Central Plains Water, a company set up to irrigate farmland in Canterbury, said it will continue to record losses in its annual accounts because of the steep depreciation charges during the early years of operation.
The company, whose shareholders are participating farmers and include owners such as Hong Kong-based An Feng Dairy and Fonterra Cooperative Group, reported a loss of $8.4 million in the year to June, narrower than last year's $10.7 million loss. Central Plains had $20.3 million of income, up from $18.8 million in 2016, of which operating income was relatively stable at $15 million and grants totalled $5 million.
Total finance costs were $10 million, of which $5.5 million went to service its loans from ANZ Bank New Zealand and Westpac Banking Corp. That's up from interest costs of about $8 million last year. Total interest-bearing debt rose to $182 million from $148 million the previous year and it has undrawn construction facilities of $178 million to complete its build.
So far, Central Plains has completed stage 1 of its scheme, which irrigates about 20,000 hectares of farms in an area bordered by the Rakaia and Hororata Rivers. It has an intake on the Rakaia River that sends water into a 17km gravity-fed headrace, from where 100km of underground pipes distribute water to shareholders downstream of the headrace. Contractor Downer EDI began work on stage 2, which will be of the same scale, last December with a September 2018 completion date, while a separate scheme to irrigate up to 4,250ha of farmland in Springfield/Sheffield area of mid-Canterbury and built by Fulton Hogan is set to be commissioned in October.
The annual loss included a non-cash depreciation charge of $5.9 million on its stage 1 infrastructure. "The company is likely to continue to report accounting losses in the early years of its operation due to the very high depreciation charge from its large asset base," chairman Doug Catherwood says in report.
In the latest year, use of stored water from stage 1 "was well down on the previous year", reflecting a wet March and April.