Description: COAT-ARM Hastings District Council

 

Civic Administration Building

Lyndon Road East, Hastings

Phone:  (06) 871 5000

Fax:  (06) 871 5100

WWW.hastingsdc.govt.nz

 

 

 

 

Open

 

A G E N D A

 

 

Finance and Risk Committee MEETING

 

 

 

Meeting Date:

Tuesday, 26 March 2019

Time:

 1.00pm

Venue:

Council Chamber

Ground Floor

Civic Administration Building

Lyndon Road East

Hastings

 

Committee Members

Chair: Councillor Travers

Mayor Hazlehurst

Councillors Barber, Dixon, Harvey, Heaps, Kerr (Deputy Chair), Lawson, Lyons, Nixon, O’Keefe, Poulain, Redstone, Schollum and Watkins (Quorum = 8)

Officer Responsible

Chief Financial Officer – Bruce Allan

Committee Secretary

Christine Hilton (Ext 5633)

 


Finance and Risk Committee

 

Fields of Activity

Oversight of all the Council’s financial management policy and operations (including assets, cash, investment and debt management) including (but not limited to):

·            Monitoring compliance with the Long Term Plan/Annual Plan and budget implementation.

·            Finance and Ownership

·            Audit and other accountability requirements;

·            Business units/CCO/CCTO ownership overview;

·            Rating matters including rating sale proceedings;

·            Taxation.

·            Establishing the strategic direction of Council’s business units (if any), Council Controlled Organisations (CCOs) and Council Controlled Trading Organisations

·            Other matters including:

-   Performance Management

-   Other matters not otherwise within the scope of other Committees

 

Monitoring compliance with the Long Term Plan/Annual Plan and budget implementation.

 

Membership (Mayor and 14 Councillors)

Chairman appointed by Council

Deputy Chairman appointed by Council

The Mayor

All Councillors

 

Quorum – 8 members

 

DELEGATED POWERS

General Delegations

 

1.        Authority to exercise all of Council powers, functions and authorities (except where prohibited by law or otherwise delegated to another committee in relation to all matters detailed in the Fields of Activity.

2.        Authority to re-allocate funding already approved by the Council as part of the Long Term Plan/Annual Plan process, for matters within the Fields of Activity provided that the re-allocation of funds does not increase the overall amount of money committed to the Fields of Activity in the Long Term Plan/Annual Plan.

3.        Responsibility to develop policies, and provide financial oversight, for matters within the Fields of Activity to provide assurance that funds are managed efficiently, effectively and with due regard to risk.

 

Fees and Charges

 

4.        Except where otherwise provided by law, or where delegated to another Committee, the authority to fix fees and charges in respect of Council activities or services.

 


 

HASTINGS DISTRICT COUNCIL

 

Finance and Risk Committee MEETING

 

Tuesday, 26 March 2019

 

VENUE:

Council Chamber

Ground Floor

Civic Administration Building

Lyndon Road East

Hastings

TIME:

 1.00pm

 

A G E N D A

 

 

 

1.        Apologies

At the close of the agenda no apologies had been received.

At the close of the agenda no requests for leave of absence had been received.

2.        Conflict of Interest

Members need to be vigilant to stand aside from decision-making when a conflict arises between their role as a Member of the Council and any private or other external interest they might have.  This note is provided as a reminder to Members to scan the agenda and assess their own private interests and identify where they may have a pecuniary or other conflict of interest, or where there may be perceptions of conflict of interest. 

If a Member feels they do have a conflict of interest, they should publicly declare that at the start of the relevant item of business and withdraw from participating in the meeting.  If a Member thinks they may have a conflict of interest, they can seek advice from the General Counsel or the Democratic Support Manager (preferably before the meeting). 

It is noted that while Members can seek advice and discuss these matters, the final decision as to whether a conflict exists rests with the member.

3.        Confirmation of Minutes

Minutes of the Finance and Risk Committee Meeting held Tuesday 13 November 2018.

(Previously circulated)

4.        Financial Quarterly Report for the six months ended 31 December 2018                                                                                                                  5

5.        Local Government Funding Agency - Half Year Report to 31 December 2018 and Draft 2019/20 Statement of Intent                             17

6.        Hawke's Bay Museums Trust Half Year Report and Draft 2019/20 Statement of Intent                                                                                       77

7.        Hawke's Bay Airport Limited Half Year Report and 2019/20 Statement of Intent                                                                                     101

8.        Hawke's Bay Regional Sports Park Trust Draft Half Year Report to 31 December 2018                                                                                       135

9.        Additional Business Items

10.      Extraordinary Business Items 

 

 

     


File Ref: 19/189

 

 

REPORT TO:             Finance and Risk Committee

MEETING DATE:       Tuesday 26 March 2019

FROM:                        Financial Controller

Aaron Wilson

SUBJECT:                  Financial Quarterly Report for the six months ended 31 December 2018        

 

 

1.0      SUMMARY

1.1      The purpose of this report is to inform the Committee of the financial result for the six months ended 31st December 2018.

1.2      The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.3      This report concludes by recommending that the report for the 6 Months ended 31st December 2018 be received.

2.0      BACKGROUND

2.1      The accounting operating financial result is reported on quarterly during the year and at year end a report is prepared on the financial as well as the rating result.  The rating result differs from the accounting result in respect of non-cash items such as depreciation, vested assets and development contributions that are not included.

2.2      This financial report is governance focussed and allows significant variances to be highlighted with explanations provided in a way this is easy to read and understand through dashboard analytics and commentary.

2.3      If Councillors require clarification on any points, please contact the writer prior to the meeting to ensure complete answers can be given at the meeting on the detail in these reports.

