Press Release – Auckland Council
Auckland Council Investments Ltd, which owns and oversees two major equity investments on behalf of the region’s ratepayers, today announced its first full 12-month financial result, including a Group net surplus of $84.1 million, as its holding of airport company shares appreciated and its ports company traded profitably.
Auckland Council investment Ltd (ACIL) owns assets worth approximately $1.5 billion, comprising a 22.4 per cent holding in Auckland International Airport Ltd, as well as 100 per cent stakes in both Ports of Auckland Ltd (POAL) and Auckland Film Studios Ltd (AFSL). Shares in Auckland Airport gained 9.7 per cent in the 12 months ended June 30, while POAL made an after-tax profit of $29.1 million.
At the parent level, ACIL earned a net after-tax profit of $30.6 million, from $14.8 million in the previous eight months, which allowed it to return $30 million to Auckland Council for the benefit of ratepayers. This dividend was $3.2 million, or 11.9 per cent, higher than budgeted.
“This is a great result for both Auckland Council and for ratepayers and we look forward to producing still higher returns in future years,” said Gary Swift, ACIL’s chief executive. “ACIL’s role is to bring a strong commercial focus to bear on the ownership of these valuable strategic assets for the long-term benefit of the Auckland region. Our contributions help to make Auckland prosperous, well connected, accessible and full of opportunity.”
The council-controlled organisation produced a total return on equity of 15.5 per cent, from 9.7 per cent annualised in the previous year.
- While POAL’s container business suffered from the economic downturn and industrial dispute, its overall business benefitted from the restocking of imported Japanese cars, after supply was disrupted due to the 2011 earthquake, and salvage services provided after the grounding of MV Rena on the Astrolabe Reef
- POAL’s break bulk, or non-containerised, shipments also rose 10 per cent
- POAL paid dividends of $17.5 million to ACIL in the 12 months
- ACIL’s equity share of Auckland Airport’s surplus rose to $31.4 million from $13 million in the previous eight months
- The airport company benefitted from a surge of arrivals for the Rugby World Cup 2011 and the diversion of some traffic away from quake-hit Christchurch
- Auckland Airport paid dividends of $26.9 million to ACIL
- AFSL, which became a subsidiary of ACIL during the period, reported an after-tax profit of $0.4 million in the 15 months to June 30, rebounding from a loss due to revaluation of property in the earlier 12-month period
- The film studios were fully booked between October 2011 and April this year, for the filming of Emperor, a big-budget US feature film.
ACIL also manages a diversified financial assets portfolio on behalf of council, which returned 4 per cent for the 12 months ended 30 June, higher than the 3.46 per cent benchmark. Given the turmoil in global financial markets, particularly in Europe, during the period this is a very solid result, said Mr Swift.
ACIL aims to achieve still greater returns from the diversified financial assets portfolio in the months and years to come. It is now 69 per cent invested in growth assets, from 19 per cent in the year-earlier period.
BusinessDesk report by Hannah Lynch
Local government-owned Auckland Film Studios returned to profit as its facilities were kept busy by the post-World War II Hollywood production, Emperor, starring Matthew Fox and Tommy Lee Jones.
Net profit, excluding property revaluations, was $300,000 in the 15 months ended June 30, from a loss of $2.4 million for the previous year, ended Mar. 31 2011, the council said in a statement. A property revaluation of $100,000 is also recorded.
The West Auckland-based studio’s profitability is “heavily dependent upon its utilisation for film production,” and the studios were fully occupied from October 2011 to April 2012 with the filming of Emperor. The council doesn’t invest in the production of films.
“As a result there are inevitably periods when the studios are not fully utilised,” chairman Glenn Wilcox and chief executive Gary Swift said in a company statement. “In those periods, occupancy for the production of television commercials and short films provide a reasonable stream to contribute to fixed costs.”
New Zealand’s largest production lot has previously hosted films and TV projects such as The Lion, the Witch & the Wardrobe, Whale Rider and Xena.
“There is some indication of other films on the way but nothing that can be confirmed publicly,” Swift told BusinessDesk. “The main competition for us is studios in other parts of the world.
“New Zealand is a good place to make films and we have a good track record. We also have the advantage of seasonality,” he said.
Auckland Council Investments, which manages the city’s investments in the port and airport, inherited its stake in the studios from the Waitakere City Council in November 2010, after the region’s eight councils were amalgamated into one. The council increased its shareholding to 100 percent from 44.4 percent in February 2011 after majority shareholder Tony Tay Films went into receivership. The shares were acquired for $1.5 million.
The supercity’s investment arm, which also owns the Post of Auckland and 22.4 percent of Auckland International Airport, posted an after-tax profit of $30.6 million in the 12 months ended June 30 up from $14.8 million in the eight months of the previous year. The gain was driven by an increase in its holding of airport shares and the ports continued profitability.
Shares in Auckland Airport are unchanged on $2.64. The stock has gained about 2.5 percent this year.