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GHL’s financial growth is not ?relying on farms

Gisborne Holdings is in a good position and future growth will not depend entirely on Tauwhareparae Farms, the District Council’s finance and audit committee was told.

GHL directors and executives were answering questions from councillors following a report from an independent review of GHL financial results for the year ending June, by its principal financial adviser Lucy Gibson.

Gisborne Holdings is a wholly-owned council trading organisation and has operations that include Tauwhareparae Farms and Property Holdings. GHL also owns the council’s administration building.

The report said most of the increase in the $8 million net profit for the year was the result of increased revenue from Tauwhareparae Farms, and increased gains in valuation from property, livestock and forestry.

Independent adviser Robert Hunter said the result was partly dependent on the revaluation of assets. He asked how the company saw its resilience in the future, should there be a downturn.

GHL board chairman Rob Telfer said he thought they were on a pretty good path.

“I feel the farm is in a very good state,” he said.

Three years ago there had been investment in an intensive fertiliser programme for the farms and, with that now in a maintenance phase, the focus would shift to staff housing and fencing.

The increase in stock valuations this year was more modest than last year, when it had been driven by a substantial increase in stock standard values. What that could be in the future was an unknown.

Committee chairman Brian Wilson said if the revaluation was taken out of the $8 million, it was a lot “thinner,”

That was why they could not be complacent. There still would be a surplus and GHL would be able to pay a dividend, but it showed how things could change quickly in the farm sector.

GHL chief executive Tracey Johnstone said GHL was investing in other areas to grow so they would not be totally dependent on the farm.

They were still growing the distribution to the council and it was based on the cash profit.

This was a commercial business and the valuation was a huge part of it, she said.

“We want to continue to grow the balance sheet and distributions to GDC to subsidise rates for our community, and it’s clear we are delivering on all fronts.”

A lot of development had been funded through cash flow funding from the Property Holdings division, although the company would have to borrow for future developments.

GHL had a “huge headroom” and was nowhere near its 20 percent debt limit outlined in the statement of intent, even with what was “in the pipeline” for the future.

Meredith Akuhata-Brown asked if there had been any consideration for using Churchill Park for social housing.

Ms Johnstone said GHL could explore that option if that was what the council wanted. Chief executive Nadine Thatcher Swann said Churchill Park was reserve land, the council did not own it and there were significant Maori interests.

Mr Wilson said GHL was operating very well. This was a good financial result and the council was happy they were looking after its assets so well.