Genesis Energy's Shipley stonewalls on Mainzeal involvement

Former prime minister Dame Jenny Shipley (pictured) stonewalled questions about her suitability to remain chairwoman of state-owned power company Genesis Energy after resigning her chairmanship of Mainzeal companies just before the country's largest construction group went into receivership.

In her first public appearance since the February 6 Mainzeal receivership, Dame Jenny was fielding questions at the six-month result briefing for Genesis, which turned in a solid 85 percent increase in net profit of $71 million and returned to paying dividends after two years.

The pressure on Dame Jenny comes as the government considers Genesis for partial privatisation later this year and the flawed governance of another state-owned company, coal miner Solid Energy, is under the spotlight as a newly appointed board enters talks with its banks and Treasury over a capital restructuring.

Solid Energy, which was to have been partially privatised but is now on the too-sick list for consideration, was chaired by John Palmer, the chairman of another government-controlled company Air New Zealand at a time when it pursued multiple non-coal investments that Prime Minister John Key yesterday declared had been "worthless".

"I am always here at the behest of the shareholder," said Dame Jenny, when asked if she expected to lead the company into a public share float, perhaps as early as November this year.

"I have always been judged by results in my career and I will be in the future," she said after repeated questioning which she attempted to avoid.

Asked whether she would consider stepping down, she said: "This company has gone from being a good company to an excellent company. I ask that people judge the performance of this company on its results."

In a presentation to journalists, Genesis chief financial officer Andrew Donaldson drew attention to Genesis's increasing ability to deliver consistent earnings, irrespective of dry hydro years or prolonged periods of low wholesale prices.

"Ebitdaf [operating earnings] is becoming more consistent year to year and half year to half year," he said.

Reflecting this, Genesis has adopted a dividend policy intended to distribute equal shares of net earnings in each half of the financial year, meaning the target is $114 million in total dividends this year, a gross rate of return of around 7.8 percent on assets valued at $2.05 billion, or a net 5.5 percent return.

CEO Albert Brantley had little joy for Solid Energy, which is already suffering low world coal prices and can expect Genesis's demand for coal for its gas and coal-fired units at the Huntly power station to keep on falling.

Genesis took one of its four 250 Megawatt Huntly units out of service in December last year, has plans to mothball another late next year and has reduced coal stockpiles by a third to one million tonnes in the latest half year.

The company is talking to Solid Energy about "re-profiling" its coal needs from the Rotowaro mine, as it seeks to stretch existing contract obligations into the future.

While Mr Brantley agrees an over-supply of generation capacity and weak electricity demand growth is likely to keep customer tariffs from rising in the short to medium term, but urges against complacency.

Drought conditions in much of the country are pushing up wholesale spot market electricity prices. Responses to over-supply that reduced the availability of thermal – gas or coal-fired – power stations could also add to price volatility in dry years, he warns.

Rather than a glut of generation capacity, there was "sufficient capacity for most foreseeable situations", Mr Brantley says.

After Dame Jenny walked from her Mainzeal position, questions were asked about her suitability to remain as chairman of Genesis, given it is a state owned enterprise, and likely to be publicly listed soon.

In a poll conducted last week, 64% of NBR ONLINE said they were uncomfortable with her retaining her Genesis chairmanship.

After Mainzeal's collapse, the directors, including Dame Jenny, said they were aware of the company's financial position and tried to salvage it, but blamed the failure on credit problems.

(BusinessDesk)

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16 Comments & Questions

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So she takes credit for the 'success' of Genesis, but isn't responsible for the failure of Mainzeal? Sorry lady, you can't have it both ways. Either you're responsible for the success and failures or you're just in pseudo retirement creaming in the director fees.

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Well said.

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Besides being an ex-prime minister, what business experience has she got to contribute as chairman of the board? I am trying hard to think of some significant business experience but I got "stonewalled" ...

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She was the chairman of NZ.

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Chairman who could not hold a government together!!!!!

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Well she was a primary school teacher in the early 70's ... surely that must count?

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All some of these rock star directors do is show up to meetings, abuse an expense account and shaft investors and creditors...

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Virtually anyone can direct a company on the up, but it takes a skilled leader to steer a company through obstacles.

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7.8% return on assets VALUED AT $2b
What is the actual return on shareholders funds with no trumped up valuation of Assets????

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Shareholders funds are $3.5b.
Of that revaluations are $3b
Actual s/h funds are approx $500m
Appears over 12 months return on actual s/h funds will be in excess of 30%
Not bad

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"I have always been judged by results in my career and I will be in the future."

That is what people are asking you about Mainzeal - i.e., the result of Mainzeal.

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Key must surely be having second thoughts about the appointment of unskilled "celebrity directors"
WG

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A school marm from the boonies. Patron Saint of leaky buildings, with acolytes Williamson and Smith. Cambridge HR, Mainzeal and others all down the drain under her 'leadership'.
Wasn't much of a PM either.
Why would she be wanted?

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Let's be fair people. Shipley won't be able to speak publicly about what went on at Mainzeal for some time. There are plenty of competent and ethical directors who have seen their companies enter insolvency, especially in these market conditions, so this attack on her credibility is both premature and in all likelihood unjustified. I am pretty sure she is a director of the Chinese Construction Bank and has spent many years consulting to business. Before people jump to conclusions, perhaps just give her a fair hearing. I agree that she is not entitled to "cherry pick" the results she should be judged on, but at a minimum the success of Genesis under her stewardship should go a long way towards netting off the very regrettable Mainzeal situation.

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"I have always been judged by results in my career." Hmm, we can think of a few that weren't up to much. What about her voting to lower the drinking age? What about the result of that? Highly damaging...

What about getting the police to move protesters out of the way when a bullying visiting Chinese delegation didn't want them there?

The result? Another blow against democracy and the Chinese think we're a pushover. So we are.

Another result. The police are now able (it's in their instruction manual) to move protesters away if they make in individual or delegation feel uncomfortable. Poor dears...

I can think of others...Shipley's smug self-congratulatory tone needs to take a reality check.

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The second worst Prime Minister in NZ.
Even she could not beat Massey.

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