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Finance and Council
Controlled Organisations Committee
19 March 2019
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Financial Review
For the period
ended 31 January 2019
This report provides a detailed commentary
on the Council’s financial results for the period ended 31 January 2019
and the financial position at that date.
net
surplus/(Deficit) (including waipori)
The net
deficit (including Waipori) for the period ended 31 January 2019 was
$210k or $500k better than budget.
REVENUE
The total revenue for the period was
$175.494 million or $4.095 million greater than budget.
The major variances were as follows:
Other Operating Revenue
Actual $43.060 million, Budget $42.198
million, Favourable variance $862k
Regulatory Services revenue was favourable
$343k, mainly due to increased building services activity.
Parking Operations revenue was favourable
$123k reflecting increased usage of parking facilities both on-street and
off-street.
Revenue from cemeteries and crematorium was
favourable $144k primarily due to an increase in the number of cremations.
Transportation revenue was favourable $148k
mainly due to greater than expected corridor accessway revenue.
Grants
Actual $23.671 million, Budget $21.494
million, Favourable variance $2.177 million
Transport grants and subsidy revenue was
favourable $1.281 million primarily due to the higher level of capital project
delivery.
Art Gallery revenue was favourable $194k
mainly due to an unbudgeted equipment grant for racking.
Investment Account revenue was favourable
$600k due to the unbudgeted Waterfront grant from the Provincial Growth Fund
Expenditure
The total expenditure for the period was
$177.025 million or $2.015 million greater than budget.
The major variances were as follows:
Personnel Costs
Actual $36.246 million, Budget $35.604
million, Unfavourable variance $642k
This unfavourable variance was due to
higher than expected recruitment costs, unbudgeted costs associated with the
2GP and a budget understatement in Aquatics (remedied for the 2019/20 budget).
Operations and Maintenance Costs
Actual $37.791 million, Budget $37.869
million, Favourable variance $78k
Transport costs were favourable $623k.
Winter environmental maintenance has been minimal due to favourable weather
conditions. The amount of sealed pavement and footpath maintenance work
and subsidised emergency work was also less than expected.
BIS costs were favourable $579k with
project management and other contracted services costs being less than
expected.
These favourable variances were offset by:
Property costs were unfavourable $1.134
million, and included increased reactive maintenance in the housing portfolio
along with unbudgeted costs associated with demolition work and asbestos
removal at Thomas Burns St and Dukes Road.
Parks costs were unfavourable $538k due to
greater than budgeted building maintenance and reserves work to date.
Civic and Admin Services were unfavourable
$122k due to unbudgeted costs associated with the second-generation district
plan.
Consumables and General Costs
Actual $11.866 million, Budget $11.274
million, Unfavourable variance $592k
Waste
and Environmental Services consultants costs were unfavourable $237k due to
unbudgeted expenditure related to the Waste Futures project.
Resource
Consents was unfavourable $182k mainly due to the need to use planning
consultants to deal with the number of consent applications.
Regulatory
Services was unfavourable $112k due to the cost of offsite processing of
consents and competency assessments.
Investment
Account costs were unfavourable $160k due to unbudgeted costs associated with
the Waterfront project proposal. This overspend was funded from the
Provincial Growth Fund grant discussed above.
Grants and Subsidies Costs
Actual $7.960 million, Budget $8.282
million, Favourable variance $322k
The favourable variance was due to delayed
disbursement of a number of grants including heritage support and waste
strategy.
Depreciation
Actual $38.789 million, Budget $36.982
million, Unfavourable variance $1.807 million
This variance was due
to a revaluation of Three Waters and Transportation assets impacting both the
depreciable replacement cost and asset useful lives.
Interest
Actual $6.668 million, Budget $7.546
million, Favourable variance $878k
Interest expenditure was less than budget
primarily due to a favourable floating interest rate applied to the non-fixed
interest borrowing.
WAIPORI FUND NET
OPERATING RESULT
Actual
$1.321 million, Budget $2.901 million, Unfavourable variance $1.580 million
The year to date Waipori result was
reflective of current market conditions with fair value write downs across the
international equity portfolios. There was however a positive market
movement in the current month.
