Ngai Tahu Holdings Group achieves record result
7 November 2008
Ngai Tahu Holdings Group achieves record operating result
Ngai Tahu Holdings Group’s Annual Report issued to tribal shareholders this week announces a net surplus of $58.2m for the year ending June 2008. This included a record operating surplus of $31.8m (prior to any asset revaluations and / or gains / losses from the sale of assets), representing an increase of over $10m on the Group’s 2007 result.
The remainder of the result was largely driven by asset value uplifts in the Group’s Rural Land on the back of strengthened agricultural land values and growth in Investment Property portfolio values.
After a distribution to its shareholder, Te Runanga o Ngai Tahu, of $22.9m, Ngai Tahu Holdings Group Shareholder Equity grew by almost $10m to $473.1m, with increases in the Rural Land and Investment Property asset values being partially offset by a drop in the Ryman Healthcare share price.
Ngai Tahu Holdings Group Chair Wally Stone said the operating result was particularly pleasing and reflected the Group’s continued focus on operating cashflow performance and balance sheet risk management. “The significant increase in operating earnings this year reflects work over the past 2 years on turning around under-performing areas of our business and implementing our balance sheet objectives” he said.
A stand-out performer in this year’s result is Ngai Tahu Seafood. The subsidiary’s $12.6m contribution to operating surplus (before interest and corporate overheads) doubles last year’s result and is by far its best ever result. “While strong seafood market prices and increases to the allowable catch for key species partially offset the high NZ dollar during the year, Ngai Tahu Seafood’s strong result is testimony to its discipline in rationalisation of non-core and under-performing assets” said Stone.
“Now that the tough decisions have been implemented and performance is where it should be, Ngai Tahu Seafood is well positioned for growth in the high value species of Koura (lobster), Paua (Abalone) and Tio (Oysters)”, said Stone. “This will include continuing to better integrate and connect the supply chain from the fisher to the end market in order to improve returns”, he said Ngai Tahu Property continued its record of solid performance with a contribution to operating surplus (before interest and corporate overheads) of $19.1m.
The subsidiary’s focus in recent years has been on increasing the exposure to income yielding assets with low volatility. It’s “develop and hold” strategy for prime investment property assets was reflected during the year in the completion of Armstrong Prestige and Department of Conservation building in Christchurch and the conversion and restoration of the old court house in Queenstown. Further the joint venture with the Christchurch City Council’s venue management company V-Base to develop the new Christchurch Civic Building, the completed building leased by the Department of Conservation and the established relationships with the Department of Courts and New Zealand Police all demonstrate the growing confidence and willingness of public sector organisations to partner with Ngai Tahu on key infrastructure projects. “We see this as a natural growth area for the Group and are actively working with a number of public sector organisations to explore partnering opportunities” said Stone.
There was strong progress during the year on the only significant ‘live’ residential property development with Christchurch’s Linden Grove sections predominantly pre-sold. The property company is actively managing it’s exposure to the dormant residential market. “Residential development is a relatively small part of our overall investment portfolio which allows us to hold a disciplined land bank through a market downturn”, said Stone.
The Group’s tourism company Ngai Tahu Tourism was impacted by a drop off in international visitor numbers during the year with its contribution to operating surplus (before interest and corporate overheads) of $6.4m down on last years result.
“We’re fortunate to have some of the New Zealand “must do” tourism attractions in our portfolio. This combined with efficiencies previously realised has meant that the tourism company has been able to mitigate the impact of the drop in passenger numbers to a certain extent” says Stone.
In the current turbulent economic environment Ngai Tahu Holdings Group does not underestimate the challenges facing business in New Zealand and is placing even greater emphasis on managing its businesses and associated risks to ensure it continues to create value for its shareholder.
“Our strong balance sheet with a diversified asset mix, coupled with low debt and a three year syndicated Bank funding facility of up to $200m means that we are as well placed as we can be if the macro economic environment continues to worsen. While we will be being conservative in pursuing investment opportunities in the coming year, we do have capacity if attractive opportunities arise in our areas of core focus” said Stone.
Stone says, “with the extreme economic
uncertainty it is difficult to forecast operating earnings
for the current financial year although Ngai Tahu Holdings
Group do expect a definite softening as a result of reduced
property development and tourism operating earnings, stemming from the economic slow down.”
The Group anticipates this will be partially balanced by a strong commercial property tenant base continuing to generate stable investment property operating returns and continued strong seafood earnings subject to market pricing in the major market, China remaining firm on the back of a lower New Zealand dollar. Further information on the Group’s performance and expectations for the future will be provided to Ngai Tahu members at the iwi’s Hui-a-Tau (Annual Meeting) in Kaikoura on the weekend of 22-23 November.