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Dunedin City Holdings Ltd group half year results

Contributor:
Fuseworks Media
Fuseworks Media

The Dunedin City Holding Ltd (DCHL) Group’s half year results are broadly in line with projections. The group recorded a pre-tax loss of $882,000 in the six months to 31 December 2019.

DCHL Chair Keith Cooper says the result is as expected, and reflects the substantial re-investment underway within the group, particularly at Aurora Energy Ltd. DCHL group forecasts to make a loss in 2020 and 2021 financial years, and return to profitability in the 2022 financial year.

"At this stage, we expect full year results to broadly meet the forecasts in our Statement of Intent. However, we are closely monitoring the impact of coronavirus on the Group, particularly at City Forests Ltd," Mr Cooper says.

Total revenue to 31 December 2019 was in line with budget and higher than the same period last year. Across the Group operating costs were higher than the same period last year, but lower than what was budgeted for this six month period. The further reduction in cost of funds achieved by Dunedin City Treasury Ltd has continued to make a favourable contribution across the Group.

DCHL remains on track to distribute $5.9 million within the financial year to the Dunedin City Council (DCC) by way of interest, in line with the Statement of Intent expectations. No dividend is forecast for this year, given the financial result. "With some subsidiaries embarking on a substantial re-investment programme, it’s prudent to ensure a balance between distributions and using internally generated surpluses to fund re-investment," Mr Cooper says. "This re-investment is essential to building sustainable future earnings and restoring dividends to Dunedin City Council."

The group’s overall debt, managed by Dunedin City Treasury Ltd, increased over the half year, as forecast. This was principally driven by increased capital expenditure at Aurora Energy and Dunedin City Council. The continued reduction in the cost of the group’s funds over the year was welcome in the context of increasing debt.

Group term borrowings total $739 million (excluding shareholder’s advance). This includes $231 million Dunedin City Council debt, $88 million stadium debt, and operating company borrowings of $374 million. These figures compare favourably with the book value of the DCHL group’s assets, which now sits at $1.42 billion (same period FY18: $1.28 billion). Cash from operations remains strong at $20.3 million. "The ability of the group to maintain strong operational cash flows is important to meet future dividend and capital investment requirements," Mr Cooper says.

The outlook for most DCHL group companies for the second half of the financial year remains stable. However, City Forests Ltd is likely to have lower sales as a result of market disruption due to the coronavirus. Copies of the reports are available at:

https://www.dunedin.govt.nz/council/dunedin-city-holdings

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