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GHL increases its council dividend

AN increase in the minimum dividend from Gisborne Holdings Ltd has been welcomed by District Council finance and audit committee chairman Brian Wilson.

He sees potential for further increased income from the council’s wholly-owned trading company, possibly from community housing and Waikanae Beach Holiday Park.

The committee agreed to the company’s statement of intent (SOI), which guarantees a minimum dividend of $1.8 million a year for the next three financial years, compared with the minimum dividend last year of $1.5 million (GHL declared a $2.548m subvention payment for 2016/27 and in 2015/16 it was $1.467m).

GHL will allocate 50 percent of its net tax-paid income from all trading except for forestry, which will be 75 percent.

It also establishes an agreed threshold of $10 million for transactions that will require prior council approval, and commits GHL to meeting industry benchmarks for its trading arms.

Mr Wilson said he believed there were opportunities for further developing GHL’s trading operations, including the holiday park and community housing.

“I believe they have got significant opportunity with the holiday park.

“That is actually the biggest tourism operation in Gisborne. They have got some good plans to move into a market that is not really supplied in Gisborne. It has been going really well and, with what they have achieved so far with upgrading and so on, they are getting a good return on the investment.”

The present proposal for community housing was to transfer it to GHL, which was already operating the service.

If it had ownership of the asset, GHL believed it would be able, with a big asset base, to perhaps invest more into housing and perhaps generate some extra profit.

In relation to Tauwhareparae Farms, he said farming could be up and down, depending on the weather, but over the years they had driven that to be more profitable, working more efficiently. There might be a little bit more in that as well.

They had the benefit of forestry coming on line, although returns were not going to be as good as first anticipated because of all the expenses, such as building a new road through the property.

They might have reached the limit of profitability with the vehicle testing station but they were always looking for new opportunities and they had increased income from it.

“So far, they are doing a pretty good job and we are reasonably confident they can increase their profits and return an increasing dividend to the council.”

Referring to the $10 million or 10 percent of assets threshold at which GHL must get written sign-off from the council, he said it was not as if they were going to be in the dark. The council was going to discuss issues with them in a lot more detail. GHL would come to the council a lot more than they had before and the committee was talking about having a permanent item on their agenda.

“Even though $10 million might seem like a large sum, you have to give them some ability to not have to be always running to the committee to get sign-off.”