Taranaki Iwi Commercial Group (Holdings and TILF) Combined Financial Performance

The Taranaki Iwi Commercial Group (Holdings and TIFL) delivered a total pre-tax return of 15.7% on opening equity.

This result is both above our longterm target and was materially more positive than it looked set to be in March 2020.

We are pleased with it as a result especially given some of the year’s difficulties, but it also reflects the portfolio structure and our balanced strategy. While some assets have been challenged, we have underpinned income with resilient assets such as our commercial property and Crown leaseback properties.

The fundamental premise of our strategy is building a portfolio whose risks are balanced in such a way that we can deliver reliable returns year after year. We know this won’t always be possible but we’re happy with how we performed in FY20 given the contortions of global economies.

At this stage we are approximately 40% invested into the longer-term portfolio, however some challenges remain. One of these is maintaining the investment focus whilst seeking assets with appropriate returns (so dividends can be maintained) in the Taranaki region. We recognise that Taranaki has started a journey of the dramatic transformation of its economy. This transformation provides opportunities as well as challenges and we are exploring ideas which could provide for a transformation of land use and bring industry to the Taranaki; although this will require patience.

Distributions

In FY21, TIHLP and TIFL together made a $1.89m distribution to Te Kāhui compared to a $1.65m distribution for the 12 months to end June 2020.

We have committed to a $2.25m distribution to Te Kāhui for

FY22. This represents around 2.0% on opening equity and 47.5% on budgeted operating profit. This is in line with policy which targets around 50% of operating profit on distribution.

Reserving

We track ‘real capital’ to ensure uri can see that Te Kāhui’s asset base is keeping up with inflation and population growth. This allows us to show true surplus retained earnings, which in turn becomes a good indicator of inter-generational equity. These calculations are detailed below. Since inception, we have been able to create reserves of approximately $13.8m over and above inflation and population growth.