DCHL’s profit up 57%

The Dunedin City Council’s group of companies has continued to cut debt and return good profits  after a year of what Dunedin City Holdings Ltd chairman Graham Crombie described as "solid returns".

Debt across the companies and the council has  reduced by  $16.8 million to $581 million.

Mr Crombie said yesterday while the council’s debt had dropped by  $30.6 million, lines company Aurora had raised debt as it invested in capital projects.

DCHL’s profit was up 57% to  $20.3 million;  but the increase included a  $9 million non-cash profit from City Forests after a revaluation of the company’s assets.

Last year’s profit was  $12.9 million.

Operating cash flow was  $31.6 million for the year.

"That’s the good bit," Mr Crombie said.

"The ability of the group to maintain strong operational cash flows is important to meet future dividend and capital investment requirements.

"This is a strong result which reflects the hard work and focus of staff and directors of the DCHL group of companies."

There was no dividend to the council this year, although the group distributed  $11.2 million  to the council and subsidiaries,  $5.9 million in interest and  $5.3 million  net in subvention payments.

Mr Crombie said usually those payments would be distributed as well as a dividend, but as had been signalled in the company’s statement of intent, the dividend had not been included this year.

The situation would be similar next year before payments began increasing the year after.

Mr Crombie said the  outlook for the next few years was favourable.

Capital investment by Aurora would provide stability for the company, Delta continued to grow  contracts, and growth in the tourism market would be good for the Taieri Gorge Railway.

Favourable interest rates would help reduce the cost of debt for Dunedin City Treasury Limited, and assist City Forests.Delta’s annual report said it had increased shareholder equity for the fourth consecutive year.

Year-on-year financial performance was more predictable, with stable earnings and profitability.

Aurora had a slight revenue increase of 0.5% from a combination of growth in electricity connections on Central Otago, recovery of higher transmission charges in the fourth quarter, and higher energy demand.

The company’s financial position was strong, and it was well placed to make infrastructure investments.Demand was strong at Dunedin Airport, which had a record month in March, when 78,167  passengers passed through the gates.

The company report said it was continuing its strategy of sustaining and growing transtasman services.Dunedin Venues Management Limited’s profit this year was "a  turnaround in financial performance".

It reflected both an increase in content offered and the implementation of stadium review recommendations, the company’s  report said.

As a result of the review,  the rent for Forsyth Barr Stadium was halved from $4 million to $2 million.Taieri Gorge Railway Ltd chairman Geoff Thomas said the company recorded a $137,000 profit despite "significant" increased maintenance costs.

Dunedin Venues Limited, which is responsible for maintaining Forsyth Barr Stadium, made a loss of  $3.5 million  compared  with

$4.1 million  the year before. Mr Crombie said that result was better than expected.

Depreciation paid for Forsyth Barr Stadium caused a loss, but not a cash loss.

For City Forests, a combination of increased log markets, reduced shipping costs and a lower-value New Zealand dollar delivered a period of "very strong log export returns".

Mayor Dave Cull said the annual return was a good result, and the group was "tracking as predicted".

The level of distribution without dividend was "absolutely budgeted for in the long-term plan".

david.loughrey@odt.co.nz