Slimmer EGL on generation path

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

Opinion

The Trust Tairāwhiti annual meeting on Thursday night was focused even more than usual on issues related to Eastland Group Ltd (EGL), the trust’s dominant asset which it owns on behalf of all of us in Tairāwhiti.

It raises again the question of whether it suits the trust’s purposes for its AGM to be the only opportunity for its beneficiaries to hear operational details from EGL’s leadership and to question them in a public forum — when this is such a key corporate enterprise for the region (although less so now, having sold its foundation asset Eastland Network this year). The group’s AGM is a closed-door affair for 100-percent owner the trust and EGL directors and executives.

Considering the challenges of the 2022/23 year and the issues to unpack, surprisingly few sparks actually flew in the “general business” part of the meeting, relative to previous years.

In part that will be due to EGL chairman Matanuku Mahuika openly discussing them in his presentation, and responding to challenges from the floor in a measured way.

He addressed upset expressed over significantly higher salary bands for senior staff revealed in the annual report by acknowledging that view, countering that they are benchmarked against similar companies, and explaining contributing factors of redundancy and long-term incentive payments, as well as the fact some executives had been with the company for a long time.

In discussing salary levels, he stressed that he would not get into personal employment matters.

The $257.7m sale price for Eastland Network, nearly $100m more than its book value, turned an otherwise terrible year for the group operations-wise — what would have been its first-ever loss — into a step-up on its stellar growth over the past two decades, recording a  $92.8m profit for the year.

EGL made a total distribution of $90m to Trust Tairāwhiti — including a special dividend of $50m and the repayment of $30m of capital notes — and reduced its bank debt by $168m.

Losing $8m on EGL’s  $12.5m investment in Flick Electric Co is an unfortunate end to that exploration of a retail offering alongside the group’s electricity generation business.

Predominantly a geothermal plant operator but with plans to expand in solar and wind energy, this is where the next stage in EGL’s evolution is centred — as it starts the process to find a 50 percent equity partner for Eastland Generation, to help execute a potential pipeline of $500m worth of renewable energy projects.

Ahead of this and the exit of the network business, EGL restructured its head office to become “primarily an investment holding company”; hence the redundancies.