News@Eastland

High Aspirations for Eastland Group

Mon, 23 Jan 2012 00:00:00 +1300

Eastland Group’s new general manager of business support makes no secret of his desire to see the company grow to great new heights.

“ I want to see Eastland Group become one of New Zealand’s great companies,” says Christopher Breen.

He has a track record in working in management, consultancy and entrepreneurial companies. At a time when the provinces are taking a lead in the economic development of the country, he saw an opportunity join a company that was having a real impact in its local community.

Part of his drive to take the new position was to be involved in an initiative that could make a real difference for New Zealand.

Eastland Group, which owns the port, the electricity network and runs the airport, has expanded into geothermal generation.

“Some have been critical about the group having interests outside the district, but here is an opportunity to bring the benefits those initiatives provide back into the local community,” says Mr Breen.

“Running a successful operation means finding opportunity that is consistent with the company’s strategy wherever it may be, and it happens that the geothermal offerings are in the Bay of Plenty region at the moment.”

The group is keen to be part of the Government’s push to see 90% of electricity generation from renewable sources by 2025.

But to keep in step with the growth, development and investment needed, Eastland Group needs more funding.

“It’s not an unattractive investment proposition either,” says Mr Breen. “Relative to a recent ‘New Zealand Management Magazine, the group would be placed 98^th in the top 200 companies in New Zealand for asset size, and 99^th for equity.”

But the big question is how to go about attracting that investment.

“As a group, we also want to continue to attract a skill set that has relationships and knowledge to achieve our goals,” says Mr Breen. “We want the best human capital – wherever they may come from.”

And those sorts of people are unlikely to hang around if the company doesn’t continue to grow as it has done in recent years.

Much of that will come back to Mr Breen’s portfolio, which encompasses human resources, information technology, health and safety, marketing, procurement and strategy development.

“It’s exciting to be part of something that can really make a big difference to this community,” he says, “but for that to happen, there needs to be change.”

Since the group was formed in 2003 it has grown in leaps and bounds – quadrupling the asset base from $88 million to $349.4 million, and profit mushrooming from $2.9 million to $8 million in the same time.

“Those sorts of figures will not continue to be possible if we don’t expand our horizons,” says Mr Breen.

Eastland Group Six Month Financial Result 2011

Thu, 29 Dec 2011 00:00:00 +1300

Eastland Group Limited is pleased to announce its unaudited financial result for the first half of the current financial year to 30 September 2011.

Revenue for the 6 months was 4.2% higher at $37.6 million compared with $36.1 million for the same period the previous year.

Earnings from operations (EBITDA) were 4.9% higher at $17.1 million against $16.3 million the previous year.

Net Profit After Tax (NPAT) for the half year was 8.7% lower at $4.2 million compared to $4.6 million for the same period the previous year.

The reduction in reported NPAT is primarily due to the increased depreciation charges on the revaluation on port operating assets, which reduced NPAT by $1.0m.

The assets of the Group have grown slightly over the six months with total assets now standing at $349.4 million. Bank debt has remained stable and is currently at $100.4 million.

A half year gross dividend of $3.1 million was paid to our shareholder the Eastland Community Trust, with another dividend of the same amount forecast to be paid prior to the end of the financial year, equating to a full year gross dividend of $6.2 million, a 3.0% increase on the previous year.

The strong financial performance has been underpinned by a growing forestry sector fuelled in the main by continued strong demands out of Asian economies, in particular China.

The infrastructure at the port is under significant pressure from the increased volumes which has lead to the Company accelerating its port development plan. Capital investment in offsite storage at Matawhero and asphalting of the lower log yard will all assist in increasing the capacity, efficiency and ability of the port to cope with the growing log export volumes which this year are on target to be greater than 1.6 million tonnes.

The aviation businesses are generating an operating profit although this sector remains the most severely affected by economic issues facing the economy.

Generation volumes and revenues from the Waihi hydro station have been stable.

The performance of the Kawerau geothermal power station has been generating at above 96% availability during the period. Work has commenced on the construction of a new pipeline to deliver additional geothermal fluid and an increased output in the well performance with completion expected in early 2012.

The Te Ahi O Maui geothermal project continues to progress with the opening of an office in Whakatane, the recruitment of a project manager based in the Bay of Plenty and some significant milestones being achieved.

The Company is currently looking to develop new sustainable energy generation projects, in particular geothermal and hydro Opportunities.

