Iwi firm eyes farm division
Ngai Tahu Holdings Corporation is investing $110 million in developing a new farming division as it posts an 18 per cent fall in net profit to $77.9m.
The commercial arm of South Island iwi Ngai Tahu has three subsidiary businesses, each in property, seafood and tourism as well as investments in property and shares.
It is developing a new agriculture and farming division around its land holdings in the South Island as another string to give it a more diversified bow.
In the year to June 2013 strong earnings from property and section sales helped keep the result on an even keel when its tourism earnings were knocked by low tourism numbers and problems at a couple of key tourism operations.
The $77.9m net profit for the year to June 30, 2013 compares with the previous year's $95.7m net profit, which was boosted by the sale of $27m of Ryman Healthcare shares and $3.8m from the sale of a forestry lease. Ngai Tahu holds about 6 per cent of that star performer in the aged care sector.
The corporation distributed a $28.25m dividend to its owner, Te Runanga O Ngai Tahu, for the year. Ngai Tahu does not pay tax because it is registered as a charitable trust.
Chairman of Ngai Tahu Holdings Trevor Burt said the big earner was the property division.
"We're back in tourism quite a bit. We are well ahead in property. Property had a great year and we had another really good year in seafood," Burt said.
Tourism earnings were impacted by the collapse of the glacier face at Franz Josef, affecting its guiding business, while the Shotover Jet speed boating business was hit at peak season when the river almost froze for two weeks.
Ngai Tahu's development property was primarily its residential subdivisions where it has about 1700 sections at some stage of development. Section sales from its residential subdivisions at Wigram Skies, Prestons Rd and Lincoln township drove the annual trading result.
"The demand is strong as all players in the market are finding. How long does that go for is the question," Burt said.
It envisaged section sales remaining strong in the short term, one to two years, but the medium to longer-term outlook was less certain.
The group is committing $110m over three years to converting land holdings in North Canterbury and on the West Coast to high value agricultural uses. A lot of the land is leased to forestry businesses.
Ngai Tahu chief executive Mike Sang said it was focused in the next three years on developing the Eyrewell area of its North Canterbury holdings. It intended to increase its dairy conversion to eight from three at present, as forest leases expired.
If there was progress on the Hurunui Water Project it would also be looking at its option for land holdings at Balmoral in North Canterbury.
Chairman Burt said: "Our mantra is we convert land to its highest and best use which for some land is dairy farming. That may not be the case for all of it but we will look to have a good mix of farming operations."
Ngai Tahu has low debt - $113m at balance date - and assets valued at $969m.
The corporation had not set up a separate company yet for farming "but it's inevitable", Burt said.
Ngai Tahu measures its total return for the June 2013 year as $181.6m, which includes a huge $90m increase in the financial year in the value of its Ryman Healthcare investment.