybrid meeting, with some attending in person and others via our online platform. Before we get started, there are a few housekeeping matters to cover. In the unlikely event of an emergency during the meeting, we ask meeting attendees to please make your way to the nearest exit to the forecourt area. The convention center staff will assist throughout the evacuation process. In case of a seismic event, please take cover, and staff will advise and assist should we need to evacuate the building. Toilets are located at the back of the room.
We are recording this meeting, and the presentation will be posted on our website later today. I confirm that we have a quorum, and accordingly, I declare the 2022 annual shareholders' meeting open. We will refer to PGG Wrightson as PGW throughout the presentation today. We're delighted to host our meeting in Hawke's Bay, a region that's very important to our business. Unfortunately, last year's meeting was planned to be here, and it had to be canceled and held online due to uncertainty surrounding COVID. This is the fourth occasion PGW has hosted our annual shareholders' meeting in Hawke's Bay since 2011, and we're delighted to be back. We held our 2011 meeting in Hastings. In 2014, we were here in this very venue, and we hosted our 2016 meeting at the Mission Estate Winery in Taradale.
Today's online meeting is being held via Computershare's online meetings platform, which allows shareholders, proxies, and guests to attend the meeting virtually. All attendees can watch this live webcast of the meeting and read the company documents associated with the meeting. All shareholders attending, whether in person or online, can participate in the meeting and submit questions and cast votes. If you're joining us online and have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen anytime. Type your question into the field and press Send. Your question will be submitted. Should you require any assistance, you can type your query, and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on 0800 650 034.
Please note that while you can submit questions from now on, we won't address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, they might be amalgamated together. Finally, due to time constraints, we may run out of time to answer all your questions. If that happens, we'll endeavor to answer them in due course via email. Accordingly, I encourage online participants to submit your questions to provide us with the best opportunity to respond. Voting today will be conducted by way of a poll on all items of business. If you're eligible to vote at this meeting, you'll be able to cast your vote under the Vote tab. Once the voting has opened, the resolutions will allow votes to be cast.
To vote, simply select your voting direction from the options shown on the screen. You can vote for all resolutions at once or one by each resolution. Your vote has been cast when the tick appears. To change your vote before voting closes, you can select Change Your Vote. You've got the ability to change your vote up until the time I declare voting closed, which will be at the close of the meeting. In order to provide you with enough time to vote, voting is now open on all items of business. The resolutions will now be available in the Vote tab. Please submit your votes at any time. The PGW board had one change to its membership during the year. Rodger Finlay retired from the board on the 30th of June, 2022, having served as the Chair of the board for three years.
The board has previously acknowledged and thanked Rodger for his leadership during his tenure. On the first of July, 2022, Joo Hai Lee was appointed chair, and Meng Foon and Garry Moore joined the board as independent directors. Garry is also a member of the audit committee. Before we begin the formal business of the meeting, I would like to introduce the board, who are all attending our meeting today. Seated alongside me is PGW's Chair, Joo Hai Lee. In the first row, we have Independent Director Meng Foon. Independent Director Garry Moore. Director U Kean Seng. And Independent Director Dr Charlotte Severne. Almost all members of the executive team are here today. Seated alongside me is PGG Wrightson's Chief Executive Officer, Stephen Guerin.
Morning.
Along with Chief Financial Officer Peter Scott.
Morning.
General Manager Corporate Affairs, Julian Daly, who is also our company secretary. I'd like to acknowledge other members of the executive team who are in attendance. GM Wool, Grant Edwards. GM Livestock & Real Estate, Peter Newbold.
Morning.
GM People and Safety, Rachel Shearer. An apology has been received from GM Retail and Water, Nick Berry. I'd like to acknowledge that we have representatives from our share register, Computershare, and BrokerWeb Risk Services, our insurance broker partner here with us in Napier. Bruce Loader from our auditors, Ernst & Young, is joining us online. Other than Nick Berry, no apologies have been notified prior to the meeting. Are there any apologies from the floor that we should note in our minutes? The company secretary has confirmed that the notice of meeting was sent on 20 September 2022 to all registered shareholders and to other persons entitled to receive that notice.
I can confirm that the minutes of the company's previous annual shareholders meeting, held virtually on 6th December 2021, were approved as a true and correct record at the board meeting on 22 February 2022. The minutes of the meeting are posted on the shareholder information section of our website. The financial statements and the reports of the directors and auditors for the year ending 30 June 2022 are set out in the company's annual report. On 20 September 2022, the annual report was posted on the company's website and our NZX page, and a copy of the report has been sent to shareholders who had requested one. Please note that we'll refer to both GAAP and non-GAAP performance issues.
We use operating earnings before interest, tax, depreciation, and amortization, or operating EBITDA, as a key measure of performance, and I encourage you to refer to our full accounts for details of how this relates to GAAP measures. I can confirm that 342 shareholders have appointed proxies for the purpose of this meeting in respect of approximately 37 million shares. I've covered the opening formalities, and I will now move to the general business of the meeting. I'll begin by providing an overview of the highlights of the 2022 financial year, and then I will hand over to our Chief Executive Officer, Stephen Guerin. Stephen will provide the financial and operational overview for individual businesses, and he will also summarize how our business is trading for the current financial year to date.
