Council-owned companies pay $188m in dividends to Christchurch ratepayers

Thursday, 5 December 2019

Profits and dividends paid to the Christchurch City Council by the companies it owns have fallen slightly over the past year, with big losses recorded by Red Bus and Development Christchurch, financial reports show.

Christchurch City Holdings Ltd (CCHL) – which owns the likes of Lyttelton Port, Christchurch Airport and broadband provider Enable – saw post-tax profits of $132.1 million in the year to June 2019, down $3.6m on the $135.7m it made the previous year.

The dividend paid out to the council was also marginally down, falling from $192.7m in June 2018 to $188.3m this year.

Christchurch Airport is one of the most profitable companies that is owned or part-owned by the Christchurch City Council.

Councillors have long-discussed the idea of selling parts of some of the council's most valuable assets in a bid to bring down rates and fund major projects.

**READ MORE:

Record container movements helped boost Lyttelton Port's profit last year, but expenses including its new cruise terminal meant a smaller dividend for ratepayers.

* Lyttelton Port Company profit up, but dividend to city council down

* Christchurch's Airport Novotel hotel opening delayed again

* Councillors accused of 'sticking heads in sand' as asset sales talks hit stumbling block

* Council can 'have its cake and eat it' by getting cash from asset sales

* Christchurch airport profit well ahead, $40m dividend

* Christchurch Airport posts a $64.6m profit thanks to tourism, freight and property development**

The idea hit a major stumbling block last year when a proposal to examine how much money could be made from a partial sale was vetoed, but the falling dividend could prompt a re-examination of the proposal.

Council staff are currently examining new ways of raising revenue in the long-term to reduce rates.

Among the options being considered are the possibility of fees and charges around water supply, using council land for commercial purposes and a possible levy on car parking provided by businesses for their staff to help reduce road congestion.

Collectively, the eight firms owned or part-owned by the council have assets worth $4.25 billion, up from $4.02b last year.

While there was a $200m increase – driven mainly by property development at the airport and the ongoing post-quake recovery of the port – overall net assets have fallen 3 per cent, from $1.91m last year to $1.85m, mainly due to increased debt.

Revenues are also up to $1.078b, a rise of $40m on last year's $1.038b.

Among the CCHL companies, electricity company Orion, the airport and port contribute 95 per cent of CCHL's profits, while Red Bus, EcoCentral and City Care face difficult market conditions.

Red Bus had the toughest time, its $5.3m loss put down partly to a fall in value of its bus fleet and accelerated depreciation due to a global shift towards zero-emission vehicles.

The report to councillors on Thursday shows:

- Orion: $47.9m profit in year to June, down $5.4m on the previous year;

Red Bus was the worst performing of the council's companies last year, operating at $5.3 million loss.

- Christchurch Airport: $57.5m profit, down $31.2m (because of fewer properties having an upwards valuation);

- Lyttelton Port: $42.2m profit, up $30m;

- Enable: $10.8m profit, up $14.6m against a loss of $3.8m last year;

- City Care: $700,000 loss, against a $400,000 loss last year;

- Red Bus: $5.3m loss, against a $100,000 loss last year;

- EcoCentral: $1.1m profit, up from $400,000 profit last year;

- Development Christchurch: $1.7m loss, against a $300,000 loss last year (draft figures only).

It comes as the council downgraded the operating deficit it expects to have by the end of the current financial year.

Council experts forecast in September that the authority's operating deficit would be $6.2m at the end of next June, but that has since been revised down to $1.9m.

The likely financial improvement is underpinned by savings on staff, lower than expected insurance costs and increased rate penalties and traffic fines, the council's first quarter financial report shows, as well as reductions in forecast electricity cost increases.

Head of financial management Diane Brandish said it was not unusual to forecast a deficit in the first quarter of the year.

'The financial forecasts over the past two months are showing a steady decline in the size of the deficit and we are confident that results will align with the budget by year's end.'