By 2020 iwi aims to have returns from $1bn of high-quality assets.

Waikato financial powerhouse Tainui aims to have assets worth $1 billion by the start of the next decade after a 24 per cent growth in its holdings in the past year.

Tainui Group Holdings and Waikato Tainui Fisheries issued an annual report to March 31, 2011, spelling out an ambitious growth strategy. It comes as Tainui is poised to open six new cinemas at its Hamilton retail project The Base and following May's opening of the new $65 million Novotel Auckland Airport that is 70 per cent iwi-owned, the remainder by France's Accor and Auckland International Airport.

By 2021, Tainui said it wanted "$1 billion of high-quality assets", to deliver long-term sustainable returns to iwi, be a recognised contributor to Waikato's economy and either run or participate in developing major assets in the region.


But debt is also rising. Last September, BNZ agreed to a $50 million loan extension, increasing debt to $250 million.

The bottom line also suffered in the latest year. A net profit of $23.1 million was recorded for the March year, down on last year's $34.1 million, a result which chairman John Spencer blamed on wider economic factors.

"We expected and experienced a difficult trading environment because of continuing sluggishness in the economy. We had lower returns from residential property sales. There were also two major investments we had to continue funding: the Novotel Auckland Airport joint venture and the next stages of The Base," he said.

Net operating profit was $14.9 million, down on $15.9 million, and operating cash flow was $14.4 million, down on $21.1 million, the businesses announced yesterday. But the company still increased the dividend to shareholders by $500,000 to $10.5 million.

Spencer said the group was 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.

"Many companies experienced flat conditions over 2011," he said.

During the year the group completed two stages of The Base and committed to a third and final stage, now a month away from completion, which features an all-digital, six-theatre movie complex.


"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," Spencer said.

The big rise in assets in the past year came from Novotel and Te Awa and Spencer said this balance sheet rise would allow more borrowing so an extension to $250 million debt had been sought. But the board has a policy not to borrow more than 30 per cent of asset value, he said.

Chief executive Mike Pohio said the next phase of growth was its 500ha Ruakura project. He described projects as the engine Tainui needed to power its future.

"A decade ago, we could not contemplate what we are now planning because we lacked the income streams to do so," Pohio said.

* 2002: $147m

* 2003: $166m

* 2004: $180m

* 2005: $238m

* 2006: $316m

* 2007: $378m

* 2008: $536m

* 2009: $497m

* 2010: $529m

* 2011: $658m

Source: Tainui Group Holdings and Waikato Tainui Fisheries