Link received from Gurglars
Sun, 1 Jan 2017 at 8:13 a.m.
“Yealands is, depending how you measure it, either the fifth or sixth biggest wine company in New Zealand and everybody in Marlborough benefits from it.” –David Dew, Marlborough Lines
### Stuff.co.nz Last updated 11:36, December 30 2016
Wine and power lines a good match as Yealands deal starts to pay off for Marlborough Lines
By Jennifer Eder – The Marlborough Express
Power users in Marlborough can expect a payout three times that of last year as an investment deal with Yealands starts to pay off, and there could be more investments on the horizon. Marlborough Lines chairman David Dew said power customers would get $150 paid into their power bill accounts in February or March as a dividend from the company’s investments. The increase from last year’s $50 was down to profits from the Yealands Wine Group, Dew said. Marlborough Lines, owned on behalf of Marlborough’s power customers by the Marlborough Power Electric Trust, bought 80 per cent of Yealands Wine Group last year for $89 million.
█ [2016 Annual Report not yet available online.]
The Marlborough Lines annual report, released this month, showed the company already owned 50 per cent of Nelson Electricity, which it bought in 1996. Its board of directors was planning to make another investment with $31m left in the bank, it said. The 154-page report, entitled Lines to Vines and Wines with a wine glass on the cover, assessed the performance of the Yealands Wine Group. Yealands recorded a profit of about $10m for the year to June 30 and Marlborough Lines owned 80 per cent of that. Dividends of $4.4m were withdrawn and would be paid to the trust, which would distribute dividends to customers.
Marlborough Lines Ltd
Yealands Wine Group Ltd
2.7.15 Marlborough Lines buys 80pc stake in Yealands Wine Group
3.7.15 Mixed reaction from Yealands sale
25.9.16 Delay in payout from Marlborough Electric Power Trust
8.11.16 Marlborough power trust urges customers to oppose possible tax on rebates
The company maintains 3383km of lines and cables across the operating region. Marlborough Lines takes its supply from the Transpower grid via three circuits to a single point of supply in the Blenheim suburb of Springlands. Supply to Marlborough then radiates out to a number of very isolated rural areas including the Marlborough Sounds, Molesworth Station (New Zealand’s largest farm at the top of the Awatere Valley) and the Southern Marlborough coast; an area bordered by the Pacific Ocean on one side and the seaward and inland Kaikoura mountains on the other.
As well as owning and operating the network that delivers electricity to more than 24,500 customers in the Marlborough region of New Zealand, Marlborough Lines also has substantial investments in other network companies supplying the Nelson and Bay of Plenty regions of New Zealand.
Posted by Elizabeth Kerr
This post is offered in the public interest.
10 responses to “A successful Lines company….”
Sun, 1 Jan 2017 at 11:03 p.m.
Subject: You might like to put up a link to the directors and management of Marlborough lines co
Message: “Engineers, lawyers, someone in construction……. and one accountant on the board, one on the senior management team.
These guys (mostly men) know stuff about how to run a business, and stuff about doing things rather than making financial spreadsheets with poor information inputs.
Counting beans isn’t the same as running a successful business you may think.”
Board of Directors
Marlborough Lines is managed by a highly experienced and qualified board of directors. Directors are appointed by the trustees on a rotating basis and have responsibility for the commercial operation of the company.
Meet the decision-makers and people responsible for our operations.
Please don’t suggest any other ways Delta/Aurora could “diversify” a.k.a. try to get out of their other messes. You know what they’d borrow more money so they could invest in – everyone seems to be talking (omg-reminiscing, shuddering) about it these days? Cold Duck!
The Yealands ‘investment’ seems to be a fairly contentious issue amongst Marlborough people. Many believe that their lines company should stick to its core purpose of supplying their customers with a reliable distribution network as cheaply as possible.
The Waitaki Network looks to be one of the best in NZ and, because of their true consumer trust ownership model, are largely exempt from any Commerce Commission scrutiny. i.e. they are genuinely operating in the best interests of their consumer-owners with any annual surplus being rebated back to consumers each year. Trustees are democratically elected, a small and capable management team runs the business and bona fide contractors perform much of the maintenance work. Drive up to Oamaru Mr Cull and compare it to the costly shambles in Dunedin.
2017 is going to be costlier again if the proposed separation of Delta and Aurora just serves up two sets of directors and two sets of executive management teams to give the perception of ‘stand-alone’ entities.
If the present sham of Delta as being Aurora’s ‘preferred contractor’ is allowed to continue with a duplicate set of generously paid head office people overseeing a total lack of any genuine competition for Delta’s operations, then we will just get further bogged down in shelling out big salaries and perhaps another stadium corporate box for preserving the cosy status quo.
Mr Thompson and his 1962 Cortina is going to have to apply some genuine market forces to Delta if any good is to come out of the Deloitte report. Delta would not have survived the last decade without access to the lucrative and guaranteed income stream provided each year by Aurora’s lines charges. All Dunedin and Central Otago people who contribute to the Aurora/Delta corporate largesse through their monthly power bills deserve to see some fundamental changes to the present fiasco.
Cut Delta loose Mr Crombie. Call tenders for all Aurora’s maintenance and asset upgrade work. Leave Mr Grady Cameron in charge of Delta only, and then we will see just how good he really is.
