Ngai Tahu honey venture dampens result, but tribal payments steady

Wednesday, 15 November 2017

A loss-making investment in a honey company and lower property revaluations reduced Ngāi Tahu's annual financial results.

The South Island tribe's commercial arm reported a net profit of $126.8 million for the year ending June 2017 - compared with last year's $168m.

It was hit with a $19m loss from a joint venture investment in North Island manuka honey and medical products company, Watson & Son, and since balance date Ngāi Tahu and Denis Watson whanau have split the company between them.

But Ngāi Tahu Tourism, Farming, Seafood and Property achieved better than expected results for the financial year, Te Rūnanga o Ngāī Tahu Kaiwhakahaere Lisa Tumahai said.

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The profit enabled payment of $49.6m ($44m last year) to fund tribal initiatives, kaumātua grants, environmental and education initiatives, cultural and wellbeing programmes.

Another $454,000 was distributed to each of the 18 Papatipu Rūnanga (ruling committees), taking the total over 20 years to $441m for tribal development.

Iwi savings scheme, Whai Rawa, grew to a collective value of $63.75m, an increase of more than $11m on the previous year.

'A particular highlight of of the year was our investment in a home ownership pilot that supported five whānau to purchase their first homes in an equity share model,' Tumahai said.

'Based on the success of the pilot we will be working towards rolling out this model,' Tumahai said.

Milestones during the year included the official opening of Ngāi Tahu Property development, the Pita Te Hori Centre on the former King Edward Barracks site in central Christchurch, and completion of the first carbon emissions report for the activities of the Te Rūnanga o Ngāi Tahu Group.

The net operating surplus of Ngāi Tahu Tourism was $13.5m ($8.5m last year), Ngāi Tahu Property $35m ($60M), Ngāi Tahu Farming $5.8m ($139,000), Ngāi Tahu Seafood $22.4m ($17.5m). Other additional adjustments such as revaluation of properties lifted the net profit for each company.

The exception to the profit-making divisions was Ngāi Tahu Capital which posted a net operating loss of $9m because of the Watson & Son investment.

The investment in Watson & Son was valued at $55m. In addition to Ngāi Tahu's $19.4m share of the Watson & Son loss was a $20m impairment expense.

Tumahai said the loss reflected one of the worst manuka honey seasons on record.

Chief executive Mike Sang said Ngāi Tahu Holdings initially invested $51m into the business for a half share of the Watson & Son group, including the mānuka medical companies, plus two earn out payments payable subject to meeting agreed earnings targets over each of the first two financial years.

The first earn out payment was made in 2016 of $17m, however, no further earn out payments have been made.

This means the total initial investment came to $67m invested into Watson and Son itself rather than paid to Watson interests.

The effect of splitting up the Watson & Son joint venture will show up in next year's accounts.

The audit report said the $55m value of Watson & Son may be 'materially incorrect' because it was based on assumptions of future earnings and plant and equipment valuations.

The net worth of the tribe, based on the value of assets rose $89m to $1.36 billion.

Ngāi Tahu Holdings Board Chair Trevor Burt said the tribe had enjoyed a prolonged period of strong growth and exceptional returns over the past few years largely from Ngāi Tahu Property developments, tourism, the kōura market in China, and farm conversions.

'Things are now easing back as the economy flattens,' Burt said.

The annual report shows 140 employees earned more than $100,000 to $149,999, with the highest salary between $650,000 and $699,999.

A total of $1.6m was paid in directors fees over the five trading companies.