3.0      CURRENT SITUATION

3.1      Set out below is a summary of the operating financial result year to date.  The financial results detailed below represent the accounting view and does not reflect the potential rating result for 2018/19:

 

 

 

 

 

$’000

$’000

$’000

Full year Revised Budget*

 2018/19

 

YTD Actual

 

YTD Revised Budget

 

YTD Variance

Operating Revenue

64,781

64,279

          502

130,314

Operating Expenditure

65,573

62,723

(2,850)

121,000

Net Surplus/(Deficit)

(792)

1,556

(2,348)

   9,314

* Revised budget includes the Annual budget, Brought Forwards and surplus allocations from 18/19 financial year

3.2      The result above is presented against the revised budget.  The revised budget includes changes and decisions made during the year on Council budgets which includes carry forwards from 2017/18 and allocations of the 2017/18 rating surplus. 

3.3      Council’s overall financial performance is $2.348m behind YTD budget for the quarter ended 31 December 2018.  Revenue is favourable to budget and expenditure is unfavourable budget.

3.4      Overall revenue is $0.502m ahead of YTD budget and expenditure is $2.850m, unfavourable to YTD budget.

 

Revenue

3.5      Subsidies, grants and donations are above YTD budget by $0.753m with the main drivers being the NZTA subsidies received Roading projects ($348k) along with grants received for a number of social development grants ($288K).  Note the additional revenue in subsidies for Roading projects is offsetting the capital cost for those projects.

3.6      Fees and charges revenue across Council are favourable by $1.427m with the main drivers being:

·     Transport are $247k favourable with drivers being money received for Hawea Park ($131k), from HB Regional Council, along with reimbursement for emergency Haumoana shingle replenishment ($83k).

·     Parks are $266k favourable with the main driver being funding received from government agency for Haumoana Freedom Camping project ($150k) along with funding received for Clifton revetment.

·     Planning and Regulatory services are favourable to budget by $480k driven by higher environmental ($72k), and building consents ($182k) revenue along with higher than budgeted parking revenues ($185k).

·     One off funding received included $287k for a GIS project along with an initial payment for insurance reimbursement for the Hawkes Bay Opera House fire of $100k.

3.7      Development contributions are unfavourable to YTD budget by $2.08m. Phasing of budgets in relation to when contributions occur is difficult, and creates timing differences as it is not always known in advance in what month a payment will occur when the budget is being set.

 

3.8      A Key contributor to the negative budget variance is the Irongate Industrial development which has a ring fenced development contribution policy. While there is still a lot of pre-development activity at Irongate, it has yet to materialise into development contributions paid this financial year. Officers have collected market Intel and whilst it is anticipated some development contributions will be paid prior to yearend it is unlikely to meet budgeted levels.

3.9      To mitigate the risk to Council, officer’s regularly review all of the assumptions that underpin the calculation.  The assumption around the anticipated uptake has been reviewed, which will result in a higher contribution rate being required going forward.  Council is consulting directly with affected land owners on a change to its development contribution schedule of charges as part of the Draft 2019/2020 Annual Plan process.  The new rate would be applied from 01 July 2019.

 

Expenditure

3.10    Overall expenditure is tracking unfavourable to year to date budget as at 31 December 2018 by $2.85m or 4.3% of total budgeted expenditure year to date.

3.11    Transport is $1.018m unfavourable to budget driven by higher emergency reinstatement costs for the June and September 2018 floods. There are still further costs to come, with final costs estimated to be in the vicinity of $2m.  Funding this cost is through NZTA Subsidies, along with the flood damage reserve and some major reinstatement budget. The net financial impact for Councils Local share on the RA2 flood reserve is expected to be $0.617m.  The current balance of the RA2 flood reserve stands at $1.8m, with the forecasted year end closing reserve balance to be $1.2m.

3.12    The negative variance to budget for non-cash entries in terms of Depreciation ($1.48m) are driven by higher asset values due to prior year revaluations in Water, Land and Building and Parks along increased spend on capital projects.

3.13    In addition within governance and support services there is a $1.1m deficit, this is for the transfer of fire emergency assets out of Council to Fire and Emergency New Zealand (FENZ).  This is an accounting entry and does not reflect in terms of Cashflow.

3.14    Finance costs are favourable by $805k which is a reflection of lower levels of debt than phased in the budget and lower actual interest rates compared with those assumed in the budget forecasts.

3.15    Council continues to spend significant sums of money on water supply activity including both Capital and Operational expenditure in line with budget. This activity is funded by way of a separate water account which is designed to either accumulate reserves or run in deficit depending on expenditure needs and Council decision making. This allows Council to spread the impact of “lumpy” expenditure in this activity.

3.16    Drinking water services operational expenditure when split out shows an unfavourable variance to budget of $39k, with the higher strategy and planning costs along with reactive maintenance offset by savings in electricity. Below shows a summary table of spend to budget in this area:

 

3.17    Te Mata Peak Project:

Council has spent $409k in the current financial year on the Craggy Range Te Mata Peak Track with this spend focused on:

-    Cultural and landscape impact evaluations

-    Development, evaluation and report of suitable track options

-    Reinstatement work

 

In a report to Council in December 2018, it was identified that $100k was to be funded by the District Plan budget.  The balance of costs incurred to date is currently being treated as unbudgeted expense.

 

Total costs incurred to date for this project (more than one financial year), is $472k.

       

Capital Spend

3.18    Council’s total capital budget (including carry forwards, renewals, new works, and growth projects) for 2018/19 is $124m.  This level of expenditure is a significant increase on what has been delivered previously by Council and there is a real risk associated with the ability of Council to deliver on this programme.  Capital spend year to date of $35.4m is ahead of actual spend for the prior year ($28.8m), however it is significantly behind current year to date budget.

