CCHL Annual Report 2018
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July 2017—June 2018 A WHOLLY OWNED SUBSIDIARY of CHRISTCHURCH CITY COUNCIL Annual Report 2018 Christchurch City Holdings Limited Christchurch City Holdings Limited Contents Group Structure 06 About CCHL 07 Chair/CEO Report 08 Financial Overview 13 Corporate Governance Statement 16 CCHL Board Of Directors 18 Subsidiary And Associated Companies: Orion New Zealand Ltd 20 Christchurch International Airport Ltd 22 Lyttelton Port Company Ltd 24 Enable Services Ltd 26 City Care Ltd 28 Red Bus Ltd 30 Ecocentral Ltd 32 Development Christchurch Ltd 34 Directors' Responsibility Statement 36 Financial Statements 37 Statutory Information 91 Investor Relations 95 Orion New Independent Auditor's Report 96 Zealand Ltd Ten Year Summary 101 Cover Photo Tram in front of Christchurch Art Gallery Directory 102 2 Annual Report 18 Annual Report 18 3 Christchurch City Holdings Limited Christchurch City Holdings Limited City Care Ltd 4 Annual Report 18 Annual Report 18 5 Christchurch City Holdings Limited Christchurch City Holdings Limited Chair/CEO Report Group Result $80.7m. The most significant reason of its previous years result. The The reported consolidated profit for for this is CIAL’s after tax profit up improved result is mainly driven by the year was $135.7m, 16.6% higher $44m on forecast, mainly driven by below budget operating costs. than the $116.4m reported in 2017. a pre-tax gain from the revaluation of This year saw the completion The improved result includes a gain their investment property of $53m of Orion’s earthquake recovery of $53m (FY 2017 $36m) in relation to as noted above. Orion and LPC also programme, a year ahead of its 2019 investment properties held by CIAL. contributed to the improved group target. This programme has delivered Total operating revenue for the result with net profit results coming in a revitalised and more resilient group was $1,043m compared to $6.5m (Orion) and $3.2m (LPC) ahead network. To add to this resilience, $997m in 2017. This 4.7% growth of their targets. These factors helped Connetics (Orion’s contracting reflects gains of 2%-6% consistent offset the reduction in profit from subsidiary) moved into their new across the group, except for ESL and Citycare. custom built base at Waterloo ECO. ESL recorded a 33% increase Further information regarding Business Park. in revenue in line with expectations the financial results and position of Customer connections are over as it moves its focus to customer the group and parent company is 201,000, an increase of 3,000 new connections now the fibre network provided in the “Financial overview” customers in 2018, largely driven build is complete. Eco was the only section on pages 13–15, and in the by new subdivisions. The revival of entity that recorded a reduction reviews of the individual companies the Christchurch’s central business in revenue as the company was on pages 20–35. district (CBD) has seen an increase impacted by the global collapse of of 18% in the amount of electricity CCHL Parent recycling commodity prices. Orion delivered to the CBD over the The parent company’s net profit for Other comprehensive income for previous year. the year of $72.9m compared with the year of $170.5m mainly relate During the year Orion continued $71.0m in 2017. to the revaluation of assets at CIAL to encourage the uptake of Electric Parent company reserves and ESL, which have driven the total vehicles by extending the public EV increased by $31m, primarily as comprehensive income for the year to chargers around the region. a result of the revaluation of the $306.3m (FY 2017 $144.4m). CCHL’s approach to work with the affecting its contracting company company’s investments. However Christchurch City Holdings The group’s net assets have Council to identify infrastructure City Care Ltd (Citycare), the the total carrying value of CCHL’s Ltd’s (CCHL) mission is increased by 6% from $1,802m needs of the region not being filled continued challenge of operating a main investments as at balance date in 2017 to $1,910m in 2018. This to support the future by the private sector or existing public transport business; and the is $2,681m compared to $2,587m in mainly reflects the value of the Council operations has led to the impact on global commodity prices 2017 as a result of further equity being Airport growth of Christchurch now complete ESL’s fibre network establishment of entities like Enable which undermined the viability of the invested into ESL and DCL. CIAL has produced another build, and the value of the ongoing by investing in key Services Ltd (ESL), and more recently EcoCentral Ltd (ECO) business model. The company paid dividends strong result, including delivering property development programme at Development Christchurch Ltd (DCL). CCHL entered the debt capital to Christchurch City Council of distributions of $29.4m to CCHL infrastructure assets that CIAL which