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Report To:
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Regional
Council
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Meeting
Date:
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16
February 2021
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Report
Writer:
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Debbie Hyland, Finance &
Transport Operations Manager; Zhivan Alach, Organisational Performance
Manager; Mereana Toroa, Finance Support Team Lead and Matthew Searle,
Corporate Planner
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Report
Authoriser:
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Mat
Taylor, General Manager, Corporate
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Purpose:
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This report provides an overview of
Council’s performance (financial and non-financial) and the progress of
our work for the six months ended 31 December 2020.
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Arotake Tuarua 2020/21 - Performance
Monitoring Report Quarter Two (October to December 2020)
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Executive Summary
This report provides an overview of Council’s performance
and the progress of our work for the second quarter of 2020/21. Arotake
Tuarua 2020/21 (October 2020 to December 2020) is included as Attachment 1 to
this report.
For the six months
ended 31 December 2020, Council is forecasting an annual operating deficit of
$14.5 million which is $1.6 million higher than the revised budgeted deficit
of $12.9 million. Council expects to receive $19.6 million of capital revenue
which is slightly lower than the revised annual capital revenue budget of
$18.5 million. As a result, Council is forecasting a total surplus of $5.1
million which is $0.5 million lower than the revised total budgeted surplus
of $5.6 million. Council is forecasting capital expenditure of $49.3 million
which is $4.8 million lower than the revised capital budget of $54.1 million.
Our total investment portfolio is $289.4 million including
$50 million on-lent to Quayside Holdings Limited (Quayside), with the allocation
by cash reserve shown in the graph. The portfolio has a weighted average
yield of 1.81%.
The Toi Moana Trust is targeted to pay a distribution of
$2.25 million for the 2020/21 financial year. Forecast interest revenue is
$3.4 million compared to the annual budget $3.5 million. Confidential
Appendix 2 Bancorp Monthly Treasury Report and Confidential Appendix 3
Quayside Holdings Toi Moana Fund Quarterly Update December 2020 provide
further details of Council’s treasury performance.
We are tracking well against our
performance measures for the second quarter with 21 out of 33 performance
measures on track, two measures not on track and one measure will have no
data available due to changes to the activity (Regional Economic
Development). Data is not available for 9 measures at this stage of the year,
mainly due to them being reported annually.
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Recommendations
That the Regional Council:
1 Receives the report, Arotake Tuarua 2020/21 -
Performance Monitoring Report Quarter Two (October to December 2020).
2 Confirms
the public be excluded on the grounds set out in the Local Government Official
Information and Meetings Act 1987 from consideration of the following report
attachments:
(a) Arotake Q2 - Appendix 2
Bancorp - Confidential Treasury Report December 2020 under Section 48(1)(a)(i)
Section 7 (2)(h) as withholding the information is necessary to enable any
local authority holding the information to carry out, without prejudice or
disadvantage, commercial activities and that this attachment remain in Public
Excluded.
(b) Arotake Q2 - Appendix 3 Toi
Moana Trust - Quarterly Report - December 2020 under Section 48(1)(a)(i)
Section 7 (2)(h) as withholding the information is necessary to enable any
local authority holding the information to carry out, without prejudice or
disadvantage, commercial activities and that this attachment be released to the
public on the Chief Executive’s approval.
1. Introduction
1
This
report provides an overview of Council’s performance and the progress of
our work for the second quarter of the 2020/21 financial year (October 2020
– December 2020). This includes a view of our service delivery and
financial forecasts to 31 December2020.
2
Arotake
Tuarua 2020/21 has been included as Attachment 1 to this report and includes
the following sections.
· Highlights for the quarter are presented
in the ‘Executive Summary’ section of the report.
· A Financial Performance section
providing an overview of Operating and Capital expenditure, key budget variance
analysis, and the consequential increases to our reserves position as at 30
June 2021. This also includes an update on Treasury performance, including
investments and borrowings.
· Non-financial performance is covered
through the Service Delivery Performance section of the report which includes
monitoring of key performance indicators as set out in the Long Term Plan
2018-2028. People and Culture,
and Health and Safety updates round out the non-financial information.
3
Following
this Council meeting, the Arotake report will be published on Council’s
website.
1.1 Alignment with Strategic
Framework
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The Way We Work
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We
deliver value to our ratepayers and our customers.
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1.1.1 Community Well-beings Assessment
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Dominant Well-Beings Affected
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þ Environmental
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þ Cultural
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þ Social
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þ Economic
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4
Councils’ Arotake report provide
monitoring information across the full range of Council activities which
collectively support all four aspects of community
wellbeing.