Statement of
Financial Position
A Statement of Financial Position is
provided as Attachment C.
Short term investments of $6.241 million relate
to the Waipori Fund.
Statement of
Cashflows
A Statement of Cashflows is provided as
Attachment D.
Cash flow from operations was greater than
expected primarily due to the increased grants revenue to fund transport
related capital projects.
Overall cash outflows from investing
activities was in line with budget.
Capital
Expenditure
A summary of the capital expenditure
programme by Activity is provided as Attachment E.
Total capital expenditure for the period to
31 January 2019 was $48.573 million or 52% of the amended full year budget
of $92.986 million.
Corporate Services capital expenditure was $224k underspent
This underspend was primarily driven by
lower than expected expenditure related to the implementation of the new
Electronic Document and Records Management system.
Property capital
expenditure was $2.504 million underspent
Some property upgrade projects are in the
final stages of design and consenting, including the Mosgiel Library re-roof,
Edgar Centre structural strengthening project and the 54 Moray Place compliance
upgrade. These projects are likely to commence late February/early March
2019.
Transport capital
expenditure was $1.760 million overspent
The primary driver for this overspend
related to expenditure on the peninsula widening project, with anticipated
early delivery of sections of the programme
This overspend has been partially offset by
delays in a number of projects including LED lighting and permanent
reinstatement costs related to the July 2017 rain event.
Three Waters
capital expenditure was $2.979 million overspent
This
overspend was primarily driven by costs associated with the completion of the
Ross Creek Reservoir Refurbishment project. There was also some
unbudgeted emergency works including wastewater pipe renewals on Brighton Road.
Debt
Refer to
Attachments F and G.
Attachment F
provides a summary of the debt servicing ratios.
All three
targets were within policy.
Comments from
group activities
Attachment H, the Summary of Operating Variances,
shows by Group Activity the overall net surplus or deficit variance for the
period ended 31 January 2019. It also shows the variances by revenue and
expenditure type.
Community and Planning - $402k Favourable
Operating costs were favourable $459k in
part due to delayed disbursement of grants including City Service and Heritage.
Corporate Services - $552k Favourable
BIS operating costs were favourable due to
the delayed timing of project management/contracted services costs.
Property - $929k Unfavourable
Operating costs were unfavourable $631k,
due to higher than expected levels of housing maintenance and some unbudgeted
projects in particular the demolition of buildings at three sites.
Revenue was unfavourable to budget due to
vacancies across the portfolio in part to allow for the redevelopment of
properties including the School Street Housing complex and 54 Moray Place.
These unfavourable variances were partially
offset by lower staff costs ($117k) as vacancies were still in the process of
being filled.
Parks and Recreation - $439k Unfavourable
Parks operating costs were unfavourable
$916k mainly due to an increased focus on building maintenance, seismic and
asset condition assessments and unscheduled reserve works.
This unfavourable variance was partially
offset by higher revenue including: increased number of cremations, favourable
participation in the new inhouse swim school and higher than expected
development contributions.
Customer and Regulatory Services - $603k
Favourable
External revenue was favourable $532 with
increased activity across a number of operational areas – in particular
parking operations and building services.
Transport - $1.925 million Favourable
Transport external revenue was greater than
budget ($1.437 million) due to NZTA funding for capital projects including the
Green Island roundabouts, urban cycleways, peninsula road widening and flood
response work.
Transport operating expenditure was
favourable $724k due to winter environmental maintenance being minimal due to
favourable weather conditions and the amount of sealed pavement and footpath
maintenance work being less than expected.
Three Waters - $992k Unfavourable
This unfavourable variance was primarily
due to higher than budgeted depreciation resulting from the revaluation of
Three Water assets impacting both the depreciable replacement cost and asset
useful lives.
This unfavourable variance was partially
offset by savings in personnel costs due to vacancies in the Planning activity,
and higher than budgeted development contributions.
