Orion blames new rules for $30m in write-downs

Orion has blamed new conservative accounting standards for $30 million in write-downs that all but wiped out any profit in the year to March 31.

The Canterbury lines company yesterday reported a profit of $200,000 on revenue of $168.8 million, after writing down $13 million on its $60 million investment in Australian energy business Energy Developments and another $17 million on its technology investments portfolio.

EDL is still causing Orion a financial headache and the write-down was based on when EDL's share price was A$2.27 on March 31, but the price has since rebounded to A$2.94. Orion's shareholders - effectively Christchurch City, Selwyn District and Banks Peninsula councils - were paid $27 million in dividends, and a $40 million special dividend.

Orion chairman Linda Constable said a dividend of $24 million and an afte- tax profit of $17.4 million was forecast this year. Constable stressed the write-downs were only a paper loss and should be seen in the context of Orion's past performance which has seen it return almost $750 million to shareholders since 1993.

"A paper write-down of $30 million, while significant, does not negate these much larger achievements, particularly given the write-downs may be reversed in the future," Constable said.

Orion acting chief executive Brendan Kearney said the company was keeping the faith with the Australian investment.

"EDL is clearly part-way along its improvement process. It's a very, very conservative accounting approach. It's obviously disappointing to write down to A$2.27 and to find a few weeks later it is back to almost cost."

- NZPA