3.19    Capital expenditure is typically split into three categories. The graphs below demonstrate that it is the New works and Growth related works that are falling behind budget.

 

The major projects that were budgeted or carried forward into 2018/2019 but are behind budget expectations include:

 

Risks

3.20    Council have spent significant amounts of money in developing infrastructure for industry within the Irongate area.  Development contributions revenue offsetting this spend has not been received in line with budgeted expectations.  There is always a tension between infrastructural investment spend and developer payment.

3.21    Following a decision by Council to outsource service delivery, Recreation Services successfully tendered for this work and started their contract on the 1st February 2019.  This work was previously carried out by the Maintenance Group (MG), with their financials integrated into Council reporting.  MG’s financial position at the end of January 2019 was a $387k deficit, largely driven by lower revenues, with lost productivity with staff preparing for transition to Recreation services, along with higher maintenance expenditure and some transition costs over to the new contract.

3.22    In addition to the final wash-up of the Maintenance Group position, it is forecasted that there will be some higher than budgeted costs for the new contract for the remainder of the year.

3.23    Capital programme of work including carryfowards – As has been noted in the Capital section of the report, new capital works along with growth projects are behind budget as at 31 December 2018.  There is a real risk that a number of projects will not be completed by the end of the financial year. 

3.24    This coupled with a $75m capital programme in the 2019/2020, consideration needs to be given to resource availability, and limiting carrying forward projects into the 2019/2020 that will further strain capability. 

3.25    It may be that reprioritising and then rebudgeting projects is a better way forward than adding spend that will possibly fall behind in the next financial year.

3.26    Cape Kidnappers’ landslide – currently no costs have been invoiced for, but it is likely that there will be significant financial impact in terms of geology assessments and recommendations and the recently authorised quantitative risk assessment.

 

Post 31st December 2018 events

3.27    Splash Planet revenue is above budget as at 31st January 2019 by $61k

3.28    Residential development contributions of a $1m have been invoiced for developments in Arataki, Northwood.

 

Treasury

3.29    Total net external borrowing as at the end of December 2018 is $104.2m with committed borrowing facilities of $114.2m, providing headroom of $10m.

 

 

 

YTD 31 Dec 2018

 

30 June 2018

$'000

$'000

Facilities at start of year

87,741

70,741

New/matured facilities (net)

46,500

17,000

Linked Investments (net)

(20,000)

0

Facilities at end of year

114,241

87,741

Borrowing at start of year

77,741

60,741

New Loans Drawn

46,500

22,000

Repayment of Loan

0

(5,000)

Linked Investments Created

(20,000)

0

Linked Investments Matured

0

0

Net borrowings at end of period

104,241

77,741

Plus unutilised facilities

10,000

10,000

Total borrowing facilities available

114,241

87,741

Liquidity Ratio

110%

113%

 

3.30    The following table sets out Council’s overall compliance with the Treasury Management Policy as at 31 December 2018:

 

Measure

Compliance

Actual

Minimum

Maximum

Liquidity (1)

ü

110%

110%

170%

Fixed debt

ü

56%

55%

95%

Funding profile:

0 – 3 years

3 – 5 years

5 years +

 

 

ü

ü

ü

 

 

39%

24%

37%

 

 

10%

20%

10%

 

 

50%

60%

60%

(1)  Liquidity Ratio = (Cash Reserves + Lines of Credit + Drawn Debt) / Drawn Debt

3.31    Council is currently compliant with Treasury Management Policy.  The Risk and Audit Subcommittee is responsible for reviewing Council’s treasury performance and policy with advice from PricewaterhouseCoopers (PwC).  Current debt forecasts indicate a debt position at 30 June 2019 to be $127m with major capital projects well underway.

4.0      SIGNIFICANCE AND CONSULTATION

4.1      This report does not raise any issues that are significant in terms of the Council’s Significance and engagement Policy that would require consultation.

 

 

5.0      RECOMMENDATIONS AND REASONS

           That the report of the Financial Controller titled Financial Quarterly Report for the six months ended 31 December 2018 dated 26/03/2019 be received.

 

Attachments:

 

1

Quarterly Report Financial Dashboard for the Quarter ended 31 December 2018

CG-14-71-00029

 

 

 

 


Quarterly Report Financial Dashboard for the Quarter ended 31 December 2018

Attachment 1

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


File Ref: 19/190

 

 

REPORT TO:             Finance and Risk Committee

MEETING DATE:       Tuesday 26 March 2019

FROM:                        Manager Strategic Finance

Brent  Chamberlain

SUBJECT:                  Local Government Funding Agency - Half Year Report to 31 December 2018 and Draft 2019/20 Statement of Intent        

 

 

1.0      SUMMARY

1.1      The purpose of this report is to present to the Committee the Half Year Report for the period ending 31 December 2018 and the opportunity to comment on the Draft 2019/20 Statement of Intent (SOI) of the Local Government Funding Agency (LGFA).

1.2      This issue arises as a consequence of Council’s shareholding in the LGFA in late 2012 and the receipt of the half year report for the period ending 31 December 2018 and the Draft 2019/20 SOI from the LGFA.

1.3      The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.4      The objective of this decision relevant to the purpose of Local Government is to allow Council to have access to the LGFA and therefore enables Council to have access to the most cost effective debt available.

1.5      This report concludes by recommending that the Local Government Funding Agency’s half year report for the period ending 31 December 2018 be received and the Draft 2019/20 SOI be received with any feedback passed onto the Directors of the Local Government Funding Agency.