I will conclude our presentation by discussing our forecast guidance for the full year to 30 June 2023. An opportunity to respond to questions will follow before we move to the formal business of resolutions that will be put to the meeting for voting. As outlined in the notice of meeting, the business of the meeting comprises four ordinary resolutions relating to the election of Meng Foon and Garry Moore as independent directors, my re-election as independent director, and authorizing the board to determine our auditor's fee. Our operating EBITDA was NZD 67.2 million, which was up NZD 11.1 million or 20%. Net profit after tax was NZD 23.4 million, up NZD 1.6 million or 7%.
Operating revenue of NZD 952.7 million, an increase of 104.9 or 12.4%. Gross profit of NZD 248.5 million, an increase of 11.3%. Net cash flow from operating activities of NZD 23.7 million, which was down 58.9%. Total shareholder returns up +38%. Fully imputed dividends for the year of NZD 0.30 per share. These exceptional results are a record for the business, and it's an outcome the PGW team is very proud of, and especially after a really challenging year at many levels.
Like all businesses, we have had to navigate managing COVID-19 protocols, dealing with a high proportion of health-related staffing absences, responding to supply chain challenges, and resourcing the business in an extremely tight labor market. Group operating EBITDA of NZD 67.2 million is an outstanding result and an increase of NZD 11.1 million or 20% on last year's strong result. Normalized EBIT, excluding non-operating items, increased by 36% compared to FY 2021 to NZD 39.1 million. Importantly, these results were achieved as a result of significantly higher revenue of NZD 952.7 million, up NZD 105 million or 12% from FY 2021, with margins broadly in line with last year. NPAT in this financial year was NZD 24.3 million, which was up NZD 1.6 million or 7% on last year.
We launched our group strategy refresh in 2021, which builds on our proud heritage and strong fundamentals, while focusing on the fast evolving future landscape for agriculture and growth opportunities. The strategic pillars highlighted in the strategy provide clarity and focus, and we have been embedding these into our operations. The strategy leverages our collective nationwide reach and scale, and also our differentiated offering. In particular, our technical offering and innovation focus to grow our market share and further cement PGW's position as leaders in the field. We have targeted three results and measures areas as part of our group's strategy to track our performance. These measures relate to our financial performance, safety performance, and customer experience. The measures cover three important areas where we want to grow and improve. Financial performance measures. Our internal financial performance measures include two key indicators.
First, we target growth through the cycles in excess of Consumer Price Index, CPI. This is measured by comparing our normalized earnings before interest and tax, EBIT, growth against the CPI. For FY 2022, we achieved a normalized EBIT growth of 36%, which is 29% above CPI. We normalize EBIT by excluding non-operating items, impairments, and fair value gains/losses. This was an extremely pleasing growth performance against our strategic KPI. A second financial measure that we target is to achieve a Total Shareholder Return, TSR, exceeding 10% per annum. TSR is calculated annually based on the movement in our share price plus the dividends paid. The TSR for FY 2022 was +38% and significantly exceeded our KPI by +28%. Health and safety measure. The health, safety, and well-being of our people is of critical importance to us.
To track our safety performance, we measure our Total Recordable Injury Frequency Rate, known as TRIFR, performance, so we can demonstrate continuous improvement in our safety outcomes. For FY 2022, PGW achieved a TRIFR reduction of 3% versus our FY 2020 baseline. This reflects well on our group-wide focus to continue to improve our safety performance outcomes. Customer experience measure. A key feature of PGW's success as a business is the trust our clients place in our company, people, and brand. Given customer experience is so important to our continued success as a business, an objective in our strategy is to target incremental improvement in our PGW group Net Promoter Scores or NPS. NPS is a commonly used measurement of customer satisfaction and loyalty, which is based on a customer's likelihood to recommend a service or business.
For FY 2022, we achieved a positive 5-point improvement in PGW's NPS from last year's customer research. This positive result is consistent with our KPI to continually strive for incremental improvement. I'll now ask Stephen Guerin, our Chief Executive, to provide an operational overview.
Thank you, Sarah. Morning, and good morning, everyone. I'm delighted to be here at the Hawke's Bay as part of the AG meeting today. PGW recorded operating cash flows during the year of NZD 23.7 million, which benefited from our strong operating EBITDA performance. As a business, we invested in working capital during the year, including growing our range of GO-STOCK receivables to NZD 66.1 million at the 30th of June 2022. An increase of NZD 20.2 million or 44% from 30 June 2021. In addition, inventories were NZD 20.6 million higher than 30 June 2021, which reflects a conscious decision to have product available for clients due to challenges in shipping and supply chain, due to the impact of COVID-19 challenges, together with higher levels of inventory from price increases for the same reasons.
Capital expenditure of NZD 8.8 million was NZD 2 million higher than 30 June 2021, which was impacted by a slowing in the implementation of projects as a consequence of COVID-19 related disruptions. Our net interest-bearing debt was NZD 32.8 million as at 30 June 2022. PGW renewed and extended the bank facilities for a three-year term in late 2021. It was pleasing to see PGW recognized as a finalist in the 2021 Deloitte Top 200 for outstanding change in business performance among New Zealand's largest companies. During the year, we refreshed our websites and our client online account services portal. New websites have a consistent contemporary design and provide an improved user experience. Our updated client online account services portal provides enhanced performance with the capability to add new features and functionality over time.
We also initiate a company-wide business improvement program that will simplify PGW's IT systems and streamline our processes, so we can be more flexible, secure, and efficient when it comes to the fundamentals of our operations and client service. This program of work is underway and will span several years, and we look forward to the operational benefits and efficiencies this will deliver over time. As at 30 June 2022, PGW employed 1,844 employees, including casual, fixed term, commissioned, and permanent staff. A continued focus on investing in our people to provide them with the tools and competencies to succeed in their roles sees us introducing our revised people and safety strategy in FY 2023 to best support the refreshed group strategy. Three key pillars surround the strategy.
