Honey business not so sweet for Ngai Tahu Holdings

A $57 million writedown on Oha Honey and lower valuations for its farming interests proved bitter pills to swallow for Ngai Tahu Holdings, serving to cut profits by 76% to $37.5 million for the year to June 2019.

Ngai Tahu Holdings chairman Mark Tume, signalling a ‘‘detailed review’’ of all of the underlying assets of the investment holding company, said the group’s farming, property development and tourism investments had had a challenging financial year.

These were marginally offset by the positive performances of private equity funds and Hilton Haulage, while the contribution from Ryman Healthcare was largely flat for the year.

After allowing for tribal distributions and the operating expenses of Te Runanga o Ngai

Tahu, the deficit before taxation was $15.5 million.

Mr Tume said the need for a review had come in light of the economic ‘‘headwinds’’ Ngai Tahu Holdings was facing.

‘‘This is critical in ensuring we strike the right balance between growth on one hand, and operational performance, cash flows and managing the balance sheet tightly on the other.’’

He described Oha Honey, which reported a net operating deficit of $6.3 million ahead of the writedown, as a ‘‘challenging investment’’.

‘‘We underestimated the risks and overestimated our ability to manage those risks.

‘‘Those errors on our part were compounded by three years of very unusual climatic conditions resulting in underproduction, lower sales, and financial underperformance.’’

He said the Oha management team was now focused on earning the value back in the business.

‘‘Good progress is being made on improving operations and culture, but we also need a good season to achieve this.’’

He said farm valuations had also fallen as the sector dealt with changing circumstances.

The writedowns and revaluations, combined with an overall distribution of $67 million to Te Runanga o Ngai Tahu, saw an overall drop in shareholder equity of $53 million in shareholder equity to $1.51 billion.

The holding company’s focus had shifted from growth to being better prepared for a less favourable business environment.

‘‘This means increasing focus on managing daytoday operations, ensuring we have a strong balance sheet and importantly operating cashflow.

‘‘To that end our attention is on ensuring all of our trading subsidiaries are delivering excellent products and services to their customers, in the most efficient way possible.’’