### dunedintv.co.nz Thu, 24 Sep 2015
DCHL in strong position
More than $15m has been paid out to the city council and its subsidiaries in the last financial year.
39 Dunedin News Published on Sep 24, 2015
DCHL in strong position
Dunedin City Council – Media release
Annual Result for the year ended 30 June 2015
This item was published on 24 Sep 2015
The Board of Dunedin City Holdings Limited (DCHL) is pleased to report the financial result for the DCHL group for the year ending 30 June 2015.
● Profit after tax and subvention payments for the group was $12.9m.
● We have distributed to the Dunedin City Council (DCC) and its subsidiaries outside the DCHL group a total of $15.7m consisting of $4.5m in dividends, $5.9m in interest and $5.2m net in subvention payments.
● Cash from operations continues to remain strong at $32.3m. This was after paying the budgeted subvention payments of $7.9m to Dunedin Venues Limited.
● Total borrowings across the group have reduced by $23m to $598m.
● The financial result for the year reflects the hard work and focus of the staff and directors of the DCHL group of companies, which is much appreciated.
Profit after tax for the group was $12.9m for the year consistent with last year’s result of $12.5m. The result for the year is a continuation of the solid returns for the group.
Aurora Energy Limited invested significantly in its network during the year, resulting in an overall increase of $23m in its asset base. This is a reflection of work being undertaken by the company in renewal investment on the Dunedin network and investment in the Central Otago network driven by growing consumer demand. Overall capital investment in the network over the next 10 years is expected to be $372m.
Now that Delta Utility Services Limited has fully exited its water and civil construction operations, it was able to have a full year concentrating on its core services. This saw a marked increase in demand and reflected positively on its results. Overall the company returned a surplus after tax of $4.7m.
City Forests Limited continues to consolidate its financial position through reduction in borrowings, an increase in its forestry investment and maintenance of its dividend distribution. The company had a net surplus of $7m after tax.
Taieri Gorge Railway Limited has turned around from a loss last year to record a surplus after tax of $173,000 in the year to 30 June 2015. The positive result is a reflection of an increase in passenger revenue and continued focus on costs within the business.
Dunedin International Airport Limited achieved an operating surplus of $1.7m for the year, consistent with its result of $1.8m for the previous financial year. The company was able to increase its dividend to DCHL in the year from $565,000 in 2013/14 to $640,000 in 2015/16.
A pleasing aspect of the financial performance is the continued drop in borrowings within the group’s balance sheet. Borrowings have decreased from $621 million at June 2014 to $598 million at June 2015. Most of this decrease has come from improved cashflow management within the group assisted by significantly reducing the interest costs for borrowing entities. All of the subsidiaries, other than Aurora Energy Limited, were able to reduce their debt levels during the year. An increase in debt levels by Aurora Energy Limited is expected given their capital investment programme.
Cash from operations continues to remain strong at $33m. The ability of the group to maintain strong operational cash flows is imperative to ensure that it can meet its dividends and capital investment requirements.
DCHL has signalled to the DCC, via its annual Statement of Intent, that its distributions to the Council will decrease from $15.7m to $11.2m over the next three years. With the planned capital investment being undertaken by Aurora, it is prudent that Aurora reduces dividend distributions to DCHL over the next three years to ensure the funds are invested into capital and to maintain an appropriate equity to total assets ratio. This naturally impacts in the distribution that DCHL can make to the Council.
Overall the upcoming 12 months for the group looks favourable. The capital investment by Aurora will provide financial stability for the company, Delta continues to grow its core contracts while maintaining its current contract base and improvements in the tourism market will continue to assist Taieri Gorge Railway. A favourable interest rate environment will assist in the cost of debt for Dunedin City Treasury Limited, and City Forests continues to operate well in the fluctuating forestry environment.
Contact DCHL Chair Graham Crombie on 0274 363 882
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