Bringing leadership and expertise, safety and certainty, and recognition are the anchors on strategy and provide a foundation over the coming three years. PGW recognizes the importance of robust learning and development initiatives, and we continue to ensure our programs are fit for advancing our group strategy. With a wide-ranging suite of safety and wellbeing, sales, leadership and management skills, alongside technical competency courses available to our people, both in person and through e-learning modules, we're encouraged by the growth and depth of expertise in our business. Our people's can-do attitude as we responded to the COVID-19 challenges consistently evolving was appreciated as we best managed the challenging environment to ensure the ongoing safety and wellbeing of our teams and communities.
The pandemic brought disruption to our businesses in a myriad of ways, and we are proud of the way our team members' commitment to the business and clients and communities under these demanding circumstances. Two key programs which were successfully reestablished after the COVID-19 lockdowns have been our PGW Academy and trainee programs, which focus on developing our internal talent pipeline and the leadership program, which combines proven leadership principles with what is critical in our PGW context. With a revised safety and wellbeing roadmap and recognized resourcing model, PGW is honoring our commitment to continuous improvement in our vision to embed a safety culture of citizenship, whereby safety is a core part of everyone's role and is a shared responsibility.
I'll start that paragraph again. A cornerstone of the revised roadmap is ensuring that we have a disciplined approach to controlling our critical risks. We partnered with HCC Global and spent time with our people to best understand firsthand the risk management challenges they face in their daily work and to identify opportunities for improvement. The popular Zero Incident Process, ZIP, as we refer to it internally, training sessions continued across the company. Development of our environment and sustainability strategy is a PGW Group strategic priority, and we have been progressing our sustainability journey. We are working towards determining our environmental and sustainability positioning, objectives, and measures, and embedding these in everything we do. During the year, the environmental, social, and governance or ESG working group engaged with colleagues across the business and with our suppliers to determine PGW's carbon emissions.
We now have an established process in place to capture our emissions, so then we can report on these in the future. We undertook a materiality assessment to determine which ESG factors are most important to our stakeholders and material to our business objectives and activities, as well as the societal and environmental impacts. Further information about our ESG initiatives and our materiality assessment are included in PGW, in the PGW commentary and ESG sections of our annual report. I'll now turn to our operational highlights for last year. Some of the operational highlights we achieved over the year include the following: Our Fruitfed Supplies technical research and development or R&D team conducted 59 new product trials across the Bay of Plenty, Tasman region, Pukekohe, Canterbury regions, and here in the Hawke's Bay.
Nearly a third of all the treatments in our R&D trials this year were biological products, which are more environmentally friendly alternatives to the current chemistry available. Agritrade released our Time Capsule proprietary product in the Australian market under the Zinc Capsule branding. Time Capsule's animal health facial eczema treatment for livestock. Our real estate business experienced the highest volume of rural sales in a decade. A 16% increase in rural sales for the year versus FY 2021. Our people completed more than 15,000 online learning and compliance courses. It's great to be here, back here in the Hawke's Bay, which is such an important region for our business, as Sarah has mentioned. Hawke's Bay is a region as a wine and food province, but there are also amazing beaches, stunning scenery, and some wonderful art deco architecture.
PGW is founded on a legacy of the brands within the region. Two of significance are Williams & Kettle, which was founded in Napier in 1891, and the New Zealand Fruitgrowers Federation, which operated its first store in Hastings in 1920. Therefore, as a company, we have worked closely with customers in Hawke's Bay throughout our long history, and in many cases, we have relationships that span many generations. Our business covers the whole region, which could be considered one of the engine rooms of PGW business due to the wide diversity of land type, land usage, all built around the unique climate of the area. These are areas of strength in our business and the region alike, being our livestock, wool, horticulture, and viticultural businesses.
There have been significant changes in land use across the region. Critically, everything in the bay is water. While you wouldn't perhaps realize it today when you're driving around the region, Hawke's Bay can be prone to localized, widespread drought, with extended periods of below-average rainfall. Significantly, droughts were experienced on several occasions in the last couple of decades. Hawke's Bay normally has a temperate climate which is neither too hot, cold, nor too wet, although it does enjoy some very hot days during summer. Wairoa in the north is home to our retail business and real estate office. There's a base for local livestock agents. Wairoa Sale Yards operate in association with local farming entities and families. Our Napier Woolstore is the only North Island hub for our PGW wool business and our North Island Auction Center is also located there.
Hastings could be considered a mega site as there are two retail stores on site, our rural supply store and our Fruitfed supply store, our real estate office, and our regional office. Directly across the road is the Stortford Lodge Saleyards facility, which hosts two sales a week throughout the year. It provides a hub through which much of our livestock business in the Hawke's Bay revolves. Waipawa around the south or central Hawke's Bay provides a base for a full-service rural supply store as well as our real estate office. There are a vast array of support services working from these sites. Our livestock, wool representatives, technical field representatives, customer services representatives, category support managers, our crop monitoring teams, our R&D teams, product management, internal customer services, alongside our real estate agents.
