TGH Annual Result 2011 Media Statement

ƒ Slower economy and major investments lead to lower profit ƒ Increase in shareholder dividend and total assets ƒ Ruakura regional freight hub the main long-term focus Tainui Group Holdings Ltd (TGH) and Waikato Tainui Fisheries (WTF) have recorded a net profit of $23.1 million for the year ended 31 March 2011. The 2010 figure was $34.1M.

The two companies’ net operating profit was $14.9M, compared to $15.9M for 2010. Operating cash flow was $14.4M in 2011, down from $21.1M the previous year. The company increased the dividend it paid its Waikato-Tainui shareholder, by $0.5M to $10.5M. “We’re happy with the results. They were very much what we expected given the state of the economy and the fact the company was investing heavily,” said TGH Chairman John Spencer. “Many companies experienced flat conditions over 2011. GDP was anaemic, consumer spending low and property prices subdued.”

During the year TGH wrapped up two stages of a new mall at its flagship retail centre The Base. It also committed to a third and final stage, now only a month away from completion, which features an all-digital, six-theatre movie complex. The company also largely finished development of a 263 bed Novotel Hotel at Auckland Airport, which opened for business in May, and in which TGH has a 70% shareholding.

“The flip side of a weak economy is that we’ve been able to take advantage of low interest rates in the past few years to fund our developments,” said Mr Spencer.
“Now that they’re largely finished, they’re giving us fresh and substantial revenue streams, and they’ll provide the engine to drive the next stage of our business.” The investments show up in total assets, which increased nearly 125% in 2011, from $530M to nearly $660M. “A stronger balance sheet allows us to seek additional project funding. By 2021 we’re aiming to grow beyond $1 billion in total assets, all of them high quality.”

TGH’s Chief Executive, Mike Pohio, said the company had made good progress with the regional freight hub on the 500 ha of land it owns around the Ag Research campus at Ruakura, including initial concept plans. “The research we’ve done, along with a number of recent independent reports, all suggest that Ruakura could be a game changer – for the Waikato, for New Zealand and for Waikato-Tainui.” “New Zealand freight volumes are expected to grow by up to 75% over the next 20 years, concentrated in the ‘Golden Triangle’ between Auckland, Hamilton and Tauranga.
“There is no other site like Ruakura in the upper North Island, and certainly none that can offer as good a solution to this very serious problem,” he said.

“In the past year we’ve spoken with major exporters, freight handling companies, Kiwirail, the New Zealand Transport Agency, the Government and both local and regional government in the Waikato. All have given us strong support for proceeding with the concept.” “But it’s about more than just taking freight off the roads and improving our country’s economic competitiveness.”
“This is a huge opportunity for Hamilton and the Waikato. What we’re looking at here are new jobs, new money coming into the region, new contracts for local businesses and new rates revenue for the Council.”

“It’ll need to be a very sophisticated, high tech operation that can bring whole new levels of efficiency to freight handling, including automated systems on a level New Zealand has not seen before,” he said. “So very strong linkages will be needed between the many and varied businesses that will be located there and Waikato’s trade training and tertiary institutions.
Mr Pohio said that in the coming year TGH would apply for re-zoning approvals from Hamilton City Council, and seek to have the concept for the site formally included in the City’s district plan and in Environment Waikato’s Regional Policy Statement. “It’s not going to be a rush job though. We’re talking about a 20-30 year development here, taken in stages, and done in careful consultation.” “We also want to ensure the development has the lowest environmental footprint we can give it.”


For further information, contact:
Mike Pohio, Chief Executive, on (07) 834-4884 or 021 555 978
Chris Wikaira, on 0274 522 472

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