2.0      BACKGROUND

2.1      The LGFA was established on 1 December 2011 with 18 local government shareholders and the Crown. Hastings District Council became a shareholder with a shareholding investment of $400,000 (1.77%). The LGFA is a Council Controlled Organisation. Following the addition of 12 new participants in the LGFA on 30 November 2012 the existing LGFA shareholders were required to sell down their paid up and unpaid shares on a pro rata basis. This reduced HDC’s shareholding to $373,196 (1.77%).

2.2      The LGFA has forwarded for information their Half Year Report for the period ended 31 December 2018 and the Draft 2019/20 SOI, seeking comment from Council.  Council have until 30 April 2019 to provide comment on the Draft 2019/20 SOI.

2.3      The Local Government Act requires all Council Controlled Organisations to prepare a Statement of Intent.  A draft is required to be provided by 1 March each year for comment with the final Statement of Intent to be completed by 30 June each year. Clause 3 of Schedule 8 of the Local Government Act 2002 outlines the Board’s responsibilities upon receiving comments from the shareholders:

 

      3)     Completion of statements of intent

               The board must –

a) Consider any comments on the draft statement of intent that are made to it within 2 months of 1 March by the shareholders or by any of them; and

b) Deliver the completed statement of intent to the shareholders on or before 30 June each year.

2.4      Clause 9 of Schedule 8 of the Local Government Act outlines the contents of a Council Controlled Organisation’s Statement of Intent for which LGFA must comply.

3.0      CURRENT SITUATION

3.1      HALF YEAR REPORT

3.2      Attachment 1 is the Half Year Report for the period ending 31 December 2018.  The report is very comprehensive and reports against stated objectives and performance targets and satisfies the reporting requirements as outlined in the Statement of Intent.

3.3      By 31 December 2018 the LGFA had lent $9.3 billion to 58 councils and continues to deliver more cost effective funding to those participating Councils. The LGFA estimate savings of 2 to 17 basis points for AA rated Councils over NZD domestic bonds being issued by Councils in their own right.

3.4      At 31 December 2018 Hastings District Council had $124m borrowed through the LGFA. A savings of 2 to 17 basis points equates to an annual interest savings of $24,800 and $210,800 on this debt.

3.5      The LGFA offers a range of borrowing options ranging from 1 month to 14 years. Long-dated lending over the six-month period to December 2018 was a strong $1.05 billion. The tenor of borrowing by councils at 6.5 years was longer than the average term of borrowing of 4.5 years over the 12-month period to June 2018. Short-dated lending for terms less than 12 months has been well received by councils and as at 31 December 2018, LGFA had $527 million of short term loans outstanding to 31 councils.

3.6      The following table shows the $8,704m of LGFA bonds outstanding by maturity as at 31 December 2018 (note this excludes short term lending):

3.7      As at 31 December 2018, LGFA’s has the following credit rating:

Standard and Poors        AA+          Long Term Rating

                                        A-1+         Short Term Rating

LGFA’s rating is the same as the New Zealand Government.

3.8      The original 31 shareholders including the Crown remain as shareholders. Over the past six months, LGFA added five new members with Ruapehu District and Waikato Regional Councils joining as guarantors and Wairoa, Clutha and Mackenzie District Councils joining as non-guarantors. Gore District Council also moved to become part of the guarantor group of councils. Total membership now sits at 61 councils and this is expected to rise slightly in the coming year as several councils are partly through the joining process.

3.9      LGFA total interest income for the six-month period of $181 million was a 1.5% increase over the 2017 comparable period of $178 million while Net Operating Profit of $6.1 million was a 0.7% increase on the 2017 comparable period of $6.0 million.

3.10    Officers are of the opinion that the LGFA’s performance continues to be  successful; creating interest savings and an efficient and diversified funding market for Councils to participate in while operating in line with the 2018/19 Statement of Intent.

3.11    DRAFT 2019/20 STATEMENT OF INTENT

3.12    The LGFA objectives are consistent with the requirements of the Local Government Act and provide a sound basis for the business to continue its activities.

3.13    Attachment 3 is the Draft 2019/209 SOI.  The SOI sets out the nature and scope of the activities of the LGFA as well as the objectives of the organisation.

3.14    Shareholders have the benefit of relying on the LGFA Shareholders Council which, on behalf of the shareholders, reviews all major documents like the SOI.  The Shareholders Council acts in the best interest of the councils involved and has already reviewed the SOI and provided feedback to the LGFA which has been incorporated in the document.

3.15    The SOI forecasts:

 

 

 

$m

 

 

2019/20

2020/21

2021/22

Net Profit

$10.9m

$11.2m

$10.9m

Loans (nominal)

$9,100m

$9,346m

$9,419m

 

There is some forecast uncertainty around the timing of Net Interest Revenue, Net Profit, Total Assets, LG Loans, Bonds and Borrower Notes depending upon council decisions regarding the amount and timing of refinancing of their April 2020, May 2021, and April 2022 loans. LGFA will work with council borrowers to reduce this uncertainty.

3.16    In addition the SOI has the following non-financial KPI’s:

·    Achieve 75% market share of all council borrowing in New Zealand.

·    No breaches of Treasury Policy, any regulatory or legislative requirements including the Health and Safety at Work Act 2015.

·    Successfully refinance of existing loans to councils and LGFA bond maturities as they fall due.

·    Maintain a credit rating equal to the New Zealand Government rating where both entities are rated by the same credit rating agency.

3.17    LGFA will seek to maximise benefits to Participating Local Authorities as Borrowers rather than Shareholders. Consequently, it is intended to pay a limited dividend to Shareholders.

