Joint
Shareholders Committee Agenda – 20 August 2024
AGENDA
1 Opening, Welcome, KARAKIA
2 Apologies
and Leave of Absence
An apology has been received from Councillor
C Hill.
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Recommendation
That an apology
be accepted from Councillor C Hill.
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3 Public
Forum
Nil
4 Declarations
of Interest
5 LATE
ITEMS
6 Confirmation
of minutes
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That the minutes of
the Joint Shareholders Committee meeting held on Tuesday, 16 April 2024, be
confirmed as a true and correct record of the meeting.
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That the confidential
minutes of the Joint Shareholders Committee meeting held on Tuesday, 16 April
2024, be confirmed as a true and correct record of the meeting.
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7 Reports
7.1 Infrastructure Holdings Limited Final
Statement of Intent - 1 July 2025 to 30 June 2027 and other matters............................................................................................................ 4
8 Confidential
Session
8.1 Procedural
motion to exclude the public............................................................... 87
8.2 Trustee Remuneration 2024/2025 - Tasman
Bays Heritage Trust....................... 87
8.3 Infrastructure Holdings Limited -
Governance matters......................................... 87
9 CLOSING
KARAKIA
Joint
Shareholders Committee Agenda – 20 August 2024
7 Reports
7.1
Infrastructure
Holdings Limited Final Statement of Intent - 1 July 2025 to 30 June 2027 and
other matters
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Report
To:
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Joint
Shareholders Committee
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Meeting
Date:
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20
August 2024
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Report
Author:
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Matthew
McGlinchey, Financial Performance Manager
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Report
Authorisers:
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Mike
Drummond, Chief Financial Officer
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Report
Number:
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RJSC24-08-1
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1. Purpose of Report
1.1 The purpose of this report is to receive
the Infrastructure Holdings Limited final Statement of Intent (SOI), 1 July
2025 to 30 June 2027.
2. Report Summary
2.1 To receive the Infrastructure Holdings
(IHL) final Statement of Intent (SOI), 1 July 2025 to 30 June 2027 noting
that appended to the SOI is the Nelson Airport Limited final SOI 2024-2025 and
the Port Nelson Limited 2025 final Statement of Corporate Intent (SOCI).
2.2 The Company’s dividend policy has
been finalised and is included in the final SOI. This
can be found on page 9 of Attachment 1. A summary is provided in Section
5.4. The intention of the Board is to replace the word “high” in
the policy with a specific target payout percentage range once further analysis
of the group’s forecast 10-year financials has been completed.
3. Recommendation
That the Joint
Shareholders Committee
1. receives the Infrastructure Holdings Limited Final
Statement of Intent - 1 July 2025 to 30 June 2027 and other matters report, RJSC24-08-1; and
2. notes the delivery of
the Infrastructure Holdings Limited final Statement of Intent 1 July 2025 to 30
June 2027 as required under the Local Government Act 2022; and
3. notes that the
Infrastructure Holdings Limited final Statement of Intent 1 July 2025 to
30 June 2027 includes the final Statement of Intent for Nelson Airport
Limited 2024-2025 and the final Statement of Corporate Intent for Port Nelson
Limited 2025; and
4. notes the
Infrastructure Holdings Limited Final Statement of Intent – 1 July 2025
to 30 June 2027 (Attachment 1 to the agenda report) and accompanying final
Statement of Intent for Nelson Airport Limited 2024-2025 (Attachment 2 to the
agenda report) and final Statement of Corporate Intent for Port Nelson Limited
2025 (Attachment 3 to the agenda report) will be made publicly available on the
Shareholding Councils’ websites.
4. Background
and Discussion
4.1 This
is a routine report on the Infrastructure Holding Limited’s final
Statement of Intent (SOI) 2025-2027.
4.2 A Statement of Expectation was sent to Infrastructure
Holdings Limited in December 2023, to guide the Board in producing the draft
SOI and contained new specific expectations for IHL and its subsidiaries being;
in addition to the general expectations in relation to climate change,
shareholders expect that Climate Resilience Plans are developed and implemented
for the Port and Airport. These were addressed in the draft SOI and are
also in the final SOIs and SOCI.
4.3 Infrastructure
Holdings Limited must have an SOI that complies with Clauses 7 to 10 of
schedule 8 of the Local Government Act 2002 (LGA). The Statement of Intent
complies with these legal requirements.
