'Really solid' results from council companies

Graham Crombie
Graham Crombie
The Dunedin City Council's group of companies are set to deliver ''really solid'' results to councillors this week, despite some mixed performances, Dunedin City Holdings Ltd chairman Graham Crombie says.

Mr Crombie told the Otago Daily Times he was encouraged by the performance of the companies, even though some continued to feel the lingering effects of the global financial crisis and Canterbury earthquakes.

Aurora Energy Ltd, Delta, Dunedin International Airport Ltd and Taieri Gorge Railway Ltd would all present their six-month reports - covering the period to December 31 last year - to this week's full council meeting.

The reports, made public before today's meeting, showed Aurora had booked an after-tax profit of $5.79 million for the period, while Delta continued to bounce back from a rough 2011-12 with a $2.765 million profit.

However, Dunedin International Airport Ltd, in which the council had a 50% stake, recorded a profit of $895,483, about $300,000 below its $1.2 million budget.

Taieri Gorge Railway Ltd had also struggled, with a $498,000 loss, which was larger than the $351,000 expected.

The latest reports came after Dunedin City Holdings Ltd, City Forests and Dunedin Venues Management Ltd all reported to the council in February.

DCHL's report had shown an after-tax profit of $8.667 million across the group, up 10.1% on the previous year, while its own profit was $1.4 million, down from $2.3 million in 2012.

City Forests' profit was up, at $5.1 million compared with $2 million the previous year, while DVML's loss - at $475,000 - was a slight improvement on 2012, when it lost $690,000.

Mr Crombie told the Otago Daily Times on Friday the companies' results showed ''really solid'' progress despite some challenging conditions, and he was ''pretty comfortable with how they're all travelling''.

That included the airport company, which he said was ''travelling along pretty well'' despite facing some ''challenging times'' in the wake of the Canterbury earthquakes.

''I think they're a little bit behind where they hoped to be,'' he said.

Airport chief executive John McCall, in his report, said the company had experienced a 5.1% drop in aeronautical income, due in part to a reduction in domestic jet services landing at the airport and changes to the type of aircraft that still were.

Scheduled domestic landings were steady, at 2731 for the last six months of 2013, but international landings were down 6%, to 140, he said.

Domestic passenger numbers were up slightly, by 0.8% to 402,487, in the same period, but international passenger numbers were down 1.7%, to 34,797, he said.

Those factors meant the company's profit, at $895,483, was 25.9% below budget expectations.

But the company was not alone in facing tough market conditions, as the Taieri Gorge Railway was also still affected by disruption to the tourism sector caused by the Canterbury earthquakes, Mr Crombie said.

''It's changed the nature of what people do. In the past, lots of people would've flown into Christchurch and jumped in camper vans or rental cars and cruised around the place.

''It's not back to where it was.''

Aurora's results had also been dented by a ''warm winter'', but the company was now experiencing a ''trending up'' of work related to subdivision and building developments, such as new electricity connections and substations, he said.

DVML's result showed signs of improvement, and - with a second All Blacks test for the year, against England, scheduled for June - the company was ''pretty hopeful they'll get a reasonable outcome'' for the year, Mr Crombie said.

-chris.morris@odt.co.nz

DVML

Kiwip: One of the stadium companies, DVML, has started to manage the Town Hall and the Dunedin Centre. DVML doesn't own these venues but it gets to collect the hire fees and take their cut and pass on to the DCC what is left.

The opportunity exists to set DVML's cut much higher than the cost of doing the bookings etc. This could be seen as a way of transferring ratepayers money to DVML. DVML are taking a commission for doing a service that used to be done by the DCC. We haven't been told how big the payment is, or what the cost of the service was before and after DVML took over the job. It appears that the Edgar Centre is not yet being managed by DVML. [Abridged]

Relevance

Why bring the Edgar Centre and the Town Hall/Dunedin Centre into it?

ODT blind-spot

Let me help you by explaining that there are two stadium companies: DVML and DVL. The loss for the 6 months was about $0.5 million (as mentioned above) for DVML, but for DVL their loss was $2.3 million (combined losses of $2.8 million). The DCC prefers to not mention DVL in their press releases because they know we only like good news.

The other blind-spot is harder to see, but very significant: in order to loose a total of only $2.8 million in the 6 months, required that the ratepayers of the city paid a subsidy of $8.4 million. So for just half a year, the FB Stadium has made the city over $11.2 million poorer ($8.4m + $2.8m = $11.2m). The real figure is much more than $11.2 million because of other subsidies and costs, including interest on stadium related DCC debt. Double these figures for the full year.

The $8.4 million subsidy is the sum of "subvention payments" ($3.64 million) and equity injections ($4.74 million) paid to DVL and DVML. In addition, ratepayers are affected by other subsidies such as the DCC rates subsidy and revenue skimming for assets like the Edgar Center and the Town Hall/DN Center.

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