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Half-year Financial Results for State-owned Enterprises and Airports image of a wind farm

This article provides an overview of State-owned Enterprises’ (SOEs’) and the Christchurch, Dunedin and Hawke’s Bay airports’ published six months financial results (the six months to 31 December 2016).[1] These entities form part of the portfolio of entities that is monitored by the Treasury’s Commercial Operations Group.[2]

Key Themes

SOE Profits were Impacted by Solid Energy

Total SOE Net Profit After Tax (NPAT) for the half-year was $283.7 million, a decrease of 23.2% from the same six months last financial year. This is partly due to the Crown no longer having a residual interest in Solid Energy. Excluding Solid Energy, total SOE NPAT increased 3.3%.[3]

  Net Profit After Tax
  HY'17 HY'16 % Change
SOEs Total 283.7 369.3 -23.2%
SOEs Total (Excl. Solid Energy) 283.7 274.6 3.3%

Five of the eleven SOEs reported higher NPAT than the same period last year. While three SOEs reported a loss for the half year, KiwiRail was the only entity to report a material loss for the half-year to 31 December 2016. KiwiRail’s half-year results were significantly influenced by the Kaikoura earthquake in November. Excluding the earthquake and Midland fire, KiwiRail expects its underlying earnings will be to forecast for the full year.

Some Changes in Portfolio Composition

In comparing performance to the previous half-year, we need to account for some changes in the make-up of each of the entities. In particular, New Zealand Post’s results reflect its partial sale of Kiwibank to the New Zealand Superannuation Fund and Accident Compensation Corporation during the period, and NZ Post’s prior year results also incorporated its ownership of Converga (which has subsequently been sold). Similarly, Quotable Value’s results no longer incorporate CoreLogic which it sold in January 2016. On the other hand, MetService’s results now incorporate its ownership interest in MetOcean, and AsureQuality’s results incorporate its joint venture interest in DTS Australia. While certain entities reported increased capital expenditure as a result of key projects, total capital expenditure (capex) was similar to last year. KiwiRail and Transpower continued to account for the majority of capex, though figures for both were less than last year. NZ Post increased capex as it continues to implement its business transformation.

The combined commercial valuation of the SOE portfolio was $3.2 billion as at 30 June 2016.

Revaluations Accounted for Nearly Half of SOE Portfolio NPAT

NPAT for the SOE portfolio totalled $283.7 million. This figure includes revaluation gains. Two entities had material revaluations for the period: Landcorp and Transpower. Landcorp reported NPAT of $37.9 million for the half year which included a gain of $43.7 million due to changes in livestock prices. Transpower's half year NPAT was $164.6m.  A significant portion of this was due to recent increases in international interest rates, with gains in the fair value of financial instruments accounting for $87.5 million of profit before tax.  These two adjustments alone account for 46.2% of SOE Portfolio NPAT for the six month period (though Transpower’s figure is before tax).

Net Gearing Reduced Across the Portfolio

The SOE portfolio overall saw net gearing reduce by 3.9 percentage points, down from 43.8% for the same period last year to 39.9%. Notable reductions were made by Quotable Value and NZ Post, which both have cash on hand following the receipt of proceeds from large transactions. Four entities finished the period with negative gearing, meaning they had a greater level of cash than debt. AsureQuality was the only entity to record a material increase in gearing, which was largely a reflection of its recent acquisition of DTS.

Airport Profits were Above Last Year

The Crown’s share of profit from airports of $5.9m was up slightly from the same period last year. This figure reflects the Crown’s 25.0% ownership of Christchurch airport, 50.0% of Dunedin airport, and 50.0% of Hawkes Bay airport. Overall passenger numbers were up for all three airports, resulting in higher revenues and NPAT for each of the three airports. Total NPAT for the three airports was $21.0 million, an increase of 14.0% from the same six months last financial year. The combined commercial value of the three airports was $1.3 billion as at 30 June 2016. The Crown’s share of commercial value was $334.5 million.

  Net Profit After Tax
  HY'17 HY'16 % Change
Airports Total 21.0 18.4 14.0%
Crown Share of Airports Total 5.9 5.2 14.8%

NPAT for the half-year as a proportion of total commercial value was lower for the airports than for the SOE portfolio as a whole.

Key Metrics and Commentary for Each Entity

The pdf below provides an overview of the half-year results for each entity and comments on the key drivers of these results. Summary of Half-year Results for SOEs and Airports (453 KB)


  • [1] State-Owned Enterprises provide half-year reports of their financial performance, which are made publicly available each year. The reports include unaudited financial statements. Christchurch, Dunedin, and Hawke’s Bay Airport also provide a half-year report to their shareholders, which include the Crown.
  • [2] For more information on the entities that the Commercial Operations Group monitors, please see:
  • [3] Solid Energy’s profits in HY’17 were offset against the value of participant debt (as statements were prepared on a non-going concern basis). This reduced NPAT by $94.7 million compared to HY’16, despite increased revenue.



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