Testing year for Gisborne Holdings Ltd sees $5.3m loss, strategy finalised with council

Tauwhareparae Farms, inland from Tolaga Bay. In the past year owner Gisborne Holdings Ltd has merged three of the farms making up Tauwhareparae into two, and retired 1400ha of marginal land. Photo / Liam Clayton

The challenging weather in Tairāwhiti, along with low stock and tree prices, have had a significant impact on Gisborne Holdings Ltd’s financial performance this past year – resulting in a $5.3 million loss.

The commercial arm of Gisborne District Council is holding its annual meeting on Monday, September 30.

Board chair John Rae encouraged people to attend in order to better understand the company’s operations and what the future could hold.

“It has been a very challenging year but there are still things to celebrate,” Rae said. “Our focus is to ensure that we can financially support necessary infrastructure within the region.”

The merger of three farms into two at GHL’s major asset Tauwhareparae Farms seemed to have been successful, Rae said.

Around 1400ha of marginal land had been retired, and an infrastructure crew had been replacing fences and performing other essential maintenance tasks across the properties.

“It looks like we’re in for a good season ahead. Lambing and calving have already started off on a positive note.”

A high point for GHL had been ambitious and robust discussions with the council, resulting in a finalised strategy that could now be implemented, Rae said.

“With that now agreed to, we can leverage our commercial position, expertise and connections to significantly help support the council’s strategic ambitions and enhance the future of the people living here.

“We want to ensure that our assets are fit for purpose and align with our shareholders’ [council] expectations,” Rae said.

“We need to be in a better position to assist the council and the community in adapting to recent challenges and becoming more resilient as a region.”

The farms were particularly hard-hit during Cyclone Gabrielle, with the effects still being felt through the absence of tracks and fencing, Rae said.

Farm accessibility was still a challenge because Tauwhareparae Rd has not been repaired yet. This had caused a 10% drop in the value of the farm.

The past 18 months had led GHL’s leadership team to consolidate, reflect, and plan with the council, Rae said.

“Our board strongly believes that GHL’s role must adapt to the current circumstances. Acting as the passive holder of a portfolio of somewhat random assets is no longer sustainable.

“We must find a way to deliver increased dividends, even if this means a significant change in our portfolio.”

There would be a full review of GHL’s asset portfolio to maximise opportunities for Tairāwhiti, Rae said.

In the past financial year, GHL made a loss of $5.3m, largely due to the lower land and building valuation of Tauwhareparae Farms. Livestock and forestry values were also affected.

Spending this past year had been limited to necessary capital expenditure only, with planned upgrades at the Waikanae Beach Top 10 Holiday Park postponed until the balance sheet was in better shape.

The council will receive a $591,000 distribution this year, including a $309,000 dividend – in line with a new regime based on 50% of net operating cash flow.

“This approach will help GHL avoid committing to unrealistic dividends and create a more sustainable strategy based on actual earnings,” Rae said.

The distribution is also made up of a $282,000 subvention payment.

Gisborne Holdings Ltd annual general meeting, Waikanae Surf Life Saving Club, Monday, September 30, 5.30pm