The electricity distribution business provided a solid regulated return and the network performed well over the winter months given the number of significant weather events during this period. This provided the electrical network contracting business with above forecast workloads.

Gisborne Airport continues to provide the physical infrastructure required for an efficient regional airport. The Eastland Community Trust’s subsidy on the 50 seater Q300 aircraft finished in June 2011, in part driving the need for a pricing review which is likely to commence during the second half of the current financial year. This will allow some important capital investments, such as a runway reseal to be planned in the not too distant future.

The Company is also about to embark on a refinancing of its $125 million of bank debt facilities. It is hoped that the strong financial performance of Eastland Group will allow a reduction in the cost of debt funding to be obtained.

The outlook through to year end 31 March 2012 remains positive. At an operating level the Company is performing well, however there is some risk around external events which, in particular a slowdown in the Chinese economy, could impact unfavourably upon the export log business. These have the potential to adversely affect the Company’s, audited, net profit for the year ended 31 March 2012.

Lots and lots of logs

Thu, 22 Dec 2011 00:00:00 +1300

MORE RECORDS TUMBLE AT EASTLAND PORT

A resurgent log market, a lull in shipping and increased harvest made for a record-breaking moment at Eastland Port over the weekend.

The 107,000 tonnes on the port last weekend broke the previous record by more than 20,000 tonnes.

A big bonus of the peak in storage was the chance to utilise the newly-asphalted two-and-a-half hectares to its full capacity, which was recently completed as stage one of the group’s biggest-ever capital investment project.

Eastland Port project development manager Marty Bayley says they hadn’t fully anticipated the volume gains the asphalting project would create. “It is certainly much bigger than we had anticipated,” he says.

Stage two, which will see the second third of the main yard asphalted, is expected to start on January 9.

The $15 million project will be completed in the next year-and-a-half, and is part of the port’s ongoing development plan focusing on delivering fit-for-purpose infrastructure for the region’s burgeoning forestry industry.

As well as the record storage on port, there were also 20,000 tons of logs stored at the port’s newly-commissioned “inland port” at Matawhero. The facility is now completely self-sufficient with its own weighbridge, log scaling operation and trailer gantry facilities, which will contribute significantly to reducing truck movements through the city.

Eastland Port is on target to record a record-breaking year, with more than 1.6 million tonnes expected to be exported in the current financial year.

Logs, logs and more logs.....looking like match sticks, more than 107,000 tonnes of logs wait to be exported from Eastland Port.

Photograph by Andrew Costello

Port Consent

Mon, 19 Dec 2011 00:00:00 +1300

RESOURCE CONSENT LODGED FOR UPPER YARD LOG

The multi-million dollar upper log yard development at Eastland Port is another step closer with the lodging of the project's resource consent with Gisborne District Council.

It has been two years in the preparation stage, with a particular focus on design and consultation, and port general manager Andrew Gaddum says he's pleased to see it take the next big step.

“We have worked hard and tried to be completely upfront and transparent with the residents to ensure their concerns are met,” he says.

Part of the process has also been a cultural assessment of the impact the project is likely to have on the historic area.

The upper log yard development will give Eastland Port another 1.5 hectares of general storage, meaning capacity for another 15,000 tonnes of logs at any one time – all up, that could mean an extra 150,000 tonnes a year.

Mr Gaddum says the expansion is critical to the on-going success of the port.

“It's definitely an essential part of our 10-year development programme,” he says. The project includes the removal of the fertiliser storage sheds, the levelling of the 2.9 hectare site , the laying of a special pavement for logs, a new storm water system and the addition of a native tree and landscaped 4-metre high by 6-metre wide earth wall.

A hearing is expected in February.

Ben Gibson heads to Whakatane

Mon, 19 Dec 2011 00:00:00 +1300

GIBSON HEADS TO EXCITING NEW POSITION IN WHAKATANE

Eastland Group's commitment to extending its renewable energy portfolio takes another step this week with Ben Gibson taking up the new role of Te Ahi o Maui geothermal project manager in Whakatane.

The former general manager – commercial, has been Gisborne based for seven years and is looking forward to the exciting new challenges his new position offers.

Mr Gibson will be working closely with land owners Kawerau A8B Ahu Whenua Trust and the Hawaiian-based Innovations Development Group.

Gibson will oversee stage one of the geothermal project which involves consenting, procuring and constructing a 10-15 megawatt plant.

“That carries an expected capital cost of between $45-$60 million over the next two to three years,” he says.

