Christchurch City Holdings Limited (CCHL) reported an underlying profit before tax of $138.4 million for the consolidated group for the year to June 2016, up 5.7% on last year’s $130.9 million.
CCHL owns or has majority holdings in Christchurch International Airport, Lyttelton Port Company, Red Bus, Enable Services, Development Christchurch, Orion New Zealand, City Care and EcoCentral. CCH also monitors the Canterbury Development Corporation on behalf of the council.
Chairman of CCHL Bruce Irvine said that overall the group was in good heart and in strong financial shape, with many of the companies now experiencing improved profitability and growth.
“The normalised profit before tax for group for the 2016 financial year of $138 million is 16% ahead of the statement of intent target of $119 million,” he said.
The improved performance reflects continued growth at Christchurch International Airport, which recorded net profit before tax of $57.5 million, up 14% on the previous year. The airport also recorded an overall record of 6.3 million passengers, an average of 17,000 per day.
The group’s reported profit before tax of $55.3 million includes an impairment expense recognised by Lyttelton Port Company (LPC) during 2016. The company’s net asset position increased significantly in 2014 when insurance proceeds of $358 million were received as income. The funds were allocated to replace assets destroyed and damaged in the earthquakes.
“LPC invested significant capital to increase the resilience of the company’s infrastructure, although that investment did not, in isolation, increase operational earnings. The resulting discrepancy between earnings and net assets gave rise to the impairment,” said Irvine.
But in general LPC had a significant year with the approval of the Lyttelton Port Recovery Plan, the opening of MidlandPort – the company’s new Inland Port at Rolleston – as well as the opening of the new Cashin Quay 2 wharf, which doubles the container berth capability.
With the purchase of eight mid-sized urban buses, Red Bus is now well equipped to match customer demand on many routes while also reducing operating costs with smaller, more efficient, vehicles.
Other highlights for the financial year include Orion New Zealand recording another strong year and delivering $136 million in distributions to CCHL, including $80 million via a share buyback and a special dividend of $13 million. The completion of the acquisition of the Crown Fibre Holdings shares in Enable Networks by Enable Services also took place. This essentially means that the Christchurch community now holds a 100% ownership stake in its fibre broadband network.
Through strong cashflows, City Care was able to purchase Apex Environmental Services, pay a dividend of $4.1 million and reduce debt. EcoCentral continued to be profitable in an environment that has moved to post earthquake activities, allowing it to repay debt. And finally the establishment of Development Christchurch (DC) to help progress and contribute to the region through development, investment and regeneration activities also constituted a highlight.
As the investment arm of Christchurch City Council, CCHL paid an ordinary dividend to Christchurch City Council (CCC) of $132 million, which included a special dividend of $90 million towards the capital release programme. This compared with $46 million in 2015.
“It was a strong year for CCHL with many positive indicators for the future. As part of its long term plan, CCC has determined that it will need to raise a substantial amount of capital from CCHL through its capital release programme in order to keep its forecast debt within appropriate limits.
The annual report is available at: www.cchl.co.nz.