2. Summary of financial and non-financial
performance to 31 December 2020
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For
the six months ended 31 December 2020, Council is
forecasting an annual operating deficit of $14.5 million which is $1.6
million higher than the budgeted deficit of $12.9 million. Council
expects to receive $19.6 million of capital revenue which is slightly higher
than the annual capital revenue budget of $18.5 million. As a result, Council
is forecasting a total surplus of $5.1 million which is $0.5 million lower
than the total budgeted surplus of $5.6 million. Council is forecasting capital
expenditure of $49.3 million which is $4.8 million lower than the
capital budget of $54.1 million.
6
The
year-end capital expenditure forecast is $49.3 million, this is a forecast
underspend of $4.8 million. This is mainly due to a $3.1 million forecast
underspend in the Rotorua Lakes Activity mainly because the alternative
engineering solutions for the Rotorua Te Awara Lakes programme have been
carried through to future years through the draft Long Term Plan 2021-2031.
7
Council
is forecasting an end of year Equalisation Reserve (general reserve) balance of
nil. Please refer to section 3.3 for the forecast balances for the targeted
rates reserves.
2.1 Schedule of Approved Budget
Changes
The below is a summary of approved changes to
the Annual Plan 2020/21:
Further detail on approved changes to the
Annual Plan 2020/21 by Activity:
2.2 Treasury
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Our
total investment portfolio is $289.4 million including $50 million on-lent to
Quayside Holdings Limited (Quayside).The portfolio has a weighted average yield
of 1.81%.
9
Council
has borrowed $231.4 million, with $50.0 million on-lent to Quayside. $112.2 million of this
is core debt, and $69.25 million is invested in term deposits. The average weighted
interest rate on borrowings at 31 December 2020 is 1.5%.
10 Confidential Appendix 2
Bancorp Monthly Treasury Report and Confidential Appendix 3 Quayside Holdings
Toi Moana Fund Quarterly Update September 2020 provide further details of
Council’s treasury performance.
2.3 Reserve Balances
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The
following graph and table shows the opening reserve balances, forecasted
movements for the year, and forecasted closing balances as at 30 June 2021.
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2.4 Performance Measures
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Quarter
2 has continued the positive trend from quarter 1, with a majority of reported
measures on track. As it is still early in the year, however, a significant
portion of the measure are yet to be reported on. Twenty-one out of a total of
33 performance measures were on track at the end of Quarter 2, with an
additional 9 measures to be reported on later in the year. In addition, two
measures were not on track to be achieved at the end of 2020/21.
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One
measure has no data available due to changes to the activity (Regional Economic
Development).
16
Further
information about how we are tracking can be found on under the section
“Service Delivery Performance” of the Arotake.
3. Considerations
3.1 Risks and Mitigations
There are no direct risk
implications arising as a result of this report.
3.2 Climate Change
The matters
addressed in this report are of a procedural nature and there is no need to
consider climate change impacts.
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There
are no direct climate change implications arising as a result of this report.
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Climate
Change is identified as a strategic challenge facing the Bay of Plenty
Region. The Arotake Report provides a report on the financial and
non-financial performance of Council and this includes work delivered through
Groups of Activities to understand the implications of and to respond to the
implications of Climate Change.
3.3 Implications for Māori
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Through
this quarter Council
continued to deliver services as set out in our LTP 2018-2028 and Annual Plan 2020/21, this includes
delivering services to all of our community including Māori.
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Council
also continues with work that involves engagement with Māori. Our region
has New Zealand’s largest number of iwi entities and the second largest
Māori population. This provides the region and its communities with a rich
and vibrant cultural dynamic. The involvement of Māori in Council decision
making has been and will continue to be, an important component of our work as
a Regional Council.
3.4 Community Engagement
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21 
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Engagement with the community is not required as the
recommended proposal / decision [relates to internal Council matters only].
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3.5 Financial Implications
There are no
material unbudgeted financial implications and this fits within the allocated budget.
As part of the adoption of the Annual Report 2019/2020 Council approved a
budget carry forward request for capital expenditure of $2.9 million some of
which is included in the next Arotake performance monitoring report.
4. Next Steps
22
Following
this Council meeting, the Arotake report will be published on Council’s
website.
Attachments
Attachment 1 - Arotake Tuarua 2020-21 ⇩
Attachment 2 - Arotake Q2 -
Appendix 2 Bancorp - Confidential Treasury Report December 2020 (Public
Excluded) ⇩
Attachment 3 - Arotake Q2 - Appendix 3
Toi Moana Trust - Quarterly Report - December 2020 (Public Excluded) ⇩