The LGFA Board’s policy is to pay a dividend that provides an annual rate of return to Shareholders equal to LGFA fixed rate bond cost of funds plus 2.00% over the medium term.

3.18    The SOI complies with the requirement of the Local Government Act 2002 and complies with the proposals submitted to Council at the time it approved its investment in the LGFA.  The draft SOI is also reviewed by the LGFA Shareholders Council on behalf of the shareholders. The performance targets are very detailed and robust and relevant to a funding agency of this nature. Officers are happy with the level of information contained in the SOI and don’t have any suggested feedback.

4.0      OPTIONS

4.1      The preferred option is that Council receive and support the draft 2019/20 SOI from the LGFA.

4.2      Officers are of the view that the Draft 2019/20 SOI not only complies with the requirements of the Local Government Act 2002 but also provides well developed and meaningful performance indicators.

5.0      SIGNIFICANCE AND ENGAGEMENT

5.1      The matters raised in this report are not of significance to trigger Council’s policy of significance and no further consultation is required.

 

 

6.0      RECOMMENDATIONS AND REASONS

A)       That the report of the Manager Strategic Finance titled Local Government Funding Agency - Half Year Report to 31 December 2018 and Draft 2019/20 Statement of Intent dated 26/03/2019 be received.

B)       That the New Zealand Local Government Funding Agency Limited Half Year Report to 31 December 2018 be received.

C)       That the New Zealand Local Government Funding Agency Limited Draft 2019/20 Statement of Intent be received and that Council provide positive feedback on a well written Statement of Intent to the New Zealand Local Government Agency Board.

 

 

 

Attachments:

 

1

LGFA Half Year Report 2018

FIN-15-5-19-739

 

2

LGFA Letter to shareholders to accompany 2019/20 Draft SOI

FIN-15-5-19-740

 

3

2019/20 LGFA Draft Statement of Intent

FIN-15-5-19-741

 

 

 

 


LGFA Half Year Report 2018

Attachment 1

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


LGFA Letter to shareholders to accompany 2019/20 Draft SOI

Attachment 2

 

PDF Creator


 

PDF Creator


2019/20 LGFA Draft Statement of Intent

Attachment 3

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


File Ref: 19/191

 

1.   

REPORT TO:             Finance and Risk Committee

MEETING DATE:       Tuesday 26 March 2019

FROM:                        Manager Strategic Finance

Brent  Chamberlain

SUBJECT:                  Hawke's Bay Museums Trust Half Year Report and Draft 2019/20 Statement of Intent        

 

 

1.0      SUMMARY

1.1      The purpose of this report is to give the Finance and Risk Committee the opportunity to comment on the draft 2019/20 Statement of Intent and to receive the half year report to 31 December 2018.

1.2      The Trust’s Chair, Dr Richard Grant, is unable to attend this meeting.

1.3      This issue arises from a requirement under the Local Government Act 2002 that requires Council Controlled Organisations (CCO) to submit a Statement of intent to their shareholder for consideration.

1.4      The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.5      The objective of this decision relevant to the purpose of Local Government is to enable the Trust to manage the Regional Collection on behalf of the Hawke’s Bay Community and in so doing, provides a good quality local public service that is cost efficient, effective and appropriate for the Region.

1.6      This report concludes by recommending that the Hawke’s Bay Museums Trust half year report to 31 December 2018 and draft 2019/20 Statement of Intent be received with any feedback passed onto the Trustees of the Hawke’s Bay Museums Trust.

2.0      BACKGROUND

2.1      The Trust is a Council Controlled Organisation with the bulk of its funding provided by the Napier City and Hastings District Councils.

2.2      The Hastings District Council appointment to the Trust is Cr George Lyons who was appointed to the Trust by Council in November 2013.

2.3      The current trustees of the Hawke’s Bay Museum’s Trust are:

Dr Richard Grant (Chairman)

Councillor Faye White (NCC)

Councillor George Lyons (HDC)

Johanna Mouat

Mike Paku

2.4      Dr Grant was appointed as the Independent Chairman by the joint appointments committee (Mayors Yule and Dalton) in late 2014.

2.5      As required under the Local Government Act 2002 the Trust is to provide a draft Statement of Intent for comment by 1 March each year and a half year report within 60 days of the end of the first six months.

2.6      The objectives of the Trust amongst other things are to hold, protect and manage the regional collection for the people of Hawke’s Bay including overseeing the collection development through acquisition and disposal of collection items. The Trust Board governs on a high level strategic direction basis to ensure the objectives of the Trust are being met and have a Management Agreement with Napier City Council for the care and management of the regional collection.

3.0      CURRENT SITUATION

Half Year Report

3.1      The Trust has provided their Half Year Report for the six months ended 31 December 2018 (Attachment 1).  As the staff are employed by the Napier City Council the main cost to the Trust is a management recharge. This recharge has had a significant reset in the past six months and further increases are signalled in the Statement of the Trust.  The accounts show a net operating surplus of $9,855 compared to an operating surplus of $25,438 last year. The half year result is in line with the Trusts full year budget which is to achieve an operating breakeven result.

3.2      The variance between the two Councils’ grants as noted in note 2 of the accounts relates to an education grant paid direct to the HB Museum and Art Gallery from the Napier City Council as opposed to the Hastings education grant paid through the Hawke’s Bay Museum Trust.

3.3      The overall financial result is satisfactory and within budget and the Statement of Financial Position represents a sound financial position for the Trust.

