Challenging year, positive future for Eastland Group

Challenging year, positive future for Eastland Group

Regional infrastructure company Eastland Group has weathered one of the most testing years in the company’s history, and goes into the second half of 2023 with a fresh strategic focus and ambitious plans for growth.

“It’s been an incredibly tough year for everyone here in Tairāwhiti, and Eastland Group is no exception,” said Group Chief Executive Matt Todd.

“Multiple severe weather events, the lingering effects of the COVID pandemic, disruptions to the global supply chain and other operational challenges all meant that the company’s underlying results were considerably impacted.

“On the upside, our long-term planning is bearing positive results. After two decades of expansion, investing in regional infrastructure and delivering value for our shareholder, we are taking steps to reposition the company in preparation for future opportunities.”

One of the most significant decisions was the sale of Eastland Network to Firstgas Group, owned by Igneo Infrastructure Partners, on 31 March 2023.

“The sale process had been more than 18 months in the planning, well before the challenges of the last year hit,” said Mr Todd. “The sale proceeds received were $257.7 million, above the asset book value of Eastland Network, which was $190 million as at 31 March 2023.”

Eastland Group posted a $92.8 million profit for FY 2023 which reflects the sale of Eastland Network.

The Group paid a special dividend of $50 million to shareholder Trust Tairāwhiti, along with repaying $30 million of capital notes. In total, Eastland Group made distributions and repayments to the Trust of $90 million.

“It was an excellent outcome,” said Mr Todd. “We have paid down debt and committed to new renewable energy projects, while releasing a big chunk of equity to the Trust for the benefit of current and future generations in Tairāwhiti.

“The Network’s day-to-day operations are still based here, and regulations mean that there are ongoing protections for local consumers around price and quality of supply.”

Eastland Network, along with Eastland Group’s other lifeline assets, played integral roles in regional recovery during the aftermath of Cyclone Gabrielle, which battered the region in February.

The Network team and contractors restored power across thousands of square kilometres in extremely difficult conditions.

Gisborne Airport provided an essential hub for supplies and personnel.

Eastland Port stood up an emergency coastal shipping service while the road to Napier was closed. This was made possible with a $500,000 grant from the government, along with a $2.25m underwrite for the charter of the Rangitata for three months. The temporary service completed 18 voyages that moved nearly 300 containers for local businesses.

The Port continued to contribute to the region’s economic resilience, exporting 2.4 million tonnes of logs and supporting the return of a successful cruise ship season.

“The Wharf 7 redevelopment is progressing smoothly,” said Mr Todd. “We have also submitted the consent application for Stage 2 of the Twin Berth project, which is another key step towards permanently establishing containerisation and future-proofing the Port.”

Gisborne Airport was open for business throughout the year, welcoming over 210,000 passengers – a new record.

Eastland Generation’s three geothermal power plants and hydro scheme generated a total of 416.6 GWh of renewable energy in the 2023 financial year.

Construction on Tairāwhiti’s first utility scale solar farm – and, for the moment, New Zealand’s biggest, at 5.2MW – started at Gisborne Airport. Te Ihi o re Ra will be completed in September 2023.

“In July 2023, we announced a capital raise to fund growth for the generation business, where we have a substantial, well-progressed pipeline of renewable generation projects,” said Mr Todd. “Local opportunities include two further solar plants, with sites secured in Uawa and Wairoa.

“We also confirmed the development of our TOPP2 project, a 49MW geothermal power station in Kawerau. Trust Tairāwhiti will provide a short-term investment of $30 million to support the land enabling works for the plant.”

The 35MW Taheke Geothermal Project, a partnership between Eastland Generation and The Proprietors of Taheke 8C & Adjoining Blocks Incorporation (Taheke 8C), reached a major milestone. The Minister for the Environment accepted the project’s resource consent application under the COVID-19 Recovery Fast Track Consenting provisions, and the application has been referred to an expert panel to consider.

“Combined, these projects will add real scale to Eastland Generation’s portfolio and position us as a significant developer, owner and operator of renewable energy in the New Zealand market.”

Eastland Group are measuring their emissions and working on delivering on their sustainability action plan, as part of their commitment to the Climate Leaders Coalition.

With the sale of the Network, and the evolving needs of Port and Generation, in 2023 Eastland Group restructured their business. This resulted in a number of roles being disestablished, and new ones created. A new operating model was introduced, with Eastland Group becoming primarily an investment holding company.

“When Eastland Group began in 2003 we had assets worth $100 million and equity of $49 million,” said Mr Todd. “This has grown sevenfold and today we have $744 million of assets with $387 million of equity.

“Over the last 20 years, we have used that $49m of equity and $549 million of shareholder value has been created and we’ve distributed $211 million to Trust Tairāwhiti.

“These results are a testament, most of all, to the exceptional work of our staff. Together with the board and the executive leadership team, I would like to thank and acknowledge each and every one of our team for their professionalism and dedication during a very demanding 12 months.”