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Finance and Council
Controlled Organisations Committee
19 October 2020
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Financial Review
For the period ended 30 September
2020
This report provides a detailed commentary
on the Council’s financial result for the period ended
30 September 2020 and the financial position at that date.
net surplus/(Deficit) (including
waipori)
The net deficit (including Waipori) for the
period ended 30 September 2020 was $3.702 million or
$4.345 million lower than budget.
REVENUE
The total revenue for the period was
$78.378 million or $1.143 million greater than budget.
The major variances were as follows:
Other Operating Revenue
Actual $18.064 million, Budget $17.033
million, Favourable variance $1.031 million
Waste and Environmental revenue was
favourable $456k due to higher post lockdown tonnage entering the Green Island landfill
than anticipated. This was partially offset by an increase in landfill
variable costs – see comments below.
Aquatic Services revenue was favourable
$158k due to greater than budgeted revenue for the gym and the swim school. The
various covid-19 alert levels have had an impact on the timing of the provision
of some services at Moana Pool. This included the renewal of gym
memberships delayed from the lockdown period.
Regulatory Services revenue was favourable
$239k primarily due to increased building services activity.
Economic Development revenue was favourable
$157k due to unbudgeted funding received for the Centre of Digital Excellence
and Otago Regional Economic Development projects.
Grants and Subsidies Revenue
Actual $10.111 million, Budget $10.483
million, Unfavourable variance $372k
Transportation revenue was unfavourable
$707k due to the lower level of subsidised capital expenditure – see
comments below.
This unfavourable variance was partially
offset by unbudgeted government funding of $226k allocated to the maintenance
of community halls.
Expenditure
The total expenditure for the period was
$84.708 million or $1.853 million less than budget.
The major variances were as follows:
Operations and Maintenance Costs
Actual $16.940 million, Budget $16.682
million, Unfavourable variance $258k
Property costs were unfavourable $400k
largely due to higher than expected maintenance costs including reactive
maintenance on some investment properties. It is expected that this variance
will reduce as the year progresses.
Waste and Environmental Services costs were
higher than budgeted due to additional ETS costs and landfill variable costs
associated with the higher tonnage entering the Green Island Landfill.
These unfavourable
variances were partially offset by the timing of some maintenance activities
(Parks and Roading) being different than anticipated.
Consumable and General Costs
Actual $5.478 million, Budget $5.722
million, Favourable variance $244k
BIS costs were favourable $476k due to the
timing of software licensing and IT consultant’s expenditure.
Grants and Subsidies Costs
Actual $6.240 million, Budget $7.168
million, Favourable variance $928k
Grant costs across the organisation were
favourable due to the timing of payments – this included the Dunedin
Heritage Fund grant, various community grants, disbursement of the Covid19
support fund, and payment of the grant to Aukaha. A number of these
grants have been submitted for payment early October.
Interest
Actual $2.223 million, Budget $2.964
million, Favourable variance $741k
Interest expenditure was less than budget
due to a favourable floating interest rate applied to the non-fixed interest
borrowing, along with a lower loan balance.
Note that as at 30 September only $20.0
million of the term loan balance is subject to historical fixed rates of
interest, with the balance being charged at the floating rate as set by Dunedin
City Treasury Limited.
WAIPORI FUND NET OPERATING RESULT
Actual
$2.628 million, Budget $1.279 million, Favourable variance $1.349 million
The
Waipori Fund was favourable due mainly to the strong performance of New Zealand
and international equity markets to date.
The
current month negative movement was driven by investor concern over a
coronavirus resurgence in Europe.
Statement of Financial Position
A Statement of Financial Position is
provided as Attachment C.
Short term investments of $10.136 million
relate to the Waipori Fund.
Total Debt was below budget year to date
reflecting the lower level of capital expenditure
Capital Expenditure
A summary of the capital expenditure
programme by Activity is provided as Attachment E.
Total capital expenditure for the period
was $24.265 million or 19.3% of the full year budget of
$125.956 million.
Corporate
Services capital expenditure was $602k underspent
The underspend was primarily driven by
lower than expected expenditure on a number of key IT projects including the
Payroll System Replacement, Online Services, and Mobility Solutions,
Infrastructure Program and Records Management System.
Property capital
expenditure was $1.424 million underspent
The underspend was due the delayed timing
of projects including the Civic Centre Roof Renewal, the School St housing
renewal, and the Wall St Manuka Causeway project. The Palmyra
redevelopment project is progressing ahead of budget.
Transport capital
expenditure was $2.017 million underspent
A number of projects were currently
underspent due to budget timing.
Three Waters
capital expenditure was $961k underspent
The underspend was driven in part by some
project budgets being phased within the first quarter of the year, whereas
project delivery is going to occur later in the year. The timing of
projects is dependent on a number of activities including finalisation of the
planning work and completing a successful procurement process.
Comments from group activities
Attachment F, the Summary of Operating
Variances, shows by Group Activity the overall net surplus or deficit variance
for the period. It also shows the variances by revenue and expenditure
type.
Community and Planning - $472k Favourable
Operating costs were favourable due to the
timing of grant disbursements, with a number being submitted early October for
payment.
Corporate Services - $903k Favourable
BIS operating costs were favourable $659k
due partly to the timing of software licence fees, IT consultants and IT
managed services.
Civic and Administration operating costs
favourable $241k due to the timing of the $250k Aukaha grant.
Parks and Recreation - $610k Favourable
Overall
revenue was favourable with the various Covid-19 alert
levels having an impact on the timing of the provision of some services at
Moana Pool. Gym memberships in particular were higher than budget with
renewals deferred from the last quarter in 2019/20 now being completed.
Parks
operating costs were favourable $252k with contract maintenance expenditure to
date slightly below budget.
Waste and Environmental - $140k Favourable
This variance reflected the net impact of
higher post lockdown tonnage entering the Green Island landfill than
anticipated.
Transportation - $601k Unfavourable
Capital subsidies revenue was unfavourable
$747k due to the lower than budgeted level of capital expenditure to date.
The new Combined Road Maintenance contract
is structured differently to the contract costs as budgeted, resulting in
favourable timing differences in overall expenditure. The expenditure at
year-end is expected to be close to budget.