There is plenty of work to be done before any new wells are dug or construction starts, but Mr Gibson says the company's due diligence puts them in a great position.

“This project, along with our existing geothermal capacity, will create significant base generation for the group.”

The Kawerau land already has on it the KD22 geothermal well, and is not far from the group's 9 megawatt geothermal power station.

Eastland Group is keen to be part of an exciting new direction for New Zealand, with the recent announcement from Government that they are aiming to have 90% of the nation's energy coming from renewable sources by 2025.

“We're most definitely going to be part of that.”

Regional network in good hands

Thu, 08 Dec 2011 00:00:00 +1300

REGIONAL NETWORK IN GOOD HANDS

Eastland Network is outperforming many of its energy peers, according to two recent reports from the Commerce Commission.

When compared to 29 other electricity distribution businesses across the nation, Eastland Network consistently featured near the top.

Eastland Network general manager Brent Stewart says it's particularly pleasing when the challenging terrain and low customer density is taken into account.

“We have a lot of kilometres of installed network over rugged country that supplies remote locations with a low customer density, making it much harder for us to feature highly in many of the performance measures, but this report highlights we are an efficient operation.”

While there were many factors considered, Mr Stewart says the two that stand out are Eastland Energy's fifth spot of the 29 businesses in the average operation expenditure per kilometre of network and 12^th spot in the average operation expenditure per connection.

“These results support our current operational and maintenance practices and validate the asset management plan we have in place,” he says.

The Commerce Commission also ranked Eastland Network in the top 10 of the 29 network businesses in terms of compliance with the requirements of asset management plans, which detail how the network will be managed over a 10-year period.

Mr Stewart says the feedback from the commission shows that the region is in good hands.

Te Ahi O Maui - New Geothermal Development

Fri, 03 Jun 2011 00:00:00 +1200

TE AHI O MAUI - NEW GEOTHERMAL DEVELOPMENT OPTION FOR EASTLAND GROUP

Eastland Group has signed an exclusive deal to be part of a ground-breaking international indigenous peoples project.

It's part of the group's energy development plans, and involves the exclusive development right for 170 hectares in Kawerau on a Maori trust block belonging to the Kawerau A8D Ahuwhenua Trust.

There is an existing commercially viable geothermal well on the land, but Eastland Group chief executive Matt Todd says an assessment of the entire area has shown a significant additional resource underneath the A8D block.

“This is an exciting development for us to be involved in,” says Mr Todd. “While Gisborne based Eastland Group is a large local business, it is not a multinational or huge corporate, and as a result we have similar provincial values with a strong sense of community responsibility, as does the Trust we are working with on this project.”

”We think there is a niche for us at a level below what would be attractive to the large generators and retailers, but which is well above the reach and capability of small to medium businesses. “

The other company involved in the deal is the Hawaiian-owned Innovations Development Group (IDG), and this project has allowed them to successfully create the world's first Native to Native trade deal.

Native to Native Trade has been established to help indigenous peoples who want to develop their lands and resources, but need assistance to see that realised. Such trade encourages ownership in projects, shared profits and socially, environmentally and culturally appropriate practices.

“This is very much a three-way partnership,” says IDG Founder Robbie Cabral. “IDG were brought on as development experts by the Kawerau A8D Ahuwhenua Trust,and Eastland became involved when they sought out financial backing and technical experts in power generation.”

The new operation is not far from Eastland Group's 9 megawatt geothermal power station which was bought in early 2010. The group is keen to expand further into the power generation sector with a particular focus on renewable energy.

A cultural consultation process will be worked through to ensure the right protocols are in place before any development on the trust land is started.

The project has been named Te Ahi O Maui, which loosely translated means “the fire of Maui”, capturing the essence of the history of the ngawha’s (geothermal fluid) journey from Hawaii to Aotearoa, and the belief that the Chief Ngatoroirangi summoned the heat from his homeland Hawaii'iki. The demigod Maui sent it from Hawaii through another demigod Pele, the Hawaiian goddess of fire.

Mr Todd says he anticipates the development to be done over several stages, with the first likely to take approximately 2 years. The initial stage one project is potentially a 10MW to 15MW plant with a capital cost of $45 million to $60 million.

The power generated will be fed back into the Bay of Plenty community using local electricity lines, where possible.

“The synergies between our two geothermal sites are strong and can only be beneficial for all involved.” says Mr Todd.

