Tainui's asset base grows to healthy $694m

Tainui chairman John Spencer said completion of the Auckland Airport Novotel hotel had been crucial. Photo / Dean Purcell

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.

Chief executive Mike Pohio said Tainui was committed to further investments in the Waikato economy, particularly Ruakura, which he said would have significant benefits, creating new businesses, jobs and training opportunities for the region.

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.

Tainui completed the final two stages of The Base and finished the Novotel Auckland Airport hotel, where it has a 70 per cent shareholding. The two projects represented a $210 million investment so had vastly increased the asset base, the company said in a media statement with the annual report.

Spencer said finishing the mall and hotel was crucial.

"Getting these major projects finished has been something of a watershed for the company. They give us a higher level of secure income, so that means more certainty for our shareholders and an improved capacity to reinvest in future projects.

"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."

Exiting Fonterra chairman Sir Henry van der Heyden will become Tainui's chairman from Sunday.