Canterbury University takes $150M quake charge, resulting in record loss
By Hannah Lynch
Mar. 1 (BusinessDesk) – The University of Canterbury reported a record full-year loss after taking $150 million in charges against earthquake damaged assets and predicted an ongoing loss of students.
The loss was $114 million in the year ended Dec. 31, turning from a profit of $10.6 million a year earlier, the university said in its annual report. The loss included a $73 million write down of its assets and an $83 million impairment charge.
Excluding direct costs and insurance proceeds from the earthquakes, the university reported a profit of $9.5 million. To date it has received $55 million in insurance payouts.
“We face the very real and imminent prospect of a significant drop in income from our tuition fees, particularly from international students,” said Rod Carr, vice chancellor. “This will have an impact on our operational budget over the coming years.”
“We also know that our capital expenditure has increased dramatically post-earthquake and that significant spending in this area will continue as we remediate our buildings and as a result of the new building code requirements.”
The university said it is committed to upgrading all its facilities to the current earthquake standards including those not covered by insurance.
“It is a more economical to remediate at UC than build new capacity in other cities such as Wellington, Dunedin and Auckland and require Christchurch students to leave town to access higher education,” said Carr.
The earthquake caused student enrollments to fall 12 percent last year, amounting to about $9 million in lost revenue. The largest reduction was for first year students, who fell 23 percent. Enrollments in the college of arts slipped 22 percent.
In October, the university said 24 of its 3,000 staff had accepted voluntary redundancy. It is also assessing all of its courses though no decision has been made to trim programmes because of the budget.
The university’s $50 million of 7.25 percent bonds maturing in December 2014 were last quoted on the NZDX at 7.7 percent.