4.4 Port Nelson Ltd is still required to produce a
Statement of Corporate Intent for IHL (as the shareholder) as set out in the
Port Companies Act 1998. The other obligations under this Act including
reporting and making the SOCI available to the public still apply.
4.5 Nelson Airport Ltd remains a CCTO and is still
required to produce a Statement of Intent for IHL (as shareholder) as set out
in the LGA. The other obligations in the LGA
including reporting and making their SOI available to the public still
apply
4.6 The
LGA Schedule 8(2) requires the IHL to consider any comments on the draft SOI
that are made to it by the first of May and deliver a completed SOI to
Shareholders on or before 30 June each year.
4.7 Infrastructure
Holding Limited’s final SOI (Attachment 1) with appendices of the
Nelson Airport Limited final SOI (Attachment 2) and Port Nelson
Limited’s final SOCI
(Attachment 3) were received by the Shareholding Councils on 26 June
2024.
4.8 Section
65 (2) of the LGA requires the councils (as a Shareholder) as soon as
practicable after receiving an SOI to agree to the SOI, or if it does not agree
to take all practicable steps under Clause 6 of Schedule 8 of the LGA to
require the SOI to be modified.
4.9 Clause
6 of Schedule 8 to the LGA allows shareholders to impose certain SOI provisions
on the company. Such a course of action would require shareholders to agree on
the changes to be imposed.
4.10 Section
64(9) of the LGA requires each Shareholding Local Authority to publish the adopted
Statement of Intent on an internet site maintained by or on behalf of the local
authority within one month of adopting it and it must maintain the statement on
that site for no less than seven years.
5. Changes
from the Draft SOI
5.1 The
draft SOI that was received from IHL showed the financials that we expect over
the next three financial years ending June 30, 2027. The final SOI has updated
these for the latest available information. There are no material changes.
5.2 The
dividend stream proposed has changed by $1 million in the final year of the SOI
period as shown below.
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25FY
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26FY
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27FY
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Dividend
24FY SOI
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$5.9m
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$6.1m
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$7.1m
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Dividend
24FY SOI
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$5.9m
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$6.1m
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$8.1m
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5.3 The
final SOI has also provided the IHL dividend policy. This was not available for
the draft SOI as at the time it was still under development. This can be found
on Page 9 of Attachment 1. The intention of the Board is to replace the
word “high” in the policy with a specific target payout percentage
range once further analysis of the group’s forecast 10-year financials
has been completed.
5.4 The
IHL Dividend Policy can be summarised as follows:
5.4.1 Dividends are
typically semi-annual and require Board consent, with special dividends as an
occasional consideration.
5.4.2 The payout
target is a substantial portion of adjusted IHL and Group NPAT, with
flexibility to moderate yearly fluctuations over time.
5.4.3 Payout ratios
are calibrated to maintain financial sustainability and a minimum BBB- S &
P shadow credit rating.
5.4.4 Compliance
with legal and regulatory standards is mandatory for dividend declarations
including maintaining capital adequacy requirements.
5.4.5 The Board
retains the right to modify or halt dividends in response to exceptional
events, ensuring transparent communication with shareholders.
5.5 The final Nelson Airport Ltd SOI
financials are down on those in the draft SOI. While the dividends have been
maintained capital expenditure has been reduced.
6. Options
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Option 1: receive
the IHL SOI (recommended)
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Advantages
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· The Company has addressed the matters in the Statement of
expectations and any feed back to the board on the draft SOI. So, this
option is consistent with the councils’ previous decision making on
this matter
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Risks and
Disadvantages
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· There are no disadvantages or risks
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Option 2: If the
Committee does not agree to the SOI, then shareholders must take all
practicable steps under Clause 5 of Schedule 8 of the Local Government Act to
require the SOI to be modified. This approach is not recommended.
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Advantages
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· There only advantage to this option is that it would enable
further dialogue with the Board over any shortcomings in the SOI.
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Risks and Disadvantages
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· This approach would require the independent support of each
shareholder. Addressing any concerns over the final SOI in this way
would signal a breakdown in the relationship between the shareholders and the
Board.
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7. Important
considerations for decision-making
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7.1 Fit
with Purpose of Local Government
Appropriate
reporting and setting of the expectations on the performance of
Council’s Council Controlled Trading Organisations supports the
economic wellbeing of the community.