Across the wide region, we have 125 colleagues work in our business, and this number increases during the very busy spring season. We have clients with significant local, national, and international export operations such as Rockit Apples, Mr Apple, Bostock, Brownrigg Agriculture, and Te Apiti Farms, who utilize a range of PGW services. We have witnessed significant land use changes in recent times, and we have seen Hawke's Bay transform from predominantly sheep and beef farming area to a diversified region with strong viticultural and horticultural sectors. In response to these developments, we've adjusted our business structure to reflect these changes so we can continue to support our customers with the products and services that they require.
The board and the executives spent an enjoyable morning yesterday at Otamauri Farm with Paul and Cathy Sherwood, who are second-generation farmers on the land. Paul and Cathy were great supporters of PGW Wool and our rural supplies business. Otamauri Farm farm around 3,000 ewes, 800 hogget replacements. They also finish 5,000 lambs and 400 rising two-year-old heifers each year. Their cropping is based around finishing stock annually and growing our capital stock. I'll now discuss the performance of our two operating groups, Retail and Water, and then the Agency group. Our Retail and Water business incorporates rural supplies, Fruitfed Supplies, Agritrade, and water. Retail and Water's operating EBITDA was an impressive NZD 52.5 million, up NZD 15 million on the prior year. Our Retail and Water business performed extremely well and achieved an outstanding result with new highs.
Our core focus remains to add value to our clients' businesses, much of this through the superior technical ability of our people. During the year, we continued to invest in training our people from both a technical and sales perspective. Our commitment to personal development and upskilling the staff supports a very stable and knowledgeable workforce. Our clients see the value and the expertise of our people, and we continue to see new clients coming into the stores and asking groups to come on farm or orchard. This is reflected in the incremental market share gains we are seeing.
To achieve these results, our teams have moved increased product volumes through our store network. Our investment in a logistics model has assisted us in delivering product on farm and on orchard in a timely and efficient manner, which ensures our rep force have more time to give our clients valuable advice. COVID-19 has caused increased uncertainty and stress, especially among our frontline teams. As COVID-19 spread throughout the region, it became a challenge to keep our stores open at reduced staffing levels. We've developed a plan to deal with temporary closures and staff move between stores to patch gaps to keep the doors open for service for our clients. Our teams have been incredibly resilient, and the key focus on servicing our clients in a challenging and rapidly changing environment. Supply chain disruption has continued and has impacted timelines and sourcing products.
Being able to get the right product to our clients at the right time has highlighted the importance of strong relationships we have with suppliers. To help mitigate supply chain risks, we have also sourced product earlier and carried more inventory than when we would have historically. Our e-commerce channel continues to increase sales and the number of orders and transactions in the second year of operation. A positive cash-flow impact of e-commerce channel is that it has showcased our product range online and contributes to a boost in-store cash sales and increased the number of inquiries the business receives. Work has commenced on a new build for store operations in Richmond, and we have planning underway also for Timaru and our Ohakune retail stores. It's been an outstanding year for the Rural Supplies business.
Through our client-focused offering, we have seen growth in a relatively tough market. Rural Supplies has sustained the momentum of recent years and has investigated opportunities to expand into adjacent season categories which were unmet, which have unmet client demand. Our reps continue to increase the usage of technical platforms which streamline their day-to-day activities and make their interactions with clients more efficient. An investment in our people through training with a focus on sales to ensure we are supporting our clients with the right advice, the right products for the job, and by providing a welcoming environment in our stores. Our promotional activity for Rural Supplies showcases our people and our expertise in the field, and we have more stores and reps than any others servicing the sector.
Our stores and people are part of the local communities in which they operate, and as a rural business, we are proud of their investment in the regions. Fruitfed Supplies had another excellent year with new operating EBITDA and revenue achievements. We've maintained a high market share across our horticultural sector and categories and continued to build relationships as a key supplier in the wire and imports in the viticultural industry. We continue to see significant investment by clients in large horticultural developments. Fruitfed Supplies has been well placed to benefit from these developments in supporting supply of significant amount of capital equipment. Many of these developments that we have assisted with over the past few years are now coming into production. Fruitfed Supplies is generally seen as the logical partner for clients as their investments transition from development into production.
Our corporate client base is expanding, and we have grown a number of long-term agreements in place with our customers. Land use change continues with a number of growers, including the corporate market, diversifying their portfolios and investing in the horticultural sector. The vegetable sector is a growth opportunity for Fruitfed Supplies, and we've increased our market share in this area through a number of targeted initiatives. A full marketing plan campaign includes promoting the brand and services offered and a refreshed Fruitfed Supplies website we delivered during the year. A technical team conducted a number of R&D trials across the sector, looking for new products and chemistry that will help and support our clients. A focused sales training program was also rolled out to increase the knowledge of our frontline staff.
Agritrade, our wholesale business division, manufactures, sells, and distributes products to improve farmer and grower production. Agritrade has continued to perform well over the past year. This was despite COVID-19's supply chain challenges, causing volatility in sourcing products and price increases which have been borne by the total supply chain. During the year, 12 products that were new to New Zealand market were commercialized, including Cervidae Oral, a triple deer drench, which is the only registered deer product of its kind in the market in New Zealand. Our Zinc Capsule for facial eczema in dairy cattle was launched in Australia. Internationally, shipping delays combined with domestic logistic issues and challenge have caused challenges.