3.4      As at the 31 December 2018 the Trust was holding $640,059 in cash/investments. The majority of this money is set aside as special purpose reserves (such as the acquisitions reserves $373,379) which are detailed in full under note 6. The majority of these special purposes funds have arisen from tagged bequests/donations.

 

Statement of Intent

3.5      The Hawke’s Bay Museums Trust has provided their 2019/2020 draft Statement of Intent for comment in accordance with the requirements of schedule 8 of the Local Government Act 2002.  A copy of the draft Statement of Intent is included in Attachment 2.  The Statement of Intent complies with the requirements of the Local Government Act 2002 and the objectives and nature and scope of the activities to be undertaken by the Trust for the regional collection are compatible with the direction of the 2018-28 LTP.

3.6      The draft 2019/20 Statement of Intent contains the following performance indicators and targets for the key result areas:

·        Protection –collections are fully insured, and are stored in an acceptable environment with regard to pest control, storage, shelving, and air quality: No collection deterioration due to the environment.

·        Quality –the collection will be conserved to best industry standard. Any accession or de-accession is managed in accordance with collection framework and strategy policies.

·        Access – the collections are available to the Hastings City Art Gallery, MTG Hawke’s Bay, and other appropriate institutions for exhibitions, research, and archives: minimum of 1,500 enquiries and 5 exhibitions

·        Development – including fundraising, reserve management, and stakeholder relations: - Bequests and funds are used for their intended purpose, and an annual meeting with Te Ropu Kaiawhina Taonga is held.

·        Financial – achieve a balanced Statement of Financial Position

3.7      These are essentially unchanged from previous years. Officers are of the view that these KPI’s could be improved on to provide a better framework for reporting against by the Trust. KPI’s should be further developed to demonstrate the Collection is being well utilised and readily available to all of Hawkes Bay, and therefore that the Council is getting value for its annual grant.

3.8      This was item of improvement recommended by the recent “Review of Management Services” by the Rationale Group. In that report they suggested the following KPI’s be considered:

·    Minimum levels of third party funding (proportionate to total funding);

·    Minimum levels of visitor satisfaction (as distinct from ratepayer satisfaction);

·    Minimum visitor spends and/or maximum visitor subsidy;

·    Minimum numbers of visitors from, or exhibitions at, other districts;

·    Minimum percentages of collection artefacts electronically recorded and accessible;

·    Minimum numbers of public online access to the collection;

·    Maximum response times to inquiries.

3.9      Included in the Statement of Intent is an inflation adjustment to the grant funding required from Hastings District Council, however Hastings District Council currently has provided a non-inflated grant in its annual plan.

3.10    The Hastings District Council continues to participate in a Joint Working Group with Napier City Council that is considering the future structure of the Hawke’s Bay Museums Trust, its funding, the storage of the collection, and the role of the MTG Hawkes Bay in the display of the collection. Officers recommend that part of this Joint Working Group’s remit should be to explore what enhancements could be added to the Trust’s SOI to enable meaningful reporting back to the funding Councils, including but not limited to those recommended by the Rationale Report.

4.0      OPTIONS

4.1      Council can receive the Hawke’s Bay Museums Trust half year report to 31 December 2018.

4.2      Council can receive the Hawke’s Bay Museums Trust draft 2019/20 Statement of Intent and can provide feedback to the Trust and/or the Joint Working Group.

5.0      SIGNIFICANCE AND ENGAGEMENT

5.1      The issues for discussion are not significant in terms of the Council’s Significance Policy and Engagement and no consultation is required.

6.0      ASSESSMENT OF OPTIONS (INCLUDING FINANCIAL IMPLICATIONS)

6.1      The draft Statement of Intent complies with the requirements of Schedule 8 of the Local Government Act and the draft should be received with any other suggested changes passed on to the Trust.

7.0      PREFERRED OPTION/S AND REASONS

7.1      The preferred options are for the Hawke’s Bay Museums Trust half year report to 31 December 2018 and the draft 2019/20 Statement of Intent to be received and if desired, feedback provided.

 

8.0      RECOMMENDATIONS AND REASONS

A)   That the report of the Manager Strategic Finance titled Hawke's Bay Museums Trust Half Year Report and Draft 2019/20 Statement of Intent dated 26/03/2019 be received, and that Council provide feedback to the Hawke’s Bay Museums Trust and/or the Joint Working Group that the Statement of Intent should be altered to include the KPI’s as recommended by the Rationale Report.

B)   That the Hawke’s Bay Museums Trust Half Year Report for the six months ended 31 December 2018 be received

 

Attachments:

 

1

HBMT Half Year Financial Report 31-12-2018

EXT-10-11-7-19-222

 

2

HBMT Statement of Intent 2019-2021 Hawkes Bay Museums Trust

EXT-10-11-7-19-221

 

 

 


HBMT Half Year Financial Report 31-12-2018

Attachment 1

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


HBMT Half Year Financial Report 31-12-2018

Attachment 1

 

PDF Creator


HBMT Half Year Financial Report 31-12-2018

Attachment 1

 

PDF Creator


HBMT Half Year Financial Report 31-12-2018

Attachment 1

 

PDF Creator


HBMT Half Year Financial Report 31-12-2018

Attachment 1

 

PDF Creator


 

PDF Creator


HBMT Statement of Intent 2019-2021 Hawkes Bay Museums Trust

Attachment 2

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


File Ref: 19/192

 

 

REPORT TO:             Finance and Risk Committee

MEETING DATE:       Tuesday 26 March 2019

FROM:                        Manager Strategic Finance

Brent  Chamberlain

SUBJECT:                  Hawke's Bay Airport Limited Half Year Report and 2019/20 Statement of Intent        

 

 

1.0      SUMMARY

 

1.1      The purpose of this report is to inform the Council of the results of the Hawke’s Bay Airport Limited (HBAL) for the six months ended 31 December 2018 and to present the draft HBAL 2019/20 Statement of Intent for consideration.

