Thursday 29 September 2016 04:18 PM
UPDATE: Christchurch council company meets first deadline for capital 'release'
(Recasts with details of special dividend, comment from CEO)
By Jonathan Underhill
Sept. 29 (BusinessDesk) - Christchurch City Holdings Ltd, the city council's investment unit, has met its target under the city's long-term strategy by paying a $90 million dividend, the first installment of a plan to return $600 million by the end of 2019 via 'capital release'.
The council's amended long-term plan was affirmed in June, delaying $110 million of a planned initial $200 million payment until 2017. It got $132 million in total payments for the 2016 year once the ordinary component of the dividend, $42 million, was added. The plan reduced what originally had been slated as a $750 million return.
CCHL chief executive Paul Munro said the amended schedule was "in reality just timing differences".
Council funding has been a key theme of local body elections because mayor Lianne Dalziel's rival John Minto is campaigning on a ticket of not selling assets. Dalziel wouldn't rule out CCHL selling assets though she said there were other ways to extract capital.
The company's investments in businesses such as lines company Orion New Zealand and Christchurch International Airport generated $138 million in underlying pretax earnings in the year ended June 30, from $130.9 million a year earlier.
CCHL chair Bruce Irvine said the improved earnings reflected growth at Christchurch Airport, which experienced a record 6.3 million passengers and a 14 percent gain in pretax earnings to $57.5 million. The holding company owns 75 percent of the airport along with 89 percent of the local power company, Orion, which made $136 million in distributions including $80 million from a share buyback and a special dividend of $13 million.
CCHL also included an impairment expense recognised by Lyttelton Port Co following the receipt of earthquake insurance proceeds in 2014. During the year CCHL became 100 percent owner of Enable Networks after buying out Crown Fibre Holdings' stake in the fibre network.
Details of the results were released under embargo via a four-page media release with the actual annual report to become available on the www.cchl.co.nz website.
The long-term plan classifies CCHL's biggest businesses - Lyttelton Port Co, 89 percent-owned utility Orion New Zealand and 75 percent-owned Christchurch International Airport - as strategic assets with a combined value of $1.8 billion that can't be sold without public consultation.
The remaining four that could be sold, Enable Services, City Care, Red Bus and EcoCentral, have a combined value of $252 million, although the council abandoned a sale of City Care, its maintenance and construction company valued at $113 million, last month after failing to elicit an attractive offer.