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Finance and Council
Controlled Organisations Committee
21 May 2019
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Financial Review
For the
period ended 31 March 2019
This report provides a detailed commentary
on the Council’s financial results for the period ended 31 March 2019 and
the financial position at that date.
net surplus/(Deficit)
(including waipori)
The net
surplus (including Waipori) for the period ended 31 March 2019 was
$10.112 million or $4.760 million better than budget.
REVENUE
The total revenue for the period was
$226.978 million or $6.777 million greater than budget.
The major variances were as follows:
Other Operating Revenue
Actual $55.151 million, Budget $53.908
million, Favourable variance $1.243 million
Regulatory Services revenue was favourable
$522k, mainly due to increased building services activity.
Waste and Environment Solutions revenue was
favourable $185k due to increased landfill revenue.
Parking Operations revenue was favourable
$160k reflecting increased usage of parking facilities, both on-street and
off-street.
Revenue from cemeteries and crematorium was
favourable $138k primarily due to an increase in the number of cremations.
Transportation revenue was favourable $123k
mainly due to greater than expected corridor accessway revenue.
Grants
Actual $31.609 million, Budget $27.761
million, Favourable variance $3.848 million
Transport grants and subsidy revenue was
favourable $2.934 million primarily due to the higher level of capital project
delivery.
Art Gallery revenue was favourable $170k
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
$221.753 million or $3.174 million greater than budget.
The major variances were as follows:
Personnel Costs
Actual $46.187 million, Budget $45.144
million, Unfavourable variance $1.043 million
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 $48.804 million, Budget $48.742
million, Unfavourable variance $62k
Property costs were unfavourable $1.157
million and included increased reactive maintenance in the housing portfolio
along with unbudgeted costs with demolition work and asbestos removal at Thomas
Burns St and Dukes Road.
Parks costs were unfavourable $448k due to
greater than budgeted building maintenance and reserves work to date.
Civic and Admin Services were unfavourable
$149k due to costs associated with the second-generation district plan.
These unfavourable variances were partially
offset by:
BIS costs were favourable $745k with
project management and other contracted services costs being less than
expected.
Transport costs were favourable $542k.
Winter environmental maintenance was minimal due to favourable weather
conditions. The amount of sealed pavement and footpath maintenance work
and subsidised emergency work was less than expected.
Waste and Environmental Solutions costs
were favourable $231k due to the reduced cost of the refuse collection
contract.
Consumables and General Costs
Actual $14.795 million, Budget $14.114
million, Unfavourable variance $681k
Waste
and Environmental Services consultants costs were unfavourable $307k due to
unbudgeted expenditure relating to the Waste Futures project.
Resource
Consents was unfavourable $258k mainly due to the need to use planning
consultants to deal with the number of consent applications.
Regulatory
Services was unfavourable $129k due partly to the cost of offsite processing of
consents and competency assessments.
Grants and Subsidies Costs
Actual $8.001 million, Budget $8.431
million, Favourable variance $430k
The favourable variance was due to delayed
disbursement of some grants including heritage support and waste strategy.
Depreciation
Actual $50.055 million, Budget $47.541
million, Unfavourable variance $2.514 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 $8.417 million, Budget 9.702
million, Favourable variance $1.285 million
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
$4.887 million, Budget $3.730 million, Favourable variance $1.157 million
The year to date Waipori was reflective of
current market conditions which saw a positive market movement during March in
both New Zealand and international equity markets.
Statement of
Financial Position
A Statement of Financial Position is
provided as Attachment C.
Short term investments of $6.748 million
relate to the Waipori Fund.
Statement of
Cashflows
A Statement of Cashflows is provided as
Attachment D.
Net cash inflow from operating activities
was favourable to budget due to the lower interest expenditure and favourable
timing related to some revenue lines.
Capital
Expenditure
A summary of the capital expenditure
programme by Activity is provided as Attachment E.
Total capital expenditure for the period to
31 March 2019 was $69.926 million or 75% of the amended full year budget of
$92.986 million.
Corporate Services capital expenditure was $365k underspent
The underspend was primarily driven by
lower than expected expenditure related to the implementation of the new
Electronic Document and Records Management system.
Parks capital
expenditure was $1.129 million underspent
Aquatic Services capital was underspent
$673k due to the delayed timing of works at Moana Pool while detailed scoping
is completed.
General Parks renewals capital was
underspent by $510k due mainly to little expenditure to date required for
second beach slip restoration work. The Logan Park Artificial Turf project was
on budget.
Property capital
expenditure was $2.032 million overspent
The overspend to date was due to the
purchase of the South Dunedin Community Complex site during the month for $4.7
million.
Some property upgrade projects are in the
final stages of design and consenting, including the Mosgiel Library re-roof
and the 54 Moray Place compliance upgrade. The Edgar Centre structural
strengthening work has commenced. Work on the Central Library roof is well
progressed.
Design work for the School St housing
project is almost complete, with site demolition expected to begin in April.
Transport capital
expenditure was $4.104 million overspent
The primary driver for this over spend
related to expenditure on the peninsula widening project, with anticipated
early delivery of sections of the programme.
The overspend has been partly offset by
delays in a number of projects including LED lighting and permanent
reinstatement costs relating to the July 2017 rain event.
Three Waters
capital expenditure was $2.309 million overspent
The 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 March 2019. It also shows the variances by
revenue and expenditure type.
Community and Planning - $308k Favourable
Operating costs were favourable $475k in
part due to delayed disbursement of grants including City service and Heritage.
Corporate Services - $707k Favourable
BIS operating costs were favourable $949k
due to the delayed timing of project management/contracted services costs.
Property - $760k Unfavourable
Operating costs were unfavourable $440k,
due to higher than expected levels of housing maintenance, unplanned repairs to
some operational buildings and some unbudgeted projects including 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 School Street Housing complex and 54 Moray Place.
These unfavourable variances were partially
offset by lower staff costs ($109k) as vacancies were still in the process of
being filled.
Parks and Recreation - $246k Unfavourable
Parks operating costs were unfavourable
$499k 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 additional revenue including
development contributions.
Customer and Regulatory - $884k Favourable
External revenue was favourable $853 with
increased activity across a number of operational areas – in particular
parking operations and building services.
Transport - $2.888 million Favourable
Transport operating revenue was greater
than budget ($3.038 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
$392k 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 - $1.701 million Unfavourable
This unfavourable variance was primarily
due to higher than budgeted depreciation resulting from the revaluation of
Three Water assets impacting on 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.
