Low profitability hits CCHL return
Some Christchurch City Council trading companies helped offset rates increases but their overall returns were dismal.
A report to the council shows City Care, Red Bus and Lyttelton Port Company failed to meet most of their performance targets.
Overall, Christchurch City Holdings Ltd’s return on the amount it has invested in the companies was just 2.1 per cent, which is below its 10-year average of 6.3 per cent.
The report blamed the low profitability of Red Bus (0.2 per cent return on equity) and Lyttelton Port (zero return) relative to the value of their assets.
Red Bus slightly surpassed its revenue target at $19 million but produced just $100,000 in profit after tax.
Even companies that provided reasonable dividends had low returns on equity (5.5 per cent).
Orion was the biggest financial contributor, with a special $80m dividend raised by increasing debt. It also had higher than forecast revenue and profit, producing an ordinary dividend of $63m.
Christchurch International Airport provided a $22m dividend from its above-forecast profit, even though it was marginally down on its revenue target.
The worst financial performer when matched against its targets was Lyttelton Port Company, which also failed to comply with dust control levels set by Environment Canterbury.
Lyttelton Port’s revenue of $105m came in below its target revenue of $114m.
It posted a $59m loss rather than a $12m forecast profit. This was due to factors including a writedown in asset values, as well as smaller costs from having incorrectly calculated staff holiday pay, legal claim costs against an insurer, and demolition costs.
City Care, which is the focus of the Keep Our Assets lobby group, posted $306m in revenue against a target of $350m. It scored well on its target of accident reduction.
The Enable Networks fibre broadband company fell below revenue targets because it was still paying for its network installation. It made no dividend contribution to city coffers but increased the number of fibre connections to 25,817 homes and businesses.