The fragility of the international freight system and increased costs highlight the importance of strong relationships the team have with our partners, which assisted ensuring the flow of key products and imports to our clients at the right time. Implementation of our water strategy has continued to increase business with new and repeat clients. Technology initiatives, including improving our client asset management system and online tracking of pivot builds to increase efficiencies in project delivery. Product shortage and shipping disruptions caused delays in product delivery to PGG Wrightson Water, as expected to hinder project completion in the near term. Our water technicians completed certified training with Valley Irrigation, resulting in the team being the only Valley distributor in New Zealand who can offer an eight-year extended warranty. The team have also been honored with a Valley 365 Asia-Pacific Largest Subscription award. Turning to our agency business.
The agency group incorporates livestock, wool, real estate, and real estate businesses. Operating EBITDA was NZD 21.8 million, down NZD 3.3 million on the prior year's strong result. Our livestock business performed well in a challenging climate, with higher revenue and operating EBITDA achieved. The strong values achieved in the dairy livestock were supported by an increase in tallies and promotional links to bidr, our hybrid sales model. The South Island recorded its strongest trading performance in all classes in a decade. Solid values were reached in all categories, especially cattle and sheep, which was compensated by a reduction in tallies. During the year, our GO-STOCK Dairy product was launched. GO-STOCK Dairy is an extension of our GO-STOCK grazing contracts, which are continuing to grow with increased uptake projected stock volumes at these high values, high levels, highest levels.
PGW's online trading platform, bidr, continued to grow its database of buyers. This was bolstered by the successful launch of live streaming of cattle sale yards in a number of sale yards, as well as continued demand for on-farm hybrid ops for auction coverage. Although the velvet business experienced shipping delays and port closures in China, the outlook was positive, with further sales growth predicted in the Asian markets. During the year, PGW's velvet team exported its first ever dry processed shipment of velvet to China. The dairy team have successful year with both live sale numbers and prices on the rise. Merino prices are now recovering back to the near five-year average and are forecast to lift as logistical challenges reduce. Strong wool market remains challenging, and then this has been accentuated by the pandemic-related disruption negatively impacting on demand.
Fine wool prices remain solid, with Merino being supported by high value grow contracts and healthy auction values. Our wool contract business grew, and our client base benefited from fine wool, organic fine wools, organic wools, and crossbreed lamb wool contracts delivering good premiums. We also saw a pleasing increase in wool volumes exported compared to last financial year. The team did well in managing the wool flow through our four wool stores and onto our overseas clients in what has been a very difficult season. We are pleased with the continuing growth of PGW's wool, PGW Wool's Integrity Program, which provides quality standards and assurances to international marketplace around consumer expectations.
To demonstrate our belief in the future of this naturally sustainable and biodegradable fiber, we have made significant investments in machinery and our logistical operations, and we have employed new trainees into the wool business. Our real estate business has enjoyed another successful year. While the returns of the residential and lifestyle channels have been challenging, sales volumes and values of our rural properties have been strong. The growth of rural property segment benefited from our increased market share and a number of property sales exceeding NZD 30 million, with a kiwifruit property achieving a record NZD 2 million per canopy hectare. We anticipate continued solid performance in the rural market segment with favorable spring appraisals and listings due to continued horticultural growth and carbon forestry interest in sheep and beef properties.
This business expanded during the year through the acquisition of Real Estate New Zealand in Ashburton, and our Te Awamutu Real Estate office moved into new premises. After the very wet winter, soil moisture levels are currently ranging from normal to well above normal across the country. However, this has delayed some planting, the application of some inputs, and the installation of some capital equipment, such as wind machines. Our real estate, our retail and water business have had a solid start to the year. Our water business is busy and performing well due to the arrival of pivots from delayed shipments. Trading of our livestock business was pleasing given the wet ground conditions, with good volumes of animals traded in all classes across both islands. We've seen good support for our GO-STOCK grazing contracts.
The forecast of normalization of spring conditions with warmer temperatures and less rainfall will be welcomed by our clients and the business. PGW is well positioned to assist our farming and grower client base with their cultivation needs as they gear up their operations and we move towards the warmer production months. We recently relaunched our Rural Supplies brand campaign, which communicates our store teams and our technical field representatives' passion for helping their clients and local communities. Under the tagline, "Working best alongside you each season for the year." The campaign portrays the way the stores and field representatives work closely with their clients.
It highlights the way we are an integral part of each of the local communities we operate and in that our staff go the extra mile to help our customers meet their aspirations. The campaign also focuses on how the technical knowledge of our team delivers value on farm. Real estate business has experienced reduced activity in the lifestyle residential markets compared to the strong performance during the same period last year. Farm sales are continuing to hold up in value, but in volume has impacted the first quarter of last year due to COVID restrictions delaying due diligence processes for those higher value properties. I'll now hand back to Sarah to discuss the outlook for the business.
Thank you, Stephen. Thank you for providing an overview of the 2022 financial year and the first quarter of 2023. I will now provide an update on our current outlook. The positive run for most New Zealand agri sectors looks likely to continue through the remainder of 2022 and into the coming year. However, inflationary pressures on input costs will likely impact on farm profits, and exporters will still need to navigate high shipping costs and challenging logistics. While input prices are increasing, rising food prices are expected to be beneficial overall for New Zealand's agricultural sector. Most agricultural industries are facing similar pressures to other businesses, including a tight labor market and disruption to production from ongoing challenges presented by the pandemic. Labor shortages are constraining production, including limiting fruit harvesting and leading to delays in meat processing.
