Real Progress

Tainui Holdings Does It Well

The Maori Waikato tribe, Tainui has been making real financial progress.  This has not always been the case.  For several years, immeidately after its historic Treaty settlement, there were reports of financial mismanagement and spending upon such essential items as brand new BMW's for the inner circle, coupled with political factions and infighting. 

But for the past few years most of these problems have been skewered by the sword.  The capital secured by Tainui through the treaty settlement now appears to be well husbanded and is increasing.  There is a strong commercial focus.  The growing commercial strength and asset productive asset base will ultimately benefit us all--but particularly the Tainui people. 

The NZ Herald provides us a summary of the latest financial results.  The good news is even more encouraging when we remember it has been delivered through a period of a pretty cold economic recession in New Zealand. 

One of the country's most powerful tribes has pushed up earnings and profit, increasing its asset base by $36 million to $694 million in the past year.

Tainui Group Holdings made $39.9 million net after-tax profit, up on 2011's $23.1 million, and increased its dividend by $500,000 to $11 million while still reducing debt.  The real estate-rich business, which released its annual report and result yesterday, forked out capital expenditure of $114.2 million the previous year but pushed that down to just$56.4 million in the year to March 31, 2012.  Debt to total assets, standing at an extremely conservative 28.3 per cent the year before, fell to an even safer 26 per cent, the business announced, and the return on shareholders' funds was 10.3 per cent, previously 6.7 per cent.

Tainui is now focused on creating its 500ha inland port and freight hub at Ruakura to Hamilton's northeast. Regulatory approval is yet to be granted. . . .


Tainui chairman John Spencer said market conditions in the year had been flat to negative, especially in the retail sector where the business has huge exposure via its Hamilton mall and cinema complex Te Awa The Base. Rising profit was largely because of money from The Base and Novotel Auckland Airport. . . . "The hotel didn't provide quite a full year's earnings, but it still generated a quarter of our revenue. And for the first time, retail earnings made up over 50 per cent of our income, and this reflects the new revenue stream from Te Awa.  Until now the company's main source of income has been rents from the Crown, SOEs and tertiary institution," Spencer said. . . .

The Base is New Zealand's largest single retail development by area and Australasia's only hybrid - large format and mall - where 1528 full- and part-time employees work.  Spencer said it was a myth that Tainui were rich.  "Take the annual dividend and divide it by 60,000 members of the tribe," he said.  "It's a few hundred dollars each. And if you liquidated Tainui Group Holdings tomorrow, sold everything, paid off the loans, each person would get a one-off cheque of about $6000.  "So there's a long way to go yet, but the trick is to stay positive and to keep looking for what's possible."

Another positive is Tainui Holdings track record of getting high quality people on to its Board.  John Spencer is one example.  He is now retiring.  But his replacement is no slouch.  "Exiting Fonterra chairman Sir Henry van der Heyden will become Tainui's chairman from Sunday."