Dunedin skips dividend from investment arm

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Dunedin City Council didn't get a dividend from its investment division this year as the local authority braces for a $721 million decade-long capital investment programme to upgrade Aurora Energy's ageing infrastructure.

Dunedin City Holdings paid $5.9m to the council in the year ended June 30 through interest payments, but didn't make a dividend payment, as projected in the statement of intent, due to the planned capital expenditure for Aurora, the investment arm said in a statement. The unit isn't projected to make any dividend payments for the next three years, although it will continue to pay interest.

"With planned capital investment by Aurora, it is prudent the company reduces dividend distributions to ensure the funds are invested into capital while maintaining an appropriate equity to total assets ratio," DCH chair Graham Crombie said in a statement. "This impacts on the distributions DCHL can make to the DCC as some funds will need to be retained to continue the maintenance programme."

The investment unit reported an annual net surplus of $18.5m, down from $20.3m a year earlier. A pre-tax surplus of $29m was $5.8m ahead of budget, it said. Revenue increased 1.7 per cent to $275.1m.

Aurora kicked off its network upgrade with $45.2m invested in capital projects in the year on new sub-stations, overhead line upgrades, power pole replacement and progress on the longer-term network system control and communications. The electricity distribution firm had 88,000 connections at the end of the financial year, with total assets of $472.6m.

The network operator plans to apply to the Commerce Commission to switch to a customised price-quality path - the regulated price it can charge - "to fund future investment" which wouldn't come into effect until 2020, the annual report said.

DCH's accounts also included Dunedin Stadium Property for the first time, which earned the statements a tagged audit report by Audit New Zealand, which considered the stadium assets should have been recorded using a commercial valuation rather than public benefit one and would have been a materially lower carrying value than the $185m accounted for.

The stadium property unit widened its net loss to $8.2m in the year from $3.6m in 2016, while the venues management arm posted a surplus of $299,000 on revenue of $13.7m.

City Forests Ltd, which owns 16,795 hectares of forestry, generated a surplus of $20.1m on revenue of $46.2m. Delta Utility Services, the infrastructure services firm, posted a surplus of $4.8m on revenue of $105.7m, while the Taieri Gorge Railway tourism unit posted a profit of $172,000 on sales of $6.9m.