A Year In Review

The 2008/09 year has been labelled as the most difficult economic climate experienced since 1929 by respected commentators around the world. Given these trying operating conditions Ngāi Tahu Holdings Group (NTHG) has continued to deliver a solid financial performance reflecting the strength of its balance sheet and its underlying assets. The final quarter of the FY09 saw stronger than expected results in each of the subsidiaries.

Undoubtedly FY09 was one of the most difficult so far for NTHG and it will come as no surprise that as a result, our performance was down significantly on the previous year with a net operating surplus of $18.63m (FY07/08 of $31.77m). The net surplus (prior to distribution) for the year was $13.3m (FY 07/08 $58.2m). This included a decrease in investment property values of $5.5m (FY07/08 included an increase in investment property values of $25.9m). However while being well below previous levels, NTHG was able to deliver both an operating profit and a net surplus in this period of severe strain, particularly for those companies with significant property assets.

The downturn in the property sector had a significant impact on Ngāi Tahu Property activity with an operating Earnings Before Interest and Tax (EBIT) of $15.6m (FY07/08 $19.1m). Property development activity contributed an operating EBIT of $2.5m (FY07/08 $6.6m). This included write-downs on the value of development Property of $4.5m, primarily on the Iveagh Bay, Lincoln Residential and Allandale projects. The quality of the tenancy base in the Property Investment Portfolio proved its strength returning an EBIT ahead of budget of $11.7m. Revaluations of investment property (commercial and rural) have resulted in a decrease in value of $5.5m, a decrease of 2.1% on last year. This is a particularly pleasing result given that this figure is significantly lower than the industry average of 10% for the year.

FY09 was Ngāi Tahu Seafood's first year of trading post review and restructure and under a new strategy. The net surplus of $4.6m was down $8.1m on the previous year and was heavily impacted by a number of one-off, non-trading payments coupled with the extreme instability of exchange rates which resulted in foreign exchange losses in excess of $6m.

A full review of the foreign currency hedging policy has been undertaken and the level of the residual cover book now aligned with the true foreign exchange exposure of the business. This should see forecast results for Ngāi Tahu Seafood increase significantly in the new financial year. The underlying trading result excluding these was a 12% improvement on the previous year.

The year in review presented challenges for Ngāi Tahu Tourism also with the global credit crisis striking just prior to the beginning of the peak summer tourist season. This resulted in reduced visitor numbers and sparked a review of all Ngāi Tahu Tourism's operations. It is pleasing to report that due to the commitment and responsiveness of the businesses within the Tourism portfolio, a $6.4m net surplus was delivered (FY07/08 $8.5m) with Operating EBIT of $5.4m slightly ahead of the forecast for the year of $5.3m.

A priority for NTHG in FY09 was conserving cash resources. This led to a reduction in NTHG's debt from $98m at the end of FY08 to $95m at the end of FY09, against a forecast of $127m.

Ryman Healthcare continues its long-standing tenure as one of our leading and most consistent investments and despite the environment delivered another strong performance resulting in a 1% increase in share price over June 2008 and dividends of $2.1m.