 

1.2      This issue arises from the receipt of the half yearly report for the six months ended 31 December 2018 and the draft 2019/20 Statement of Intent (SOI) from HBAL. Tony Porter (Chairman) and Stuart Ainslie (Chief Executive Officer) from HBAL will be in attendance at the Council meeting.

 

1.3      The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

 

1.4      This report concludes by recommending that the Half Year report for the six months to 31 December 2018 and the draft 2019/20 Statement of Intent be received with any comments passed onto the HBAL Board for consideration.

 

2.0      BACKGROUND

 

2.1      HBAL is a joint venture between the Crown (50%), Napier City (26%) and Hastings District (24%).

 

2.2      The Council’s share of HBAL is considered to be a Strategic Asset in Council’s Significance Land Engagement Policy.

 

2.3      HBAL is required to report to its shareholding partners every 6 months.

 

2.4      The Local Government Act requires all Council Controlled Organisations to prepare a Statement of Intent.  A draft is required to be provided by 1 March each year for comment with the final Statement of Intent to be completed by 30 June each year. Clause 3 of Schedule 8 of the Local Government Act 2002 outlines the Board’s responsibilities upon receiving comments from the shareholders:

 

      3)     Completion of statements of intent

               The board must –

a)   Consider any comments on the draft statement of intent that are made to it within 2 months of 1 March by the shareholders or by any of them; and

b)   Deliver the completed statement of intent to the shareholders on or before 30 June each year.

2.5      Clause 9 of Schedule 8 of the Local Government Act outlines the contents of a Council Controlled Organisation’s Statement of Intent for which HBAL must comply.

3.0      CURRENT SITUATION

        Half Year Accounts

3.1      Attached as Attachment 1 is a copy of the report to shareholders for the half year ended 31 December 2018.

3.2      HBAL has reported a half year after tax profit of $1,008,307 which is above budget ($736,395) and ahead of last year’s half year result of $933,430.  The result reflects a 14.8% ($498,396) increase in revenue on last year. Operating expenses were $364,968 or 26.3% above the same period last year which reflects an increase in costs aligned with supporting business growth, specifically consultancy fees and remuneration.

3.3      Passenger numbers at 380,323 are 7.3% up on last year.

3.4      Bank borrowings of $7.990m as at 31 December primarily relates to the Terminal redevelopment project which is underway. The airport continued to invest in infrastructure, in line with its strategic plan, with total capital investment of $4.2m for the half year.

3.5      Return on Equity of 6.4% is in line with the same period for the prior year and exceeds budget of 4.3%.

 

                Statement of Intent

3.6      HBAL has prepared a draft 2019/20 Statement of Intent which is attached as Attachment 2.  The draft Statement of Intent is for the year ended 30 June 2020 and includes financial forecasts for the following two years. The draft SOI includes capital expenditure of $13.9m over the next three years with investment concentrated on the Terminal ($5.4m), security ($1.8m) and Airfield Infrastructure ($2.65m).

3.7      HBAL are forecasting a 25.6% increase in total revenue on the 2018/19 budget with further increases in total revenue of 10.5% and 8.7% in 2020/21 and 2022/22 respectively, driven by continued growth in passenger numbers, and rentals.

3.8      The 2019/20 Net Profit before tax is budgeted to be $1,874,067 which is well ahead of the 2019/20 result forecast in the previous year’s Statement of Intent (that is year two’s of the Statement of Intent). This is on the back of much higher revenue targets.

3.9      The company will endeavour to deliver an annual dividend to shareholders as per the Company’s policy of 40% of the operating surplus after taxation, however the company would highlight that the recent voluntary administration of the head contractor on the HBAL terminal expansion project, Arrow International Ltd, increases risk to the business and may necessitate a request for dividend relief. It is the company’s intention to keep shareholders fully informed in this regard.

3.10    A dividend of $100,000 has been factored into Council’s 2019/20 Annual Plan

3.11    HBAL have updated their key objectives which include specific financial targets, and targets around sustainability, operational, commercial, property, partners, and people.

3.12    The HBAL’s key objectives tie back to the Airport’s 2019-2024 Strategic Plan.

3.13    The HBAL 2018/19 Statement of Intent satisfies the requirements set out in Schedule 8 of the Local Government Act 2002.

4.0      OPTIONS

4.1      Council can receive the HBAL six monthly report.

4.2      Council can receive the draft 2019/20 HBAL Statement of Intent.

4.3      Council can also request directors of HBAL to consider changes to the Statement of Intent if it wishes.  The directors of HBAL would then need to consider the request alongside the feedback from the other 2 shareholders and decide if a change is appropriate.

4.4      If HBAL decided that it did not wish to make the changes requested by Council as its shareholder, Council has recourse through Schedule 8 (5) of the Local Government Act. Council can by resolution, require the board to modify the statement of intent if Council deemed it necessary. However given HDC’s minority shareholding in HBAL, it would need majority shareholder consensus to enforce this option.

5.0      SIGNIFICANCE AND ENGAGEMENT

5.1      While Council’s share in HBAL is considered a strategic asset, the issues for discussion are not significant in terms of Council’s Significance and Engagement Policy and no consultation is required.

6.0      PREFERRED OPTION/S AND REASONS

6.1      The preferred option is for the Half Year report to 31 December 2018 and the draft Statement of Intent to be received with any suggested changes to the Statement of Intent passed onto the HBAL Board.