These macroeconomic factors, coupled with concerns relating to the raft of regulatory and compliance change impacting the sector, are shown in adverse farmer sentiment surveys. While the Rabobank Rural Confidence Survey results released in early October for the last quarter have shown some improvement, overall, New Zealand farmer confidence remains in net negative territory. On balance, while we remain cautiously optimistic about the financial year ahead, there are mixed signals in the macroeconomic environment. Consumers in export countries want high quality and safe food that our farmer and grower clients export. Both beef and spring lamb schedules are forecast to remain positive, and dairy commodity pricing strong. However, we've seen a cool and wet start to spring and in some areas, late season frosts, which have resulted in a delay in early demand for inputs.
Farmer concerns regarding the proposed agricultural emissions scheme and other regulations are also negatively impacting on-farm sentiment. All these factors are contributing to increased levels of uncertainty. Overall, though, we consider the macroeconomic indicators for the New Zealand agricultural sector remain positive. Trading for the first quarter has been broadly in line with expectations, including a subdued real estate market. While it remains early in the financial year, we are forecasting an operating EBITDA result for the financial year to 30 June 2023 of around NZD 62 million. While this is back from last year's very strong operating EBITDA result of NZD 67.2 million, it is based upon our current assessment of a less certain operating environment. It is very early in the year, however, and we'll be in a better position to assess this after the busy spring trading period.
In the meantime, the business remains focused on continuing to deliver on our strategy and creating value as we head into the busy spring trading period. Ladies and gentlemen, we'll now respond to questions. Do we have any questions from online?
I can see.
Nothing's come through online?
No, there's nothing.
We've got nothing that's come through online. Sure. Fantastic.
My name is Paul Meigh. Thanks for that. What a good year last year. A great result. Thank you very much. Excellent result. I just wondered what your dividend policy was. 'Cause last year's earnings per share were about NZD 0.33 and a dividend fully imputed of NZD 0.30. It's quite a high payout in terms of retaining some earnings to grow the business or reduce debt. Just what is your dividend policy?
Our dividend policy is actually available. I believe it's available on the website, Julian.
It is, yes.
Yes. Yeah. It's very much on a case-by-case, year-by-year basis. Julian, are you able to access that?
I am. I'll...
I was just conscious, Paul. I'll give you the exact wording rather than.
It takes into a number of factors, actually, Paul, including our cash flow position.
Sorry, Paul, could you hear that? That was Peter answering that.
A number of factors.
Yes. Yeah, including cash flow position.
I'm aware of that. I just, this is not to be seen as negative, but it was a very good and generous payout.
Mm-hmm.
Uh-
It was also a very, very good year, Paul. A record year, in fact.
What I'm saying is, the correction in terms of, estimated.
Mm.
operating EBITDA is about 10% down, isn't it, on last year? Mm-hmm. That's gonna bring the net profit down more.
I just see sheer volatility in share price probably. Just a question, probably, I would have liked as a personal shareholder for you to get more and put more into growth of the business. It makes sense because you seem to be stuck around that NZD 20 million income. How do we get some more aggressive growth into the business?
I'd certainly take on board your point there, Paul. I can assure you that directors are very much considering the growth of the business. I think the investment into IT is key for us next year. Those factors will be taken into account when we consider our dividend in February.
Paul, to answer you specifically about what we take. Yep. The policy itself takes into account working capital requirements, CapEx, so capital expenditure, and as Sarah had mentioned, just on IT, we've got some significant investment in IT. The intention of shareholders and sorry, the interest of shareholders, free cash flow and the relevant market price. Now, if we go back a year or two, remember that we didn't pay any dividend at one stage when we were in COVID. In the next period, we did actually pay a healthy dividend of NZD 0.16, then NZD 0.14 and NZD 0.16. That's kind of the recent history. One period there was no dividend declared at all when we were in the middle of COVID.
Thank you, Peter. Any further questions? Yes.
Kia ora mai. It's Maxine. Climate change poses a significant risk to the horticulture and agricultural sector, and I wondered how the board is taking this into consideration in your deliberations.
Yes, very much taking that into consideration. I think it's discussed at every meeting. Just the fact of, for example, the wet spring that we've had. There are also ongoing obligations in terms of our environmental reporting, which bring those obligations to front of mind at any meeting.
If I can add a few quick comments as well. The climate change question is probably just broader than specifically around climate change. It's probably we can probably morph that into the regulatory regimes as well. There is a response from government to climate change. Couple of responses that we would say is that, firstly, we make sure that our staff are educated on the products and the regulatory regime that is known. So we have regular training sessions around that. There are new grass species, there are new products that are coming to marketplace in that space, and some of the products we talked about from a trial perspective try and combat that. I don't want to suggest that we have an answer for every particular challenge around climate change.
That's a big question that the world is grappling with. We are seeing changes in our fertilizer programs as a result, because if we broaden the question out to, you know, what does it look like from a leaching perspective of the waterways and so forth. We're making sure that we respond in that regard as more of a move to foliar fertilizer applications, for example. The broader question is we engage with our colleagues across the sector, our supplier partners and, you know, the people like Beef + Lamb New Zealand, Horticulture New Zealand, those sorts of organizations. Not limited to those organizations, but those sorts of organizations.
We ensure that we're at the table because the size and nature of PGW means that we do get invited to those forums, and we do have a voice. Myself and my colleagues, depending on the nature of the discussion, if it's more science, technical science-based discussion, my science lead's there. If it's a CEO type discussion, I'm part of that. We are all looking for solutions in those spaces. I know that on our visit yesterday with our client, our customers, Cathy and Paul, you know, that was very much a conversation. The question around the current methane emissions, for example, is sort of, is it a government response to climate change, in part. You know, the board, that information came out just last week.