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7.2 Consistency with Community Outcomes
and Council Policy
The
recommendation supports the Community Outcome that “our infrastructure
is efficient, cost-effective and meets current and future needs”.
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7.3 Risk
There is low risk to Council of receiving and accepting the final
Statement of Intent as it does not propose any substantial change to the
previous draft Statements of Intent.
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7.4 Financial impact
This decision has no direct financial impacts however, the final
SOI contains the projected dividend payments to the councils from IHL.
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7.5 Degree of significance and level of
engagement
This matter is of low significance
therefore no engagement has been undertaken.
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7.6 Climate
Impact
Climate change responsiveness was identified by Council as a
specific matter of interest in the Statement of Expectation letter. There are
no climate change impacts arising from receiving the SOI.
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7.7 Inclusion
of Māori in the decision-making process
No engagement with Māori has been
undertaken in preparing this report.
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7.8 Delegations
The Joint
Shareholders Committee has the following delegations to consider the final Statement
of Intent:
Areas of
Responsibility:
· All matters relating to jointly owned Council Controlled
Organisations and Council Controlled Trading Organisations, including
statements of intent, statements of corporate intent, half yearly reports,
and the appointment of directors and setting of director fees.
Powers to
Decide:
· All matters relating to jointly owned Council Controlled
Organisations and Council Controlled Trading organisations, including
statements of intent, statements of corporate intent, half yearly reports,
and the appointment of directors and setting of director fees.
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8. Conclusion
and Next Steps
8.1 Infrastructure Holdings Limited has met the expectations of the
Shareholding Councils with the delivery of their final Statement of Intent 1
July 2025 to 30 June 2027.
8.2 The staff’s recommendation is for the Joint Shareholders
Committee to receive and agree to the Infrastructure Holdings Limited’s
final Statement of Intent 1 July 2025 to 30 June 2027.
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1.⇩
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Infrastructure
Holdings Limited final Statement of Intent 1 July 2025 to 30 June 2027
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9
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2.⇩
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Nelson
Airport Limited final Statement of Intent 2024 to 2025
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27
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3.⇩
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Port
Nelson Limited final Statement of Corporate Intent 2025
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56
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Joint Shareholders Committee Agenda – 20 August 2024
8 CONFIDENTIAL SESSION
8.1 Procedural
motion to exclude the public
The following
motion is submitted for consideration:
That the
public be excluded from the following part(s) of the proceedings of this
meeting. The general subject of each matter to be considered while the public
is excluded, the reason for passing this resolution in relation to each matter,
and the specific grounds under section 48(1) of the Local Government Official
Information and Meetings Act 1987 for the passing of this resolution follows.
This resolution is made in reliance on section 48(1)(a) of the Local
Government Official Information and Meetings Act 1987 and the particular
interest or interests protected by section 6 or section 7 of that Act which
would be prejudiced by the holding of the whole or relevant part of the
proceedings of the meeting in public, as follows:
8.2 Trustee Remuneration 2024/2025 - Tasman Bays
Heritage Trust
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Reason for passing this resolution in
relation to each matter
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Particular interest(s) protected (where
applicable)
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Ground(s) under section 48(1) for the
passing of this resolution
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The public conduct of the part of the
meeting would be likely to result in the disclosure of information for which
good reason for withholding exists under section 7.
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s7(2)(i) - The withholding of the
information is necessary to enable the local authority to carry on, without
prejudice or disadvantage, negotiations (including commercial and industrial
negotiations).
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s48(1)(a)
The public conduct of the part of the
meeting would be likely to result in the disclosure of information for which
good reason for withholding exists under section 7.
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8.3 Infrastructure Holdings Limited - Governance
matters
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Reason for passing this resolution in relation
to each matter
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Particular interest(s) protected (where
applicable)
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Ground(s) under section 48(1) for the
passing of this resolution
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The public conduct of the part of the
meeting would be likely to result in the disclosure of information for which
good reason for withholding exists under section 7.
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s7(2)(a) - The withholding of the
information is necessary to protect the privacy of natural persons, including
that of a deceased person.
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s48(1)(a)
The public conduct of the part of the
meeting would be likely to result in the disclosure of information for which
good reason for withholding exists under section 7.
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