-ENDS-

Eastland Group Financial Result 2011

Tue, 31 May 2011 00:00:00 +1200

Eastland Group Limited Announces Financial Result for 12 Months Ending 31 March 2011

Eastland Group Limited today announced that its earnings for the year ending 31 March 2011 were a record net profit after tax of $8.0 million compared with $5.6 million the previous year.

Group chief executive Matt Todd says it's a fantastic result and one that underscores how well the group has done in challenging financial times.

Dividend distributions to Eastland Group’s 100% shareholder, the Eastland Community Trust, were $4.2 million dollars for the financial year, which was up from $4.0 million from the previous year.

In addition capital note interest of $2.6 million was paid to the Eastland Community Trust.

Revenue for the group was also up on the previous year from $61.9 million in 2010, to $73.2 million in the 2011 year, which resulted in the operational earnings (EBITDA) for the business growing considerably in the same period from $22.5 million to $31.3 million.

The operational result for all sectors and businesses was improved on the previous year.

Total assets have increased to $345 million, while equity grew from $122 million to $162 million.

Eastland Group is a Gisborne based national company, investing in and managing a targeted portfolio of businesses, with a focus on the energy and logistics sectors, in addition to holding some key regional assets, all of which must be capable of delivering value to its shareholders, customers and stakeholders.

A more detailed announcement will be made in conjunction with the Eastland Community Trust's end of year result and annual general meeting later in the year.

[ENDS]

Rail is uneconomic and we can’t afford it

Wed, 25 May 2011 00:00:00 +1200

Rail is uneconomic and we can't afford it

It is appreciated that there are people who are very emotional about the railway line, but at least up until this point the debate has been grounded around what was best for Gisborne Inc.

We now have a councillor implying that the forestry industry should pay significantly extra to use an inefficient form of transport to rail logs from Matawhero to Napier Port. Why would anyone rail product an extra 200km when there is fit for purpose infrastructure on their to doorstep?

Apparently this is justified because it will provide some un-quantified social benefits associated with having less logging trucks running through the city.

What about the economic and social consequences of making our forestry industry uncompetitive, taking volume away from the locally owned port and the loss of jobs from an industry that is a major employer in the region?

The Gisborne to Napier railway line is an uneconomical piece of infrastructure that has no prospect of being able to pay its own way now or in the foreseeable future.

It is accepted that there are many people who support keeping the railway operational but they are driven mostly by nostalgia and they seem to miss the point that it can only survive with an ongoing subsidy.

In these tough economic times it would seem irresponsible for taxpayers or ratepayers to continue to fork out over $2 million annually to fund obsolescent infrastructure.

It is uneconomic as a passenger railway, it is uneconomic as a tourist railway or as a historic railway for WA165, it is uneconomic as a freight railway and it is extremely unlikely that any of these potential revenue sources, singularly or collectively, will ever be able to provide the necessary volumes.

The facts are plain and simple; there is no industry that will provide the volumes that rail needs to survive without a subsidy.

Eastland Group has worked hard to provide a port that is efficient, effective, that meets the needs of industry and is financially sustainable. The forestry sector is the primary driver of economic growth in this region and Eastland Port, as the second biggest log export port in New Zealand, is a key part of the supply chain.

In the 2005 financial year the port exported 350,000 tonnes of logs, last year it was 1,500,000 tonnes, so the port log volumes have grown over 500% during this period. In 2005 the railway took 0 tonnes of Gisborne logs to Napier, last year it took 0 tonnes of Gisborne logs to Napier. The market has spoken and industry has already decided that rail plays no part in the export of local logs.

For the record it is also uneconomic to use rail to shunt product from Matawhero to Eastland Port and even if the numbers did work, people seem to have forgotten that trains operating 24/7 through the middle the city would potentially be as nosey as trucks. The reason nobody is complaining about trains is that there aren’t any!

Some of the traditional argument for retaining the railway has been based on future volumes of processed forestry product that could be containerised and therefore could go to Napier by rail. New investment in forestry processing has been continually delayed and this doesn’t look like occurring any time soon.

The simple truth is if processed containerised volume does arrive it would be a comparatively easy and a more cost effective option to put a small coastal vessel on between Gisborne and Napier to transport these containers.

The people trying to save the railway believe they are doing so for noble reasons, but it is misguided to try and anchor its future to an industry that doesn’t want to use it and it is doubly misguided for this solution to destroy jobs and lower economic productivity as a consequence.

-END-