Tainui Group Holdings Reports $15.8 million Profit

Tainui Group Holdings Reports $15.8 million Profit

Tainui Group Holdings, the commercial arm of Tainui, has reported a 90 per cent increase in net profit of $15.8 million for the year ended 31 March 2004.

The net operating profit which excludes asset realisations increased by 94 per cent for the year to $9.1 million. The group made a distribution of $5.45 million to its shareholder, the Waikato Raupatu Lands Trust which represents the people of Waikato-Tainui.

The Group’s Chief Executive, Steve Murray, said the result reflected a transformation within the group of companies over the past two years.

A new management team and Board of Directors took over the reins of the group in 2002 and since then have achieved a net profit year on year growth rate of 104 per cent.

Chairman John Spencer said the group needed to create a strong commercial culture and a stable platform from which it could make the right strategic decisions.

“Today, after two years of reinvention, the group has no external debt and has made substantial gains in profitability,” he says in the group’s Annual Report. “We are confident that the present levels of profitability are sustainable.

Steve Murray says a number of strategic decisions have been made which have reduced the risk profile of the investment portfolio while increasing returns.

“In light of the well-documented historical financial performance of Tainui, we have been extremely disciplined in how we manage resources and develop and execute strategy.”

The group’s investment portfolio includes property, fisheries, tourism and equities and fixed interest investments.

Over the past year some poor performing and non-core assets have been disposed of with funds redirected to create a managed funds portfolio.

One of the significant developments for the group during the year was the agreement of the Tainui Parliament, Te Kauhanganui, to transfer the ownership of all commercial assets over to the group. Prior to that the group had managed the assets but ownership was with the Waikato Raupatu Lands Trust.

The group now has total assets of $180 million.

“It was an important sign of their trust in the directors and management of the group to separate commercial and tribal management objectives, giving us a more orthodox commercial structure” said Mr Murray.

Mr Murray said the group still faced a number of commercial challenges particularly in relation to its fisheries and property portfolios.

“Our view is that unprofitable businesses, if they can’t be fixed, should be exited rather than playing a ‘wait and hope’ game while shareholder value is being eroded.

“We will continue to realign investments to improve our risk/return profile to maximise shareholder wealth.”

Strategic alliances with organisations such as The Warehouse are an important part of the group’s ongoing investment strategy. The two companies are currently working together on two significant retail development projects in Hamilton.

Mr Murray said the realignment of the company’s investment portfolio will take between three and five years.