A significant swing in the fortunes of the Dunedin City
Council's group of companies can in large part be attributed
to recent changes in governance and the ''tidying up'' of the
operation of the companies, the chairman of the companies'
parent group says.
The council's five companies and Dunedin International
Airport, in which the council has a half share, reported a
strong result for the year ending June 30.
Their annual reports, released yesterday, showed the group
posted a $20.5 million surplus, up from a $5.1 million loss
Not counting forest revaluation, carbon credit revenue, asset
impairments and subvention payments, the group's net profits
for the financial year were up $4.4 million on the previous
year, to $11.5 million.
About $15.7 million, including a $9.5 million subvention
payment to Dunedin Venues Ltd, interest payments and
dividends, was paid to the council, meeting budgeted
Graham Crombie, chairman of Dunedin City Holdings Ltd, the
holding company for Aurora Energy, City Forests, Dunedin City
Treasury, Delta Utility Services, Taieri Gorge Railway and
Dunedin International Airport Ltd, said various factors made
up the improvement.
All the council's companies improved their financial
performance and City Forests had its best year in Dunedin
City Holdings' history of the company, with a profit increase
of $12.7 million to $14.6 million.
Its profit was increased by a substantial improvement in the
margins in export log sales, the sale of the last tranche of
pre-contracted sales of carbon at favourable prices and a
positive revaluation of the forest stock.
DCHL chief executive Bevan Dodds warned the existing stock of
carbon credits was unlikely to sell as well in the short to
Aurora Energy and Delta Utility Services Ltd both had better
performances, while Dunedin International Airport also had a
strong year, due to terminal rent, car parking and taxi
Its Fonterra shares, held as part of its dairying operation,
also increasing in value.
At Delta, restructuring and a new strategic direction helped
it make ''considerable progress'' in exiting from real estate
investments at Jacks Point and Luggate and quitting its
volatile civil contracting business.
Its loss of $5.9 million in 2011-12 turned into a profit of
$4.6 million in 2012-13.
In coming years the overall business of Delta was expected to
be more predictable and yield higher margins than in the
past, Mr Crombie said.
There had also been significant progress in restructuring the
operation and governance of the group, as recommended in a
2011 independent report commissioned by the council.
Mr Crombie said many of the positive developments of the past
year could be attributed to interim DCHL directors Denham
Shale and Bill Baylis, who were brought in to implement the
changes and who would both stand down at the end of this year
when replacements were found.
The directors appointed to company boards in the last quarter
of 2012 had also contributed strongly.
''In some cases, a new focus has been brought to company
strategies and good progress has been made in exiting
investments now well recognised as non-core investments.''
Cash generated from operations, which was a critical measure
as it was the basis for dividends and capital investment,
also improved significantly and was at the highest for the
past five years, he said.
That allowed the dividend to the council to be paid without
borrowing, as well as allowing the group to reduce its
overall debt by $10 million, to $253 million.
The balance sheet still showed a debt increase on last year
to a total of $623 million, because the Dunedin City Treasury
company accounted for the total debt of DCHL, the stadium and
the council and the debt of the latter increased to cater for
the completion of several budgeted projects, Mr Crombie said.
Dunedin Venues Management Ltd, which is a subsidiary of the
council, but sits outside the company group, posted a net
loss of $986,000, compared with a loss of $3.21 million for
the corresponding period the previous year.
Chief executive Darren Burden said it was positive progress
and aligned with expectations, but the company needed to
remain focused on continuous improvement if it was to meet
its financial targets, including $4 million rent each year
paid to the council to retire debt.
During the year 272,000 people attended 60 events at the
stadium, and 16,000 attended meetings, conferences or
functions off the field.
The company had taken over the Dunedin Centre and Porter's
Lounge at the Dunedin Railway Station which would be included
in company accounts from next year.