80% as much for twice as many, you know it makes sense. Afraid I don’t. Make sense, I mean. All the excitement of Christmas-NewYear has driven important details of Delta/Aurora reorganisation from my memory.
Or has it?
(Nick:) “2017 is going to be costlier again if the proposed separation of Delta and Aurora just serves up two sets of directors and two sets of executive management teams…” and no proposed reduction in the amount paid for them. No suggestion (or did I miss that news item?) of reducing total director fees, and spreading that smaller amount over 2 sets of old boys & usual suspects. Likewise CEOs & their retinues of managepersons optimistically good at managing to stick to their knitting this time.
Haven’t heard yet of the 20% reduction for vital belt-tightening reasons, new sum to be split in twain. Did you? Can you remember where it was published?
There are different forms of success. Nick is right in that the decision for Marlborough Lines to invest in Yealands Wine Group was contentious, and still is. That doesn’t mean it is wrong although I too, in general, like the purity principle to apply for essential infrastructure investment. Not long after Richard Healey went public as a whistleblower, What if? discussed Network Waitaki briefly.
Network Waitaki Limited is an electricity lines company distributing electricity from the national grid to consumers’ properties. Its area of supply extends from the Waitaki River to Shag Point, up the Waitaki Valley as far as Ohau and the Hakataramea Valley. It services 12,000 consumer connections across a network of 1,800km of power lines.
Network Waitaki Limited is a 100% consumer trust-owned company. It is owned by the consumers for the consumers’ benefit and returns profit surplus to requirements back to its consumers by way of a discount.
To be a locally owned and operated electricity distribution company
that provides the benefits of local consumer trust ownership by:
● owning and operating a safe, reliable and efficient distribution system that meets the evolving needs of its consumers, in accordance with the Asset Management Plan.
● supporting the economic growth and wellbeing of the community it serves.
Since the industry reforms of 1999, Network Waitaki Limited has operated solely as an electricity lines business. It does not generate or sell electricity; this function is provided by electricity retailers. Network Waitaki’s core business is the provision, operation, and management of electricity infrastructure. It is an engineering-based asset management team. Construction, maintenance, and fault repair services are contracted out to field service providers. Network Waitaki Limited also has a contracting department which provides a range of field services. A metering service is also offered to electricity retailers.
█ Read more about Network Waitaki here:
There is a strong argument for “the purity principle to apply for essential infrastructure”.
We have seen how crap some CEOs and boards and councillors are at the plain basics of their responsibilities.
The chance of getting a full complement people in those roles who are highly competent not only at their core tasks but also in unrelated fields?
On form, if we were to take a gamble on this we’d need to be escorted straight to Gamblers Anonymous.
And have our financial affairs put in the hands of a responsible adult.
The following comment was received at 9:07 this morning from Hilary Calvert:
“The other part of Marlborough Lines to learn from is that the trustees’ role is to choose the directors. The trustees are elected. So those who elect the trustees are choosing them to use their judgement to choose directors rather than be directors.
In Dunedin we have unelected directors chosen by other unelected directors effectively. Now DCHL is in charge of the choices being made by the elected ones, who don’t appear to feel confident in choosing directors.
The idea that the elected council should not criticise staff is extended to not criticising the directors, so a vicious cycle is perpetuated.
Now DCHL has been asked whether it has confidence in Delta et al.
The Marlborough example shows a model where the shareholders are effectively in charge of whether they have confidence in the judgement of those choosing directors.
Don’t ask the turkeys whether they are confident those organising Christmas will do a good job. Ask those eating the dinner whether they got value from their expensive fare.”
Lines companies investing in wineries? It seems like a mini-reprise of the ‘conglomerate’ concept, in which companies stick together all sorts of unrelated enterprises in order to reduce shareholder risk by constructing a portfolio of activities.
Conglomerates come and go in fashionability, but their long term track record is not a happy one. As they are fundamentally unmanageable. typically they collapse in a welter of cross subsidisation and boardroom ‘porkies’ leaving the shareholders out of pocket.
The lesson is that it’s best to build your own personal portfolio of investments than have someone else, who may have other interests, do it for you. The same goes for unit trusts and managed KiwiSaver funds whosé returns appear to be consistently abysmal.
Resene have branched out into wine too. Can you see the fit? We will see how that one pans out in the long term – Perhaps the flavours of the two product lines will converge?
But I would like to see my power company stick to running the lines.
“But I would like to see my power company stick to running the lines” to which I would add –
economically by stinting on wastefulness, investing in quality,
paying workers at risk from previous heinous decisions a sizeable per-hour risk premium taken from the whole salary amount not an extra impost on customers,
without bullshit merchants on the payroll because good performers can proudly make honest public statements and doesn’t need PR spin.
A long time ago a guy asked a group I was in, what was the business that Kodak, Agfa and Ilford were in? Most people said something like photographic film. The answer of course was that they were all in the business of making money, photographic film was simply the means by which they did this. If they could make more money by making something else, then they would, but all their manufacturing staff were experts in film.
A lines company, if correctly run, should be an ideal vehicle for making money. It is essentially a monopoly and nearly everyone needs power lines in order to purchase electrical energy. What Aurora/Delta have shown is that despite all that they have going for them they still manage to stuff up to an incredible amount. They don’t know the first thing about running a business that should be making money hand over fist. God help us all if they decided to increase their experiences of Luggate, Jacks Point and Yaldhurst by diversifying anywhere.