GHL meeting tonight might be a bit rowdy

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The council’s commercial arm Gisborne Holdings Ltd is set to draw a more vocal crowd than usual to its annual meeting tonight after making clear that a potential sale of its dominant asset, Tauwhareparae Farms, is on the table and it wants to hear public views on that.

Essentially the same message was delivered at last year’s AGM, when chairman John Rae said there was “simply no choice” but to consider how GHL could restructure its assets in a way that allowed it to meet the expectations of its shareholder and stakeholders. The company was then initiating a strategic review.

A month later it was announced that the potential for Tauwhareparae to switch from a mainly pastoral farming operation to forestry, and earning carbon credits, meant its valuation had increased from $70m to $85m.

Soon afterwards the New Zealand carbon market started to tank.

GHL’s 2023 annual report, now available on its website, explains that the farms are valued on a farming basis again and, largely because of this, company equity has dropped by $31.7m to $122.7m.

GHL posted a $1.9m loss for the year to June 2023, compared with a $2.5m profit the year before, mainly due to a $2.3m fall in the value of its investment properties because of increasing interest rates, and a $2.2m decrease in the value of livestock — $2m of that related to average sheep valuations dropping from $207 to $162 and increased sheep losses during Cyclone Gabrielle. GHL’s earnings before interest, tax, depreciation, amortisation and revaluation were $5m, up from $4.6m the year before.

Early last month we reported from a council finance and performance committee meeting that GHL would not be paying $2.5m of a declared $2.7m distribution to it this year because of the impacts of Cyclone Gabrielle on Tauwhareparae Farms.

Regarding dividends, the chairman (and acting chief executive) writes in this year’s annual report that, “We recognise our strengths and vulnerabilities, and continue to work with our owner to find a way to pay this year’s dividend and shore up our contributions for the future.”

While GHL’s debt ratio of 8 percent was low, compared to a target agreed with the council of no more than 25 percent, the board’s approach was conservative “because we felt like there were challenges coming”.

“. . . the group’s relatively poor cash generation ability makes taking on more debt problematic. This cash generation issue is at the heart of our strategic review.”

So, with the review completed and a draft five-year strategic plan having been delivered to the council, tonight provides an opportunity for the public to have their say.