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Trust proud of Covid response

Regional wellbeing framework to be announced at AGM tomorrow.

The unprecedented impact of Covid-19 and the role Trust Tairawhiti played in helping businesses get through will be revealed in more detail at the community trust's annual meeting tomorrow.

“February and March saw Tairawhiti feel the impact of the global pandemic Covid-19,” trust chief executive Gavin Murphy and chairman Paul Reynolds said in a joint statement.

“The regional impact started in the forestry sector, then moved to affect the lives of every one of us.

“We are proud of the role we played as a trust, adapting to provide Covid-19 specific funding, surveying our businesses and communities to lobby government with the ‘real' impact on the ground, and encouraging our communities to support the local businesses, which are the backbone of our economy.”

The trust also operates as the Regional Tourism Organisation and regional economic development agency.

Speaking to The Gisborne Herald, Mr Murphy said the trust's roles in economic development had been very busy over the past year.

“There has been a lot of business engagement as we all try to grapple with Covid-19. Behind the scenes, we were quite active for example in supporting the report to the Government that ultimately led to that $23 million economic redeployment package.”

The trust also invested a further $4.8m into the Prime wood processing centre of excellence, $3.3m of that into the Prime sawmill.

The sawmill assets were reacquired for $1.7m after the operator, (Far East Sawmill) experienced trading difficulties.

A $2.93m impairment to the carrying value of the trust's holding in Far East's parent company, Spectrum Group Ltd, reduced the carrying value to nil.

It also invested a further $1.5m into WET Gisborne Ltd to provide working capital support for the wood engineering investment.

Mr Murphy said a lot of human resource work had also been done to support economic activity, such as the refresh of the Tairawhiti Economic Action Plan.

A total of 160 businesses had engaged with the trust's government-funded Regional Business Partner network.

“The way we are seeing Covid is it only reaffirmed the kind of things we were needing to work on in terms of this region, and the outcomes were broadly right.”

Trust Tairawhiti will also announce tomorrow how it will fund and invest in wellbeing outcomes through a new regional wellbeing framework.

The regional community trust's annual report for the financial year ended March 2020 will be presented to the public, along with the new wellbeing framework project, at its annual meeting at Gisborne Boys' High School from 5.30pm tomorrow.

Details of the regional wellbeing framework, which has been a year in the making, will be presented on the night.

The trust's annual report and financial statements have been released to The Herald.

Last year the trust made $9.8m of community distributions, including a $5m distribution to Eastland Group to help fund the new terminal at Gisborne Airport, the annual report shows. In addition, it made $4.4m of direct investments.

The trust is the sole owner of Eastland Group, which owns Eastland Network, Eastland Port and two geothermal power stations in Kawerau, and operates Gisborne Airport.

In the year ended March 31, Eastland Group's businesses delivered a profit of $18.5m, from a record income of $111.7m.

It also saw a significant increase in equity with a $47m revaluation of its electricity generation assets.

Eastland Group has grown its investments to the point where it now has $670.4 million of assets, alongside $250m in debt.

Eastland Group returned a record $12.3m to Trust Tairawhiti in the year to March 31, 2020.

Over the year, Trust Tairawhiti grew the amount of capital available for income beneficiaries by $3.6m to $128.1m — this is the amount deemed available to income beneficiaries over the life of the trust — while the “preserved capital” grew from $208.9m to $249.2m.

The total trust fund is now $377.3m — up from $333.4m in the 2019 financial year.

It also noted $2.8m of operational investment in economic, tourism and community development towards regional wellbeing.

The trust's listed equity investments were down $4.7m to $25.9m due to a slump in global stock markets in March.

“We're very mindful of that, in terms of the trust's balance of investments, in terms of equity versus cash,” Mr Murphy said.

The trust's annual financial satements also noted Eastland Generation had signed a project agreement to investigate the development of a geothermal power plant.

The statements also show Eastland Group's debt had risen from $227m to $250m during the year.

Mr Murphy said it was important to remember that debt spiked when large infrastructure investments were made and over time these made returns on capital and paid back debt.

“Debt and gearing allows equity to be leveraged and achieve more. So, debt is not a bad thing, in and of itself — it's just the right balance and range within which we agree with the company is prudent to operate in.”

Eastland Group's last major investment, in the Te Ahi o Maui geothermal plant near Kawerau, totalled $149 million and while debt levels of the company were the responsibility of directors, as 100 percent owner the trust was towards the “upper end” of its expectations around debt levels with the group's current banking facilities allowing for debt of up to $305m.

Mr Murphy said the potential new significant developments would need to find alternative structures or potentially other investors to support funding them.

He also said the trust was in discussions with the company on options to release some capital from Eastland Group over the next five-year period, to fund growth and to provide special dividends back to the trust.

A number of developments at the trust's Commerce Place business park were also under way but not yet ready for public release.

Trust Tairawhiti chief executive Gavin Murphy. File picture by Paul Rickard