We're considering that, and we will respond accordingly alongside our industry colleagues in that regard. Come back to that first point. It's really important that our team members understand the implications, and they're offering that advice and support for our customers because they are quite. You take the headline emissions around climate change, and you're trying to distill that down to an individual farm. The farming unit here in Hawke's Bay might be quite different from a high country sheep station in Central Otago, for example. Trying to make sure that our staff can then distill that macro story down to what does it actually mean on this farm for the type of operation that I have and the objectives that they have.
Because our farmer clients have a number of objectives individually. Quite a long answer, but it is very much a topic that is at the board table. We had a discussion about it yesterday. We had a discussion with our client yesterday. It's a discussion that we have in many forums across the industry, and it is a foundation topic within our training programs as well for our people. I don't know whether I'd answer your question, but it gives you a sense that we are anticipating this issue. Yeah. Yeah.
Thank you. Any further questions? In that case. Oh, I apologize, Paul. Sorry.
Oh, wait till the microphone gets here so they can hear us.
Again, thank you for coming to Hawke's Bay. We do appreciate that. We wish there were a few more people here, don't we? Just a little bit more about how you're tracking at the moment. We've got an estimated operating EBITDA for the year of NZD 62. In terms of first quarter and current, there's a lot of cost pressures and a lot of squeeze going on in lots of ways. Just a little bit more clarity of how you're tracking first quarter at the moment.
Can I answer that?
Stephen, yes, go ahead.
Can I answer that question? Our first quarter, if I just try and broadly answer that question, Paul, through the business units, probably give you some sense. The retail and water demand has been strong, although it's been lumpy within the categories, because of the nature of the wet season. For example, our seeds category, we've got good forward orders there. Hasn't all been delivered on farm because it's not currently needed. Although through October month, you know, we're starting to see that volume going out, and we've factored those things into our forecast because we know that the forward orders sit there. Margins, generally speaking, holding up pretty well in the business. We've seen some good delivery of pivots coming into the country from a water perspective.
You know, the retail business is trading pretty well. Wool volumes, you know, very similar story to last year, although we've had some good, there's been some good wool pricing in the Merino sector by Grant, that would be correct? Yep, at the fine wool market. The livestock sector, both cattle is, you know, very similar to last year. Prices have actually elevated against last year, though, and both in the sheep category and in the cattle category. Dairy, it's just too early in the dairy market because that is really a second-half trading story.
Real estate, we have lifestyle and residential has been a challenge for us, but we've got some good volumes and conditional sales out there in the rural farming space. We call rural as being the farm, you know, the commercial farming operations. That's at sort of a business unit level. Costs, margins holding up pretty well. We do see some price resistance in the area of fertilizer pricing, particularly at the prices that some of that solid fertilizer is.
We're seeing some price resistance there, particularly around capital investment on those sorts of products because they, you know, they've had good couple of years, and they have done that program 'cause those are the sorts of things you can suspend a limit. There's a bit of price resistance there. If we're talking about our operational costs, you know, we're managing our costs pretty well. It's a very unusual year. I've been saying this to my team across the country. We've got quite strong commodity prices, so confidence from that perspective is good. But we know that we've got inflationary pressures on the business from a cost perspective, rentals, people costs, interest rate costs.
You've kind of got to manage the business that's got positives on one side, but it almost feels like you're managing it, anticipating a recession. I don't wanna use those words. I'm not an economist, but that's the way we are seeing our business. If we had one area from an operating cost perspective that is a bit of a concern for us, and it'd be no surprise to anyone, that's the fuel costs for our vehicles. You know, we have 700 vehicles in the fleet, and you know, the cost of diesel because we're largely running diesel and the types of vehicles that we run are on farms. They are heavy-duty vehicles, so suddenly switching their technology to electric is not simple.
That technology is simply not available at the moment. Something we're anticipating. That's probably the area from an operating cost perspective that, we're a bit challenged by at the moment. We've anticipated those things in our forecast as well. Does that answer, help answer the question in a bit more detail?
Yeah. I am grateful for that, Stephen. I know perhaps you don't want to put a number on it, but I was just, in terms of first quarter, 'cause you'll have those, that data.
Yeah.
Compared with last year, are you a bit behind? Where are things at?
Um-
In terms of operating our first quarter.
We're about where we thought we would be, but that's why we give them the market guides. That's an honor because some sectors of the business are a wee bit ahead and some sectors are a wee bit behind. As I said, the livestock's a wee bit ahead because of prices. As we've covered that, but we've seen some delay in the planting. We really need that first, the next three months to.
Yeah. Yeah. I appreciate that.
Yeah.
It's just in terms of the market, informing the market.
Yeah.
Where we expect it to be is very vague.
It is.
Yeah.
That's not deliberate. It's the reality. If we'd had a better start to spring, we could be a bit more certain. That's the factor around the situation. We're in agriculture. We're a weather-driven business, so.
Thank you, Paul. If there's no further questions, we'll conclude this part of the meeting.
We've got a few questions. We have a few questions online, Stephen.
Yeah.
There's just a comment thanking us for having a hybrid meeting this time, so those out of the district can attend, but no questions. That's good.