contributed to net debt This approach has led to CCHL’s market this year with a $150m, 5 year $192.7m (FY2017: $113.7m) which during 2018. are commercially viable for the group increasing by $323m 100% shareholder, Christchurch City fixed rate bond, as a means to fund its included special dividends of $140m CIAL’s NPAT of $88.7 million is for the year to 30 June 2018. Other and environmentally and Council (CCC), owning a valuable 2018 capital release commitment to towards the overall capital release up 37% on last year’s result. This is factors driving the increase in net portfolio of trading assets. its shareholder. As part of its financial programme. due to strong growth in profitability socially sustainable. debt were the ongoing investment by 2018 has seen the CCHL group strategy, becoming a debt issuer as well as revaluation gains of $53 Lyttelton Port Company Ltd (LPC) in continue to grow in value through the allows CCHL to diversify its funding million (2017: $36m) reflecting the the implementation of the Lyttelton success of its major infrastructure programme. The capital release value of the significant investment in Port Recovery Plan, reducing its cash assets, including the completion of commitment would not be possible commercial property development reserves and significantly, the $140m core projects like ESL’s fibre network, without the ongoing support of our over the last few years. to fund the capital release programme Electricity Network Orion New Zealand Ltd’s (Orion) subsidiaries, and their continued CIAL’s results reflect the ongoing that CCHL is currently undertaking to Orion recorded another strong year in earthquake recovery programme, commitment to enhance dividend business focus on the core strategies support its parent, Christchurch City 2018. Orion is a consistent performer and further growth for Christchurch returns to their parent. targeting Planes, Passengers, Council. for the group, delivering $49.5m in International Airport Ltd (CIAL). In Property, People, Planet and The 2018 group net profit after tax distributions to CCHL this year. addition CCHL has had to respond Protection. (NPAT) of $135.7m is significantly up Orion’s NPAT of $53.3m is $6.5m and adapt to: tough market conditions on the Statement of Intent forecast of ahead of target and $1.5m ahead 8 Annual Report 18 Annual Report 18 9 Christchurch City Holdings Limited Christchurch City Holdings Limited Passenger numbers through the • Midland Port’s success now takes with forecast), however it continues to made progress on its environmentally tender round and continue to play was re-opened in December 2017 terminal have reached 6.87m, which 700 truck trips off the road route grow its EBIT (earnings before interest sustainable targets by replacing an important role in the delivery of after the devastating Port Hills fire have grown faster in the last year each week, and tax) result from its business a number of their petrol powered Christchurch urban public transport which had a significant impact on the than any other airport in the South • completion of the walk-on floating operations. vehicles and equipment with electric services . business and is now steadily growing Island. International visitors grew by ‘Te Ana Marina’ A positive customer experience or low emitting equivalents including its track offering. 8.5%, which outperformed overall • acquisition of a new $12.5m continues to be a high priority for ESL its first commercial grade electric 2019 will see DCL continue international visitor arrivals for New Liebherr crane as they move from a construction mower and the first electric LDV to progress these key projects, Zealand as a whole, which grew by • opening of Waterfront House, the company to a customer services/ transit van to be registered in New including working with its preferred 3.9%. new home to the operations and asset management entity. ESL Zealand. development partner to redevelop the Recycling Property development continues administration staff on the Port site invested in its internal systems, site of the old convention centre (the The 2018 year was always going to be to grow strongly, with approximately • resource consents granted to process and training programmes, Peterborough Quarter). a challenging year for Eco, with the $100m of new investment in property permit dredging for the Harbour and delivered several initiatives to steady reduction of waste volumes Governance on the airport campus during the year. channel, and expansion of the improve customer experiences when Public Transport in post-earthquake construction The CCHL Board recognises that CIAL primarily develops property container terminal land area at Te connecting to fibre broadband this Red Bus Ltd (RBL) continues to remain work and competition impacting good governance is critical to the when tenants are confirmed and will Awaparahi Bay. year, resulting in an increase of 42% to profitable in a very challenging the EcoDrop revenues.