New customers boost Dunedin lines company Aurora's annual result

A week after Dunedin City Council voted to retain ownership of lines company Aurora, the company yesterday announced an after-tax profit of almost $23.7 million, after collecting more than 1,200 new customers.

The company is owned by DCC through its commercial entity Dunedin City Holdings Limited (DCHL), which also owns Aurora Energy, City Forests, Delta Utility Services, Dunedin International Airport (DIAL), Dunedin Stadium Property (DSPL), Dunedin Venues Management (DVML), Dunedin Railways and Dunedin City Treasury (DCTL).

The group’s latest financial results for the 2024 financial year show an overall $9.5 million lift in group after tax profit year-on-year, to $12.8 million.

That enabled it to provide cash distributions to DCC of $16.9 million, up from $11.4 million the previous year.

“That’s a pleasing outcome, based on a strong result from Aurora Energy,” DCHL chairman Tim Loan says.

“Aurora Energy is performing well, which is a credit to the Aurora team. Significant investment has gone into the network in recent years and now the regulated return on that investment is reflected in improved profitability.”

Aurora Energy’s net profit after tax of $23.7 million exceeded target by just under $8 million.

This was mostly due to higher network use by consumers, higher capital contributions from customer-initiated works and lower than anticipated operating costs, Mr Loan says.

“We respect council’s decision to retain ownership of Aurora and we remain committed to achieving the best for Dunedin from its investments.

“We have been clear in our advice. Our investment in Aurora Energy will generate a regulated return and it will grow in value. However, ongoing capital expenditure will require funding, from both operating cash flows and substantial debt funding, which will restrict the company’s ability to pay dividends.”

The company has invested heavily in the electricity distribution network, with capital expenditure of $420 million across the last five years, Mr Loan says.

Aurora Energy’s capital expenditure of $110 million in the 2024 financial year was funded by operating cash flows of $67 million and a $43 million increase in borrowings, with no dividend paid to DCHL.

Much of Aurora’s performance was down to a rise in customer numbers in Central Otago.

Mr Loan said that increase was driven by development in the area.

“The number of new customer connections on the Aurora Energy network increased in the year by 1,225 to a total of 95,604. Of this total, 611 were new connections in the Clyde Cromwell and Wānaka areas. This growth rate was in line with expectations.”

Results from other commercial companies were modest, reflecting global economic challenges, the annual report says.

“The construction slowdown in China continued to impact on log prices achieved by City Forests. Inflation has been a challenge to achieving desired margins at Delta. Passenger numbers at Dunedin Airport were softer than expected as inflation and interest rates impacted travel demand.”

The airport welcomed 903,396 passengers, just over 80 percent of its capacity of 1,109,974.

The group annual report says the company recorded a net loss after tax of $400,000, $3.7 million lower than budget.

“Underlying financial performance was higher than budget; however, the company recognised a $4.3m deferred tax expense due to the government’s withdrawal of tax deductibility for depreciation on commercial buildings.”

DCHL distributed $16.9 million to DCC in the 2024 financial year, an increase from $11.4 million in the prior year. Distributions included $5.9 million of interest on its shareholder advance.DCHL companies delivered some great outcomes for the community in the 2024 year, Mr Loan says.

“After many months of hard work from the team at Dunedin Airport, we are all thrilled to welcome international flights coming back to Dunedin next year.

“Dunedin Railways lifted passenger numbers to 25,000 in the 2024 year, an increase of 9,000 passengers year on year. The team is excited to resume passenger services to Pukerangi in October.”

DVML’s highlights included the FIFA Women’s World Cup. Forsyth Barr Stadium played host to six matches, attracting an attendance of more than 64,000 people, including 18,600 visitors from outside Dunedin. In March, DVML also hosted the P!nk Summer Carnival Concert, which contributed $16.6 million to the Dunedin economy.

DCHL received $16.5 million in dividends from City Forests, which included an ordinary dividend of $3 million, in line with its dividend policy, and a special dividend of $13.5 million. A $1 million dividend was received from Delta and Dunedin International Airport Ltd paid a dividend of $1.3 million to DCHL.