6.2      The half year report provides a solid financial result for HBAL. HBAL continues to have a strong balance sheet to enable distributions to its shareholders and to also enable continued investment in the business (noting the uncertainty surrounding the completion of the terminal expansion with the recent voluntary administration of Arrow International Limited, the head contractor).

6.3      The Statement of Intent presented by HBAL satisfies all the requirements as set out in Schedule 8 of the Local Government Act and also clearly sets out the nature and scope of the HBAL activities and its performance targets.

 

 

7.0      RECOMMENDATIONS AND REASONS

A)       That the report of the Manager Strategic Finance titled Hawke's Bay Airport Limited Half Year Report and 2019/20 Statement of Intent be received.

B)       That the Hawke’s Bay Airport Limited Half Year report to 31 December 2018 be received.

C)       That the 2019/20 Draft Statement of Intent of Hawke’s Bay Airport Limited be received with any feedback provided to the Hawke’s Bay Airport Ltd board.

 

 

Attachments:

 

1

Hawke's Bay Airport Limited Interim Report for the six months ended 31 December 2018

CG-14-71-00031

 

2

Statement of Intent 2019-2020

EXT-10-9-1-19-59

 

 

 

 


Hawke's Bay Airport Limited Interim Report for the six months ended 31 December 2018

Attachment 1

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Statement of Intent 2019-2020

Attachment 2

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Statement of Intent 2019-2020

Attachment 2

 

PDF Creator


Statement of Intent 2019-2020

Attachment 2

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


File Ref: 19/197

 

 

REPORT TO:             Finance and Risk Committee

MEETING DATE:       Tuesday 26 March 2019

FROM:                        Manager Strategic Finance

Brent  Chamberlain

SUBJECT:                  Hawke's Bay Regional Sports Park Trust Draft Half Year Report to 31 December 2018        

 

 

1.0      SUMMARY

1.1      The purpose of this report is to inform the Council about the Hawke’s Bay Regional Sports Park Trusts (the Trust) half year result to 31 December 2018

1.2      This update arises from a requirement detailed in the Funding Agreement between Council and the Trust.

1.3      The Trust’s Chief Executive (Jock Mackintosh) will be in attendance at the meeting.

1.4      The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.5      The Trust is responsible for the efficient and cost effective management of sporting facilities (good quality local infrastructure) located at the Hawkes Bay Regional Sports Park.

1.6      This report concludes by recommending the Hawke’s Bay Regional Sports Park Trust half year report to 31 December 2018 be received.

2.0      BACKGROUND

2.1      The presentation of a half year report by the Trust is a requirement of the Management Agreement between Council and the Trust which was updated and executed in October 2017. The Management Agreement states that the Trust shall provide to Council as part of its project reporting, annual and six monthly financial accounts for the Trust. The half year report of the Trust has been received in accordance with the requirements set down in the Funding Agreement.

3.0      CURRENT SITUATION

3.1      The presentation of the Trust’s half year report is in accordance with the funding agreement. Attachment 1 includes the Hawke’s Bay Regional Sports Park Trusts half year report to 31 December 2018. These accounts show an operating surplus of $95,438 before depreciation for the first six months compared to a budgeted surplus of $2,735 and a $59,080 surplus for the same period last year.

3.2      The budget for the second half of the year includes a provision for acquiring a naming right sponsor for the Park. At the time of writing there are initial discussions occurring, but nothing has been signed. If this doesn’t come to fruition then the financial gains made against budget in the first half of the year will be lost, and the Trust will finish the year broadly on budget with an operating surplus (before depreciation) of approximately $90,000.

4.0      FUTURE DEVELOPMENTS AND FUNDING NEEDS

4.1      The HBRSP has provided a letter (attachment 2) giving details of its proposed capital program for the next 12 months and its associated funding strategy. Included in this is a request for Hastings District Council to contribute $250,000 towards this capital program, and a request from the Community Fitness Centre Trust for bridging finance of $150,000. The Trust asks for these requests to be included as a submission to, and considered as part of, the Councils 2019-20 Annual Plan to be adopted in June 2019.

5.0      OPTIONS

5.1      The Council can receive the Trust’s half year report to 31 December 2018.

5.2      That the Council receives the Trust’s submission to the Councils 2019-20 Annual Plan for consideration in June 2019.

6.0      SIGNIFICANCE AND ENGAGEMENT

6.1      No consultation is required and there is nothing in this report that triggers any threshold in the significance and engagement policy.

7.0      PREFERRED OPTION/S AND REASONS

7.1      That Council receive the Trust’s half year report to 31 December 2018.

7.2      That the Council receives the Trust’s submission to the Councils 2019-20 Annual Plan for consideration in June 2019.

 

8.0      RECOMMENDATIONS AND REASONS

A)       That the report of the Manager Strategic Finance titled Hawke's Bay Regional Sports Park Trust Draft Half Year Report to 31 December 2018 dated 26/03/2019 be received.

B)       That the Hawke’s Bay Regional Sports Park Trust Half Year Report to 31 December 2017 be received.

C)       That the Council receives the Trust's submission to the Councils 2019-20 Annual Plan for consideration in June 2019.

 

 

Attachments:

 

1

RSP Half Year Report 31 December 2018

EXT-10-38-19-226

 

2

HBRSP Funding Requests 2019-20

EXT-10-38-19-227

 

3

HBRSP Map of Complex

EXT-10-38-19-228

 

 

 

 


RSP Half Year Report 31 December 2018

Attachment 1

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


HBRSP Funding Requests 2019-20

Attachment 2

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


HBRSP Map of Complex

Attachment 3