Insurance cash lifts profit

MARTA STEEMAN
Last updated 05:00 07/04/2014

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Christchurch City Holdings' group of seven trading companies have produced a combined mega half-year profit of $365.7 million.

But it is a one-off resulting from an insurance payment to the Lyttelton Port company.

The large insurance settlement must be included as income of the port under accounting rules.

If the insurance windfall is excluded the combined profit is a more normal $35.7m for the six months to December 31 2013, 3.7 per cent higher than the year before's $34.5m.

The group of seven, owned either wholly or largely by the Christchurch City Council, is being scrutinised now by one of the country's top investment banks, Cameron and Partners, engaged by the council.

Cameron and Partners is assessing how the council can get better performance and dividends from the companies which collectively have nearly $3 billion of assets.

It is also examining the capital structures of the companies. Most carry relatively low debt.

The seven trading companies are electricity network company Orion, Lyttelton Port, Christchurch Airport, Enable Services which is building an ultrafast broadband network at present, recycling business EcoCentral, Red Bus, and infrastructure maintenance company City Care.

Their combined revenues were just over $850m for the half-year including the insurance settlement.

They paid or will pay $24.5m in dividends for the half year to Christchurch City Holdings (CCHL), the parent company supervising the seven.

Two of the seven companies - Red Bus and Enable - posted losses in the first half, which were smaller than the previous first half.

Enable is not expected to make a profit until 2019 when the construction of the ultrafast broadband network is completed. It reported a $2.9m half-year loss.

Red Bus' loss was $350,000. It is struggling with lower passenger numbers after the earthquakes.

Orion, Christchurch Airport, Lyttelton Port and EcoCentral posted lower profits than the previous half year.

City Care's half-year profit of $5.7m was the same as the previous half, the CCHL half-year report, to be tabled with the city council's finance committee next week, says.

Chairman of CCHL, Bruce Irvine, said the half-year was steady and trading was returning to normal.

The group had moved on from the drama of the earthquakes and related issues though there was still rebuilding to do at the companies.

For instance passenger numbers were rising at the airport bringing higher revenue but the airport was now paying more interest costs on the building of the new terminal and had higher depreciation costs as well compared to a year ago.

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The CCHL report says the phasing in of higher landing charges for airlines and new property developments at the airport would improve its profits from the 2015 financial year.

Cameron and Partners review of CCHL companies may be out next month.

- BusinessDay.co.nz

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