Brilliant. Thank you, Julian. Before I proceed to the remaining agenda item, I'd like to take this opportunity on behalf of the board to say that we're extremely grateful for the amazing dedication of our people in serving our clients. Our continued growth would not be possible without their ongoing support and hard work in what has otherwise been another challenging year. To our clients, we thank you for your loyalty and the trust you continue to place in us. We want to acknowledge our suppliers who've been exceptional at making sure we have the products we need at the right time to service our clients. Finally, thank you to our shareholders for your continued investment in PGW. We now come to the formal business of the meeting, being ordinary resolutions in relation to the election of two independent directors, my re-election, and the authorizing.
authorizing the board of directors to fix the remuneration of our auditors. The four resolutions and accompanying explanatory notes are set out in the notice of meeting. As usual, we offered shareholders the option to cast their votes on meeting business by post, email, and in person, and online today. The proposed resolutions will be determined by a poll that will be undertaken by our share registrar, Computershare. The first resolution relates to the election of Meng Foon as an independent director. Meng's biographical notes are set out in the notice of meeting. Meng is an independent director and joined the PGG Wrightson board on 1 July 2022. Meng, being eligible, offers himself for election.
The company's directors wish to note the specific expertise and experience that Meng Foon brings to the board, as noted in his biography notes in the notice of meeting, and recommend shareholders vote in favor of Meng Foon's election. The second resolution relates to the election of Garry Moore as an independent director. Garry's biographical notes are set out in the notice of meeting. Garry is an independent director and a member of the audit committee. He also joined the PGG Wrightson board on 1 July 2022. Garry, being eligible, offers himself for election. The company's directors wish to note the specific expertise and experience that Garry brings to the board, as noted in his biography notes in the notice of meeting, and recommend shareholders vote in favor of Garry Moore's election. The third resolution relates to my re-election as an independent director.
My biographical notes are also set out in the notice of meeting. I'm an independent director and chair of the Audit Committee of PGG Wrightson Limited. I joined the PGG Wrightson board on 30 April 2019. Being eligible, I offer myself for re-election. The company's directors recommend shareholders vote in favor of my re-election. The proposed ordinary resolution is to authorize the board of directors of PGW to fix the auditor's remuneration for the following year for the purposes of Section 207S of the Companies Act 1993. As is usual with audit fees, it is impractical to fix the remuneration at the beginning of the year. Accordingly, the board of directors are seeking authority from the shareholders of the company to fix the audit fees at the appropriate time. Thank you.
I will now move resolutions one, two, three, and four, as set out in the notice of meeting by way of four separate motions as ordinary resolutions. A poll will be conducted in respect of the four resolutions. For those who have not cast votes already, please do so by clicking on the Vote tab on the right side of your screen. For those present that have not voted, please complete your voting paper and hand this in at the Computershare share register table as soon as convenient. That concludes our discussion on the items of business.
I've just got a question from a shareholder.
Sure.
Who's asked if Meng Foon can address the meeting regarding his nomination?
Oh.
Garry as well.
Garry.
Meng Foon, we'll start with you. Yeah, Sharon, he might need a microphone. Thank you.
Morning. Thanks for the question. Just a brief introduction as to my
Meng Foon, could you come up to the podium for that one and then so then those online can see you.
Ah.
Morning, everyone. Awesome to be with you. Just as a brief introduction to myself, born and bred in Aotearoa. Awesome to be living in the first place in the world to see the sun, Gisborne. From a governance experience, I've been a governor for about 40 years, 24 of those, on the Gisborne District Council and currently as the Race Relations Commissioner. What is my relationship to the land? My parents actually started off as a market gardener, and we were, at one stage, the largest lettuce grower in the whole of New Zealand. From that, we have an affinity with the land and all the aspects of the macro and micro economies of land-based businesses, and we know it is very challenging.
That's the other part that I bring to the board of PGG Wrightson. Also, I am a entrepreneur, and I think the entrepreneurship of my personal experience in life. Having built our own businesses in Gisborne and throughout New Zealand brings another perspective in terms of ideas that I can contribute to the organization of PGG. From where I've been at the present time, I'm really proud of this organization that I've just joined on the first of July. It is progressive, it's got a great culture in terms of the staff, and it has great trusted friends in the organization from shareholders, suppliers, customers, and a fantastic group of staff. I'm looking forward to contributing to the well-being of this organization going forward. Kia ora.
Thank you, Meng Foon. Garry, if I could ask you.
Good morning. Kia ora. I'm Garry, obviously. I'm very excited about the prospect for this business, insofar as it touches a big part of rural New Zealand primary industry in this country as New Zealand Incorporated, and that's what appeals to me. My background, 40 years in financial services. A qualified chartered accountant. I've been involved in a number of boards in viticulture, farming generally. I'm a trustee of a 900-hectare farm property in South Canterbury. Raised in rural mid-Canterbury on farms. In terms of specific skills to the board, I speak fluent audit. I can shear a sheep. It is just an immersion in rural agriculture that led to me being interested in this role, and it was a pleasure to be invited onto the board. Thank you.
Thank you, Garry. That concludes our discussion on the items of business. In a few minutes, I will close the online voting system, so please ensure that you've cast your votes on all resolutions. While we're waiting, I'll just check there's no further questions.
None online.
Nothing further. Thank you. The results of the voting on the four resolutions will be released on the NZX shortly. Ladies and gentlemen, the meeting is now open for general business. Are there any further matters for discussion or questions? That completes the business of the meeting. I therefore call the 2022 annual shareholders meeting closed. The documents from today's presentation are on the PGW website, and we will post the recording of the meeting there later today. On behalf of the board, I thank you for your attendance and ongoing support. Those in attendance are welcome to stay and join the PGW team here for some light refreshments, which I see are at the back of the room now.